Current Events in December 2010

Unemployment benefits for millions of out-of-work Americans have been extended for at least another 13 months as part of compromise tax bill signed by President Obama. That may be good news for a large percentage of the nation's unemployed, but there's a growing group of out-of-work Americans known as the 99ers for whom the extension doesn't help at all.

That's because as written, the extensions only allow unemployed workers to receive benefits for up to 99 weeks. After that, they're on their own.

This is causing some major concern, especially in those states where unemployment is between 12-14% and where the number of 99ers is increasing. According to the Labor Department, there already are over a million people who no longer receive unemployment benefits because they've been out of work for more than two years.

The largest surge in claims for unemployment came in early 2009 with the peak hitting 643,000 claims in a single week came in March. That's about 90 weeks ago so there's a large group of unemployed who are about to run out of benefits soon, as they join the 99 week club.

There are some who ran out before 99 weeks, which is the longest possible duration you can get benefits while on unemployment. But the real total varies by state depending on the unemployment rate and whether the state participates in certain voluntary programs.

Only 24 states and Washington D.C. offer the full 99 weeks. Six states offer benefits for 93 weeks, five for 86 weeks, nine 73 weeks, and five states only allow 60 weeks. Mississippi is the only stated that offers 79 weeks. The Labor Department says that as of November, more than 4.2 million people were unemployed for longer than 52 weeks.

Highest since 1970s

Nearly one-third of the estimated 10 million unemployed had been out of a job for more than a year, which is the highest they've been since the Labor Department began tracking them in the 1970s.

So what can the 99ers or anyone who runs out of unemployment benefits do to survive?

If they're fortunate enough to have any kind of savings or other assets they could carry them over until the job picture brightened enough for them to find work. But jobs for people who have been out of work for a long time are even harder to get. They may have to move to another area with a better job market.

Unemployment hit more than 14% in Nevada and over 12% in Florida. If someone hasn't found a job in 99 weeks, they probably live in a region with a poor job market. For example, in Mansfield, Ohio, the unemployment rate was 10.9% but just 66 miles away in Columbus, Ohio, the unemployment rate was only 8.4%.

Providence had an unemployment rate of 11.0% while Portsmouth, New Hampshire, two hours away, it was just 4.4%.

Without that weekly unemployment check, there's no time wait for your dream job. Take what's available. You need income of any kind so grab whatever job you can get for the time being.

If all of your options have been exhausted, the only thing left is welfare. Even though the government won't provide unemployment any longer, you could qualify for welfare.

Unfortunately, for many of these unemployed Americans, times aren't going to get easier anytime soon. The longer someone is unemployed, the harder it can sometimes be to find a job. And since the unemployment rate is expected to recede very slowly, employers will continue to be able to hold down wages and benefits without fearing that they won't be able to fill their vacancies.

Some people are probably going to gag at the thought of this, but have you ever considered renting a piece of clothing instead of buying it? After all, we rent apartments and cars, sometimes furniture and Blue-ray DVDs. So why not clothes.

Men have been renting tuxedos since that first junior prom. But what if you had been invited to a fancy social event and you just didn't have an extra $1,500 lying around to buy a new evening gown? What if I said you could go online and rent a $1,500 gown for $200?

Well you can and there are plenty of women out there who are already going to renttherunway.com to grab the latest fashions created by the hottest designers at a fraction of their retail price so they can wear them while they're, well, still in fashion.

How often would you wear a dress like that anyway? There aren't that many places you could go. So why not save hundreds of dollars and still keep your closets from getting over-stocked.

RentTheRunway.com rents thousands of dresses for a four- or eight-day period. The dresses are geared toward special occasions or limited use wear for those on a budget and the rental prices run about 80% off the retail price.

You'll find dresses from such designers as Nicole Miller and Proenza Schouler. New styles come in all the time and when a dress has been on the racks too long, they're put up for sale at 65% off. You can find these dresses on the clearance section of the website.

The dresses are organized on the site by style, designer, or occasions like a winter wedding, a girls-night-out or this-is-getting-to-be-serious-date. You select the dress and schedule a delivery date.

It helps to live in cities like New York City where you can get the dress that day. Otherwise it will be sent overnight.

