College students and immigrants are favorite targets as new customers. Previous bankrupts are also targeted, because they have what's been called "a taste" for credit. Today's New York Times editorial The College Credit Scam cautions against the most aggressive and unfair practices that the card companies use on campus:

Colleges, which often allow solicitation on campus, need to do more to protect their students from taking on credit card debt that can severely damage their economic prospects once they graduate from school and join the world of work.

When we did our first PIRG report on identity theft in 1996, we had trouble measuring the extent of the crime but we knew it was big. We still don't know how bad it is (but it is still big, and getting bigger). Over at the Consumer Law and Policy blog, professor Jeff Sovern summarizes Chris Hoofnagle's new paper, Identity Theft: Making the Known Unknowns Known available at SSRN and forthcoming in the fall issue of the Harvard Journal of Law and Technology. From the Hoofnagle paper:

If "lending institutions," used here to describe the entities that actually extend credit (such as banks and credit card companies) and control access to accounts (including payment companies such as Paypal and Western Union), were required to provide statistical data about the crime, a more
complete and focused picture would emerge. Lending institutions have not provided this information because it could cause embarrassment and because it could attract unwanted regulatory attention. Another important reason is the advent of "synthetic" identity theft. This new form of the crime, I argue below, has caused us to underestimate the prevalence and severity of identity theft greatly.

One good thing that's happening with all the China toy recalls: we've finally got a spotlight aimed at the tiny Consumer Product Safety Commission (CPSC). The light points out the urgent need for the president to nominate a consumer protection champion to run the CPSC and for Congress to give it the money and enforcement tools it needs to protect us.

Two consumer champions who ran the agency during the Clinton administration, chair Ann Brown and executive director Pamela Gilbert, have a column explaining steps needed in Reviving a Consumer Watchdog in today's Washington Post:

In its early years, the commission enjoyed bipartisan support, which resulted in steady budget and staff increases. Its activities involving just three types of products -- baby cribs, baby walkers and child-resistant cigarette lighters -- are estimated to save the United States about $2 billion and prevent more than 300 deaths and 10,000 injuries annually.

Brown and Gilbert go on to describe efforts by Ronald Reagan and others to knock the agency down.

But the era of downsizing government changed things. Ronald Reagan and many members of Congress believed they were elected with a mandate to decrease domestic spending, no matter how beneficial to citizens or cost-effective that spending was. The commission's budget, like that of many agencies, was slashed, and its powers were reduced.

The commission has never recovered from those changes. Proposed 2008 funding is about $63 million, with only 400 full-time staffers -- which would make the agency less than half its size in 1978. Today our economy is global; more products enter our stores from other nations than ever before, yet we have far fewer resources dedicated to ensuring their, and by extension our, safety.

This history helps explain how we got to our current situation, where millions of toys have been recalled in the past year. What is the commission doing? According to recent news reports, the agency is "negotiating" a plan with the toy industry to keep dangerous toys out of stores. Not bringing action to enforce the law, not assessing penalties, not writing regulations. Negotiating, because it is too small and underfunded and because it lacks the will to do much else.

Two good consumer money stories in the New York Times this weekend, plus a nice one in the Detroit Free Press:

In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender. And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.

In the last couple of years, credit card companies have created cards that are a hybrid of credit, debit and gift cards -- and the companies are marketing them squarely at teenagers. [...] And some companies promote the cards as a step toward using credit cards. The parental information section on the MYplash Web site says: "This will give your son/daughter a chance to get acquainted with a cash card prior to getting a credit card."

Our view: Paying with plastic is too much like magic to learn the value of money. Sure, the banks claim that the parent can track spending on whiz-bang computer interfaces and then have meetings with the kids to explain money, but what do you expect the banks to say?

Between 6-7 pm Eastern time both Saturday and Sunday night, I'll appear on a panel on CNN's Lou Dobbs Tonight talking about SpongeBob and the other most recent China toy recalls. Sorry I do not know the exact time of the story. Our toy safety pages are at toysafety.net.

Saving me the trouble, the Credit Union National Association (CUNA) has issued a release refuting a silly "survey" from the American Bankers Association purporting that most Americans pay less than $3/month in bank fees. From CUNA:

In 2006 U.S. banks reported a record $36 billion in service charges on deposit accounts, which works out to roughly $360 in yearly charges for each household with a bank relationship.

You won't find a press release anywhere, but buried deep on the Federal Reserve Board website is its August report to Congress on Credit Scoring and Its Effects on the Availability and Affordability of Credit (2 mB pdf). Its a companion to the widely criticized recent FTC report on credit scoring and insurance. Both reports were required by 2003 amendments to the Fair Credit Reporting Act. I haven't read the Fed report yet, but look forward to it, since it has the contradictory finding that even though non-whites have lower credit scores, not to worry, because there is "no compelling evidence, however, that any particular demographic group has experienced markedly greater changes in credit availability or affordability than other groups due to credit scoring."

