The wealthy financier "is getting a taste of what the rest of us have to deal with all the time," said Gail Hillebrand, the senior staff lawyer for Consumers Union in San Francisco. That sour taste is called automated clearing house fraud, theft involving unauthorized electronic transfers through the automated networks of the circulatory systems that connect the world’s bank accounts.

U.S. consumers today have a broad range of choices about how to make payments. In addition to checks, credit cards and traditional debit cards, consumers may be offered prepaid cards, contactless cards, mobile payment devices, online payment sites, online credit payments, and other new ways to pay.

Federal payments law was developed before many of these methods existed, so it is no surprise that it has gaps in coverage. The variations in the law underlying the different payments methods place consumers in very different legal positions when something goes wrong. The gaps in the law mean that the particular payment method used, and how the payment is processed, can affect the consumer's ability to get his or her money back if the goods are not delivered as ordered, the payment information is stolen and misused, the payment was unauthorized, or the payment is processed for the wrong amount.

Yesterday the FTC announced two amendments to the Telemarketing Sales Rule. The key change "expressly bar telemarketing calls that deliver prerecorded messages, unless a consumer previously has agreed to accept such calls from the seller." There are some exceptions, but it is a big step.

There's always good stuff in the Multinational Monitor. From this month's issue:

AARP has announced a new member benefit: a cell phone from Consumer Cellular with (among other benefits):

Yikes, other cell phone companies claim all these pro-consumer terms are impossible to offer! AARP also has a credit card with no mandatory arbitration. When your buying club has 45 million members, companies are willing to negotiate with you. Let's hope these consumer-friendly terms are adopted by other cell phone companies.

Yesterday NCPIRG staff attorney Shana Becker and coalition colleagues rolled out NC SAVE$, an alternative to the controversial Duke Energy plan to charge ratepayers $16 each for compact fluorescent light bulbs worth less than two bucks each, all supposedly in the name of energy conservation. The coalition (Carolina Newswire) proposed that the state Utilities Commission establish NC SAVE$, instead of allowing Duke to run a ratepayer-fueled boondoggle for its shareholders.

NC SAVE$ would be an independent non-profit established by the Utilities Commission. Historically, the Utilities Commission has established non-profits to meet needs underserved by the utility companies. Advanced Energy Corporation was established to promote alternative energy generation methods, and to maximize the energy currently produced.

North Carolina PIRG (campaign page) is leading a campaign that's shining light on a not-so-bright idea from Duke Energy. The behemoth utility -- one of the monsters that came out of the misguided Enron-wrought deregulation push of the 1990s, is asking ratepayers to buy compact fluorescent lightbulbs at a price that includes a subsidy to shareholders for 90% of the cost of the nuke and coal base-load plants it will not need to build due to the energy savings. From a coalition release:

"While families are struggling to pay energy bills, Duke Energy is requesting hefty, new charges for energy efficiency." says Shana Becker, Staff Attorney for NCPIRG. Under the program, Duke would charge $18.23 for promoting an energy efficient light bulb that retails for $1.65...

Our colleagues at Consumer Action have released their annual credit card survey. From the release:

Notable findings:

Four of the top ten credit card issuers cited factors beyond a consumer’s control that might cause an interest rate increase such as: "market conditions," "the economy," and "business strategies."

77% of surveyed credit card issuers (17 of 22) answered "Yes" to the question "Can you increase my APR or change my terms 'any time for any reason'?" This includes all Top Ten issuers - even Citibank which pledges not to change a customer’s terms before the card's expiration date.

Five financial institutions told CA surveyors that they would reduce a cardholder's credit limit because of perceived customer risk. Factors include: a decline in credit scores, late payments and balances that go too close to the credit limit.

Interstate Commerce Subcommittee Chairman Byron Dorgan (D-ND) and Chairman Daniel Inouye (D-HI) of the Senate Commerce Committee held a hearing today entitled Privacy Implications of Online Advertising. In her testimony, Lydia Parnes, Associate Director of the FTC, referenced the PIRG/Center for Digital Democracy online advertising petition to the FTC (previous blog).

In her testimony, Leslie Harris of the Center for Democracy and Technology offered a good overview of what's at stake. She pointed out, as does our PIRG and CDD petition, that the new trend of behavioral targeting poses greater threats than traditional search advertising:

There is also a risk that profiles for behavioral advertising may be used for purposes other than advertising. For example, ad networks that focus on “re-targeting” ads may already be using profiles to help marketers engage in differential pricing.10 Behavioral profiles, particularly those that can be tied to an individual, may also be a tempting source of information in making decisions about credit, insurance, and employment. [...] The concerns about behavioral advertising practices are heightened because of the increasingly sensitive nature of the information that consumers are providing online in order to take advantage of new services and applications. Two data types of particular concern are health information and location information.

