NY AG: Banks Paid Bonuses That Were Substantially Greater Than The Banks' Ne...

NY AG: Banks Paid Bonuses That Were Substantially Greater Than The Banks' Net Income [Failure]

via Consumerist by Meg Marco on 7/31/09

New York Attorney General Andrew Cuomo's report on the bonus structures of the banking industry is out and — oh my— it's damning. The AG says that 3 banks, Goldman Sachs, Morgan Stanley, and JP. Morgan Chase, paid out bonuses that " were substantially greater than the banks' net income."

The report says that combined, these three firms earned $9.6 billion, paid bonuses of nearly $18 billion, and received TARP taxpayer funds worth $45 billion. Why did this happen? Because, according to Cuomo, when times were good the bankers rewarded themselves based on performance. When the economy started to sour — they decoupled the bonus structure from reality and kept rewarding themselves.

From the report:

As one would expect, in describing their compensation programs, most banks emphasize the importance of tying pay to performance. Indeed, one senior bank executive noted recently that individual compensation should not be set without taking into strong consideration the performance of the business unit and the overall firm. As this executive put it, "employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak."

But despite such claims, one thing is clear from this investigation to date: there is no clear rhyme or reason to the way banks compensate and reward their employees. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based.

But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance. Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well. Bonuses and overall compensation did not vary significantly as profits diminished.

So, how was this allowed to happen? Why did the bankers feel justified in rewarding themselves as the ship sank?

In some senses, large payouts became a cultural expectation at banks and a source of competition among the firms. For example, as Merrill Lynch's performance plummeted, Merrill severed the tie between paying based on performance and set its bonus pool based on what it expected its competitors would do. Accordingly, Merrill paid out close to $16 billion in 2007 while losing more than $7 billion and paid close to $15 billion in 2008 while facing near collapse. Moreover, Merrill's losses in 2007 and 2008 more than erased Merrill's earnings between 2003 and 2006. Clearly, the compensation structures in the boom years did not account for long-term risk, and huge paydays continued while the firm faced extinction.

The AG says that the bankers explained the need to do this by claiming that they had to pay bonuses to individuals working in divisions that were still making money for the firm. The trouble with this rationalization is that banks continued paying bonuses to people in losing divisions.

We recognize, of course, that there can be situations where the distribution of profits to employees who created real profits would be appropriate even though the overall firm may have lost money. This might be the case, for example, where one division of a firm earned large profits but another division lost profits. A principled and consistent approach would, however, balance the need to reward and retain those who created profits with the need for bonuses to reflect the overall performance of the firm. In any event, our investigations have shown numerous instances where large bonuses were paid to individuals in money-losing divisions at firms who saw either substantially reduced profits or losses in 2008.

The entire report can be downloaded from the AG's website, here. (PDF)

Watch Out For Best Buy's Extended Warranties [Empty Promises]

Watch Out For Best Buy's Extended Warranties [Empty Promises]

via Consumerist by Chris Walters on 7/30/09

HD Guru took a deeper look at the extended warranties and service plans Best Buy pushes on customers who buy expensive electronics like hi-def TVs. You probably won't be surprised to find out that the fine print negates a lot of what the person or pamphlet on the sales floor will try to promise you—but you might be surprised at just how useless these plans can be when you get right down to it.

Here are just a couple of examples from the HD Guru report:

Sales Pitch: Their Geek Squad Black Tie Protection pamphlet says that if your product requires 4 repairs, "we'll make sure that you get a new one."
Truth: Contract says "new" can mean refurbished or rebuilt, at Best Buy's discretion.

Sales Pitch: Pamphlet says on TVs 30" and up, you'll get a loaner if they can't fix yours on the first visit.
Truth: There's no mention of a loaner TV anywhere in the contract, so you'd better hope your Best Buy honors pamphlets.

Sales Pitch: If they can't repair your TV, they'll replace it with a product of equal value, or reimburse you fair market value for it.
Truth: "Fair market" means what they determine it's worth at the time of the repair. As an example, HD Guru points out that this past April Best Buy recalled a house brand LCD HDTV that sold for "up to $1000" and was less than 3 years old. The fair market value compensation it gave out: "gift cards amounting to $500 or about half of the original purchase price."

Click over and read the full report for more details on the truth versus fiction of Best Buy's warranty programs, and to read the company's official response to HD Guru's questions.

"Extended Warranties: What You See Is Often Not What You Get - An HD GURU Investigative Report" [HD Guru]
(Photo: Robert Scoble)

Grocery Store Manager Loses Job For Recovering Stolen Purse [Don't Be A Hero]

Grocery Store Manager Loses Job For Recovering Stolen Purse [Don't Be A Hero]

via Consumerist by Laura Northrup on 7/28/09

It's all well and good to be a hero. Just, if you're an employee of a Randalls grocery store, do it on your own time. That's what an employee at their Round Rock, Texas store learned when he was fired for recovering a customer's stolen purse.

The reason for his termination? A store policy against chasing suspects out of the store.

After hearing a woman scream about her stolen purse, [Troy] Schafer said he made a split-second decision to chase the suspect out of the store, through the parking lot and into a nearby field where police arrived to arrest the teenager and recover the purse.

"I felt I did the right thing," said Schafer. "You protect people that need help."

Schafer said Randalls suspended him July 22 without pay, and on July 24, the store manager let him go - citing a company policy against chasing a suspect into the parking lot.

Employees are supposed to note details and cooperate with police in order to track down criminals. Which is an understandable policy for the safety of employees, but probably not all that helpful in getting stolen purses back. Which is not likely if the victim actually wants her purse back—it's likely to remove all of the credit cards and cash and then just throw the purse in the garbage.

