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    McDonald's Prepares to Fire Back at Critics

    Get ready for a public relations war as intense as any ever waged by competing spinmeisters in the political arena

    Get ready for a public relations war as intense as any ever waged by competing spinmeisters in the political arena. McDonald's is girding up to do battle with its critics, hoping to deflect mounting criticism of the healthfulness of its food.

    Over at Wendy's, the chairman-CEO has stepped down after 18 months of sales declines and unrest among franchisees.

    McDonald's took a pounding in popular culture with the release of the movie "Supersize Me," in which an independent film maker lived only on McDonalds food for a month and nearly wrecked his health. Next month could bring another blast, as Eric Schlosser, author of "Fast Food Nation," releases a new book targeted at teens, "Chew On This: Everything You Don't Want To Know About Fast Food." A movie based on Schlosser's first book is set for release by the end of the year.

    "We need to do a better job telling our story," said McDonald's CEO Jim Skinner.

    Skinner has announced a global effort to promote what he sees as the positive aspects of the chain. He says McDonald's has become a target in recent years simply because of its size and dominance in the industry.

    The company is also trying to prepare its franchisees for the coming storm. It says the upcoming book and movie will provide pressure at a time when many are trying to make the fast food industry responsible for the rise in obesity among the U.S. population, especially among children.

    McDonald's says it provides plenty of healthy choices on its menu, but it's up to consumers to exercise the right choices. The company said its promotional campaign will attempt to educate consumers about nutrition and encourage them to make the right choices.

    Still, that's unlikely to mollify McDonald's critics. A recent study published in the New England Journal of Medicine claimed the company sells healthier french fries and chicken strips in Europe than in the U.S.

    Wendy's Wobbling

    McDonald's problem is basically that it's too successful, whereas Wendy's is suffering from sinking sales and a potential uprising among its franchisees, leading John "Jack" Schuessler, 55, to turn off the grill and head for the beach after 30 years with the burger chain.

    "I am proud to have been part of Wendy's for three decades... I believe it is the appropriate time to pass the leadership of the brand to the next generation of leaders," Schuessler said. His resignation came just 10 days before the annual shareholders meeting.

    "With the company focusing on new strategies and opportunities Jack and the board decided that it was time for new leadership," a Wendy's spokesman said.

    There's been a schism among the franchisees, a number of whom have seceded and formed an independent association representing 13 percent of the chain's stores.

    Besides slow burger sales, Wendy's has been having problems with its Tim Horton's doughnut chain and the Baja Fresh chain.

    McDonald's Prepares to Fire Back at Critics...
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    Researchers Find Pesticides In Cigarette Smoke

    If the nicotine doesn't get you, the pesticides just might

    If the nicotine doesn't get you, the pesticides just might. That's the upshot of a study by researchers at the Colorado School of Mines in Golden, who say they have found previously undetected pesticides in tobacco smoke.

    Using electron monochromator-mass spectrometry, the scientists found three pesticides suspected of being toxic to the human endocrine system as well as carcinogenic in a wide sampling of experimental and commercial cigarette smoke samples.

    The three nitro-containing pesticides, including flumetralin, commonly used in tobacco farming, survive the combustion process.

    Flumetralin, a suspected endocrine disrupter already banned for use on tobacco in Europe, belongs to a class of chemicals that may be active at miniscule levels, the researchers say.

    Endocrine disrupters can produce adverse effects on early development, reproduction and other hormonal processes.

    When the three unidentified compounds turned up in the smoke, the researchers utilized a unique selective and sensitive instrument to analyze the chemical "fingerprints" of the substances and identify the new compounds as dinitroaniline pesticides.

    They found the three pesticides in both the mainstream and sidestream smoke, with the sidestream showing the higher levels for all three compounds. Although the pesticides are reduced in quantity, they survived the combustion at an estimated level of 10 percent of the original residue on the tobacco.

    The research has just been published online in the American Chemical Society journal, Analytical Chemistry, in an article by John Dane, Crystal Havey and Kent Voorhees.

    Pendimethalin and trifluralin are the other two pesticides identified in this study.

    Pendimethalin has been identified as an endocrine disrupter that specifically affects the thyroid. Trifluralin is also an endocrine disruptor that affects the reproductive and metabolic systems. Both compounds are suspected human carcinogens.

    None of the three pesticides has been previously reported in either the mainstream or sidestream smoke from current U.S. tobacco.

    "No information exists for long-term low-level inhalation exposures to these compounds," said Voorhees, "and no data exists to establish the possible synergistic effect of these pesticides with each other, or with the other 4,700-plus compounds that have been identified in tobacco smoke."

    Using electron monochromator-mass spectrometry, the scientists found three pesticides suspected of being toxic to the human endocrine system as well as car...
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    Health Insurance A Near-Monopoly, Study Finds

    Health insurance is nearing monopoly status in most markets, driving up the cost of insurance, reducing innovation in health care and squeezing doctors and hospitals, an American Medical Association (AMA) report finds.

    "The remarkable reduction in the number of competing health plans is troubling for doctors and patients, as competition drives innovation and efficiency in the health care system," said AMA Board Member J. James Rohack, M.D. "Most alarmingly, in the combined HMO and PPO markets, 95 percent of metropolitan areas have few competing health insurers."