The use of ISP data for behavioral advertising is one area that requires close scrutiny from lawmakers. The interception and sharing of Internet traffic content for behavioral advertising defies reasonable user expectations, can be disruptive to Internet and Web functionality, and may run afoul of communications privacy laws.

You can watch Thursday's hearing of the Financial Institutions and Consumer Credit subcommittee at the CSpan website. The hearing explored the implications of aggressive credit card marketing to college students. Look for the hearing on this page (although after a few days it may move and you'll need to use the search engine). The hearing featured testimony by U.S. PIRG's Chris Lindstrom explaining the results of our report The Campus Credit Card Trap, available at www.truthaboutcredit.org. Other key witnesses were from the NY Attorney General's office, Campus Progress, and the University of Illinois at Chicago Student Government. All testimony and the House video of the hearing available here.

Today, PIRGs around the country released our new report Squandering the Stimulus: Average American Households Spent Economic Stimulus on Gas. It's part of our campaign to promote mass transit spending increases to reduce the heavy negative impacts of our car and gasoline based transportation system. I joined staff attorney Shana Becker and NCPIRG outreach staff at their release in Raleigh today in front of the Moore Square transit center (photo). From the national release:

Without sufficient alternatives to driving, American families spent their entire economic stimulus check on high-priced gas. According to new analysis from the U.S. Public Interest Research Group, since President Bush signed the tax rebates into law on February 13th, the average household spent over $1500 filling their tanks. Gas costs were higher than average in areas without robust public transportation.

On Thursday, the US House of Representatives will vote on a bill to approve additional funding for public transportation as an alternative to high gas prices. "If Congress wants to do something long-term about high gas prices, it will give people more alternatives to driving," said US PIRG staff attorney John Krieger, "Unless we make it easier to drive less, American families will be stuck in neutral as they spend more and more at the pump."

Today the FCC held a hearing on cell phone early termination fees. At least two witnesses Pam Gilbert, an attorney representing California consumers and Pat Pearlman, a West Virginia state government consumer advocate representing the National Association of State Utility Consumer Advocates (NASUCA), cited our authoritative 2005 Locked In A Cell report. It describes the results of a nationwide survey of consumer opinion against these penalty fees of $150-200 or more that prevent you from switching cell service when you have shoddy service. The ETFs, of course, therefore allow the wireless providers to offer shoddy service, since you happen to be ... locked in a cell phone contract.

What is truly incredible and outrageous is that FCC Chairman Kevin Martin didn't hold this hearing in response to the pleas of the thousands of consumers who complain to the FCC about ETFs each year. He held the hearing in response to requests from a few powerful wireless companies that have asked him to enact a federal rule to protect them from consumers. The federal proposal Tom Tauke of Verizon and other special interest lobbyists back would have the effect of releasing the telcos from the liability they face if ETFs are held to be illegal and unconscionable under state law in several pending lawsuits. The real question is how far will Martin go in his last few months as chairman? Will he actually push for a vote to provide the telcos with an industry safe-harbor federal regulation that retroactively immunizes them from the liability they face for harms they have already caused millions of consumers? That is a bold step.

More and more, the Bush Administration appears to be a one-stop shopping center for companies seeking relief from strong state consumer laws. Previous blog.

Today in Geneva Switzerland, at an undisclosed location, the US government, the European Commission, Japan and a handful of other countries will meet in a secret negotiation on a new treaty. The working name is the Anti-Counterfeiting Trade Agreement (ACTA), a name that masks the much broader subject matter, and one that was deliberately chosen to intimidate and discourage politicians from expressing opposition to provisions that undermine civil rights and privacy, and which many say will change the substantive rights the public has to use copyrighted works or inventions.

You can't make this stuff up. It writes itself. I guess I can't fault the iconic Saturday Night Live character Mr. Bill or his creator Walt Williams for selling out to MasterCard. After all, too many of my favorite rock stars who probably need the money a whole lot less have done the same. Wendy Lee reports in Tuesday's New York Times that Mr. Bill Returns (in One Piece) to Pitch a Debit Card:

The small clay figure that appeared in "Saturday Night Live" short films three decades ago -- being dismembered, pulverized and humiliated to his falsetto cries of "Oh, nooooo!" -- will be the latest star of MasterCard’s "Priceless" campaign. He is being revived as a debit-card holder who gets roughed up but keeps on going.