Man recovers stolen purse, loses job [KXAN]

RELATED:
Wal-Mart Employee Fired For Stopping Punch-Happy Shoplifter
Whole Foods Fires Employee For Stopping Shoplifter

(Photo: Rob Lee)

Watch Out For Panasonic's Proprietary Battery Cameras [Crippled]

Watch Out For Panasonic's Proprietary Battery Cameras [Crippled]

via Consumerist by Chris Walters on 7/27/09

Many of Panasonic's cameras will only work with official Panasonic batteries—the newest models require "an embedded security ID chip," while older models have been issued a firmware upgrade that locks out third-party vendors. This is already pretty obnoxious, but what makes it even worse is Panasonic can't keep up with demand, so the batteries they insist you buy for your camera aren't available.

James writes,

New consumer digital cameras introduced by Panasonic in 2009 have been disabled to require the use of Panasonic original batteries with an embedded security ID chip. The problem? Panasonic cannot supply batteries! Third-party batteries (at a cost of $10-20) no longer work.

Panasonic brand batteries ($40 to $80) with the security chip have never been available from Panasonic or anyone else. Users have only the battery supplied with the camera, and when it's depleted you are done taking photos for the day. In an effort to sell over-priced batteries that they are unable to supply, Panasonic has crippled a line of fine, expensive cameras ($300 - $1,200 retail). The situation has existed for months and involves sixteen of their latest cameras.

Today, three new cameras were introduced and each will work only with the unavailable Panasonic batteries. While Panasonic frames their decision as a safety issue, the lack of any batteries from any source [see the B&H, Panasonic, and Crutchfield websites for examples] clearly indicates this is a failed marketing ploy.

Panasonic issues firmware update for existing cameras that prevents use of less expensive 3rd party batteries
Panasonic claims battery change is a "safety issue"
Panasonic locks down sixteen camera models

EPA Tweaks Official MPGs Prior To Cash4Clunkers, Shafting Some [Cash For Clu...

EPA Tweaks Official MPGs Prior To Cash4Clunkers, Shafting Some [Cash For Clunkers]

via Consumerist by Ben Popken on 7/27/09

Shazam! Your car magically gets more miles per gallon! That's what some consumers hoping to take advantage of the government's "Cash For Clunkers" program are discovering. And the result is that they suddenly no longer qualify for up to $4500 voucher.

Daniel Anderson's 1991 V6 Toyota Camry went up from 18 mpg to 19 mpg. Same for Jeff Chase and his 1989 Mazda 929, reports Jalopnik. Some time in the past week the FuelEconomy.gov fuel efficiency numbers increased for these cars, rendering their owners ineligible for the program that gives vouchers to drivers who trade in old gas guzzlers for more fuel efficient cars. Jalopnik spoke with several government spokespeoples and none of them had any idea that the change had happened.

Check out FuelEconomy.gov, and see if the government suddenly says you get more mpg and it just so happens to disqualify you from a Cash For Clunkers voucher.

And for information on whether Cash For Clunkers is right for you, check out this Consumer Reports special feature.

EPA Secretly Changing MPG Numbers Ahead Of Cash For Clunkers, Screwing Consumers [Jalopnik] (Photo: seanmcgrath)

Rent A Center Accused Of Illegal Collection Tactics In Washington [Rent-to-own]

Rent A Center Accused Of Illegal Collection Tactics In Washington [Rent-to-own]

via Consumerist by Laura Northrup on 7/27/09

There are many, many good reasons why you shouldn't purchase your home furnishings from rent-to-own outfits, but the state of Washington has discovered an exciting new one: collection tactics from Rent A Center that are so aggressive, they're illegal.

According to the AP:

McKenna also filed complaints signed by 10 individuals claiming they were abused by Rent-A-Center collectors. Their complaints include trying to break down a door, threats against their children, profanity in collection calls and giving personal financial information to neighbors.

Yes, there is inherent risk in the business model of grossly overcharging low-income people for household goods, but that doesn't even come close to excusing any of the behavior detailed above.

Rent-A-Center accused of illegal dealings in Wash. [Seattle Post-Intelligencer/AP]

RELATED:
Do Not - We Repeat - Do Not Rent Your Home Furnishings
Rent-A-Center More Like Ripoff Center

(Photo: indiewench)

American Airlines Raises Baggage Fees [Fees]

American Airlines Raises Baggage Fees [Fees]

via Consumerist by Meg Marco on 7/27/09

Despite lowered fuel prices, American Airlines just can't seem to figure out how to make money. That's too bad for you — because you'll be paying higher bag fees.

DowJones says the airline reported a 21% drop in second-quarter revenue last week. Get your wallet out, travelers.

The fees "will rise to $20 for the first bag and $30 for the second on tickets bought after Aug. 13. The changes will also affect regional affiliate American Eagle and AmericanConnection flights."

How angry does this make you?

How Angry Does This Make You?(survey)

American Airlines To Raise US Checked-Bag Fees By $5 [CNNMoney]
(Photo:Zonaphoto.com)

Borders Against Blogging

Borders Against Blogging

via The Stranger by Paul Constant on 7/27/09

Used Book Blog reports that Borders is striking a blow for free speech*:

Borders employees are claiming that they are being pressured into signing a non-blogging contract that essentially puts a gag on any writing about new policies and procedures implemented by the distressed book chain. Here's what one employee said.

Borders is now trying to get the employees to sign a non-blogging contract, and several employees have been fired or put on probation for writing and producing videos in response to the "make books" controversy.

The post goes on to explain why blogs (and Twitter) and booksellers are a match made in heaven. You should read the whole thing.

And if any Borders employee has a copy of this non-blogging contract, I'd love it if you would e-mail me a copy.

*Sometimes I wish there was HTML for sarcasm.

[ Subscribe to the comments on this story ]

Firefighter allegedly shoots cyclist in head to teach him not to ride on a b...

Firefighter allegedly shoots cyclist in head to teach him not to ride on a busy street

via Boing Boing by Mark Frauenfelder on 7/27/09

Police say firefighter Charles Diez was upset that a man was riding a bike with his 3-year-old son on a busy street so shot the cyclist in the head. The bullet embedded itself in the rider's helmet.

Diez was arrested on attempted first degree murder charges, but lucky for him the fire department in Asheville, NC is keeping him on paid investigative leave, so he will continue to draw a salary.

