The New York Times has a story today-- Credit Cards With Rewards Are Worth a Look. For 40% of you who are convenience users and do not ever carry a balance-- yes, get the miles, get the rewards, whatever. For the other 60% of you -- who carry a balance -- bad idea. The story does have one sentence, buried deep, explaining this caveat: It makes no sense to borrow money at an interest rate of 12 or 25 percent a year to get 1 percent back. Most of these rewards cards give higher rewards for regular household purchases than for travel purchases, which is another red flag for consumers who carry a balance. Don't run up credit card debt at the grocery store-- live within your means. For more information about credit card tricks, see our truthaboutcredit.org pages.

A NY Daily News story this week Loans strap G.I.s: Thousands in heavy debt as 'payday' firms rake it in reports on the pressure military families, like the rest of the working poor, face from predatory payday loan stores.

More than 100,000 U.S. troops have been saddled with long-term debt in return for short-term cash from "payday loan" stores charging interest rates that would make the mob blush. And the loan industry's powerful lobbyists, both Democratic and Republican, are fighting hard to keep the interest windfalls, which in at least one case topped 500%, the Daily News has learned.

On New Year's Day or shortly thereafter, a number of state-enacted security breach notice, security freeze and other identity theft laws take effect. I list them below. Now, our big task and #1 New Year's Resolution is to prevent Congress from eviscerating all these new laws and replacing them with a weak, shoddy industry-approved alternative.

The Associated Press reports on New Jersey's law, among the toughest and broadest in the nation. The story includes extensive analysis by NJPIRG advocate Abigail Caplovitz. In addition to the nation's best security freeze, the new NJ law includes a strong breach notice provision, a requirement that police take reports from identity theft victims and document destruction and Social Security Number protection provisions. On his blog, privacy expert Chris Hoofnagle of EPIC throws some nice props to New Jersey and NJPIRG:

The privacy center of gravity may have shifted from Sacramento, California to Trenton, New Jersey...New Jersey PIRG deserves much of the credit to shepherding the legislation and keeping it strong.

Breach Notice and Security Freeze Laws Taking Effect 1 January 2006 or soon: New Jersey, Connecticut, Illinois (and North Carolina's law took effect 1 Dec 2005).
1 February 2006: Maine

Other Breach Notice Laws Taking Effect 1 January 2006 or soon:
1 January: Louisiana, Minnesota, Nevada
20 January (approx, actually 120 days after 20 Sept 05): New York
31 January: Maine
15 February: Ohio
1 March: Rhode Island

Over at the Orlando Sentinel, reporter Richard Burnett had a nice story recently, Ties That Bind, on the growing use of binding mandatory arbitration in consumer contracts.

Americans are discovering that they live in a nation of arbitration -- and many are not too happy about it. Whether buying a home, applying for a credit card or financing a new car, consumers who read the fine print are likely to find a clause in the sales agreement that requires them to waive their right to sue if a dispute arises. Instead, they must take their complaint to binding arbitration.

Over at the Huffington Post, Jamie Love of CPTech, one of the world's leading activists on reforming intellectual property laws as they affect drug prices and availability, has a nice piece. "AstraZeneca tells New Zealand cancer patients they will withdraw cancer drug from the market to protest government pressures to lower prices" describes how a bill drafted by U.S. Rep. Bernie Sanders, HR 417 (here is a summary), would establish a new method -- a Prize Fund instead of profits from patents -- to compensate drug companies that would result in better allocation of drugs to people who need them:

The important thing in the Prize Fund approach is that it separates the market for innovation from the market for the physical copies of the drug. If passed, it will eliminate the marketing monopolies for all medicines. Competition would lead to much lower prices. When new drugs are priced the same as off-patent generic products (at the cost of making copies), doctors, governments, insurance companies and employers would no longer have an incentive to restrict access. Medicine would be prescribed on the basis of medical merits, rather than cost effectiveness.

Although neither my name nor PIRG are mentioned (we'll try to get that fixed), I am the consumer advocate giving identity theft tips ("financial DNA") in this ABC News web extra video on the Marriott breach. Previous blog.