Fortunately, we get the last word in the story:

But Ed Mierzwinski, the federal consumer program director for the United States Public Interest Research Group, said that debit cards were far from a panacea. "If you’re using plastic, you tend to spend more than when using cash," he said, adding that cardholders can incur heavy fines if they overdraw their accounts. Mr. Mierzwinski also said that debit transactions -- and the right to dispute them -- are not legally protected the way credit card transactions are. "Zero liability promises on debit cards are only promises, they’re not the law," he said.

In her Washington Post story Scrutiny of Phone Fees May Broaden to TV, Internet, Cecilia Kang reports on Saturday that the 12 June FCC hearing on unfair cell phone early termination penalty fees

may be expanded to include a discussion on similar fees for ending cable and Internet services ahead of schedule, the chairman of the Federal Communications Commission said in an interview yesterday.

Scouring the Internet this morning, I found our name and data from our 2004 report on credit bureau errors Mistakes Do Happen in two recent PR news releases from two separate firms claiming NOT to be illegal credit repair doctors -- one from Lexington Law Firm and another from something called NACRA.

We are not connected with either of these firms and would never urge you to give your money (hundreds of dollars!) to a company that claims it can eliminate bad credit, even ones that claim to do "legal" credit repair. You can fix mistakes yourself. You can eliminate identity theft and fraud accounts yourself. But your own bad credit can only go away over time. Keep your current bills timely. Pay down your credit cards so you aren't maxed out. But don't waste your money on credit repair. More from the FTC.

Anytime a firm claims not to be an "illegal" credit doctor, but makes promises to fix bad credit for large amounts of cash, use your head. if your efforts to fix false or inaccurate negative information on your credit report fail, we recommend you talk instead with an attorney who specializes in the Fair Credit Reporting Act, such as one from the National Association of Consumer Advocates.

Should your car insurance bill be based on how many claims, accidents and speeding tickets you have? Makes sense to us but not to the insurance industry. They want to base your rates on whether you paid your Mastercard on time last month and whether your credit score is high enough. Today, Consumer Federation of America's Bob Hunter (an actuary, a former Texas Insurance Commissioner and a former U.S. insurance czar) will urge the House Financial Services Committee and its Subcommittee on Oversight and Investigations to look at how insurance credit scoring is not based on legitimate insurance rating factors and hurts non-whites even worse than whites. Details in previous blog.

Over at The Philly Inquirer's Philly.com, reporter Henry Holcomb has more on the impact of credit card interchange fees on small retailers, especially gas stations, in his story Credit card fees further strain gas stations:

Gasoline at $4 a gallon might be a burden for consumers, but it is a windfall for credit card companies, according to industry experts. Caught in the middle are the gas station operators, who must pass the credit card fees on to their anguished and angry customers.

Over at his Red Tape Chronicles, MSNBC's Bob Sullivan reports that when student loan giant Sallie Mae merely changed its reporting method to credit bureaus, something in the the massive credit reporting/credit scoring system burped, and the credit scores of young graduates with student loans that were paid as agreed came crashing down. For those interested in credit bureaus and credit scores, here's some more analysis from me.

Credit scores are derived from credit bureau databases. The bureaus sell their own now, but the market leader in scoring has long been Fair Isaac and its FICO score. As Sullivan reports, a coding change at the bureaus or at Fair Isaac caused the scoring algorithm to presume that regular, on time payments as agreed were actually partial payments negotiated by delinquents as part of a workout strategy. Some consumers lost over a hundred points.

For years, Fair Isaac protected its scoring system like the Coca-Cola formula. No one could look inside the black box. They wouldn't even explain the general concepts and weighting of factors.

They claimed it was so consumers couldn't figure out how to game the system. They claimed it was to protect their intellectual property from would-be competitors.

It seems to me that another reason is they don't like to admit mistakes. For years, for example, their software downgraded consumers who were simply shopping around, for example, for the best deal on insurance or a new car. FICO instead presumed their multiple inquiries were precursors to credit-binge fueled bankruptcies.

Today, thanks to pressure from advocates and ground-breaking California legislation on credit score disclosure later incorporated into federal law, FICO's system is more transparent, it is richer (thanks to sales to consumers) and it has some competition. But it still needs to do a better job of preventing these sorts of errors before they happen.