If you're worried about the fit, the company sends the dress in two sizes and takes care of the dry cleaning afterward. Renting a dress requires signing up for a free membership, and then paying for the rental, $5 insurance, shipping and any taxes that may apply.

In the short time it's been up, renttherunway.com already has 600,000 members and it went live during the height of the recession when people were cutting back on their clothes budget.

This year, Rent The Runway says it's having its busiest season ever. A similar site is Bag Borrow or Steal which rents designer handbags and accessories. Since launching in 2004, it has over 2 million members in the U.S. alone. They rent luxury bags, jewelry, sunglasses and watches from high-end designers like Chanel, Louis Vuitton, Gucci and Prada.

Now, you're all set for that fancy New Year's Eve party with some money left over to rent a limousine for the night.

Arizona Attorney General Terry Goddard today filed a lawsuit against Bank of America alleging violations of the Arizona Consumer Fraud Act and violations of the consent judgment entered in March 2009 between Arizona and the Countrywide companies owned by BofA.

The lawsuit, filed in Maricopa County Superior Court, was triggered by hundreds of consumer complaints and follows a year-long investigation into Bank of America's residential mortgage servicing practices, particularly its loan modification and foreclosure practices.

Goddard said that Bank of America, the nation's largest residential mortgage loan servicer, should be leading the way out of the country's foreclosure crisis.

Instead, he said, "Bank of America has been the slowest of all the servicers to ramp up loss mitigation efforts in response to the housing crisis. It has shown callous disregard for the devastating effects its servicing practices have had on individual borrowers and on the economy as a whole.”

The complaint asks the court to hold the defendants in contempt for violating the consent judgment and to order them to pay restitution to eligible consumers and civil penalties, attorneys' fees, and costs of investigation to the state. It further asks the court to order the defendants to pay up to $25,000 for each violation of the consent judgment and up to $10,000 for each violation of the Arizona Consumer Fraud Act.

Goddard noted that Arizona has been particularly hard hit by the foreclosure crisis, as evidenced by recent reports ranking the state second behind Nevada in foreclosures. Nevada reportedly plans to file a similar lawsuit against Bank of America today.

The consent judgment was entered into on March 13, 2009 to resolve the Attorney General's allegations that Countrywide had engaged in widespread consumer fraud in originating and marketing mortgage loans.

In the judgment, Countrywide agreed to develop and implement a loan modification program for certain former Countrywide borrowers in Arizona.  Bank of America acquired Countrywide on July 1, 2008 and has assumed responsibility for Countrywide's compliance with the consent judgment.

The complaint filed today alleges that, since the consent judgment was entered, Bank of America has repeatedly violated the judgment's provisions related to loan modifications.  Instead of providing the relief to which eligible homeowners were entitled, Bank of America has failed to make timely decisions on modification requests and proceeded with foreclosures while modification requests were pending in violation of the agreement.

The complaint also alleges that Bank of America has violated the Consumer Fraud Act by misleading Arizona consumers about its loss mitigation process and programs, including matters such as:

-- Whether homeowners must be delinquent on their mortgage payments to be considered for a loan modification.

-- How much time it would take to receive a decision from Bank of America on a modification request or a short sale request.

-- Whether foreclosure would proceed while a modification or short sale request was pending, or while a homeowner was making trial payments.

-- Whether the homeowner had been approved for a loan modification.

-- Failure to provide valid reasons why the homeowner was declined for a modification.

-- Whether the homeowner would be approved for a permanent modification if the consumer successfully made all trial modification payments.

Many homeowners who tried to obtain a modification from Bank of America ended up owing more principal on their loans or having less equity (becoming more "underwater”) in their homes.  Others gave up their chances to pursue other financial options, such as short sales, while trying to modify their loans with Bank of America.

These consumers endured months of frustrating delays, not knowing whether or when they would lose their homes, Goddard charged. He said they called Bank of America and resubmitted their paperwork over and over again in futile efforts to get the help they were promised.

"I am filing this lawsuit today because, after years of delay and broken promises, Arizonans should not have to wait any longer to seek redress,” Goddard said.  "Our homeowners and communities need and deserve relief. Bank of America must be held accountable for its deceptive conduct and failed commitments.”