The CPSC has announced 4 more lead recalls:

All toys manufactured in China. More info here at CPSC. PIRG's toysafety.net pages.

I just did a local TV interview on the latest breach: Hundreds of thousands of job applicants with resumes at Monster.com had their email addresses stolen for use in a phishing attack (phishing attacks are always better if the "phish" think you are their friend).

Even though the hackers didn't directly obtain non-public personal information, the hackers were able to then send the job applicants phishing emails containing legitimizing information and purporting to be from the trusted (to the job seekers) website Monster. But, the emails were actually designed to trick the applicants into loading malicious software on their machines. Some news stories report that the bad software included keystroke loggers to obtain passwords and account numbers later; others report that the software propagated Trojan Horse ransom emails, or both. What concerns me both is that a Monster official said that because the hackers used passwords of legitimate outside users that the "security breach was not due to a bug in his company's systems." Yes, Monster, it was due to a bug in your system. Your system, dear Monster, failed to audit its authorized users adequately, allowing a malicious user to to troll through and collect millions of names. What legitimate user would conceivably do that and why didn't the system catch it? Reminds me of my friends at Mattel blaming the Chinese supplier instead of admitting that it was their fault for failing to check up on him.

Over at the Consumer Law and Policy blog, Deepak Gupta has a nice blog explaining a Florida appellate judge's important dissenting opinion in an arbitration case:

This dissent doesn't say anything that hasn't been said many times before, but it does say it forcefully--and at a time when Congress is beginning to take notice. Ultimately, the question isn't whether state courts take their role seriously, but whether federal law should stand in the way, and only Congress can decide that question.

New York Governor Eliot Spitzer has put the machinery of New York State to work enforcing the recent recalls of numerous Mattel toys for lead or magnet hazards (his statement announcing a series of actions). The governor's actions recognize that voluntary recalls negotiated with manufacturers by the CPSC are often ineffective at getting toys off shelves. Due to the juxtaposition of China, Barbie, Mattel and the August news hole, this recall is getting significantly more press than most others do, but that is no guarantee that all toys will be removed from store shelves. Among Spitzer's announced actions:

Mandatory, not voluntary removal: The State Health Department (DOH) will take summary action under existing Public Health Laws to ensure that recalled toys are removed from New York stores, returned to manufacturers and appropriately destroyed. State Health Department and the state Consumer Protection Board (CPB) staff will inspect retailers to make sure that they comply. In the past 24 hours, the state has found numerous of the recalled toys still on shelves throughout the state.

Our privacy and online marketing colleague Jeff Chester of the Center for Digital Democracy has a long blog post critiquing the op-ed Googling 'Monopoly' (pd sub. may be req'd) in today's Wall Street Journal by two officials of the Progress and Freedom Foundation. From CDD:

The Progress and Freedom Foundation (PFF) is a classic example of a think-tank whose ideological worldview is so distorted, it can't be relied on to truly provide an objective analysis. Its commentary, "Googling 'Monopoly'" (Wall Street Journal, Aug 21, 2007. Sub. maybe required), fails to be an well-informed discussion of the issues raised by the FTC's review of the proposed Google acquisition of Doubleclick. The commentary was co-authored by PFF's acting president Thomas M. Lenard and Paul H. Ruben (a professor at Emory University and a PFF senior fellow). Both were FTC senior officials during the 1980's. Clearly it was written to influence the FTC as that agency currently engages in a serious review of the proposed deal.

What if there were a credit bureau that only reported negative information and your better payment of your more recent bills wouldn't help your score? Actually, there are numerous credit bureaus that only collect negative information, which is then used to blacklist consumers or workers. Among these are bounced check databases, workers' compensation bureaus and tenant screening bureaus. Bankrate.com has a good explanation of the problems renters face due to the often sloppy practices of tenant screening bureaus.

The big 3 credit bureaus (Experian, Trans Union and Equifax) collect both positive and negative information about how you pay your bills and then combine it with public record financial data (generally all negative) to compile credit reports. You can improve a bad credit report by improving your bill payment history, since positive information raises your credit score. You can also attempt to correct mistakes, of course.

It's worse with a blacklist bureau, where all the information is negative. What if you were legally withholding rent because the landlord hadn't completed repairs? What if the tenant screening bureau reported you'd been sued by a landlord but not that you'd won the case, including damages against the landlord for a retaliatory eviction? What if you were mixed up with someone else who'd filed for bankruptcy or been convicted of a crime? You can attempt to correct mistakes, of course, just as if it were one of the Big 3. But when all the information is negative, it's harder to climb out of the hole. Attorneys who go after these tenant screening bureaus tell me that their attitude is often even more arrogant than that of the Big 3. You are entitled to look at your file, of course, but first you have to know if you have one, and at which tenant bureau. Bankrate has a recent list of some of the major specialty bureaus, of all sorts.