In this case, either the bureau computers or FICO computers bungled entries that resulted from a laudable Sallie Mae program that benefited its younger borrowers by setting repayment schedules to ramp up as a young graduate's income increased over time. The mis-coding presumed these were not payments as agreed, but some sort of partial payment workout plan after a consumer's delinquency. (The default switch at a credit bureau is generally "D for deadbeats." The FICO analytics rely on the coding of the payment history it receives from the bureaus.)

Sometimes, creditors game the scoring system:
But Sallie Mae hasn't always been so altruistic. Several years ago, it came under Congressional pressure for failing to report to all the credit bureaus. Columnist Ken Harney helped expose the fiasco. This resulted in potentially lower scores for consumers when their score was calculated from a credit report at a bureau that Sallie didn't report to. Many young consumers only have a few trade lines on their credit reports. To use a collegiate analogy, it would be like calculating their cumulative grade point average on only 3, not all 4, of the courses they were taking.

Sallie did this intentionally -- both to deflate scores, making their customers appear less desirable to competitors who wanted to send them pre-screened offers, and also to make it harder for those competitors to find their customers generally, so they'd never send the offers in the first place. Sallie didn't want other student loan companies to offer loan consolidation deals. This was also during its high-flying days when it wanted to become a one-stop shop for all financial products. Keeping its own customers as a captive customer base and limiting their ability to shop around aided that business plan.

But it certainly made it harder for young consumers who were applying for auto or home financing to get the credit they deserve, when their paid-as-agreed student loan wasn't adding points to their score. Under pressure from the Congress, Sallie changed its ways. By the way, one of its lamer defenses at the time was that it was simply doing it for the students, since for every consumer who benefited from reporting, it claimed there was another who didn't make payments as agreed and would benefit from not having that negative trade line shared. Of course, that's ridiculous.

Another way to game the system and make your customers appear less desirable to competitors seeking to buy pre-screened lists from the bureaus to make offers is to report only partial information about them. Credit card companies, including Capital One and Citibank (again, Ken Harney was on the case), have been accused of doing this, in Congressional hearings and other venues. If you only report a consumer's credit card balance but not his or her credit limit, the scoring computers' default setting is that the current (or highest previous) balance equals the limit. If your balance equals your limit, you are of course maxed out. Maxed out consumers have lower scores.

I am not necessarily a big fan of pre-screened offers, which can led into too much debt. But some consumers may benefit. More importantly, remember that the consumer making his own or her own applications for credit is hurt also.

Finally, even though FICO guards the scoring algorithm as if it were the fabled Cocoa-Cola formula, it is prone to systemic mistakes as above, it can be spoofed by creditors as above, and it's even been reverse-engineered (by the Fed and others). "Pay no attention to that man behind the curtain, I am the great and powerful FICO," just doesn't cut it anymore.

In addition, the bureau coding systems contribute to the problem. Everyone involved needs to do a better job.

Over at The Consumerist blog, check out the important warning Watch For Baloney "Reservation Rewards" Charges On Your Credit Card. Companies, including federally-insured banks whose regulators should have them concerned with "reputation risk," form partnerships with often-sued marketers including Trilegiant (see 2006 settlement between 16 state Attorneys General and Chase Bank and Trilegiant. Chase has recently been accused of continuing these practices anyway). Another firm in the biz is the ever-morphing Memberworks (is it now Vertrue?). The companies and their partners exploit gaping loopholes in the porous 1999 Gramm-Leach-Bliley Financial Modernization Act which "allow" them to share confidential information garnered from account relationships with the telemarketers. The club purveyors then claim the right to bill you based on either a "one-click" look at their pages or, in the offline version of the scam, after you cash a teeny $2.37 or so check that arrives with your bill. In either case, you've "signed up" for an often useless but expensive $10-$15 month club membership. Insist that your credit card company remove these charges.

Years ago, the federal government foolishly deregulated interstate moving companies, leaving consumers whose goods are held hostage for punitive additional fees, or delayed weeks or even broken in transit with little recourse. With the arrival of mover advertising on the Internet, as the story Keeping 'Furniture Ransom' Off Your Moving Bill by Kristina Shevory in the New York Times notes, things have only gotten worse. The story does note a few sites where you can get information, at least, including the federal government site protectyourmove.gov and the bad mover warning and consumer advice site movingscam.com. The story notes that Florida and Maryland are among states with strong intrastate moving protections.