With the unemployment rate hovering near 10 percent, many people will likely make getting a job a prime New Year's resolution for 2011. They should be careful, however, not to fall for a scam that promises a job, for a fee.

Nebraska Attorney General Jon Bruning has posted some guidelines on his website to help consumers avoid some of these scams, that prey on desperation and have multiplied since the start of the recession.

For starters, never, ever agree to pay a fee for the chance to interview for a job. If you applied at a Fortune 500 company,how would you react if the interviewer asked you to pay $50 or $100 to land the job, for starter materials, or for a "good faith" payment to make sure you were serious about the job?

Chances are, you wouldn't consider it, which is good advice if someone who contacts you using the Internet does the same thing.

"Whenever you're asked to pay for the chance at a job, or information about work-fromhome jobs, it's a scam,” Bruning says.

Also, check out the business before you apply, especially if you've never heard of it before. Make sure they have a physical address and a phone number. Call to make sure it's a real phone number. Do an Internet search to see if you can find any positive or negative comments.

While asking for an upfront fee is a dead giveaway that the job is part of a scam, here are some other red flags, according to Bruning:

• The company uses free Web hosting services (such as Tripod or Geocities).

• They use free Web email services (such as Yahoo! Mail or Hotmail).

• They use Post Office boxes for mailings and don't disclose their real addresses.

• They won't give you a telephone number where you can contact them.

You should also beware of vague and incredible claims. A company that doesn't state its name, costs, or other important information in their ads usually has a good reason to do so. It's a scam.

Some offers claim that you can "make up to $1,000 a week" doing just a few hours worth of unskilled work. Really? If the pay is that good, why isn't the recruiter doing it, instead of giving you the opportunity?

Don't let scammers use high-pressure tactics to sucker you in. If you're given a timelimited offer, there's usually a reason why. Scammers know that pressure brings in people.

Never reply to spam. Fraudulent offers for home-based businesses or work-at-home opportunities almost always arrive as spam. The better it sounds, the less likely that it's legitimate.

A new survey by the Center for the Digital Future, at the Annenberg School for Communication & Journalism at the University of Southern California reveals parents' growing concern about the amount of time their kids spend online.

Many are starting to view the Internet in the same way they view television: too much is not okay.

Researchers at the Center report parents are now limiting their children's Internet access and television use in nearly identical ways.

Three in five American households restrict television use as a punishment, a figure that's hardly budged over the past decade. Restricting children's Internet use as a form of punishment has steadily increased over the years and is now a practice in 57 percent of the nation's homes with children under 18.

Less facetime

The survey also revealed eleven percent of parents with children under 18 worry the Internet is reducing the amount of face-time their kids have with friends. This concern has grown in the last decade; only seven percent of parents had this fear when the Center's surveys began in 2000.

And it's not just time with friends that's suffering; the 2010 surveys report family face-time is suffering because of Internet use, too.

From an average of 26 hours per week during the first half of the decade, family face-time had fallen to just under 18 hours per week by 2010.

Michael Gilbert, a senior fellow at the Center, whose work is focused on gender and family issues, believes online community involvements are playing a significant role in reducing family time.

He points to Center surveys which, since 2006, indicate roughly half of those involved with an online community value it as highly as their real world ones.

While Gilbert believes Americans' growing attachment to social networks and the increased time they often demand is to blame for dwindling face-time between family members, there's really no way to determine who or what is to blame.

"With all the digital diversions out there, it's hard to pin this on any one thing." said Gilbert.

Dr. Jeffrey Cole, the Center's director, says recent expressions of parental disenchantment with the Internet confirm the Center's earlier predictions.

He notes that, while families have traditionally turned technological advances, such as the telephone and television, to their advantage, the interactive demands of digital technologies and social networking threaten to put inordinate stress on the modern family.

Interestingly, while parents' concerns over their children's Web use grows, many still consider it the lesser of two evils compared to television.

Sixty-nine percent of parents said the time their kids spent online was "just about right" as opposed to the 57 percent who said the same about television.  Only 28 percent of parents thought their children spent too much time on the Internet, against 41 percent who thought television time was excessive.

In a win for retailers, and perhaps consumers, the Federal Reserve has proposed a new rule that would establish debit card interchange fee standards and prohibit network exclusivity arrangements and routing restrictions.