There's a fascinating article by Gail McGovern and Youngme Moon in the June Harvard Business Review: Companies and the Consumers Who Hate Them (long summary is free, download full article for a fee). The article picks on practices including tricky bank fees, cell phone early termination fees, unfair longterm health club contracts from Bally's and others, Blockbuster's business model built on late fees, not rentals and a variety of other scams. Then, it points out that ING Bank, Virgin Mobile pre-paid cell phones, Curves and other health clubs and Netflix are among those firms that have taken advantage of the large pool of disgruntled "defecting" consumers who simply want to be treated fairly in the marketplace. These firms and others have a business model that puts "customer satisfaction and transparency first." From the summary:

Why do companies bind customers with contracts, bleed them with fees, and baffle them with fine print? Because bewildered customers, who often make bad purchasing decisions, can be highly profitable. Most firms that profit from customers' confusion are on a slippery slope. Over time, their customer-centric strategies for delivering value have evolved into company-centric strategies for extracting it. Not surprisingly, when a rival comes along with a friendlier alternative, customers defect.

This week the FTC finalized a consent order against KMart for deceptive gift card dormancy fee practices. Consumers who can jump through the government's hoops may be able to obtain refunds. But, in a letter to our pro bono attorney David Balto, the FTC rejected arguments made (previous blog1 and blog2) by U.S. PIRG, Consumers Union and Consumer Federation of America to improve the order in several ways, including our request that KMart disgorge its ill-gotten gains collected from bewildered consumers whose gift cards shrunk in value due to the deceptive fees.

Two of five FTC commissioners, Pamela Jones Harbour and Jon Leibowitz, agreed with us on disgorgement. Without disgorgement, what incentive is there to deter future corporate criminals? What message does our lead consumer protection agency send when it issues wrist-slaps for ripping off consumers? We doubt very many consumers will collect refunds under this scheme:

Under the order, consumers may contact Kmart to determine if they are eligible for a refund, and must provide to Kmart: 1) a Kmart gift card identification number, 2) a mailing address, and 3) a phone number. If it is determined that a consumer’s Kmart gift card had a dormancy fee imposed against it, Kmart will mail the consumer a new gift card with a balance equal to the amount deducted in fees.

As more and more transactions are made with stored value and other new types of debit cards, there is a growing need to improve consumer protections. Your rights with a credit card are strong. Your rights under law with an ATM/debit card are less strong (and it is your own money at risk). Following recent regulator actions, your rights with a payroll debit card are better than before. But with other stored value and prepaid cards, your rights are "not so good" or "it depends." Why shouldn't all plastic have equal, strong consumer rights under law?

A small, but growing, number of law and social science professors are investigating the implications of unfair consumer credit practices on consumer-debtors. Many of them are now blogging. Two good blogs are Credit Slips and the Consumer Law and Policy blog. One Credit Slips blogger, Katherine Porter, an associate professor at the University of Iowa College of Law, has recently posted an important new study to the Social Science Research Network (SSRN). You can download Professor Porter's paper -- Bankrupt Profits: The Credit Industry's Business Model for Postbankruptcy Lending -- at the bottom of this abstract page.

The study, based on a longitudinal study of bankrupt families, finds empirical evidence to challenge the conventional wisdom (fueled by repeated industry claims), as one bank association lobbyist once said with a straight face opposite me in a TV interview, that most bankrupts are bad guys whose purported inability to handle credit is actually calculated, who often go on pre-bankruptcy "mall shopping sprees" (yes, the bank lobbyist said that on TV) and engage in other opportunistic abuses of the credit system. Professor Porter's robust analysis, however, shows that "industry's characterizations of bankrupt families as opportunistic or strategic actors" are false. Instead, Porter finds that the system works the opposite way-- it is the lenders that are opportunists:

many lenders target recent bankrupts, sending these families repeated offers for unsecured and secured loans. The modern credit industry sees bankrupt families as lucrative targets for high-yield lending, a reality that has important implications for developing optimal consumer credit policy and bankruptcy law.

College students and postbankruptcy debtors both face difficulty in meeting bills without borrowing. The credit industry's intense marketing to postbankruptcy families parallels their efforts to lure other vulnerable borrowers into lending relationships. Because bankruptcy is a public process, recent bankruptcy debtors offer a useful group to study to understand creditors' strategies for profiting from financially vulnerable consumers. If lenders' intense solicitation of such customers indeed is drive by these families' propensity to pay late, go over the limit, and revolve large balances, society may wish to prohibit or constrain such lending. Lending strategies that profit from financial distress may be suboptimal because they force society to bear the costs of such distress.

One bank spokesperson has asserted that any credit card offers that it sends to people who have filed bankruptcy are inadvertent. The data cast doubt on this denial. Major lenders deploy sophisticated analytical tools to identify future customers and their anticipated profitability. This strategy has been fundamental to the price and term differentiation that dominates the current lending environment. During the same period in which the bankruptcy rate escalated, technology improved the credit reporting and scoring systems. Simultaneously, marketing departments launched powerful incentives such as create "teaser" interest rates and affinity programs to attract customers. Given this formidable marketing prowess, accidental offers are probably rare.