We spoke today at Chairman Chris Dodd of the Senate Banking Committee's news event announcing the introduction of the Credit CARD Act (previous blog). Senator Dodd was joined by 4 Senators -- Senators Carl Levin (D-MI), Bob Menendez (D-NJ), Claire McCaskill (D-MO) and Jon Tester (D-MT) -- and by Professor Elizabeth Warren of Harvard Law School, as well as by leading consumer groups and labor organizations. Here is Senator Dodd's release and statements of support from Senators, Representatives and groups, including U.S. PIRG. Here is a summary of the bill, which should be available tomorrow. The little camera-phone flash was somewhat overwhelmed by the klieg lights of the Senate Banking Committee hearing room, but the photo shows Senator Dodd at the microphone, with Professor Warren behind him and Senator Levin at right. Our letter of support to Senator Dodd. In addition to the bill's strict prohibitions on unfair consumer practices, the bill includes a study of the unfair interchange fees imposed on merchants. See previous blog (last paragraph) for more on interchange fees.

When the somnolent regulators over at the regulator/cheerleader known as the Office of the Comptroller of the Currency (OCC) issue a civil penalty (OCC release) against one of the members of their country club --in this case, the nation's #4 bank, Wachovia -- think Halley's Comet, think hundred year flood, think Cubbies win the World Series -- you get the idea. Also think: who got there first and shamed the OCC into action? In this case, it was a Page One New York Times story nearly one year ago by Charles Duhigg, Bilking the Elderly, With A Corporate Assist. That story reported that at last one victim had been scammed as early as 2003, and that several banks had warned Wachovia since then that its accounts were being used to fleece their customers (our previous blog after release of "Yikes! Double Yikes!" Wachovia emails). As Duhigg reported in his story Friday on the settlement:

The bank's actions were "part of a pattern of misconduct" that resulted in Wachovia’s collecting millions of dollars in fees, regulators wrote. Wachovia has agreed to pay a $10 million fine, contribute $8.9 million to consumer education programs and make restitution to victims that could top $125 million. In a statement, the bank said this "situation was unacceptable and we regret it happened."

severed relationships with Mexican foreign-exchange firms in December and January after authorities began their inquiries. Some have struck agreements with the government to improve their efforts to fight money laundering, avoiding prosecution.

In 2005, [Wachovia] introduced the Dinero Directo card to facilitate cross-border remittances. The bank pushed into the business despite well-publicized concerns from U.S. law enforcement that such firms were sometimes used to launder drug money. Wachovia declined to discuss why it pursued this business despite the warnings. Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms.

... Lee has continued to do business with banks and licensed mortgage brokers who fail to detect questionable actions by him and the people working for his companies. Last year, Wachovia, the fourth-largest U.S. bank, funded 196 loans totaling about $54.2 million that Lee brought to the financial institution, according to an e-mail sent to Lee by Scott Davenport, a former national account executive with Wachovia.

Davenport sent the e-mail several months after The Washington Post and other publications reported that cease-and-desist orders had been issued against Lee in Maryland and Georgia for originating loans without a license. Soon after I inquired about Wachovia's business transactions with Lee, Davenport was fired. Wachovia confirmed that Davenport was terminated but declined to comment why.

2 bad 4 us that the big bnks & OCC r BFFs (Best Friends Forever).

Back to Duhigg: His story also points out that not everyone is happy with the OCC action, which requires bilked consumers to run through a complicated, if court-approved, rat maze to obtain restitution:

Under the terms of the settlement, victims will not automatically receive compensation from Wachovia. Instead, they will have to submit claims through a complicated bureaucracy. Because many of the victims are elderly or poorly educated, it is likely many of them will stymied by these obstacles, Mr. Markey said. In previous cases, the comptroller’s office, also known as the O.C.C., has mailed checks to victims of fraud, rather than requiring them to file claims. [Release from U.S. Rep. Ed Markey-D-MA: Weak Wachovia Deal Shortchanges Elderly Fraud Victims]

Every once a while, I'll list some new, or higher, gotcha fees:

The ticket applications for the early rounds for next year's men's basketball tournaments are due March 1 and require the consumer to pay about $200 plus a $9 service charge for each ticket. Consumers can apply for as many as eight tickets.

On the bright side, as Kelli Grant reports at SmartMoney.com, the FAA has increased passenger "involuntary" or forced bumping compensation from the longstanding prehistoric level of $400 to "up to $800." That's not anywhere near inflation levels since 1978 ($1300) but it should at least result in better offers to the people who accept bumps.