    In addition, the study found that in 95 percent of markets, a single insurer had a market share of 30 percent or greater, and in 56 percent of the markets, a single insurer had a market share of 50 percent or greater.

    The AMA report, Competition in Health Insurance: A Comprehensive Study of U.S. Markets, analyzed 294 metropolitan health insurance markets against an index used by federal regulators for measuring market concentration. According to the federal index, markets that are highly concentrated have few competing health insurers.

    "Patients do not appear to be benefiting from the consolidation of health insurance markets," said Dr. Rohack. "Health insurers are posting historically high profit margins, yet patient health insurance premiums continue to rise without an expansion of benefits."

    The AMA findings must be viewed in the context of the unprecedented consolidation of the health insurance market, Rohack said. Between 1995 and 2005, there were more than 400 mergers involving health insurers and managed care organizations, according to a researcher of merger and acquisition trends in the health care industry.

    "Given the troubling trends in health insurance nationwide, federal regulators need to take a hard look at whether patients are being harmed as mergers and takeovers reduce the number of competing health insurers," said Dr. Rohack. "When it is difficult for a new insurer to enter a market with few dominant health plans, patients can be charged high prices without the threat of competition to keep insurers in check."

    Health insurance is nearing monopoly status in most markets, driving up the cost of insurance, reducing innovation in health care and squeezing doctors and...
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      Rebate: Discount or Lotto Ticket

      Either is about as likely to pay off

      You can't believe your luck. While trolling Best Buy for a new computer package, you found a Compaq system with color printer, flat-screen monitor and plenty of memory. Best of all, it comes with three mail-in rebates, shaving $250 off the sales price.

      Six weeks later, you're happily pecking away at the keyboard, but only the Compaq rebate has shown up. What about that $100 from the monitor and printer purchases? Grumbling to yourself, you dial the 800 number listed on the second rebate form.

      Welcome to the dicey world of rebates. With mail-in rebates offered on everything from yogurt to power saws, many consumers, understandably, consider them an incentive for choosing one product over another -- sort of a time-delayed discount. But along with the mushrooming of rebate offers comes another feature: frustrated buyers chasing hard-earned discounts that have increasingly come to seem more like long-shot Lotto ticets.

      How It Should Work

      Theoretically, rebates are a good deal for both consumers and manufacturers. Consumers get a substantial discount off the retail price; manufacturers get publicity, increased market share, and demographic information on buyers that they can use in future marketing campaigns.

      Ideally, you read about an offer in your local paper for a product you were considering buying anyway. You head down to the store, purchase the item and pick up rebate forms and two receipts -- one to send away with the paperwork.

      You mail everything in to a "fulfillment house," a company which collects rebate forms and proofs of purchase and tells the manufacturer what they owe. The manufacturer pays the fulfillment company, which in turn pays the consumer. A couple of weeks (or months, depending on the offer) later, your mailbox contains a nice check.

      Sometimes it does work this way.

      Marcia Layton Turner has collected rebates on everything from Pepsi to a paper shredder, with nary a problem. But glitches can arise along the way: rejection letters stating that you haven't submitted the proper UPC code; claims that the item you bought wasn't included in the rebate offer or that the time to submit forms has expired; a check that never arrives or arrives three months late.

      It's estimated that 60% of rebates are never honored -- 40% of consumers don't apply and another 20% apply but aren't paid, according to Consumers Union Senior Attorney Gail Hillebrand.

      The Federal Trade Commission, which monitors unfair trade practices, reports that rebate complaints rose from 1100 in 2003 to 1900 in 2004. The FTC has gone after such well-known brands as Bumble Bee Seafoods, America Online and Office Depot. Clearly, "rebate rage" is on the rise.

      ConsumerAffairs.com received 914 complaints about rebates in 2005, 838 in 2004 and 786 in 2003.

      Although complaints are up, so is rebate use, according to the NPD Group, a sales and marketing information firm based in Port Washington, New York. Their recent survey showed that nearly a third of U.S. consumers have purchased a product with a rebate during the past six months.

      Consumer Stories

      Diana Burrell is nobody's fool -- she once ran a rebate program for a consumer packaged-goods company. But when she recently purchased a Cuisinart food processor because of the lure of money back plus free kitchen accessories, Burrell never saw the check or promised cake pan and disk holder.

      "I was careful to follow directions and send the form in on time. But when the check didn't arrive and I checked online for the status of my rebate, I found that the claim was rejected because I supposedly purchased the item during a non-rebate period," she recalls.

      Burrell didn't stop there, writing to the manufacturer and explaining that she used to work for a rebate program. When she got a form letter back reiterating that her time frame was wrong, Burrell decided to go straight for the president of the company. Stay tuned.

      Quinn Warnick, who teaches at Iowa State University, found a Dell system offering a $150.00 rebate. After waiting 10 weeks, he got a postcard stating that his purchase was ineligible for the rebate requested. His sin: buying the system without the monitor.