As policymakers on Capitol Hill evaluate legislative changes to rein in dubious and unfair credit card industry practices and fix the mortgage mess that threatens the world economy, this study provides important information about lenders' intent. It deserves widespread circulation. News on the study: AP story; Bankruptcy expert and Professor Elizabeth Warren's blog entry; the Iowa Press-Citizen.

Talking about the China toy recalls: Over the weekend, I will be appearing on CNN's Lou Dobbs Tonight (both Saturday and Sunday, 6pm Eastern) on a panel with Lori Wallach of Public Citizen's Global Trade Watch and Don Mays of Consumer Reports. Sorry I don't know where in the hour the piece will hit.

And tonight Friday in the 8 o'clock hour (that time is on the East coast at least) I have a long interview with Lee Rayburn on Air America radio (station list).

Sign the U.S. PIRG petition to strengthen the CPSC. The CPSC has committed staff in the trenches, but no leader, not enough money, not enough staff and insufficient legal authority to protect us from either dangerous imported or dangerous domestically-produced products. As the manufacturer, Mattel is responsible, but CPSC needs more resources to hold it and other manufacturers accountable when they break the law.

Urge the Bush Administration to protect children from dangerous toys by giving the CPSC the resources it needs to operate efficiently.

In an editorial today, Fliers' Remorse, the Washington Post joins the call for an airline passengers' bill of rights. Its lede:

A trip to the airport these days is like going to the ninth circle of hell, where myriad aggravations await travelers.

Yesterday, the Solicitor General of the United States ignored the SEC and filed a Supreme Court amicus brief urging the court to protect powerful corporations against investors in the case Stoneridge Investment Partners v. Scientific-Atlanta. The case concerns when powerful professional advisors -- such as banks, lawyers and accountants -- can be held liable for participation in schemes to defraud investors. In May (previous post), the SEC (an independent expert agency) had voted unanimously to file a brief on behalf of investors in the case, but it appears that this president and his political advisors have forgotten all the lessons of Enron. Along with AARP and the Consumer Federation of America, we filed a brief on behalf of investors as have House Financial Services Chairman Barney Frank (D-MA) and Judiciary Chairman John Conyers (D-MI) (their release with link to brief).

A wide variety of law professors, pension funds and state attorneys general also filed briefs siding with small investors against corporate wrongdoers. Here's a summary of the issues from American Lawyer. The story notes that

The last time the Supreme Court directly addressed this issue was 1994, in Central Bank of Denver v. First Interstate Bank of Denver. The Court held that private securities actions can be brought only against someone who is a "primary violator," and are barred against anyone who simply "aids and abets" corporate fraud.

Some have speculated on a possible cause for Mattel products suddenly being loaded up with lead paint from a factory in China: the manufacturer used the same production line for Chinese toys, with weaker standards, and contaminated it before painting U.S. toys. You've all seen those notes on the candy wrappers -- "contains no peanuts, but may have been produced on a machine that processed peanuts"?

There's an interesting new interview by Alternet's Vanja Petrovic -- The Toxic Chemistry of Everyday Products -- with Mark Schapiro, author of a new book that explains that

companies that manufacture hazard-free products for the European Union often produce toxin-filled versions of the same items for America and developing countries.[...] some companies, whether American or international, often have two production lines: one that manufactures hazard-free products for the European Union and another that produces toxin-filled versions of the same items for America and developing countries.

The interview goes on to explain what corporate "logic" goes into this decision, when they could simply manufacture all products to the safer European standards.

For years, we've advocated that the U.S. CPSC ban toxic phthalates in toys. As the interview points out, Europe has.

I'll be on the Diane Rehm Show on NPR, Wednesday morning, (airing from 10-11 am in the DC market, at least, but I don't know about times nationwide so check your local listings) joining other guests and all discussing Mattel, China, dangerous toys and the CPSC.

For Immediate Release:

Statement of U.S. PIRG Consumer Program Director Ed Mierzwinski

The unfortunate news that another 9 million toys tainted with lead paint or dangerous small magnets were recalled (New York Times, Fox) today underscores many problems. First, parents should understand that the government itself does not test products to ensure that they comply with mandatory standards-- that's left up to manufacturers. Second, those manufacturers cannot merely rely on relationships with and promises from foreign suppliers-- they must trust, but verify that tough American standards are met. Third, the CPSC lacks the leadership, the money, the staff and the legal authority it needs to protect us from dangerous imported or domestically-produced products. This recall should be a lesson to all manufacturers that it can happen to anybody. It should also serve as a wakeup call to Congress that the headless CPSC needs a safety-oriented chairperson, more money, more authority and more staff.
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We're excited to announce the first of our occasional U.S. PIRG video consumer blogs. Episode 1: An interview with Kate Hanni of the Coalition for an Airline Passengers Bill of Rights, who explains what passengers should know about tarmac strandings and what to do if stranded. We go through the items -- from diapers to water purification tablets to emergency phone numbers -- in the coalition's Stranded Passenger Emergency Kit. Click on the Youtube picture to watch the video. (It's a little long, I know, but it's our first! Thanks to my producer/cameraman, U.S. PIRG administrative director Rick Trilsch.)