Today's Washington Post features an op-ed column Preventing Profit From Debt Help from my colleague Johanna Neumann, director of Maryland PIRG. She and other consumer advocates in Annapolis are fighting a proposal to allow for-profit debt counseling.

What's wrong with the proposal? Remember Andris Pukke? Probably not, but he's a big part of the reason the original 2003 law was passed to limit for-profit counseling. Despite his apparent status as a previously-convicted federal felon, he and his wife Pamela were the principals in a Maryland-based debt counseling mill with various names, most commonly Ameridebt and DebtWorks, that masqueraded as a non-profit debt collector even though its basic business purpose was to take money -- many millions of dollars -- from desperate debtors and enrich the Pukkes. From the FTC in 2006:

The Federal Trade Commission today put a successful end to the largest case against deceptive credit counseling and debt management brought by the agency. The FTC announced a settlement with Andris Pukke, founder of AmeriDebt, Inc., and with a related company owned by Pukke, DebtWorks, Inc. The agreement, if approved by a federal court in Maryland, would require Pukke to give up virtually all of his assets for a consumer redress program for victims of the deception, a fund that ultimately could total as much as $35 million. [...] "Our case alleges that these defendants used their credit counseling business to deceive nearly 300,000 consumers about the services they provide, the fees they charged, and their status as a non-profit company," said Lydia B. Parnes, director of the FTC’s Bureau of Consumer Protection.

The McClatchy papers are running a nice story today by Christina Rexrode. The story is titled Your low-interest credit card? Yeah, well ...Some consumers' rates are rising for mysterious reasons. The piece highlights how Bank of America, in particular, is among the credit card companies jacking up the rates of good customers, perhaps because it lost money on its mortgage and hedge fund business recently, but also, of course, because it can:

Some consumers and analysts say Bank of America, which saw profits all but disappear in the fourth quarter, is trying to squeeze money out of its credit card users to make up for disappointing earnings.

But what I liked most about the story is the illustration, torn from the pages of George Orwell's 1984:, "If you want a vision of the future, imagine a boot stamping on a human face - forever." If that Orwellian dystopia doesn't best describe both the effect of perpetual debt brought on by penalty interest rates and the attitude credit card companies have toward consumers, what does? Kudos to the unnamed illustrator.

UPDATE: In this great video from WRAL-5 in Raleigh, NC reporters who didn't yet know about our study duplicated it yesterday and found the same results!

FCC Commissioner and consumer champion Jonathan Adelstein (his statement) was kind enough to help us release a new "secret shopper" report today on retailers and their understanding, or lack thereof, of the impact of the digital television transition on Americans who still receive over-the-air TV on analog sets. One year from this Sunday, 17 February 2009, those TVs will go dark unless the consumers purchase government subsidized converter boxes. Consumers with older non-digital TVs receiving satellite or cable service will not be affected. Find out (in several languages) more about free $40 coupons from the government to reduce the cost of converter boxes at www.dtv2009.gov.

Here is our news release, which also includes a comment from Rep. Ed Markey (D-MA), chairman of the House Subcommittee on Telecommunications and the Internet Highlights from the report Mixed Signals: How Retailers Mislead Consumers on the Digital Television (DTV) Transition:

Retail sales clerks are providing inaccurate or misleading information about the upcoming digital transition and these mixed signals will cost consumers time and money, according to a new report released today by U.S. PIRG.

Nationally, U.S. PIRG researchers found the following:

You can listen to me on Marketplace Morning Report or read these stories: Baltimore Sun or WRAL-Raleigh, NC. I hear Best Buy is claiming our data are old and things have changed! Well, we re-validated our fall results in January-- same results, including at several Best Buy stores. More recently, meaning this week, Best Buy and other retailers have announced improved education campaigns for their staff and the public. That's great-- and it is probably due to relentless pressure from Jonathan Adelstein, Ed Markey, U.S. PIRG and others. We released preliminary data from this study at two Congressional hearings last fall.

Over at the New York Times, Charles Duhigg reports that Papers Show Wachovia Knew of Thefts. The papers were released in a lawsuit concerning a long-running telemarketing fraud scheme targeting the elderly. It's a followup to his 2007 expose Bilking the Elderly, With a Corporate Assist. In today's story, he reports that internal papers show that while some Wachovia Bank executives were saying "Yikes, Double Yikes," -- others were counting profits from the fees that the fraudsters had to pay the bank after charges were reversed following consumer complaints:

"YIKES!!!!" wrote one Wachovia executive in 2005, warning colleagues that an account used by telemarketers had drawn 4,500 complaints in just two months. "DOUBLE YIKES!!!!" she added. "There is more, but nothing more that I want to put into a note." However, Wachovia continued processing fraudulent transactions for that account and others, partly because the bank charged fraud artists a large fee every time a victim spotted a bogus transaction and demanded their money back. One company alone paid Wachovia about $1.5 million over 11 months, according to investigators.