      "Dell's website didn't state that you had to buy the whole system to get the rebate," said Warnick. "I clicked on the $150 Rebate Offer link, removed the monitor from the purchase, and paid for itthe final payment screen even reminded me that I would be getting the rebate." Warnick faults the customer service provider he spoke with for failing to find the problem, and notes that this experience tainted his opinion of the company.

      Computer purchases are an unusually rich source of rebate problems. Jena Ball recently bought a computer which malfunctioned. "When I brought it back, the retailer kept it for more than a week, and by then the rebate date had passed. Make sure the retailer gets your rebates, especially if they caused your rebate submission to be late," advises Ball.

      Diane Benson Harrington got caught up in a UPC Code trap. "I bought a package of three zip disks for my computer, and included one of the codes with my rebate coupon, together with the receipt. They sent me a note saying they were more than happy to have me resubmit the data with the right UPC code. I had sent in the code for the whole package, when what they wanted was the code from individual items."

      Even boxes can be crucial.

      "Last spring I bought a new laptop while visiting family out of state," said Deborah Brauser. "I didn't want to worry about the big box while flying back, and left it at my Grandma's house. When I got home, I found I needed to cut out parts of the box and send them in. But my Grandma had thrown it out! I sent in all three rebates, and got money back on two, even though I was missing box parts. One rejected my request," Brauser remembers.

      Some merchants are more flexible than others, so don't be afraid to ask for a perk you may have just missed. Beverly Burmeier bought a new printer on December 30, to get the tax break for the current year. The next week, Office Depot offered a $30 gift card with the purchase of her model. Burmeier returned the printer and bought it anew, snagging a gift card.

      Inside the Manufacturer's Mind

      Pierce Pelouze can shed light on what manufacturers are thinking when they dream up rebate tortures. Pelouze, past Chairman of the Board at the Promotion Marketing Association and former VP of Promotion at the Campbell Soup Company, now runs his own marketing company.

      "Rebates can have a definite short-term impact on sales and image. Consumers understand price reductions, which is in essence what rebates do," he said.

      Pelouze sees no end to the rebate craze: "As long as there is strategic sense in having one as part of a marketing effort, manufacturers will continue to use rebates. The challenge is to ensure that the terms and structure of their offer are clearly communicated to the consumer and the rebates are fulfilled on a prompt and complete basis."

      Southern Methodist University's Marketing Department Chair, Daniel J. Howard, is less sanguine on what rebates do for manufacturers.

      "Rebates are disproportionately attractive to a certain type of consumer -- the 'deal prone,' Howard notes. "Lots of marketing tools, like coupons, appeal to this consumer, but especially rebates, because often you're giving people a significant amount of money back. But this segment of the population is the least brand-loyal, since manufacturers want to gain new brand customers, and rebates don't accomplish this."

      Anne Brumbaugh, Assistant Professor of Marketing at Wake Forest University's Babcock Graduate School of Management, mentions three types of consumers who treat rebates differently.

      "First are folks who don't 'fall for' them because they know they will be difficult to fulfill. If they do apply for the rebate, they consider it a bonus. Second are folks who make their decision based on the discounted price but never apply because they forget or can't be bothered. These are manufacturers' favorite consumers because the offer increases demand but manufacturers don't have to take the hit on price. Third are folks who decide based on the discounted price and apply for the rebate. Unfortunately these folks don't always read the fine print or follow directions completely and are occasionally disappointed to find they will not receive the rebate," Brumbaugh said.

      She emphasizes that "with a rebate the consumer is asking for a significant discount. Manufacturers will make it as difficult as possible for them to receive this discount."

      For the persistent, Brumbaugh offers tips:

      • Before you purchase an item based on a post-rebate price, ask if you are really going to fulfill all the requirements. If not, ask if you really want that item at full price. If so, purchase and enjoy it. If not, pass it up.

      • Read the fine print of the rebate offer before you purchase the item. Make sure you comply with all requirements. Are you within the required time frame? Is the item you're considering listed specifically on the rebate offer (not a model or variation thereof)? Do you have all the paperwork necessary (UPC, receipt, rebate form, etc.) to apply? Will you mail it in on time?

      "Plain Old Theft"

      Some consumer advocates take issue with Brumbaugh and Howard. "It's no wonder once-respectable companies engage in this disgraceful and dishonest fleecing of the consumer," said ConsumerAffairs.com's Jim Hood. "Look what they're teaching in universities!"

      "When you have faculty members from respected universities saying that consumers are 'asking for' a discount when in fact it is the merchant who is offering it as an enticement to buy and then implying that only gullible rubes -- what Howard apparently means with his condescending "deal-prone" label -- fall for the offer, it's no wonder freshly-minted MBAs who have never done an honest day's work in their lives think it's fine to rob consumers of their hard-earned and much-needed money."

      Failure to fulfill rebate promises should be labeled for what it is -- theft, Hood said. "Some enterprising Attorney General needs to send a few marketing executives to prison," Hood insisted. "Where is the bunko squad when you need it?"

      More Tips for Success

      The more vocal consumer advocates' comments notwithstanding, manufacturers and merchants will continue to offer rebates and many consumers will continue to believe they are dealing with honest retailers.

      • When possible, shop at stores which have application forms on hand and providing duplicate cash register receipts. Best Buy, Circuit City, Lowes and Costco are among these.