On the Media, the NPR show, has a nice updated interview with Professor of Medicine Stan Glantz of the University of California at San Francisco, commenting on Disney's recent ballyhooed announcement that it was taking smoking out of Disney-branded films for small kids, but not out of all its other movies. Stan is quoted extensively in a variety of print stories on the Disney announcement, which got much more praise than it deserved, as archived at his Smokefree Movies project news pages. MASSPIRG's 2002 report: Tobacco at the Movies.

Papers (New York Times) are reporting that "Zhang Shuhong, a Hong Kong businessman and owner of the Lee Der Industrial Company," has committed suicide. Lee Der is the firm implicated in the recent Fisher-Price lead paint recall of over a million toys. The Times, and others report that there is "no independent confirmation" of the suicide. Our previous blog.

Over at the Prescription Access blog of our partners the Prescription Access Litigation project, check out the post: AMA sells your Doctor's info to Big Pharma. It's based on an op-ed column Prescription mining raises millions for doctors' group by Robert Restuccia and Lydia Vaias that ran in the San Francisco Chronicle last month. The blog excerpts the full op-ed. Excerpt from the blog portion:

As the op-ed points out, most doctors aren't even aware that their information is sold -- not just by the AMA, but by pharmacies as well. When one of the 100,000 drug salespeople that blanket the country enters a doctor's office, they know exactly how many prescriptions the doctor has written for their drug and for those of their competitors. And they know how the doctor's prescribing habits changed since their last visit -- so they can figure what messages worked, and didn't work, with that particular doctor.

The Interstate 35W bridge tragedy in Minnesota last week has so far brought pain and suffering. Perhaps it will also alert the Congress, the public and the administration that we need existing infrastructure funding. Many of our roads and bridges are in a state of disrepair. Road conditions are a factor in a third of the nation's 40 thousand annual road fatalities. "Fix It First" policies would prioritize deferred maintenance projects over new capacity. Doing so would also slow down sprawl and free up funds for public transportation.

The state PIRGs support such a "Fix It First" policy. We're urging our members (and you) to contact the Chairman of the House Transportation and Infrastructure Committee, Rep. James Oberstar (D-MN) and urge him to take action now to introduce a "Fix It First" policy.

Jeff Chester of the Center for Digital Democracy (CDD), our colleague and co-complainant in several FTC privacy petitions, has posted a serious blog critique called CDT's Privacy "Report" --Full Disclosure is Missing of a new report on Internet search privacy from the Center for Democracy and Technology (CDT's Search Privacy Practices report). From Jeff's blog:

CDT has long been an ally of the various data collection companies it purports to oversee on behalf of consumers. It's funded by a number of them. In fact Microsoft's Bill Gates helped raise money for the group just last March.[...]Most troubling is that CDT fails to acknowledge that the widespread and evolving role of interactive advertising practices by these companies--including behavioral targeting, "rich" immersive media, and virtual reality formats--pose a serious threat to privacy and personal autonomy. It is not just the "bad" actors that require federal legislation, as CDT's report suggests. If all Americans are to be protected online, the entire industry must be governed by federal policies designed to ensure privacy and consumer protection.

Check out the Hearusnow.org blog for a post by Bob Williams on how the mega-monopoly AT&T appears to intentionally hide the availability of the

$10 a month Internet service the company was forced to begin offering to gain government approval of its megamerger with BellSouth last year.

The Center for Justice and Democracy has a comprehensive new white paper on the corporate assault on public protections: Corporate Empowerment and the Decline of Public Safety.

Just look at today's federal regulatory agencies, which were created to safeguard the public from corporate abuses. These agencies have been captured and are controlled by the very industries they were intended to regulate. This transformation of mission and management is primarily the result of the President's agenda to minimize the government's role in protecting its citizens. [...] And finally, the Bush administration has been quietly attempting to wipe out or render meaningless the legal rights of consumers hurt by the very dangerous products and practices that the agencies themselves were created to safeguard against and have failed to prevent.

The Yale Daily News is reporting on a recent security breach involving theft of two password-protected computers. I'd heard about this a few days ago from an alum, who'd sent me the breach notice letter. Yale's letter to the alum stated that a "computer containing your name and Social Security Number" but not your "financial account numbers" was stolen on July 17th from the Yale College Dean's Office. Yale Police "have very strong reason" to believe that "in such cases, the purchaser of stolen equipment usually moves quickly to erase the hard drive to hide its origin" and, further, that the thief had "no interest" in identity theft.