The story goes on to point out that Wachovia looked the other way while internal fraud investigators, credit unions and even other banks sent it warnings about fraudulent accounts. Meanwhile, I ask: Where was Wachovia's chief regulator, the little-seen regulator known as the OCC (our site OCCWatch) that spends more time preempting state regulators than supervising big banks? It hasn't issued a public civil penalty of note in many years. While Duhigg reports that Wachovia announced some changes last summer, any unreported, private regulatory sanction that may have been imposed by the OCC to inspire such unfettered altruism is simply not enough to reassure this consumer advocate, or the Congress, that enough has been done to deter shabby bank practices that lead to crime against consumers. Public sanctions, including civil penalties, would reassure us that vulnerable populations have the full force of the federal government protecting them from unsavory practices that deplete their life savings.

Michael Sorkin, who writes the Savvy Consumer column for the St. Louis Post-Dispatch, points out in his story Naked DSL arrives -- but you'll get a better price next month that AT&T continues to do a sloppy, self-serving job offering the low-cost naked-DSL (no phone package required) broadband product that was required by the FCC as a condition of its competition-eliminating purchase/merger with BellSouth:

AT&T finally is offering "naked" Internet service to people without the company's landline phone service. Meanwhile, scores of angry customers say AT&T is still making it hard, if not impossible, to sign up for two nonadvertised money-saving services: $10 a month DSL and "uSelect3," one of the company's cheaper phone plans.

Thanks to vigilance by state legislators, state enforcers and the FTC, store-issued gift cards have even fewer fees than before and are an even better deal than high-priced fee laden bank and mall issued cards, according to a story Gift Cards Coming With Fewer Strings by Nancy Trejos of the Washington Post. The story goes on to also point out:

Many retailers have responded to consumer complaints that gift cards are too laden with fees and expiration dates, experts said. In its fifth annual gift card survey, Montgomery County's Office of Consumer Protection found that 18 of the 22 retail cards examined had no fees and no expiration dates and could be replaced if lost or stolen or had scratch-off PINs for security.

Gift cards aren't necessarily the best gift, as we recently pointed out. Recipients may forget to use them. Worse, some gift cards, especially bank-issued cards (including many with the name of a mall or store on them) decline in value due to fees. Although many states have banned or limited the fees, the national bank regulator known as the OCC (our warning site OCCWatch) has aided and abetted bank lawsuits seeking to overturn state laws restricting gift card fees as they apply to bank-issued cards. Now comes the OCC press release: OCC Reminds Consumers to Read Gift Cards' Fine Print because of fees and expiration dates, which largely only occur on bank-issued cards. With regulators like these, who create the problem and then issue the warning about the problem, who needs enemies?

It's illegal to impersonate a police officer. But dress up like a prosecutor so you can better threaten consumers into paying off small debts? Heck, the prosecutors actually let debt collectors do this-- why? In return for kickbacks of course! The debt collectors "rent out a prosecutor's name and authority."

Do the debt collectors then gain the right to break the debt collection laws, by arguing that the sovereign immunity of the government official extends to them? Over at Consumer Law & Policy Blog, Deepak Gupta, a Public Citizen consumer attorney who has been fighting these tawdry arrangements (which have even been legitimized by Congress) reports that important progress is being made in the courts.

Sovereign immunity, the court said, "has never been held to apply simply because an independent contractor performs some government function." The decision has potentially far-reaching implications for holding all sorts of government contractors--from private prisons to Blackwater--accountable in the federal courts.

titled "Prisoners of Debt," by reporters Robert Berner and Brian Grow. The piece focuses on how big lenders and credit card companies keep squeezing money out of consumers whose debts have been discharged in bankruptcy, and on the selling and buying of those discharged debts.

The National Consumer Law Center has a new report Fee-Harvesters: Low-Credit, High-Cost Cards Bleed Consumers. The report provides an excellent overview of the entire credit card industry, the history of its rapid growth under deregulation and preemption and how its staggering profits have been fueled by abusive practices affecting all consumers. It then focuses on the fee-harvester cards, which "represent an extreme version of the abuses by the card industry." It describes how the companies use sophisticated algorithms and access to credit report data to target vulnerable consumers, not for true credit solicitations, but for fee-harvesting. I could use the metaphor of a parasitic alien, jumping on the backs of consumers and sucking out their money, fee by fee, but the report does better.