      • Apply promptly. Many rebate offers are on a tight time frame after purchase. Don't leave forms on your desk for four weeks.

      • When you mail in forms, ask for delivery confirmation from the post office. Keep a photocopy of everything you send in.

      • Mark the date on a calendar when the rebate should be received and jot down a toll-free number and mailing address just in case it doesn't show up on time, says FTC attorney Leslie Fair.

      • If your mailbox remains empty, try calling the manufacturer directly, says Burrell. They want to keep good relations with customers and may intercede for you to make sure you get your rebate.

      • When you get the check, cash it promptly.

      • Most importantly, know yourself. Are you detail-oriented enough to follow the money? Will this exercise be more trouble than it's worth? Research has shown that when there's more money at stake, consumers are more willing to spend time and energy chasing that discount.

      "Only super-organized, highly competitive consumers should count on getting their rebate," said Hood. "It's a battle of wits between you, the manufacturer and a faceless fulfillment company. Don't play the game if you're not ready to fight for the trophy."

      More on this topic ...
      Rebate: Discount or Lotto Ticket?
      Where to Complain
      Sample Demand Letter
      The "Easy Rebate" Movement
      Rebate Rogues Kennel
      More About Rebate Madness

      Rebate: Discount or Lotto Ticket...
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      Bausch & Lomb "Withdraws" ReNu Contact Lens Solution

      In what it is calling a "voluntary market withdrawal," Bausch & Lomb is asking retailers to stop selling ReNu with MoistureLoc

      In what it is calling a "voluntary market withdrawal," Bausch & Lomb is asking retailers to stop selling ReNu with MoistureLoc, a contact-lens solution that's suspected of causing a serious eye infection. Many major retailers have already pulled the product and the company has suspended shipments.

      The action is not a recall. The company is not asking stores to return the product, but rather to take it off the shelves while the investigation into the outbreak of fungal infections is concluded.

      The Centers for Disease Control and Prevention (CDC) says it has received new reports of the fungal infections that have been linked to the solution, which is used for storing, cleaning and wetting soft lenses. But the agency refused to say how many additional complaints it had received.

      Earlier this week, CDC and the Food and Drug Administration said they had information on 109 suspected cases of Fusarium keratitis, an infection that can lead to blindness. Of the 109 cases, 30 had been reviewed and 26 of those involved patients who had used ReNu.

      Major retailers were quick to pull the product after learning of the problem. Kmart, Sears, Wal-Mart, Walgreen, CVS, Rite Aid and Drugstore.com all said they had stopped selling the product.

      Consumers who return their ReNu to the company will have the choice of getting their money back or receiving a coupon for other Bausch products. Information is at www.bausch.com or call 1-888-666-2258.

      The company is placing ads in major newspapers today featuring an open letter to consumers from Bausch & Lomb Chairman and CEO Ron Zarrella explaining the situation and providing guidance on alternatives.

      "Bausch & Lomb's first priority is the health and safety of consumers," said Zarrella in his letter. "If there is a problem with our product, well find it and well fix it. If theres not, when we come back youll be able to know with absolute certainty that weve taken every possible step to ensure your safety."

      In "exhaustive tests on the product" and an inspection of its manufacturing plant, "nothing has yet been found to show that ReNu with MoistureLoc contributed to these infections in any way," Zarrella's letter said. "However, in the cases of infections reviewed to date, the majority of patients reported using ReNu with MoistureLoc manufactured at our U.S. factory," which is in Greenville, S.C.

      An FDA inspection of the Greenville plant in 2002 turned up some quality-control issues that the agency detailed in a warning letter to the company. The FDA found that the company "failed to establish and maintain procedures to adequately control environmental conditions, or other sources of contamination, which could reasonably be expected to have an adverse effect on product quality."

      Bausch & Lomb is asking retailers to stop selling ReNu with MoistureLoc, a contact-lens solution that's suspected of causing a serious eye infection....
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      Paying Taxes With Your Credit Card Can Get Expensive

      More and more Americans are paying their tax bill with their credit cards. Some card issuers are even offering incentives for paying the bill using their card.

      Though the convenience and added perks may sound like a great deal, the Association of Independent Consumer Credit Counseling Agencies (AICCCA) suggests consumers take a second look before charging their taxes.

      "Consumers would be wise to consider all payment options and avoid charging their tax bills if other payment arrangements are available," said AICCCA President David Jones. "With some 50 percent of credit card users revolving a balance monthly, adding to those balances is not a good idea."

      AICCCA advises consumers consider the following before charging their tax bills:

      • You will pay more than the amount owed the IRS. The convenience of charging your tax obligation comes with a 2.49 percent fee assessed by the third-party company that processes the transaction. If your tax liability were $3,000, your total charge would be $3,074.70.

      • A reward from your card issuer may not be cost effective. For those consumers that want to cash in on double air miles or other incentives, check the math and determine if the reward outweighs the processing fee to use your credit card.

      • Revolving the tax charge on your credit card will increase your total tax bill. Consumers who will be charging to a credit card account would be wise to determine how long it will take to pay off the charge. Interest charges add up quickly and your tax bill could end up costing you much more than the original amount if the balance will not be paid within 90 days or so. A $3,000 balance at the average annual interest rate of 13 percent is up to an additional $32.50 per month in interest charges.