Asheville Firefighter Shot Bicyclist -- Officers Say Pair Argued Over Child Safety

Delta Adds The "Fee For Not Paying A Fee" Fee [Fees]

Delta Adds The "Fee For Not Paying A Fee" Fee [Fees]

via Consumerist by Meg Marco on 7/21/09

Following in the fee-laden footsteps of US Airways, Delta has added a $5 fee for not paying your baggage fees online in advance.

From the Atlanta Journal-Constitution:

Atlanta-based Delta already charges $15 for the first checked bag and $25 for the second checked bag on domestic flights.

But starting Aug. 4, Delta will start charging those who pay for checked bags at airport ticket counters, kiosks and curbs $20 for the first checked bag and $30 for the second checked bag, for tickets purchased July 15 or later.

Can someone think of a way that we can all agree to start charging the airlines our own fees? Sorry, there is a $5 "these snacks suck" fee and a $10 "seat is full of crumbs" fee...

Delta adds $5 to fee for bags checked at airport [AJC]
(Photo:Zonaphoto)

Dodge Dealership Refunds Money On Truck It Couldn't Fix [Follow Ups]

Dodge Dealership Refunds Money On Truck It Couldn't Fix [Follow Ups]

via Consumerist by Chris Walters on 7/21/09

Last Friday, we posted about how a Dodge dealership in New York spent nearly a week working on a truck, and charged over $700 for the labor, only to say they couldn't fix it in the end. It looks like the story has a happy ending: after the truck's owner sent in a formal complaint and pointed the dealership to our post, the dealership's owner refunded both the repair fees and the towing fees.

Joe wrote back on Saturday:

My father filled out a online survey expressing his discontent with his level of service, and used the comments section to refer them to The Consumerist. He also sent an inquiry via their website, also directing them to the published article. Within an hour, the owner of the dealership contacted us from his farm. He was clearly upset, but consented to refund our money plus the towing charge. The dealership made good on our repair bill as far as we are concerned. We are considering a future purchase.

I did not write this as a dig to the dealership, or to the owner, Billy Caprara, but more as a story about how a car dealership, any car dealership or repair shop, can make promises, and charge for a repair that was unsuccessful. I felt that if the vehicle leaves with the same problem as when it arrives, charging for the full repair is unwarranted, and unethical.

I wish an attempt was made by the service people to give an option or a contact to complain. Only after writing to you, and following up with an email to a generic dealership contact did we get a response.

Thank you Consumerist, and thank you fellow readers.

RELATED
"Dodge Dealership Can't Repair Truck After 6 Days, Local Mechanic Does It In 10 Minutes"
(Photo: Photocapy)

Babies R Us Accused Of Price Fixing [Price Fixing]

Babies R Us Accused Of Price Fixing [Price Fixing]

via Consumerist by Chris Walters on 7/22/09

If you feel like had to pay too much for baby supplies this past decade, look to Babies R Us. Time reports that last week, "the U.S. District Court in Philadelphia granted class-action status to a complaint that Babies 'R' Us coerced manufacturers of high-end strollers, car seats, high chairs, strap carriers and breast pumps into preventing Internet retailers from discounting their products."

The basic charge is that from 2001 to 2006, Babies R Us forced manufacturers to disallow online retailers from discounting their products, so that the brick and mortar chain could price competitively without having to take a loss.

If they resisted, Babies "R" Us threatened to cut off the manufacturers, according to the suit, and refuse to sell their products in Babies "R" Us stores. Since Babies "R" Us sold 30% to 50% of these companies' products, Medela, which is based in Switzerland, and other brands like BabyBjörn, the Swedish strapmaker, and Maclaren, the strollermaker based in the U.K., had no real choice but to go along.

According to the judge, one manufacturer named in the suit said, "It's hard to say no when they [Babies R Us] have over 50% of our business!"

Although nobody is disputing that Babies R Us took a hard line with manufacturers and either withheld or threatened to cancel orders if they offered Internet retailers discounts, that's not necessarily illegal anymore.

In 2007 the Supreme Court overturned a nearly century-old ruling that used to make these types of pricing deals inherently illegal. Now such practices must be evaluated under "the rule of reason." For the plaintiffs to win, anticompetitive effects of the minimum-pricing agreement between the manufacturer and retailer must outweigh the pro-competitive effects.

Time notes that although it can be hard to prove this, there's some evidence that sales for the manufacturers actually decreased during this time period. The case will likely go to trial in 2010.

"Did Babies "R" Us Gouge Mommy and Daddy?" [Time]
(Photo of the cutest baby ever: TedsBlog)

Power Washer Company's Warranty Policy Sucks And Blows [Power Washers]

Power Washer Company's Warranty Policy Sucks And Blows [Power Washers]

via Consumerist by Phil Villarreal on 7/24/09

Jim bought an industrial-strength Karcher power washer new on eBay a few months ago, didn't open it until recently and found that the pump didn't work.

When he tried to warranty it out through Karcher, he was denied because he bought the washer via eBay. Jim writes:

Karcher, which bills itself as the biggest seller of power washers in the US, is playing games with people who buy their products and then try to get warranty coverage.

I bought a Karcher power washer in late February, unboxed it yesterday and found it is defective (pump doesn't pump). So I called their 'customer care center' to get a replacement unit (they say their warranty is good for one year). They asked the model number, the purchase date, and then, where I bought the unit. I told them it was bought, brand-new, via eBay.

Their response — they don't warranty their products unless they are purchased from an "approved retailer," and they specifically deny all warranty coverage to products bought on eBay.

Aside from this being a dumb policy, there's no way for consumers to know this before the fact, and they don't mention on their website that if you don't buy from an authorized outlet they will deny all warranty coverage. They simply say that you aren't eligible for what they call their 'Rapid Exchange Program'. Nowhere do they disclose that this is their only warranty program, and that the rest of us are left out in the cold.

Disreputable business practice!

Even though months have inexplicably passed since the eBay transaction, it's still worth contacting eBay and the seller to see if he can return or exchange the washer. It's disappointing that Karcher won't stand by its product, though.