In the 1975 movie "Jaws," a marine biologist played by Richard Dreyfuss makes this observation about the great white shark: "What we are dealing with is a perfect engine, an eating machine. It's really a miracle of evolution."

One of the fee-harvester cards featured in the NCLC report comes with a credit limit of $250. However, the consumer who signs up for this card will automatically incur a $95 program fee, a $29 account set-up fee, a $6 monthly participation fee, and a $48 annual fee -- an instant debt of $178 and buying power of only $72. Fee-harvesting is extremely lucrative for the industry. In 2006, Atlanta-based CompuCredit -- one company featured in the NCLC report -- collected $400 million in fees from a portfolio of fee-harvester cards that by mid-2007 had saddled cardholders with nearly $1 billion in debt.

The report points out that "fee-harvester cards have very little purchasing power" for the consumers who "use" the cards: "much of the unpaid balances represent fees rather than payments for purchases to third-party merchants." The report describes in detail how credit card banks, large and small, obscure (CorTrust) and well-known (Capital One and HSBC) have developed the fee-harvesting business model to target sub-prime consumers with low credit scores. The report provides a detailed explanation of the techniques used by fee-harvester cards to deplete millions of dollars annually from consumer wallets -- from down-selling and abusive debt collection to the slice-and-dice, used by the massive "What's In Your Wallet?" lender Capital One:

Slice and dice: Rather than increasing the credit available on an existing card with a low limit, a bank will sometimes issue an additional card that also has a low limit. That increases the odds that a cardholder will incur penalty fees or rates by exceeding the limits or missing payment deadlines on one of multiple cards. A 2006 report in Business Week magazine identified five consumers who ended up mired in debt after they were issued multiple credit cards by Capital One Bank. A Capital One spokeswoman told the magazine that the "vast majority" of Capital One cardholders had only one account, but that "a very small percentage" had three or more cards.

Reverse redlining. Lenders have historically denied residents of minority communities equal access to credit, a form of discrimination known as redlining. Some issuers, seeking to exploit that history, have launched "affinity" campaigns that market high cost products, including fee harvester cards, to minority communities. For example, a marketing company called Urban Television Network distributed the Freedom Card, a fee-harvester card that often had a credit limit of only $300. Promotional efforts for the Freedom Card included a contract with musician Queen Latifah.

Wal-Mart Watch has a post by Alex Goldschmidt that the CPSC has charged that Wal-Mart withheld recall information (score one for the CPSC!). Meanwhile, over at Consumer Law and Policy blog, Steve Gardner's post The Doctrine of Unintended Consequences finds that the fast food industry should have been more careful about what it wished for when it sued to overturn New York City's food menu labeling law:

The court thus provided a road map for cities and states to draft menu labeling laws that don't conflict with federal law. In other words, the decision gave cities and states a green light to make nutrition information mandatory at restaurants.

Meanwhile, over at Credit Slips, the blog about bankruptcy and consumer credit issues, Katie Porter has a withering critique -- Reporting on the "Mortgage Meltdown" -- of a recent Wall Street Journal article and an editorial that both get it wrong on bankruptcy facts. Bookmark these consumer blogs.

Today's Wall Street Journal has a front page expose on the business of "lead cards" called Marketers Use Trickery To Evade No-Call Lists (pd. subs. req'd). The story by Jennifer Levitz and Kelley Greene explains that "Older Americans around the country are getting duped by a seemingly innocuous tactic that can expose them to hard-sell pitches from the insurance industry." Read the story and you won't be surprised to find that right in the middle of it are the data brokers, led by ChoicePoint (you remember ChoicePoint, the ones who sold consumer dossiers to identity thieves and paid a $15 million fine including victim restitution to the FTC). Well, according to information obtained during a successful lawsuit by AARP to defend its name:

In internal emails, ChoicePoint employees attributed the cards' success in generating responses to their "fear factor" and described response rates that "tumbled" when AARP's name was temporarily removed from mailings.

In April 2006 it [AARP] won a permanent injunction in U.S. District Court in Jacksonville, Fla., prohibiting a company owned by ChoicePoint Inc., a big Alpharetta, Ga., seller of personal data, from referring to AARP on its lead cards and from using a Washington, D.C., return address unless it had an off