      • Adding tax bill to a credit card with an existing balance could spell disaster. With the universal default clause that is buried in the fine print of many consumers' credit card agreements, a missed payment on any account could mean an automatic increase in annual interest rate charges to 30 percent or more. The last thing you want to do is pay a 30 percent surcharge on your tax liability until the entire balance of your card is paid off.

      Paying Taxes With Your Credit Card Can Get Expensive...
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      Soft Drink Makers Sued Over Benzene

      Consumers have filed class action lawsuits in Florida and Massachusetts, claiming two soft drink makers produce products that, under the right conditions, can contain benzene, a carcinogen. The suits were filed against Polar Beverages and Zone Brands.

      The plaintiffs concede the drinks do not contain benzene unless they are subjected to heat and light. Under those conditions, vitamin C interacts with other preservatives to create benzene.

      Last month, a group of public health advocates appealed to public school officials to remove certain soft drinks from school vending machines because of the benzene problem.

      The industry and the Food and Drug Administration have tested the products in question, but have not released the result. The FDA, a public agency supported by taxpayer funds, said it plans to release the test results to the public eventually.

      The lawsuits ask that the companies be stopped from selling beverages that have a tendency to form benzene. It also asks for unspecified damages, in the amount of profits the companies have realized in selling the products.

      The American Beverage Association says removing vitamin C from the beverages would prevent them from forming benzene.

      The benzene is formed by a reaction of ascorbic acid (vitamin C) and sodium or potassium benzoate (which are used as preservatives) -- especially in the presence of light or heat.

      Soft drinks that contain ascorbic acid and sodium or potassium benzoate include Diet Pepsi Wild Cherry, Fanta Orange, Hawaiian Punch, Mug Root Beer, Pepsi Vanilla, Sierra Mist, Sunkist and Tropicana Lemonade, among others.

      Soft Drink Makers Sued Over Benzene...
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      Absence Of Wedding Ring Linked To Parental Neglect

      A social psychologist at the University of Alberta claims that people who do not wear wedding rings are more neglectful of children than people who wear them. Further, Dr. Andrew Harrell states that young attractive people who do not wear wedding rings are the most neglectful child caretakers of all.

      The director of the university's Population Research Lab, Harrell made his conclusions after leading an experiment in which 862 caretaker-children combinations were furtively observed in 14 supermarkets in Edmonton, Alberta, Canada.

      Caretaker neglect was measured according to how often the caretakers or their charges, estimated to be between one and seven years old, wandered out of sight or were more than 10 feet away from each other -- too far to prevent most accidents.

      Harrell found that an average of 14 per cent of the caretakers, with or without wedding rings, lost sight of their charges at least once. However, young attractive female caretakers without rings lost sight of children 19 per cent of the time, and young attractive males lost sight 25 per cent of the time, a "statistically significant" jump, Harrell said.

      "Past research suggests that the absence of a wedding ring in North American culture is indicative of a lack of emotional commitment to marriage," said Harrell. "Our research shows that it may also be an indicator of a lack of a commitment to one's family, including care of the children."

      "It is our belief that an interest in establishing social, sexual or emotional ties outside of marriage may have the inadvertent consequence of diminishing attentiveness to children," Harrell added. "And it's not surprising that this distraction occurs even in a mundane setting like a supermarket, which is more than a place to purchase bananas and cereal. It can also be a place for social encounters and maybe even a romantic rendezvous."

      Harrell presented the results of his research at the 17th Annual Warren E. Kalbach Conference in Demography, held recently at the University of Alberta.

      A year ago, at the same conference, Harrell started a media storm when he suggested, based on similar research, that parents are more neglectful of unattractive children than they are of attractive children. This year, the findings from the study last year were replicated, with unattractive children being more neglected, particularly those older than three years of age.

      Also this year, Harrell found that, among caretakers wearing wedding rings, the unattractive ones were more neglectful than the attractive ones.

      "The unattractive parents could have health problems or psychological troubles that distract them from their parental duties," he said, adding that the observations are consistent with past evolutionary research on attractiveness and evolutionary fitness.

      Harrell noted that the ratings of both parental and child attractiveness were "remarkably consistent" throughout the study, even though the observers made their judgments independently.

      "I know these results may sound harsh, but suffice to say it's not good at all to let a child out of sight at a supermarket," he said. "We're just trying to determine the causes of accidents, because it's important to be aware of what happens and why it happens so that we can take steps to improve our behavior."

      Absence Of Wedding Ring Linked To Parental Neglect...
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      Opposition Grows as FDIC Examines Wal-Mart Banking Bid

      By Martin H. Bosworth

      April 10, 2006
      The world's biggest retailer is telling the government that its bid for a charter bank is not designed to compete with community banks.

      The Federal Deposit Insurance Corporation (FDIC) is holding final hearings to determine whether or not Wal-Mart can use an industrial loan company, chartered in Utah, to found its own bank.

      The retail behemoth has claimed it would not use the financial franchise to undermine local bank chains, but everyone from consumer advocates such as Ed Mierzwinski to new Federal Reserve chair Ben Bernanke has expressed concern about the move.