As a result, those "swipe" fees could drop as much as 90 percent, according to industry analysts. The interchange fee is what the business pays the credit card network each time a customer uses a debit card. The new Fed proposal would cap them at 12 cents per transaction.

The Fed has requested comment on its proposed rule, which would be implemented as part of the recently passed financial reform legislation.

New standards

The rule would establish standards for determining whether a debit card interchange fee received by a card issuer is reasonable and proportional to the cost incurred by the issuer for the transaction. These standards would apply to issuers that, together with their affiliates, have assets of $10 billion or more. Certain payment programs administered by the government would be exempt from the interchange fee limitations.

The Retail Industry Leaders Association (RILA), an industry group, was quick to offer its comment through a statement to the media.

"Although Federal Reserve's proposal is not entirely conclusive, it does validate the long-held claims of merchants and consumers that the electronic payments market is broken and needs to be fixed," said Katherine Lugar, executive vice-president for public affairs for the group. "Today's announcement is a step forward for the effort to bring relief to merchants and consumers who for too long have faced excessive fees and unfair rules imposed by big banks and credit card companies."

'Savings for consumers'

Lugar also said the proposal "will undoubtedly result in savings for consumers."

The Electronic Payments Coaltion,  representing banks and payment networks, said the rule would end up costing consumers, claiming big chain stores would likely pocket the savings.

The Fed is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction).

Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.

While banks stand to lose profits on the proposed new rule, analysts say they would be free to make up that revenue by phasing out rewards programs on debit cards and even charging some customers a fee for using them.

There's one thing all great financial advisors have in common. They put their clients' interests ahead of their own. They also listen to what you have to say rather than wait until you stop talking just so they can tell you how they're going to manage and invest your money.

For the uninitiated it's often hard to tell whether your advisor is actually giving good advice or just spouting off what he or she thinks you want to hear. After working with financial advisors for 15 years, I can tell you that there is indeed a great deal of difference and there are ways to weed out those who may be putting their interests ahead of yours.

So whether you are questioning the motives of the financial advisor you already have or are looking for a financial advisor you can trust, here are some questions that could extract their hidden agendas that may not be in line with your financial goals.

Question 1. How exactly do you get paid?

This question should immediately trigger a reaction that could separate the honest financial advisors from the shills just out to make a buck and could care less about your portfolio. You need to be careful if they immediately answer this question by saying "I make money when you make money." If that's their answer, your following question should be, "Does that also mean when I lose money, you'll lose money too?"

There are generally five ways a financial advisor is compensated and many make their money through a combination of some or of all five. They can be strictly on salary, which is becoming more rare these days, or they can be paid on commission, on an hourly basis, a flat fee, or on a percentage of your assets under their guidance.

How they are paid is actually not as important as whether the advice they give you is based on what's best for you or driven by how much they can make from it. Therefore, if commissions are involved in any way, you have every right to be suspicious. It means that they could be investing your money in specific devices such as mutual funds, ETFs or structured products that they are compensated for.

Financial advice should be free from any conflicts of interest.

Advisors that charge a flat fee or on an hourly basis like lawyers, might seem expensive at first, but if their advice is sound and your portfolio grows, it should more than compensate for that fee. If the advisor is compensated on the size of your assets, watch out. This is similar to commissions, only in a less direct manner. Here, they can put you into mutual funds or ETFs and sit back and watch your investments grow without lifting a finger and still make money. Basically, all they're doing is something you could have done yourself and saved the money.

Question 2. More important than how a financial advisor is paid is actually how they conduct their business with you. Are they transaction oriented -- do they try to put you into the latest hot stock or fund and do a lot of trading on your behalf just to generate performance, or are they more interested in developing a long-term relationship and learning as much as they can about the way you're wired when it comes to investing, or what keeps you up at night?

Advisors who simply want you to turn over all the thinking and strategizing to them are advisors you want to stay away from or move away from if you're already doing business with them. These are the "get a hunch, buy a bunch" stock-jockeys who are obsessed with stock picking, and who ignore such important issues as risk tolerance.

They'll use words like "this is a sure thing" or "I can get you in at the bottom and we can ride this baby to the top." One to particularly be wary of is, "I've got an exclusive access to this investment." You want someone who understands that you would rather not lose money than make money when it comes to investing, or that daily gyrations in the stock market are fine with you as long as over the long term, the share price inches up.