How exactly do they know this? Actually, I don't see how they can, unless they've already recovered it and conducted forensic research on the hard drive. Even though the letter goes on to advise the recipient to add a fraud alert to his credit reports, the tone of this letter is similar to the attitude taken by pretty much every industry lobbyist in Washington. Here, the industry hordes are lobbying fiercely that any federal breach notice law both preempt stronger state laws and also set a "risk trigger" before notification is required after a breach. It's a patronizing attitude. "Since we know best we believe that we should decide whether the risk of identity theft is high or low before we notify potential victims that we've lost their confidential financial information." Since they do not actually know the risk, the default should be to always notify. Not only does always notifying place potential victims on alert, which will make it easier for them to spot identity theft, an "always notify" requirement will force data collectors to do a better job protecting data in the first place, instead of leaving non-public information on unencrypted machines that are unsecure. Oh, by the way, breaches are happening almost daily, as the Privacy Rights Clearinghouse reports.

Reporters keep calling and saying: "Why can't the CPSC do the job of protecting us from dangerous Chinese imports and other hazardous products?" One big reason is money. In a previous post, I pointed out that the CPSC's startup budget of $34 million in 1974 would be $149 million today, but its actual budget is only $63 million. Here's another analysis:

$63 million = Annual CPSC budget.

$70 million = Total amount wasted by FEMA by not delivering ice to New Orleans Katrina survivors. Instead, FEMA drove ice all around the country in trucks, then stored it for two years at 12 regional ice "installations" and just recently, melted it ($3.5 million for melting alone). Sources: AP story and news release from U.S. Rep. Steve Cohen (D-TN).

On a related matter, the House Oversight and Government Reform Committee recently held a hearing on FEMA's toxic formaldehyde-laden trailers for Katrina survivors, after the problem was exposed by Sierra Club testing. And, some are saying that the formaldehyde in FEMA's toxic trailers came from China, too. FEMA says: Open the windows. Brownie, you did a heck of a job.

In news releases, leading advocates for low-cost AIDS drugs and other medicines for lesser-developed countries, including Knowledge Ecology International and Doctors Without Borders/Medecins Sans Frontieres (MSF), have praised the Republic of India's High Court in Chennai for ruling against a Novartis patent claim, thereby allowing lower-cost Indian generic equivalents to continue to be sold without royalties. From KEI:

Novartis is complaining that the decision today will undermine R&D by claiming that it needs strong patent protection in India for R&D. India has more poor people than the combined population of Europe and the United States. We cannot depend on high drug prices in poor countries to stimulate R&D.

According to Setback for Novartis in India Over Drug Patent in today's New York Times,

Yusuf Hamied, chairman of the Indian pharmaceutical company Cipla, also described it as a positive ruling. "If Novartis had won, this would have been a tremendous setback for us," he said. "I am willing to pay a royalty on a new invention, but I am against monopolies. This would have increased monopolies, which would have meant higher prices."

From MSF:

Developing country governments and international agencies like UNICEF and the Clinton Foundation rely heavily on importing affordable drugs from India, and 84% of the antiretrovirals that MSF prescribes to its patients worldwide come from Indian generic companies. India must be allowed to remain the 'pharmacy of the developing world.'

In scheduling a two day Town Hall to Examine Privacy Issues and Online Behavioral Advertising on 1-2 November, the U.S. Federal Trade Commission (FTC) has taken its first deliberative, tentative baby steps in response to the fall 2006 online privacy complaint filed by U.S. PIRG and the Center for Digital Democracy. The FTC has also received additional filings in support of our views from other experts, as well as our subsequent USPIRG/CDD/EPIC petition against Google/DoubleClick's merger. PC World explains that the FTC wants to "learn more about current practices in targeted advertising." But our co-complainant, Jeff Chester of the Center for Digital Democracy says in the same story: "The FTC should be issuing rules, not invitations for an industry talkfest that will result in a delay protecting consumers."

When is the enemy of your enemy not your friend? When the two supposed antagonists -- Ma Bell and Big Cable -- are actually boon companions and fellow monopolists seeking to share a duopoly market with no consumer protections and at the consumer's and citizen's expense, of course. In this column, Bruce Speight of Wisconsin PIRG and Joel Kelsey of Consumers Union explain in the Green Bay Press-Gazette that, in enacting statewide cable franchise and broadband expansion legislation, the legislature should make sure that Consumers, not AT&T, should get favored status :

The dual goals of increased competition in the cable market and the expansion of broadband Internet service in Wisconsin are laudable. In today's connected world access to robust networks means much more than just the opportunity to watch cable television -- it means increased access to news, art, entertainment, and diverse marketplaces. Unfortunately, the so-called "cable competition" bill that is currently before the state Legislature is missing its opportunity to develop the video service marketplace in a way that truly benefits Wisconsinites.