Scientists Agree: Denny's Is Dangerous [Sodium]

Scientists Agree: Denny's Is Dangerous [Sodium]

via Consumerist by Carey on 7/25/09

Denny's entrees are loaded with dangerous amounts of salt, according to a class action suit filed by the Center for Science in the Public Interest. The CDC recommends consuming no more than 1,500 milligrams of sodium each day, but some Denny's entrees contain a whopping 5,500 milligrams.

No Denny's dish contain less than 500 milligrams of sodium, and 75% of them contain more than the maximum recommended allowance, including:

• Moons Over My Hammy, a ham, egg, and cheese sandwich, has 2,580 mg of sodium by itself-more than even a healthy young person should consume in a day. It's served with hash browns (adding 650 mg of sodium) or grits (an additional 840 mg).
• The Super Bird sandwich, served with regular French fries, has 2,610 mg of sodium-more than twice what someone with high blood pressure should consume in a day.
• Denny's Meat Lover's Scramble, which has two eggs with chopped bacon, diced ham, crumbled sausage, Cheddar cheese, plus two bacon strips, two sausage links, hash browns, and two pancakes has 5,690 mg sodium, or 379 percent of the advised daily limit.
• A full meal at Denny's consisting of a bowl of clam chowder, a Spicy Buffalo Chicken Melt, and a side of seasoned fries contains an alarmingly high 6,700 mg of sodium. It's a big meal, to be sure, with about 1,700 calories. But that's more sodium than what 70 percent of Americans should consume in four and a half days.

Ew!

Denny's: Public Health Enemy # 1 [Consumer Law & Policy Blog]
(Photo: oddharmonic)

Store Brand Mixed Vegetables: Not Quite As Mixed As You Would Think [Food]

Store Brand Mixed Vegetables: Not Quite As Mixed As You Would Think [Food]

via Consumerist by Laura Northrup on 7/16/09

Have you ever taken a serving of mixed vegetables and sorted it by vegetable? Louis, annoyed at inaccurate depictions of food on labels, decided to sort, count, and weigh the vegetables in his can of Always Save brand canned vegetables. The results? Uh, not so mixed.

Here's his tally:

6 peas, 3 grams
2 lima beans, 1.5 grams
13 corn, 3 grams
1 celery, .25 grams
6 green beans, 2.5 grams
109 carrots, 146 grams
99 potatoes, 149 grams

Not quite the distribution shown on the label, is it? Maybe the green vegetables have been hit with a grocery invisibility ray. Not to knock potatoes and carrots, which are nutritious and extremely tasty, but that's not quite the mix one would expect from the label.

CA's Menu-Labeling Law Inspires Restaurants To Cut Calories [Menu Labeling]

CA's Menu-Labeling Law Inspires Restaurants To Cut Calories [Menu Labeling]

via Consumerist by Alex Chasick on 7/15/09

California's law requiring that chain restaurants post calorie counts for their foods took effect earlier this month. It's already producing results, as two chains, Macaroni Grill and Denny's, are reexamining and revising their offerings.

According to the Sacramento Bee:

Romano's Macaroni Grill, with four locations in the [Sacramento] region, has managed to squeeze a whopping 880 calories out of just one salad, as the chain's menu undergoes a massive revamp under new ownership.
...
The new [Denny's] Grand Slam – two eggs, two sausages, two bacon slices and pancakes – is a build-your-own option with substitutions such as chicken instead of pork, egg whites, turkey bacon and whole wheat pancakes. For another 49 cents, add-ons such as yogurt are available.

With the healthier options, the Grand Slam drops from 882 calories to 546, not to mention a 70 percent drop in fat grams.

This is a nice bonus of menu-labeling: some restaurants will be too ashamed to continue offering items like 1,200 calorie salads and will look for ways to make their foods more healthful. Although we're sure there will be complaints about a person's individual freedom to eat as much crap and be as fat as he wants, we think the public health benefits outweigh such concerns (especially considering that in the instances here, Denny's is keeping things like Moon Over My Hammy intact, and the type of person we just described probably wasn't celebrating his gluttony with a 1,200-calorie scallop and spinach salad at Macaroni Grill).

Although it's good to see restaurants retooling their menus, the main purpose of menu-labeling laws is to allow consumers to make informed decisions about the foods they eat. It's up to you, not the restaurant, to ensure you eat reasonably.

California Calorie Law Alters Chains' Fare [SacBee]
(Photo: satosphere)

Delta Screws Man Out Of Family Trip, Business Conference, WSJ Interview, And...

Delta Screws Man Out Of Family Trip, Business Conference, WSJ Interview, And Two Flights [Travel Disasters]

via Consumerist by Chris Walters on 7/15/09

Wow, the folks at Delta really must hate the creative director behind and star of those UPS whiteboard commercials, Andy Azula. On the open letter he published today, he notes that he's a frequent-flyer with Platinum status on Delta, and until this past June one of their "biggest fans." Then Delta forced him, his wife, and his twin seven-year-olds to wait 13 hours in the Richmond, VA airport, while their luggage remained trapped on a plane that was forever "almost fixed."

You can read the full letter here, but here's the gist of how Andy's Delta experience went:

You see, our flight was delayed due to a mechanical problem on our plane. Over the course of the next 13 hours we sat in the terminal at Richmond as flight after flight after flight all departed on time to Atlanta. Except, of course, ours. An entire airplane full of people – all of whom had gotten up early to catch the first flight of the day - watched helplessly as every other plane departed incident-free.

And since our bags were on the plane (we had all already been seated, before we were asked to de-board) we couldn't even get our luggage off the plane and go home. Also, we kept being told our plane was almost fixed.

I took the initiative at noon to book us on the 5pm flight to Atlanta. I called Delta (five times in fact – you can check) to confirm and re-reconfirm again. I was continually reassured that my family had guaranteed seats on that 5pm flight. I was, in fact, on the phone with you as the Delta employees at the gate refused to give us our seats - on a flight we had already been confirmed on. And I never even heard an "I'm sorry."