Consumer attorney/advocate Carl Mayer successfully sued long distance firm MCI in Small Claims Court for continuing to bill him after he cancelled service. But they won't pay up on his default judgment of $2,893. Here's his letter to a corporate scrooge from his blog. Excerpt:

MCI apparently routinely engages in illicit conduct without the slightest worry that the costs of getting caught would outweigh the benefits of continuing the conduct. The recently released (December 14, 2005) national Corporate Reputation Survey by Harris Interactive Polling revealed that Americans still consider MCI one of the least trustworthy and most unethical corporations in America today.

Marriott is sending breach notice letters to time-share customers after admitting it lost or misplaced or had stolen (it says it doesn't know) 206,000 time share customer data files according to the Washington Post). MORE:

I couldn't find the news release at Marriott.com. I finally found it buried under "corporate info" over at Marriott Vacation Club International along with the letters to customers and others. Over 53 million Americans have had their confidential information lost, stolen or sold to thieves (Choicepoint's claim to breach fame) by companies or agencies this year. Privacy Rights Clearinghouse and Identity Theft Resource Center keep nice lists. We're watching Congress closely to make sure that it doesn't eviscerate strong state breach notice and other privacy laws (our list) as it continues efforts in 2006 to enact an unnecessary national breach notice law. If companies are already complying nationally with the California breach notice and other state laws, who needs a weaker federal law that coincidentally guts other privacy laws also? Campaign contributor corporations that don't like being responsible and don't like admitting they blew it, that's who.

26 state Attorneys General have urged (San Diego Tribune story) the National Highway Traffic Safety Administration not to go forward with an incredibly weak roof safety rule that just happens to also provide immunity from any lawsuits under state law. Our previous blog on bad NHTSA rule proposal here.) NHTSA is the latest Bush Administration agency asserting authority Congress has simply not given to it to preempt state laws. Also see our OCCWatch pages.

Banks like to claim they're the only victims of identity theft. Wrong. Yesterday, NJPIRG Consumer Attorney Abigail Caplovitz gave identity theft tips on the Montel Williams TV show. Watch for it in reruns. The other guests were victims of criminal identity theft who were wrongly identified as criminals. From Montel's show description:

One night Lori was at home with her twins cooking dinner when there was a knock at the door. The police ransacked her home, took some of her belongings, handcuffed her in front of her young children, and she sat in jail for two days.

Today's New York Times editorial Time for Chemical Plant Security echoes PIRG concerns that federal law should serve as a floor, but states should be allowed to protect their citizens and environment better. Here's an excerpt:

Until recently, it appeared that the bill might include pre-emption language, which would block states from coming up with their own chemical security rules. That would have made the bill worse than no bill at all. New Jersey has just imposed its own chemical plant security rules, and other states may follow. These states should be free to protect their citizens more vigorously than the federal government does, if they choose. To Senator Collins's and Senator Lieberman's credit, the bill now expressly declares that it does not prevent states from doing more.

Unfortunately, that same final Defense Spending bill included a sweeping drug company immunity provision, supposedly to urge greater vaccine production but with a much broader impact. Here's some details from Public Citizen. My previous blog with a link to our hill letter.

While not a consumer blog entry per se, I would be remiss if I didn't mention a stunning victory for U.S. PIRG and the environmental movement in general against corporate polluters and their supporters in the Congress. This week, we again defeated an attempt by the powerful Alaska Senator Ted Stevens (R-AK) to open the pristine Arctic National Wildlife Refuge to oil drilling (our statement)). Stevens attached the proposal to the Defense spending bill, thinking, wrongly, that no Senators would vote against Defense spending during a war. Wrong again, Senator. Enough Senators voted to block your play and you were forced to remove the Arctic drilling proposal. Then, the spending proposal passed unanimously. Here's a New York Times story quoting Athan Manuel, PIRG's Arctic Campaign director. More information at our SavetheArctic website. Thanks to Senator Maria Cantwell (D-WA) for leading the fight, and to all the Senators who supported the effort.