Update 5 Aug 07): Big victory last night! Despite fierce and misleading opposition from utilities led by the notorious Southern Company, the Udall (D-NM) amendment to require that 15% of electricity be derived from renewables passed last night 220-190 (roll call, Public Interest Vote = AYE) in the U.S. House. The Energy bill then passed 221-189 (roll call, Public Interest Vote = AYE)

Original post: It's time to renew American energy. If the House of Representatives gets past procedural squabbles and considers the energy bill today, in a rare Saturday session, the key vote will be on establishing minimum federal renewable energy goals. As U.S. PIRG's Anna Aurilio points out in the Associated Press today: "This is the top priority for the environmental community. It would be a real clean energy breakthrough."

Meanwhile, the many opponents of clean energy, led by the utilities, the U.S. Chamber of Commerce, and the National Association of Manufacturers, have blanketed Capitol Hill papers with print ads and mobilized hordes of lobbyists, all making the ludicrous claim that the federal renewable energy standards we support are unnecessary and that we should leave this up to the states. Recently, these guys have been fighting a rear-guard action against enactment of renewable energy standards by dozens of states. When they're outside the beltway, their mantras are: "patchwork quilt" and "balkanization." Here in DC, they're claiming that the states would be blocked from further action by the federal bill (wrong) and their mantra is that federal action is wrong because it would be "one-size-fits-all." Can't have it both ways and besides, you're wrong in both places, industry guys. For more on U.S. PIRG's clean energy future campaign, go here.

In the story today After Protests, City Agrees to Rewrite Proposed Rules on Photography Permits the New York Times reports:

Responding to an outcry that included a passionate Internet campaign and a satiric rap video, city officials yesterday backed off proposed new rules that could have forced tourists taking snapshots in Times Square and filmmakers capturing that only-in-New-York street scene to obtain permits and $1 million in liability insurance.

U.S. PIRG, Consumers Union and Consumer Federation of America have sent a letter to Congressional leaders and the Bush administration outlining actions that must be taken to guarantee the safety of consumer products and food. The proposals would apply to all products, but new protections are proposed for imports:

Clearly, the system of effectively protecting consumers from dangerous and toxic foods and products is broken. [...] We ask that you act quickly to provide more resources and tools to the federal agencies charged with policing the safety of the nation's product and food supply. In addition, we must put mechanisms in place to hold companies accountable for the products they import and sell in the United States including requiring independent third party testing and certification of consumer products.

The Canadian Internet Policy and Public Interest Clinic of the University of Ottawa Faculty of Law has asked Canadian competition authorities to undertake a similar review of the Google/DoubleClick merger as we and others have requested of the U.S. FTC:

In an application to the Competition Bureau, CIPPIC requests areview of the proposed merger between Google and DoubleClick. CIPPIC is concerned that the merger prevents or lessens competition substantially in the online targeted advertising market, as Google-DoubleClick will be able to manipulate the market to raise advertising prices and advertisers and web publishers will have to choose Google-DoubleClick in order to be visible in the e-commerce market.

Pictured is one of the million or so units of various licensed character toys from Fisher-Price/Mattel recalled today because of banned lead paint. When children are exposed to lead it causes chronic, cumulative developmental and brain disorders and lowers IQ. This is not new science.

If manufacturers want to stretch their supply chains all the way to China (and other places) to find lower-cost producers, then they'll need to spend more money making sure that the safety links in the chain don't break. Fisher-Price may have thought its modern factories were immune to the corruption and cost-cutting and cheating that seem to permeate the Chinese economy, but it needs to do a better job. A much better job.

But China is only part of the problem and Congress shouldn't forget that. Unfortunately, the U.S. Consumer Product Safety Commission (CPSC) does not test all toys that enter the market. And if were required to, it wouldn't have the money, anyway.

CPSC enforces laws that require manufacturers, distributors, retailers and importers to guarantee that their products (toys and other products) entered into U.S. commerce (wherever they come from) meet U.S. safety rules, but doesn't have the resources or responsibility to test all products in advance. That's up to sellers. When the CPSC was established in 1974, it was given a budget of $34 million. That's $149 million in today's dollars, but its actual 2007 budget is only $63 million. Its staff of 400 is less than half its 1980 peak of 978, yet it now has global responsibilities. It's the little agency that couldn't.

While it has many dedicated career staff in the trenches, it has no leadership. It's a headless horseman. This president has made things worse, by nominating three bad candidates to run it. The first, Mary Sheila Gall, in 2001, was defeated in the Senate. The second, Hal Stratton, quit less than halfway through his lackluster term. And the president's latest nominee, Michael Baroody of the National Association of Manufacturers (NAM) withdrew his nomination under a potential ethical cloud. Three strikes and you're out, Mr. President.