Consequently, I missed a few things in Atlanta: The Direct Marketing Association's conference – of which I was the guest speaker. It was a paid event and the DMA was understandably shocked, mortified and embarrassed by the situation. They had to offer refunds to all their attendees.

I also missed my Wall Street Journal interview.

I also missed my meeting.

What's worse, he said, was that his children spent the day crying and stressed out, wondering why they couldn't go see their grandparents or go back home. Do you think these kids will want to be Delta customers in the future (provided Delta is around)?

I had to promise my children that I would not make them fly on an airplane anytime soon. They used to LOVE to fly. They simply cannot understand why things are so unfair.

The good news is, Delta has lost thousands of dollars in what are most likely business-class flights from Andy for the time being. Maybe competing airlines can provide some minimum of customer service and keep his business for the rest of 2009 and beyond.

Since returning on June 21st, I have flown 5 round trip flights to Las Vegas, Atlanta and New York. None of those flights have been on Delta.

I am now prepping my travels for the next three months, which include multiple flights to Los Angeles, St Louis, New York, Orlando, London, Berlin, Singapore and Shanghai.

In fact, I am literally flying MORE than I ever have in my life!

But until I receive some sort of apology, I will continue to adjust my schedule to avoid Delta.

"Letter to Delta" [AndyAzula.blogspot.com]

Soldier won't go to Afghanistan because he doesn't believe Obama is the pres...

Soldier won't go to Afghanistan because he doesn't believe Obama is the president of the United States

via Boing Boing by Mark Frauenfelder on 7/14/09

U.S. Army Maj. Stefan Frederick Cook says Obama can't be president because he hasn't proven he was born in the United States. Therefore, he refuses to be deployed to Afghanistan.

[Cook] and his lawyer Orly Taitz have filed a lawsuit so the Major does not have to go to war and fight in Afghanistan because that would be, "in violation of international law by engaging in military actions outside the United States under this President's command."

Birthers insist that a giant conspiracy has taken place. The birth certificate showing that Obama was born in Honolulu in August 1961 is fake, they say. Birthers are also certain that some kind of time travel treachery has been undertaken by shadow pinko government agents, who warped themselves back to 1961 to insert notices in the Honolulu Advertiser and the Honolulu Star Bulletin saying that "Mr. and Mrs. Barack H. Obama" gave birth to a son on August 4, 1961.

Birther Soldier Refusing to Deploy

Minnesota Attorney General Punches National Arbitration Forum In The Face [L...

Minnesota Attorney General Punches National Arbitration Forum In The Face [Lawsuits]

via Consumerist by Alex Chasick on 7/14/09

Minnesota has filed a lawsuit against the National Arbitration Forum, alleging fraud, false advertising, and deceptive trade practices.

The lawsuit alleges that NAF is a biased forum for resolving disputes, and claims that NAF has business ties to collection agencies that prejudice its arbitrators. A Business Week article last year uncovered materials showing that NAF marketed its arbitration services to companies as more likely to collect on debts than litigation.

From the AG's website:

The company tells consumers, the public, courts, and the government that it is independent and operates like an impartial court system. In fact, it has extensive ties to the collection industry-ties that it hides from the public," said Attorney General Swanson.


The lawsuit alleges that the National Arbitration Forum, while holding itself out as impartial, works behind the scenes-alongside creditors and against the interests of ordinary consumers-to convince credit card companies and other creditors to insert arbitration provisions in their customer agreements and then appointing the Forum to decide the disputes. The lawsuit alleges that the Forum pays commissions to executives whose job it is to convince creditors to put mandatory arbitration clauses in their customer agreements. The suit alleges that the Forum does this to generate arbitration filings in the Forum-and hence, revenue-for itself.

San Francisco sued NAF last year, alleging similar biases and complaints.

Consumerist readers know how much we dislike forced arbitration, and we're glad to see action being taken in courts, and in Congress, to curb its abuses.

Minnesota Sues a Credit Arbitration, Citing Bias [Business Week]
(Photo: nfarley)

Bank Manager Helps Thwart $25K Con Of 80-Year-Old [Customer Service]

Bank Manager Helps Thwart $25K Con Of 80-Year-Old [Customer Service]

via Consumerist by Chris Walters on 7/14/09

A manager at Chemical Bank in Midland, Michigan, grew suspicious when he saw Marion Case, an 80-year-old customer, withdraw $25k from her account last December. Case told him she was going to mail it to someone who would then pass it along to her son. The manager, Carl Ahearn, "remained suspicious. He followed her as she walked to the nearby post office, where Case bought an Express Mail envelope addressed to a man in New Jersey. Ahearn shared his concerns with postal officials, who opened an investigation and arrested a man Monday for fraud."

Elan Saraf, 45, of Newark, N.J., a flight attendant with Continental Airlines, was arrested Monday and charged with mail fraud as he landed in New Jersey on an international flight. Two other current or former Continental flight attendants are identified as having been involved in the alleged fraud, but have not been accused of wrongdoing.

"The investigation is still ongoing and the case has the potential to be much larger," said Wylie Christopher, a spokesman for the U.S. Postal Inspection Service in Detroit.

"We're just grateful that citizens are willing to go above and beyond to make sure those who do things wrong pay for their actions."

"Midland banker's suspicion thwarts $25,000 scam of 80-year-old" [Detroit News] (Thanks to dguralnick!)
(Photo: frankieleon)

Visa claims teen spent $23,148,855,308,184,500.00 on prepaid credit card

Visa claims teen spent $23,148,855,308,184,500.00 on prepaid credit card

via Boing Boing by Cory Doctorow on 7/14/09

Visa recorded a $23,148,855,308,184,500.00 purchase on Consumerist reader Dale's kid's prepaid Visa Buxx card: "My lectures about financial responsibility appear to have failed: yesterday she charged $23,148,855,308,184,500.00 at the drug store. That's 2,000 times more than the national debt, which is a paltry 11 trillion. The ever-vigilant folks at VISA added a $20 'negative balance fee,' and have suspended the card."

Unruly Teen Charges $23 Quadrillion At Drugstore

High-ranking insurance PR flack defects, explains dirty tricks used to fight...