Question 3. Ask them what all those certificates on their walls mean.

Unfortunately, the agencies tasked with overseeing this industry have a poor track record for weeding out the crooks. Can anyone say Madoff? Also, in most states, anyone can put up a shingle that says "Financial Planner." It's sort of like the word "Therapist."

So you need to do some investigating and to check out their certificates to make sure they are backed by legitimate or official designations. You want to look for titles such as CFP, which stands for certified financial planner, or ChFC, which is a chartered financial consultant, or the most widely known, CPA for certified public accountant, who has a specialty designation as a PFS, which stands for personal financial specialist.

These designations won't guarantee this person is good for your or even any good at what they do, but they do show he or she has had at least extensive training and experience.

Another thing you should do is find out whether there are any public disciplinary actions against them and how they were resolved. You do this by going to the FINRA BrokerCheck database.

Just remember that even good financial advisors can have a few disputes on their record. Start to worry, however, when there's more than five. Your state securities regulator might also provide background information on registered advisors.

Question 4. Do they have the proper registration forms on file?

This may sound like an unusual question to ask any professional, but in the case of a financial advisor, you want to stay away from anyone who's not registered with the Securities and Exchange Commission (SEC) or the state securities agency. This is easily verified by asking to see their Form ADV, which is filed with the SEC and discloses the advisor's education and business background, compensation, and investment methodology. If they manage less than $25 million in assets, they often must disclose similar information with their own state's security agency.

In the same vein, any advisor who is allowed to sell securities will have what's called a Central Registration Depository (CRD) file. You can get CRD information through your state's securities agency and it provides a 10-year history, including any disciplinary actions taken against that person.

Question 5. You probably don't want someone who's fresh out of business school or financial advisor training. You want someone who has some experience under their belts. So ask them how long they've been doing business as a financial advisor. Don't let the gray hair fool you. For many advisors, this is a second or third career.

Question 6. Ask for references. Then go to these people and ask them what they didn't like about the services they received, or in which areas they think their advisor isn't as strong in as others.

Question 7. If you are looking for an advisor, you'll want to know how they work. So find out how often you expect to meet and will this be in person or over the phone. Obviously, most interactions will be by phone or email, but in the beginning you'll want at least two or maybe more in-person meetings, and then at least one in-person meeting a year, maybe more.

You'll also want to know that after you give them all your financial information along with any other information they might need, how much time will it take before you receive an assessment or a financial plan.

What form will this plan take? How will you execute it? A financial plan is like a doctor's prescription. If you don't follow it, you won't get better. And if you don't follow the financial plan your advisor has come up with, you won't reach your financial goals, which should be agreed to at the outset.

Question 8. This is a question to ask yourself. How do you feel about the advisor? Do you trust them? Does he or she make sure you understand what they're talking about or do they speak in financial jargon that only a CPA or an MBA would be able to grasp?

Does he or she care about how you feel and that you understand everything they are saying. If not, find someone else because no matter how good their advice seem now, one day you're going to look back and wonder "what happened."

Loan sharks take note. There's a new lender in town and they don't break your legs when you get behind on your payments. Lending clubs, or what used to be known as peer-to-peer lending, appear to be growing in popularity as banks remain stingy with their credit and only loan money to those with pristine credit and high FICO scores.

Peer-to-peer lending began as a way for cash-strapped entrepreneurs to start a new businesses, expand an old one, or for people trying to consolidate their high-interest credit card debt (the new loan shark) but don't have credit scores high enough to get a home equity loan.

So they find a peer-to-peer lending group that will let them rollover their credit card balances that are charging anywhere from 14% to 29% into loans that charge 11%.

One such place is appropriately called the Lending Club at www.lendingclub.com. Over the past three years, it has matched 23,000 lenders with 18,500 borrowers. It has a total outstanding balance of $179 million, which is small potatoes when compared to banks and credit cards.

Lending Club was founded by Renaud Laplanche in 2007. It was one of Facebook's first applications, which helped attract mostly young borrowers who had poor credit histories or no histories at all.