On the positive side, a Senator Pryor (R-AR) amendment (Section 2204) to the 9/11 Commission bill, HR 1, which is on its way to the President's desk, temporarily grants the CPSC a quorum with only 2 commissioners, so it can again issue rules and impose penalties and invoke mandatory recalls. It lost those powers when Stratton quit over a year ago. (The Fisher-Price and other recalls have all been voluntary; these can be negotiated by staff.)

It's time to restore the CPSC to an agency that can protect the American people, especially kids, from dangerous products from China and everywhere else. Let's hope that this latest China syndrome serves as a reminder that our consumer product safety system is a house of cards. Dangerous products come from home and from China, and from Mexico and other places, too. CPSC is under-funded and under-led and it lacks the enforcement authority it needs to provide an adequate safety shield. Ideally, Congress will re-authorize the agency and give it better enforcement tools and more money.

Check out a Marketplace Radio interview with NYPIRG's Russ Haven criticizing the announcement that Major League Baseball is hooking up with online ticket reseller StubHub in an exclusive deal. Click the Listen To This Story link next to the picture of Barry Bonds to listen to the interview. Excerpt:

Steve Henn: The deal gives StubHub the exclusive right to set up shop on Major League Baseball team Websites. So if you go to a team site looking for a seat you'll have more choices. But there's a catch:
Russ Haven: It's going to lead to higher ticket resale prices.
Henn: Russ Haven from the New York Public Interest Research Group's a critic of the big fees charged by StubHub, which takes 25 percent of the ticket price. He thinks this deal will make those fees worse.
Haven: It also means that no competitor can come into the marketplace and say "Hey, we can undercut those fees."

I recently upgraded from an old (really old) Acura to a newer (almost new) Civic. I called my insurance company to report the change. I then received an absurd letter stating that I would be receiving a "good," but not the "best," insurance rate. Why? Because my credit score was very good, but not the "best." Reason stated: because I had "too few" credit cards, even though they are paid as agreed and in good standing.

A big problem here: My auto insurance rate should be based on factors including "too many miles driven" or "too many moving violations or fender benders," not a credit score, especially one based on flimsy data such as "too few" credit cards.

But it's worse if you're non-white.

As syndicated Washington Post financial columnist Michelle Singletary points out in her Color of Money column Your Car and Your Credit today:

Consumer advocates say using credit scores to set insurance rates unfairly hurts African Americans and Hispanics because those groups tend to have lower credit scores and thus end up paying more for their auto insurance. They also complain that errors in credit files can result in lower scores and therefore higher insurance premiums.

We were privileged to participate in a House briefing sponsored by Rep. Keith Ellison (D-MN) (pictured with me reviewing report before the event) today to release a new Demos report Who Pays? The Winners and Losers of Credit Card Deregulation (release and report), which

reveals how low-income families, African Americans, Latinos and single females bear a disproportionate amount of the cost to subsidize "competitive" credit card offers by paying excessive fees and high interest rates.

A new California law extends lemon law protection to military personnel based in California, even if their car was purchased in a different state. The bill was pushed by long-time lemon rights and car safety champion Rosemary Shahan and her group Citizens for Auto Reliability and Safety (CARS). The legislature enacted the law after the debacle faced by Lt. Nathan Kindig when Chrysler refused to grant him rights under the lemon law for his 2004 Dodge Dakota lemon truck.

In 1982, when I was with Connecticut PIRG, we helped pass the nation's first new car lemon law. At the time, we were only a few weeks ahead of passage of California's law, where Rosemary Shahan was leading the way.

Lemon laws have now been enacted in every state. They solved the myriad legal problems consumers faced when they bought a car from a dealer that didn't work. Lemon laws generally define a lemon (a new car that has the same major unfixable defect 3-4 times during warranty, or is in the shop 30 days during warranty, for example) so consumers no longer have to prove their particular car is a lemon in court (previously, they did). Lemon laws also give consumers an explicit legal right to sue a manufacturer, something that they didn't have, which also crippled many lawsuits. Lemon laws also streamlined the legal process. A few states have enacted similar laws for used cars.

The new California law is the latest example of laws designed to meet the special needs of our underpaid military personnel, who are often targets of unfair predatory practices. The law simply provides the same protections to in-state military personnel that other residents enjoy. Recently, the Congress has recognized that in some cases, military personnel need even greater rights. In 2003, stronger rights for military personnel to prevent identity theft (active duty military fraud alerts) were established. In 2006 rights against predatory lending (although rules on this are not yet final and aren't as good as we would like) were enacted.

Cory Doctorow, activist, science fiction author and co-editor of the blog Boing Boing, has a new column over at Media Guardian, the website for media professionals of the British newspaper The Guardian. His first column is on digital rights management schemes, and as you'd expect, Doctorow pulls no punches in his message to content providers:

The wheat won't grow under Lysenkoism, and you can't stop people from copying files on a computer. But you can still get rich -- just sell the same stuff, without the DRM. We're the same customers, and we'd buy just as many DVDs if there was no anti-copying magic on them.