We're quoted in a USA Today story today on banks raising credit card minimum payments. Consumers opening their bills next month may face sticker shock as their minimum payment due could double (if their bank hasn't already complied with a new regulatory requirement). While we strongly support the notion of paying more on credit cards, it's shoddy and embarassing that the regulators have allowed some banks to wait 3 years to comply at the last minute with the new requirement instead of urging them to raise payments gradually over the three year period. Our recommendation: Never pay the minimum on your credit cards. If you can't pay the full balance, always pay as much as you can afford, and pay as early in the month as possible to avoid late fees and penalty interest rates. Here's more:

Three years ago the bank regulators finally became shocked, shocked! at skyrocketing credit card debt (now $800 billion and rising) and ordered banks to raise minimum payments, within three years. Consumer debt had increased -- seemingly exponentially -- due to banks luring consumers onto a perpetual debt treadmill with lower and lower minimum monthly payments -- most at around 2% (or a little more) of the principal owed. With credit card interest rates for many consumers at 24-30% APR, or 2% to 2.5% per month, making that 2% minimum payment literally meant either never gaining ground or actually losing ground. Losing ground? When your interest is 2.5% each month and your payment is 2%, the amount you owe goes up, not down. It's called negative amortization and is entirely inappropriate for most credit card customers.

If you owe the credit card company $5000 at 16% APR and make 2% minimum payments, it would take you 26 years to pay off the card if you never used it again. More here.

In a recent speech to consumer advocates, the nation's chief credit card regulator, John Dugan, Comptroller of the Currency, said that he expected banks to work with consumers who can't make the new increased minimum payments:

...let me make one point perfectly clear. We recognize that the change in required minimum payments will make it more difficult for some existing credit card borrowers to pay the full amount of the increased minimum payments due. We have encouraged lenders to work with these borrowers to the maximum extent possible to avoid writing down the loan and cutting off the customer’s credit. Lenders have a variety of tools to do this, including restructuring or deferring payments and, in appropriate circumstances, re-aging accounts. In addition, lenders always have the option of reducing high interest rates charged to delinquent borrowers – sometimes exceeding 30 percent of the outstanding loan balance – and/or waiving fees in order to reduce a minimum payment while still amortizing a modest amount of the outstanding principal.

By the way, I was shocked, shocked, yet again, to find a clear explanation of what is going on with minimum payment increases, including examples, at the MBNA credit card company website. Usually the credit card companies make things as murky as possible.

Watch for future blogs about the implementation of new credit card disclosures about minimum payments, which will be appearing soon on your monthly statements as required by the recently enacted bankruptcy law. They're industry-approved, rather than what we wanted. We had hoped that the new law would require two new boxes to appear on your statement-- one to say how many years it would take to pay off your card if you stopped using it while still making required minimum payments and one to say how much interest would accumulate over that time. We got a more generic, less useful, disclosure, of course. More to follow.

The new regulator guidance requires minimum payments to result in a payoff of the principal within 5 years. In practice, this means a payment of about 4% (instead of 2%) of the principal, plus finance charges and any penalty fees. Note that the guidance does not specifically require a 4% of principal payment, it requires that payments result in a reduction of current principal to zero over 5 years (presuming the card is not used any more). Effectively, that means payments must cover accumulated interest and penalty fees and also reduce principal by 1% per month. As a rule of thumb, a payment of 4% of the amount due (plus fees) meets the 1% reduction in actual principal to zero over 5 years goal.

In a letter today, U.S. PIRG and five other leading consumer and civil justice groups urged Senators to oppose efforts to pass a defense spending bill that includes a sweeping immunity clause for drug manufacturers. While the prvision is ostensibly to urge them to make adequate stocks of pandemic vaccines, its immunity is broad. News release.

Last week, despite our opposition letter, the House Energy and Commerce Committee approved a proposal known as HR 4167, the National Uniformity for Food Act. It's a sweeping proposal designed at the request of food manufacturers and grocery store chains to eliminate, or preempt, state and local authority over food safety. State and local food officials say these laws are "our "first line of defense against acts of terrorism involving the food supply." Here's info from the Center for Science in the Public Interest, also opposed. Here's detailed info from state food and drug officials, also opposed. My previous blog.