      Mierzwinski, chairman of the U.S. Public Interest Research Group (PIRG), has called Wal-Mart's move "a truly bad idea that has harsh risks for the economy."

      He said that using an industrial bank as its foundation would enable Wal-Mart to offer loans and other products at prices that undercut local competition, and without the same regulatory scrutiny that's applied to commercial banks.

      In prepared testimony before the FDIC, Wal-Mart spokesperson Jane Thompson said the company "has no plan to open bank branches."

      Thompson points to the many lease agreements Wal-Mart has already made with community banks to open branches inside Wal-Mart superstores. The industrial bank would only be used to process "low-risk" transactions from current Wal-Mart customers, she said.

      But an alliance of consumer groups, banking advocates, and Congressional representatives have been gathering forces to oppose Wal-Mart's plan, expressing concern that the company is using loopholes in banking law to open banks in any state the Utah bank is chartered with.

      The FDIC has received nearly 2,000 letters on the issue, most of it opposed to Wal-Mart's plans.

      Industrial Strength

      The key to Wal-Mart's banking ambitions lies in the differences between a commercial bank and an industrial bank.

      Industrial banks, or Industrial Loan Centers (ILCs), operate under an exemption from federal regulations that govern oversight of banks insured by the Federal Reserve.

      The exemption has allowed big corporations ranging from Harley-Davidson to General Electric to own ILCs, leading to phenomenal growth in their assets and financial clout since the exemption was instituted in 1987.

      Utah alone hosts several ILCs, including those controlled by Merrill Lynch, the Volvo Corporation, and Pitney Bowes, with hundreds of millions of dollars in assets.

      ILCs are used by these companies to handle payment processing, such as debit and credit card transactions.

      The lack of financial scrutiny over ILCs led both former Fed chair Alan Greenspan and current chair Bernanke to advocate closing the loophole and putting ILCs under the government's thumb.

      Utah has an agreement with 20 states that enables its ILCs to do business with them. To expand into the remaining 30 states, Wal-Mart would have to buy out an existing bank.

      According to The New Rules Project, a local business advocacy group, Wal-Mart has been stealthily lobbying Congress to preempt state laws and allow industrial banks to expand nationwide.

      Wal-Mart has tried on several prior occasions to partner up with community banks in order to gain a charter, but was rejected. As part of its current bank bid, the company agreed to drop its proposed exemption from the Community Reinvestment Act (CRA), designed to encourage banks' investment in low- and moderate-income neighborhoods.

      Even with that olive branch, community bankers and consumer advocates are still skeptical of the retailers' claims. Andrew Grossman, executive director of the Wal-Mart Watch organization, said "stability is the bedrock of the American financial system, but the Bank of Wal-Mart would threaten that with a dangerous concentration of commercial and financial power."

      "When the enormous bank comes to town, it will threaten the local alternatives, just like super centers have undermined so many other local stores," Grossman said. "Then, with these critical centers of capital gone, local businesses that compete with Wal-Mart may be forced to rely on the retail giant's bank for loans."


      Opposition Grows as FDIC Examines Wal-Mart Banking Bid...
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      Consumers Want Better Online Banking Security

      Almost 90 percent of U.S. bank account holders would like their financial service providers to monitor online banking sessions for signs of irregular activity in the way they currently scrutinize credit card transactions, according to a recently released study.

      The poll, conducted by online security firm RSA Security, also revealed that nearly 60 percent of adults would like their banks to contact them when something suspicious is detected.

      Almost three-quarters of U.S. bank customers believe that username-and-password login security is inadequate and that financial institutions should replace such systems with stronger authentication for online banking, according to the RSA annual Financial Institution Consumer Online Fraud Survey.

      In addition the poll found that 79 percent of account-holders are less likely to respond to an email from their banks due to scams including phishing; this was up from 70 percent in the 2004 survey.

      Some 65 percent of account holders reported seeing either "a slight increase" or "no change" in the amount of phishing emails they received in 2005. The RSA Cyota Anti-Fraud Command Center (AFCC), which scans over 1 billion emails a day backed up this assertion: The number of phishing attacks it monitors has remained close to 2,500 to 3,300 attacks per month for the last eight months, with only a small increase each month.

      "It is important to preserve the speed, simplicity, ease of use and convenience of the online banking channel. Consumers seem to feel comfortable with the notion of their financial institution monitoring their online activity and contacting them when something suspicious is detected, just as they've become accustomed to for years in the credit card space," said Chris Young, senior vice president and general manager of RSA Cyota Consumer Solutions.

      When presented with several options, including hardware tokens, watermarks for mutual authentication and risk-based authentication, the majority of respondents (74 percent) selected risk-based authentication as their preferred method.

      Risk-based authentication involves a behind-the-scenes assessment of the user's identity based on factors including logon location, IP address and transaction behavior - which can be supplemented with out-of-band phone calls or secret questions for high-risk transactions.

      The survey also showed that account-holders are looking to their banks and internet service providers (ISPs) to protect them from phishing: 45 percent of account holders feel that an ISP blocking service for phishing would be effective and 68 percent would like their ISP to offer such a service.