High-ranking insurance PR flack defects, explains dirty tricks used to fight universal healthcare

via Boing Boing by Cory Doctorow on 7/12/09

Ross sez, "A high-placed insider (ex VP of PR at Cigna) describes the machinations the insurance industry has used to keep us from getting a decent health care system."

This guy literally wrote the talking-points memo that the anti-universal-health-care crowd uses. He had a conversion experience and has now come clean. Remarkable.

BILL MOYERS: Was [Michael Moore's SICKO] true? Did you think it contained a great truth?

WENDELL POTTER: Absolutely did.

BILL MOYERS: What was it?

WENDELL POTTER: That we shouldn't fear government involvement in our health care system. That there is an appropriate role for government, and it's been proven in the countries that were in that movie.

You know, we have more people who are uninsured in this country than the entire population of Canada. And that if you include the people who are underinsured, more people than in the United Kingdom. We have huge numbers of people who are also just a lay-off away from joining the ranks of the uninsured, or being purged by their insurance company, and winding up there.

And another thing is that the advocates of reform or the opponents of reform are those who are saying that we need to be careful about what we do here, because we don't want the government to take away your choice of a health plan. It's more likely that your employer and your insurer is going to switch you from a plan that you're in now to one that you don't want. You might be in the plan you like now.

But chances are, pretty soon, you're going to be enrolled in one of these high deductible plans in which you're going to find that much more of the cost is being shifted to you than you ever imagined...

WENDELL POTTER: And [Wall Street thinks] that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that's what-- that is what happens, what these companies do, to make sure that they satisfy Wall Street's expectations with the medical loss ratio.

Wendell Potter on Bill Moyers (Thanks, Ross!)

Previously:

• Dr Mario agitates for universal health care in Mushroom Kingdom ...
• Health insurance versus health - Boing Boing
• We Want the Public Option, a novel approach to online petitions ...
• Google News from a better world - Boing Boing
• Boing Boing: Sicko inspires grassroots action in Dallas cinema
• Michael Moore rebuts CNN on Sicko, calls for apology - Boing Boing
• More on Google vs Sicko - Boing Boing
• Google's "Sicko" scandal - what went wrong? - Boing Boing
• Boing Boing: BlueCross's internal talking points memo for Sicko
• Moore's "Sicko" leaks onto P2P - Boing Boing
• Boing Boing: Google to HMOs: pay us and we'll defuse "Sicko"
• Google's "Sicko" scandal - what went wrong? - Boing Boing

Don't Put Too Much Faith In Select Comfort's 20-Year Warranty [Misleading]

Don't Put Too Much Faith In Select Comfort's 20-Year Warranty [Misleading]

via Consumerist by Chris Walters on 7/13/09

If you're thinking of buying a Select Comfort mattress, you might want to budget in an extra $200+ every couple of years to replace the controllers that let you adjust the bed. That's the commitment Henry seems to be stuck with. Although Select Mattress keeps telling him it's a rare occurrence, it's happened twice now with him with both controllers, and he's not the only one.

What's really upset Henry, and other customers who have complained online, is that they were sold the mattress with a 20-year warranty spiel. It's true the mattress has a 20 year limited warranty, which means that after two years, the customer has to pay "20% plus 4% of price for each year from original purchase date" for any repairs.

Here's what Henry's been going through with the company's poorly made controller/air pump units:

I purchased a model 7000 bed from Select Comfort on June 5, 2004.

July of 2006 — I noticed that the digital display on one of the 2 controls that show the "sleep number" had a missing segment on the number (the numbers are formed by combinations of 4 "lines", any one of which can apparently disappear). It was a minor issue and I ignored it.

January 17, 2007 — the display on the control for my wife's side of the bed now was missing so many parts of the numbers that she could no longer read the numbers and the controller on my side was nearly as bad. I called Select Comfort and suggested that we got a defective unit and asked for a replacement. It turns out they made them so you have to replace not only the controls, but also the pump. They said it was past the 2 year free period (it started going bad a month after that), and that I would have to pay $133.42 (prorated). They said it was a rare problem. I paid. I assumed my new unit would have the same full warranty.

February, 2009 — both the digital displays on our bed started to have problems again. Note that this was almost precisely the same amount of time as before (25 months).

As of 2 weeks ago, both our controls are unreadable and my wife's unit does not properly inflate her side of the bed. I called Select Comfort and they repeated the same line — this is a rare problem. The prorated cost this time would be $220 plus tax and shipping. I was angry and did not agree to pay.

July 11, 2009 — I did an internet search to see if I was alone with this problem. I discovered many other people are having the same problem and that Select Comfort has not acknowledged any problem.

I called Select Comfort back and asked for a supervisor. I spoke to "AJ". He repeated the same party line — that this was a rare problem, not a pervasive defect and that all the company would do would be to follow the terms of the warranty and I would have to pay $220 plus tax and shipping for a new unit.

I pointed out that I could not afford to spend this kind of money on my bed every 2 years and that I thought a digital control should be able to take being used more than 20-30 times (we do not adjust or check our bed using the control more than once every week or two). Plus, it was not just one, but both our controls each time that had gone bad. Did he not think that was defective merchandise and that the company should help out? He said what the company would do is honor its warranty and that I had to pay the money. I told him "good day" and said I would pass the word that it was very expensive to own a sleep number bed.

I don't know how you feel on this but I feel ripped off. The bed cost us thousands of dollars, far more than a new mattress set. To then have to pay hundreds more every couple of years seems not to fit what they are advertising... specially when the dealer showrooms emphasize not having to worry because there is a 20 year warranty. Perhaps it would be worth warning other customers. Feel free to check for yourself online. You will find others like me. I think Select Comfort should recognize they have used faulty parts and offer free replacement to those like me who have had them fail. At the very least, they should cover the costs after the first one is replaced!