With some help from the band the Austin Lounge Lizards, our colleagues at Consumers Union, publishers of Consumer Reports, have released a new webvideo and song It's Always Christmas Time for Visa. Watch it and take action to tell Congress to fix the credit card laws. PIRG's credit card reform pages are at truthaboutcredit.org.

Over the weekend, without a vote, Senate Majority Leader Bill Frist (R-TN) attached a 43-page provision granting drug companies unprecedented and sweeping immunity from liability lawsuits to a conference report on the so-called "must-pass" defense spending bill. It's a shocking giveaway to some of the biggest campaign donors in Washington, has little to do with increasing vaccine supplies and could apply even to existing over-the-counter drugs if used in a pandemic. Any conduct less than willingly injuring or killing people appears to be protected from lawsuits for harm ("willful misconduct" is defined as evidence that the drug company had actual knowledge that its product would injure or kill someone). Here's more:

The provision is on pages 423-465 of the Conference Report on HR 2863, Defense Appropriations. Here's an excerpt from a letter consumer groups including USPIRG sent up to the hill last week opposing a still-shocking but slightly less unfair version of the drug company protection proposal.

We recognize the urgent need to prepare adequately for infectious disease outbreaks. It may very well be that during public health emergencies expedited approval of vaccines and drugs is necessary for the nation’s security...Broadly shielding manufacturers from responsibility for gross negligence, recklessness and other egregious behavior and leaving victims with no recourse, may cause more public harm than the pandemic disease itself. As doctors and public health officials have warned, if individuals know there is no remedy for injuries caused by the vaccine’s side effects or by a defective batch of vaccine, they are likely to refuse immunization, thus undermining efforts to contain outbreaks.

According to Rep. David Obey (D-WI), a conferee, Frist's action also was against promises repeatedly made that it would not be included. Obey said in Congress Daily:

"For the last eight hours we have been dealing with a majority leadership that has stripped out of the appropriations process and the conference virtually every understanding in those bills...We've had the United States Senate ram down our throats an ANWR [Arctic National Wildlife Refuge] provision, and after we were assured in conference there would be no [liability language] three hours after the conference report we get 45 pages..."

Frist had the help of Senator Ted Stevens (R-AK and Chairman of Appropriations Subbcommittee on Commerce, Justice and Science), who also has attached PIRG-opposed drilling in the Arctic National Wildlife Refuge to the same bill.

Just catching up on my inbox: Ron Brownstein at the LA Times has a nice column A Wave of Activism in States May Signal a Surge Nationwide (5 Dec, free reg. may be req.) on state leadership in a number of policy areas where the Congress and Bush Administration have either dropped the ball or surrendered to the demands of powerful corporations to do nothing much (usually while also preempting state authority). Here's an excerpt:

On any of these fronts — stem cell research, children's healthcare, combating global warming — there's a limit to how much states and localities can accomplish without federal action. It's possible Congress or the Bush administration may try to block some of the global warming initiatives (such as the California emissions standard).

But the ideas now germinating in the states may increase the pressure on Washington to address these concerns — especially when the cycle in national politics next tilts.

NYPIRG has released a new report Many Unhappy Returns documenting store return policies and making recommendations to consumers to avoid hassles. (News clip here from the North Country Gazette) Two things to remember:

(1) State (and local) laws generally only require that retailers disclose their return policies (that is, retailers are generally not required to accept returns for 30 days with receipts, etc.)
(2) Many retailers are now using a shared database known as the Return Exchange which keeps track of frequent returners in an effort, they say, to crack down on a small number of abusers. The Return Exchange is yet another commercial database tracking Americans. Over at EPIC West, privacy expert Chris Hoofnagle explains how it works and how it appears to barely skirt the Fair Credit Reporting Act's requirements for becoming a credit bureau (which would subject it to numerous requirements and give data subjects (consumers) delineated rights).