      Conducted in November 2005, the online survey asked 402 U.S. adults for their opinions on online banking authentication and email fraud, such as phishing.

      Consumers Want Better Online Banking Security...
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      Consumers Can Profit From Hotel Makeovers

      Hotels throwin' old stuff out; you can get some of it

      The Seven Year Itch is a big factor in the hotel business too. It seems that no reputable property waits much longer to undergo massive makeovers that make artwork, draperies, and furnishings expendable. That's where the public can profit.

      Liquidators charge about 25 per cent of the typical retail price for beds, desks, chairs, credenzas, and electronic equipment acquired from hotels. They even operate showrooms and websites designed to keep furniture moving.

      Sometimes, their acquisitions are so good that they remain in the hotel industry in smaller, less upscale properties seeking to upgrade with castoffs from the top hotels and resorts.

      "When hotels want their stuff out, they want it out," said Chicago liquidator Kurt Karchmer in a perfect imitation of Yogi Berra. "I have a glut of stuff. We're getting stuff that's barely used."

      Karchmer's company, Cooper Used Hotel Furniture, is one of two major players in Chicago, along with Fort Pitt Furniture Liquidators. Others are located in Atlanta, Los Angeles, Phoenix, Colorado, Connecticut, Ohio, and Texas.

      Several of the firms report they cleared 10,000 hotel rooms last year a significant increase over the year before. The California-based Hotel Surplus Outlet cleared the 570 rooms of the Beverly Hilton last year and will soon add furnishings from the Regent Beverly Wilshire, another upscale property.

      Hotels pay liquidators about $100 per room to take old furnishings off their hands, then sell it to the public, to nursing homes, or to hotels one step down the luxury ladder. The result is a bonanza for bargain hunters.

      Consumers don't seem to mind used furniture as long as it is undamaged.

      Even interior decorators are getting into the act, purchasing hotel surplus to furnish homes they hope to sell.

      Guests of the Kiptopeke Inn of Cape Charles, Va. might experience a sensation of deja vu if they've ever stayed at the J.W. Marriott in downtown Washington the general manager of the Virginia property purchased in bulk items the Marriott no longer wanted.

      "The unique thing was the hotel the furnishings came from," Matt Diamond explained. "If they were from budget hotels, I wouldn't have taken the trip (to Washington)."

      The price is right for consumers too, with buyers purchasing both individually and in "room sets," with beds, armoires, lamps, tables, and more selling for one set price.

      For further information, see www.fortpittfurniture.com (Tel. 773-247-3523); www.hotelsurplus.com (Tel. 323-780-7474); www.ircahotelservices.com

      (Tel. 800-266-6019); www.nclsales.com (Tel. 937-647-0001); www.nhlfurniture.com (303-452-7733); www.hotelliquidation.com (Tel. 972-780-7600); or www.furnishcheap.com (Tel. 203-776-7000). _____ Former AP newsman Dan Schlossberg of Fair Lawn, NJ is the only American journalist who covers baseball and travel exclusively.

      Consumers Can Profit From Hotel Makeovers...
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      Class Action Challenges AT&T/NSA Surveillance

      The Electronic Frontier Foundation (EFF) has filed legal briefs and evidence supporting its motion for a preliminary injunction in its class-action lawsuit against AT&T.

      After asking EFF to hold back the documents so that it could review them, the Department of Justice consented to EFF's filing them under seal -- a well-established procedure that prohibits public access and permits only the judge and the litigants to see the evidence.

      "The evidence that we are filing supports our claim that AT&T is diverting Internet traffic into the hands of the NSA wholesale, in violation of federal wiretapping laws and the Fourth Amendment," said EFF Staff Attorney Kevin Bankston.

      "More than just threatening individuals' privacy, AT&T's apparent choice to give the government secret, direct access to millions of ordinary Americans' Internet communications is a threat to the Constitution itself. We are asking the Court to put a stop to it now."

      EFF's evidence regarding AT&T's dragnet surveillance of its networks includes a declaration by Mark Klein, a retired AT&T telecommunications technician, and several internal AT&T documents. This evidence was bolstered and explained by the expert opinion of J. Scott Marcus, who served as Senior Advisor for Internet Technology to the Federal Communications Commission from July 2001 until July 2005.

      The internal AT&T documents and portions of the supporting declarations have been submitted to the Court under a tentative seal, a procedure that allows AT&T five court days to explain to the Court why the information should be kept from the public.

      "The public deserves to know about AT&T's illegal program," said EFF Legal Director Cindy Cohn. "In an abundance of caution, we are providing AT&T with an opportunity to explain itself before this material goes on the public docket, but we believe that justice will ultimately require full disclosure."

      The NSA program came to light in December, when the New York Times reported that the President had authorized the agency to intercept telephone and Internet communications inside the United States without the authorization of any court. Over the ensuing weeks, it became clear that the NSA program has been intercepting and analyzing millions of Americans' communications, with the help of the country's largest phone and Internet companies, including AT&T.

      "Mark Klein is a true American hero," said EFF Staff Attorney Kurt Opsahl. "He has bravely come forward with information critical for proving AT&T's involvement with the government's invasive surveillance program."