We found similar complaints from angry customers at ConsumerAffairs.com and epinions.com. It seems some people just don't find them comfortable, or say they're just expensive (but cheaply made) air mattresses with foam covers, but one recurring complaint is that customers are told they're covered by a 20 year warranty and are unpleasantly surprised to find out that they're going to have to start paying for repairs after 2 years. Here are some quotes we pulled from those complaints:

"Now after 2 years and 1 month, the LCD displays on the controls, which show the the bed or mattress pressure, have disappeared. Select Comfort is very stern in saying 'no exceptions' to their two year warranty."

* * *

"The pump for our Select Comfort Mattress stopped working for the second time a few days ago. The first time it was replaced, but 1 1/2 years later the new one is also defective and I was told that even though it is only 1 1/2 years old it goes by the original date of the bed purchase (2002)and I would have to pay 48% of the cost to replace it, which is absurd."

* * *

"Just after 2 yr warranty expired, my pump and hand held remote failed. Now just after two years, I am expected to "pump" more money into my mattress that I paid 1500 for."

* * *

"My pump is bad and now I have to pay the prorated price. I was told the new pump would only have a 30 day warranty!"

* * *

"We purchased a Sleep Number Bed Model 5000 and had problems with the air pump within the first month. Which they exchanged free of charge. Less than two years later the pump has had the same failure. Their customer service department has said that this particular pump has had problems and that they are moving all replacement pump customers up to a new wireless model due to the wired units failing. The new pump is costing me 132 dollars to replace with a 30 day warranty and Chad stated that if it goes bad after 30 days I have to buy another one at that same cost."

* * *

"I also had to e-mail select comfort to exchange the foundation of my mom's bed because this newer plastic frame was breaking at the spots that lock it together and the panels where starting to come apart. I feel bad because I am the one that recommended the Select Comfort bed to her. As for me, the last response from select comfort was that my bed is now pro rated @ 70% and it will cost me $120 plus tax and shipping to get the new and improved foundation sent to me."

The lesson here: never take a salesperson at his word on what the warranty covers. Always ask for a copy of it first so you can read the fine print, and if necessary ask him to leave you alone while you read it so you're not distracted. And take Select Comfort's commitment to customer service with a grain of salt, because they don't seem to be the type of company to go above and beyond when customers repeatedly suffer from manufacturing defects.

RELATED
"20-Year Limited Warranty Fine Print" [Select Comfort]

Banks Consider Running TV Spots Against Proposed Consumer Financial Protecti...

Banks Consider Running TV Spots Against Proposed Consumer Financial Protection Agency [Propaganda]

via Consumerist by Chris Walters on 7/13/09

Remember Harry and Louise? I don't, but apparently they were a fictional couple in an early-90s TV commercial, produced by the insurance industry to help sway opinion against the Clinton health plan. Now banks and other financial companies may be pooling resources to create a new "Harry and Louise" style ad to convince Americans that Obama's proposed agency to monitor abusive financial practices will limit choice and ruin lives.

According to Jessica Holzer of Dow Jones Newswires, "Four public relations firms, including Powell Tate and Direct Impact, pitched their ideas for the television spot at a meeting" that was attended by "representatives from the National Association of Realtors, the American Bankers Association, the Mortgage Bankers Association and the Financial Services Roundtable," and organized by the American Financial Services Association. They haven't made any formal statement yet about running ads, but it's obviously being discussed.

The vice president of the American Financial Services Association told Holzer, "We're not considering running ads against anything as much as trying to ... ensure we don't move forward, in the haste to do something, with the wrong type of approach."

If they do create the ads, expect to see them as early as this month. In the meantime, you can get your industry propaganda fix by watching the old Harry and Louise spots:

"Groups Mull 'Harry And Louise' Ads To Sink Consumer Agency" [NASDAQ via TNR] (Thanks to Heather!)

RELATED
"Harry and Louise on Clinton's health plan"

OMG U FAIL SO HARD

OMG U FAIL SO HARD

via FAIL Blog: Pictures and Videos of Owned, Pwnd and Fail Moments by tofuburger on 7/13/09

EDITOR'S NOTE: This post is in response to an email FAIL Blog received from an attorney representing Guinness World Records Limited.

Dear Sir/Madam,

Thanks for writing us an email regarding the "Record Breaking Fail". Unfortunately, douchebaggy cyber-bullying emails will only bring upon you more shame on your house. I am also resisting the urge to write this email in ALL CAPS.

I believe it is the duty of FAIL Blog(TM) to call out organizations when they encourage the public to do such things as "Break the record" for the "Most Individuals Killed In A Terrorist Act". We firmly believe that our publication of your fail is protected under the concepts of fair use, commentary and non-trademark use. Please RTFM and we welcome you to teh interwebs.

Since we at FAIL Blog(TM) don't have a legal defense department, we have complied with your request to remove the trademarked term and logo from the original image. We have used the "naughty bits filter" on the image to secure your naughty, naughty, trademark assertions. However, we have posted your email so that our audience can see why we had to remove the name of the failer from the image. I hope that this is the outcome you have expected as now NO ONE WILL EVER KNOW THAT GUINNESS WORLD RECORDS LIMITED HAS FAILED.

The full legal response can be read here: icanhaz.com/legalresponse

Cheers,
FAIL Blog

P.S.: This is what we think of your letter.

7-Eleven Asks Consumers To Help Fight Credit Card Companies [Interchange Fees]

7-Eleven Asks Consumers To Help Fight Credit Card Companies [Interchange Fees]

via Consumerist by Carey on 7/11/09

7-Eleven plans to serve up your next Slurpee with a petition to Congress protesting unfair credit card fees. No, the fees aren't unfair to you, they're unfair to 7-Eleven. The vendor of last resort is mad about interchange fees, the fees banks charge merchants for accepting a credit card payment. The recent credit card legislation signed into law protected consumers from rate increases, but stayed silent with regards to interchange fees.

7-Eleven says the fees are becoming more burdensome to small businesses as people increasingly use plastic to pay for even minor purchases. These days, Jones noted that it's not unusual for people to buy a pack of gum or cup of coffee with a credit card. He noted that the average purchase at 7-Eleven totals just $6.

"If you're a very low margin business, that kills you," Jones said.