You can contact FTC Chairman Deborah Platt Majoras and urge her to take action on the PIRG petition regarding some toy manufacturers deceptively labeling toys, teethers, and other children's products as "phthalate-free" when they in fact contain these toxic chemicals. The petition is a followup to independent lab tests we commissioned for our annual toy safety report in November. Previous blog.

Looks like the U.S. House -- with the strong backing of the grocery manufacturers' lobby -- wants to preempt strong state food labeling and safety laws. While many are familar with California's pioneering toxics disclosure law known as Prop. 65, the grocers and the food suppliers are going after at least 70 strong state laws with HR 4167, the so-called National Uniformity for Food Act, which may be voted in the Energy and Commerce committee this week. We oppose the bill. Here's what the state food officials -- The Association of Food and Drug Officials or AFDO -- said in a letter to chief sponsor Mike Rogers (R-MI)

The preemption provisions in HR 4167 are broad, vague and sweeping and will likely dismantle the authority of state and local laws that address adulterated foods -- which includes food laws, dairy laws, animal feed laws, other agricultural commodity laws, anti-tampering laws, anti-terrorism laws, etc. When you consider that local and state food safety laws are our first line of defense against acts of terrorism involving the food supply, AFDO respectfully suggests that now is not the time to dismantle our national food protection program that maintains one of the safest food supplies in the world.

Yesterday I spoke as part of a panel on state solutions to privacy and identity theft at the national conference of the National Center for Policy Alternatives. Other panelists were Susanna Montezemolo of Consumers Union and State Senator Jeanne Kohl-Welles of Washington State. The moderator was Georgia State Representative Alisha Thomas Morgan. C-Span covered the event. It is running live on C-Span 1 right now (2:30pm Monday). It may appear in C-Span 1, 2 or 3 re-runs or be watchable on the C-Span Internet archives for the next few weeks. Check the C-Span site.

Once again demonstrating that the competitive threat from satellites or even from Ma Bell doesn't matter, Comcast has annnounced a 6% cable rate hike as reported nationally by the Associated Press in a story quoting PennPIRG director Beth McConnell.

We published a detailed white paper in 2003 on The Failure of Cable Deregulation, which exposes many seamy practices of the industry, including its clockwork rate hikes. This 2004 U.S. GAO report explains the cable industry's pricing power, when it finds that only where consumers have a second cable cable company to choose from are rates lowered:

Competition leads to lower cable rates and improved quality. Competition from a wire-based company is limited to very few markets. However, where available, cable rates are substantially lower (by 15 percent) than in markets without this competition. Competition from direct broadcast satellite (DBS) companies is available nationwide, and the recent ability of these companies to provide local broadcast stations has enabled them to gain more customers. In markets where DBS companies provide local broadcast stations, cable operators improve the quality of their service.

The Washington Post (free reg. req.) has two separate stories by Jonathan Krim this week reporting on the arrogance of BellSouth, one of the Baby Bell phone monopolists.

Today's story Angry BellSouth Withdrew Donation, New Orleans Says reports:

Hours after New Orleans officials announced Tuesday that they would deploy a city-owned, wireless Internet network in the wake of Hurricane Katrina, regional phone giant BellSouth Corp. withdrew an offer to donate one of its damaged buildings that would have housed new police headquarters, city officials said yesterday.

Perhaps more troubling even than BellSouth's pouting treatment of a nearly destroyed city trying to climb back from its near-destruction, however, are reports that it wants to remake the open, democratic Internet in its own monopolistic image. Krim reported Thursday in the story Executive Wants to Charge for Web Speed that BellSouth executive William Smith:

said yesterday that Internet service providers should be allowed to strike deals to give certain Web sites or services priority in reaching computer users, a controversial system that would significantly change how the Internet operates.

"The incredible potential of broadband will be severely compromised if network operators are permitted to be the gatekeepers of the Internet, deciding what content, applications and services succeed or fail on the Internet," wrote the coalition, which includes Amazon.com Inc., eBay Inc., Google and IAC/InterActive Corp.

Ohio is the 22nd state to enact a security breach notice law, HB 104. We've updated our state security freeze and breach notice pages.