      In the lawsuit, EFF is representing the class of all AT&T residential customers nationwide.

      Class Action Challenges AT&T/NSA Surveillance...
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      Traveling With Needles

      So, you need to carry a medical needle with you on an airplane?

      So, you need to carry a medical needle with you on an airplane?

      Good luck! Since September 11, the FAA and Homeland Security have tight new rules about needles on planes. For example, if you carry a needle you must have a corresponding medication to be used in the needle.

      The medicine must have professional labels with the name of the medication and your doctor's name, as well as the date. Some of the airlines also require a picture ID to match the name on the label or a letter on your doctor's letterhead to explain the prescription.

      An illegible prescription on a prescription pad just won't do, although you may also need a copy of your original written prescription.

      Enforcement varies ... a lot. Some folks get on the plane easily while others don't.

      There are no clear guidelines on adrenaline, the pre-measured allergy injection that patients use to save lives in emergencies, like bee stings.

      If you need to carry a needle on a plane, even a diabetic needle, call the airlines ahead of time.

      The FAA and Homeland Security have tight new rules about needles on planes. If you carry a needle you must have a corresponding medication to be used in th...
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      Congress Retreats from Guaranteeing Internet Neutrality

      Verizon is rushing to assure American consumers that it won't block content transmitted over the Internet

      After successfully bulldozing Congressional efforts to protect "net neutrality," Verizon is rushing to assure American consumers that it won't block content transmitted over the Internet.

      Verizon also says it won't give favorable treatment to its own content. AT&T hasn't not noticeably rushed to give any such assurances.

      By a vote of 23-8, the House Energy and Commerce Subcommittee defeated an amendment presented by Rep. Ed Markey (D-MA) that would have codified the principle of "net neutrality" -- that all Internet content should be available to all users, and providers shouldn't favor one class of user over others.

      Supporters of net neutrality fear that telecoms such as Verizon and AT&T, formerly SBC, would institute a "tiered Internet," setting aside the fastest connections and best service to the highest-paying clients.

      Won't happen, claims the telecoms' lobbying arm. Walter McDowell, president of the United States Telecom Association (USTA), which lobbies on behalf of the fast-dwindling number of major telecoms, famously stated that "Our commitment to our customers, our commitment to you is this: We will not block, impair, or degrade content, applications, or service."

      But the chairman of AT&T has never made any secret of his feelings on the matter. Ed Whiteacre has repeatedly stated that his company deserved a return on investment for letting content providers use his "pipes."

      "[T]here's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?" asked Whiteacre, apparently forgetting the millions of dollars AT&T collects for maintaining its portion of the Internet backbone and the additional millions it charges its DSL, T-1 and dial-up customers.

      Nor does Verizon's management of its Wireless Broadband service instill confidence. The service sets Verizon subscribers back $60 a month in order to check their e-mail and surf the Web at what might be called semi-high speed, using what's called the EV-DO (Evolution-Data Optimized) network.

      Subscribers are told in Verizon's ads and sales literature that usage is "unlimited." However, Verizon's chief technology officer Dick Lynch told PC World magazine recently that heavy users of the service might face a tiered pricing structure if they continue to eat up bandwith.

      Lynch was miffed to learn that enterprising subscribers have been using the network to stream movies, television shows, and act as modems for their laptops when no other broadband service is available.

      "I don't think you ought to assume that for the long term you're going to be able to pay the same amount as the ... more casual user and be fair to all our customers," Lynch said. "So I think you'll find over time that the amount of usage that you demand from the network each month will in fact have to ... drive the pricing structure."

      Advertising aside, Verizon's customer agreement for Wireless Broadband Access is somewhat restrictive. Ars Technica reporter Eric Bangeman detailed that the agreement restricts "uploading, downloading or streaming of movies, music or games, ... server devices or with host computer applications, including, but not limited to, Web camera posts or broadcasts, automatic data feeds, Voice over IP (VoIP), automated machine-to-machine connections, or peer-to-peer (P2P) file sharing."

      Paying $60 a month just to check your e-mail faster seems a touch on the extreme side, but Verizon seems bound and determined to wring as much money out of the service as they can.

      "At some point, in order to provide you the same grade of service for that application, we're going to have to differentiate the grades of service," Lynch said.

      Typical Tech Troubles

      But Verizon customers, tech pundits, and observers note that the company can't even commit to providing decent service and customer support on a regular basis.

      Take the case of Greg V., an insurance analyst in Washington, D.C. Greg, a Verizon Wireless subscriber, completely lost service at a time when he needs to be in contact with his co-workers.

      "I had absolutely no service at all [last Tuesday], even when I was on my roof deck," he said. "And in the past week about 50% of the times I have tried to use the high speed Web surfing and data transfer, [it] was not available at all."

      In a test of Verizon's Wireless Broadband last year, ConsumerAffairs.com's James R. Hood called it "the most shiftless, unreliable service we have ever paid good money for. At about $90 a month, it's far from cheap but we found it to work so poorly it would be overpriced at any price."

      Service has improved since then, Hood said, but he said an upcoming review will find the service still fails to deliver the reliability most serious business users require.

      Congress Retreats from Guaranteeing Internet Neutrality...
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