Last year, Jones said 7-Eleven paid $160 million in bank card fees, up from $40 million five years ago — a 300 percent increase.

Interchange fees generated by bank cards totaled $23.99 billion in revenue last year, according to Card & Payment. That accounted for about 19 percent of revenue from bank cards.

While card companies such as Visa and MasterCard set the fees, the revenue is distributed to multiple entities, including the merchant's bank and the issuing bank — with the latter getting the bulk of the fees, said Kate Fitzgerald, associate editor at Cards & Payments.

Creditors sputter out all the usual talking points to defend their interchange fees, saying that lower fees for businesses would raise rates and undermine benefits for consumers, yadda yadda yadda. This is a business-to-business problem, not one that consumers need to add to their already lengthy list of credit card concerns.

Would you consider signing 7-Eleven's petition?

7-Eleven Rallies Customers Against Card Fees [WDSU]

Is Bottled Water Safer Than Tap Water? Please... [Science Says]

Is Bottled Water Safer Than Tap Water? Please... [Science Says]

via Consumerist by Carey on 7/11/09

Bottled water isn't any safer than tap water, and could actually be more dangerous, according to a report from the Government Accounting Office. The big difference lies in the government regulator: tap water is covered by the Safe Water Drinking Act, administered by the aggressive and powerful Environmental Protection Agency, while bottled water falls under the Food, Drug, and Cosmetic Act overseen by the powerless anything-goes industry-lovers over at the Food and Drug Administration.

In fact, bottled water makers are not required to disclose even as much information as your local municipality. If you live in a city of 10,000 residents or more, you probably receive a copy of a water report each year. The Solid Waste Disposal Act requires that public water systems test tap water for various contaminants using certified laboratories and issue a water-quality report, called the consumer-confidence report (CCR), once a year. (For particularly toxic contaminants, the SWDA requires results to be reported within 24 hours.) The CCR summarizes local drinking water quality, information about the water source, levels of detected contaminants, whether any of the detected contaminants exceed federal levels, as well as information on the potential health effects of certain contaminants. (If you live in a smaller town, consult the EPA's Web site.)

In contrast, bottled water manufacturers don't have to use certified laboratories nor report the results of any water quality testing to the FDA, even if the contaminants exceed federal standards. The GAO study also found that only a small percentage of the 83 bottled water labels looked at, companies contacted, or company Web sites reviewed contained information comparable to that required of tap water.

Consumer Reports tested bottled water in 2000 and found that it was safe when it met FDA standards, which wasn't always the case. All water should be regulated by the Environmental Protection Agency, but since it isn't, we'll stick with tap water, thank you very much.

Is tap water safer than bottled? [Consumer Reports]
(Photo: Snap®)

Delta Fined $375,000 For Bumping Passengers [Fines]

Delta Fined $375,000 For Bumping Passengers [Fines]

via Consumerist by Carey on 7/11/09

The Department of Transportation smacked Delta with a $375,000 fine for ignoring federal laws that require airlines to offer bumped passengers adequate compensation and an explanation of their rights. Inside, a listing of your options if an airline tries to bump you off their flight...

From the Department of Transportation:

Voluntary bumping

Our rules require airlines to seek out people who are willing to give up their seats for some compensation before bumping anyone in- voluntarily. Here's how this works. At the check-in or boarding area, airline employees will look for volunteers when it appears that the flight has been oversold. If you're not in a rush to arrive at your next destination, you can give your reservation back to the airline in exchange for compensation and a later flight.

DOT has not said how much the airline has to give volunteers. This means carriers may negotiate with their passengers for a mutually acceptable amount of money-or maybe a free trip or other benefits. Airlines give employees guidelines for bargaining with passengers, and they may select those volunteers willing to sell back their reservations for the lowest price.

Involuntary bumping

DOT requires each airline to give all passengers who are bumped involuntarily a written statement describing their rights and explaining how the carrier decides who gets on an oversold flight and who doesn't. Those travelers who don't get to fly are frequently entitled to an on-the-spot payment of denied boarding compensation. The amount depends on the price of their ticket and the length of the delay:

• If you are bumped involuntarily and the airline arranges substitute transportation that is scheduled to get you to your final destination (including later connections) within one hour of your original scheduled arrival time, there is no compensation.
• If the airline arranges substitute transportation that is scheduled to arrive at your destination between one and two hours after your original arrival time (between one and four hours on international flights), the airline must pay you an amount equal to your one-way fare to your final destination, with a $400 maximum.
• If the substitute transportation is scheduled to get you to your destination more than two hours later (four hours internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles (200% of your fare, $800 maximum).
• You always get to keep your original ticket and use it on another flight. If you choose to make your own arrangements, you can request an "involuntary refund" for the ticket for the flight you were bumped from. The denied boarding compensation is essentially a payment for your inconvenience.

When a flight is oversold and there are not enough volunteers, some airlines bump passengers with the lowest fares first. Once you have purchased your ticket, the most effective way to reduce the risk of being bumped is to get to the airport early. For passengers in the same fare class the last passengers to check in are usually the first to be bumped, even if they have met the check-in deadline.

Airlines may offer free transportation on future flights in place of a check for denied boarding compensation. However, if you are bumped involuntarily you have the right to insist on a check if that is your preference. Once you cash the check (or accept the free flight), you will probably lose the right to demand more money from the airline later on. However, if being bumped costs you more money than the airline will pay you at the airport, you can try to negotiate a higher settlement with their complaint department. If this doesn't work, you usually have 30 days from the date on the check to decide if you want to accept the amount of the check. You are always free to decline the check(e.g., not cash it) and take the airline to court to try to obtain more compensation.

In a "number of instances" between January and July of last year, Delta didn't ask for volunteers, explain why people were involuntarily chosen, or pay out adequate compensation. We doubt a relatively minor fine will teach Delta much of anything, but at least you can know your federal rights next time an airline tries to take back their seat.

DOT fines Delta $375k over 'bumped' passengers [AP]
A Consumer Guide to Air Travel [The Department of Transportation]
(Photo: zonaphoto)