Today, Lending Club is one of a number of peer-to-peer lenders who fill the gap created between banks loaning to only those with a great credit history and the millions of others who don't but who still need to borrow money. Another peer-to-peer lender is a company called Prosper at www.prosper.com. It holds competitive auctions in which lenders bid to offer borrowers the lowest interest rates. It claims to have over 900,000 borrowers.

35 categories

Lending Club puts potential borrowers into 35 categories or levels based on their credit histories and other data. To qualify, a borrower must have a minimum FICO score of 660, a debt-to-income ratio (excluding mortgage debt) of less than 25% and no current delinquencies, recent bankruptcies or tax liens. They're not completely stupid. In fact, Lending Club rejects roughly 90% of prospective borrowers.

Creditors can choose which individuals to lend to and commit as little as $25 to loans whose total values range between $1,000 and $25,000. They can also become creditors in baskets of loans to debtors of various risk levels.

Lending Club charges borrowers upfront fees and pockets a spread between the interest lenders earn and the higher rates that borrowers pay. It expects to earn $7 million this year and triple that in 2011.

One of the lenders, Craig Jones, is a venture capitalist, who joined the club while waiting for the IPO market to return. In the meantime, he puts up $1.2 million, or one-fifth of his investment portfolio, to be used as loans.

How's he making out? When you compare the return you get to a high-yielding bond, let's say a five year B-rated corporate bond that pays 7.5%, with defaults averaging 3.4%, lenders at the lending club earn on overage 9.6% once you strip away defaults and the lending club's take, according to Laplanche. These days, that's not a bad return.

The television pundits are still arguing over whether it was a tax cut bill or an extension of current taxes bill. Well, it turns out they're both right.

The 1,900 page bill that finally made its way through congress extended the Bush tax cuts but also cut taxes by lowering the payroll tax for all workers by two percentage points.

Is it a win-win? That depends on with whom you speak. While it extends the cuts for everyone including the super-rich, it also leaves has its share of losers.

Winners and losers

The biggest winners appear to be individual taxpayers who would have seen their taxes rise if the measure hadn't passed. On the other hand, some bond investors could take a hit if the bill triggers a sell-off in U.S. Treasuries.

The reason that might happen is that earlier this month, Moody's Investment Service said the tax cut extension bill increases the possibility it would put out a negative outlook on the government's AAA credit rating because the bill increases the nation's debt by more than $800 billion.

There also are some things that got dropped in the compromise legislation. A provision that would have taxed earnings of hedge and private equity fund executives as income rather than capital gains was left out. But so was language that would have helped small business owners by removing a requirement that they issue 1099 forms to any vendor that receives at least $600 a year.

Individual benefits

As for individual income and payroll taxes, the bill extends the Bush-era tax rates that were enacted earlier in the decade. This basically prevents taxes from rising to pre-2001 levels for all taxpayers through 2012. Also, approximately 15 million lower-income workers who would have had their income taxed now get to remain off the tax rolls.

Another big win is the reduction in Social Security (FICA) taxes. The bill trims two percentage points from the employee's portion of the 6.2 percent tax. How much you'll save depends on your income, but it could be as much as $2,136 for those earning more than $106,800, which is the maximum amount subject to Social Security tax.

The bill also contains a two-year patch for what's known as the alternative minimum tax or AMT, retroactive to January 2010. The AMT was set up to ensure that people with high incomes pay taxes. But it isn't indexed for inflation and it has come to include middle-class taxpayers. The patch spares an additional 21 million taxpayers this year.

Investors

For investors, the bill extends for two years the current tax rates on long-term capital gains and dividends. The top rate for both will remain at its historic low of 15 percent. The rate will remain zero for couples with taxable income below $69,000.

According to the Tax Policy Center, more than half of the benefit of this extension will go to people with incomes above $100,000. Absent the extension, the top rate on long-term gains would have risen to 20 percent, while the top dividend rate could have risen to as high as 39.6 percent.

Among the benefits extended through 2011 are deductions for teacher expenses and for state sales taxes in lieu of state income taxes. Lawmakers also extended through 2011 the provision allowing taxpayers over age 70 1/2 to make tax-free donations of IRA assets to qualified charities.

Several education benefits were also extended through 2012. Not renewed, however, was a property-tax deduction for people who didn't itemize their deductions.

Estate taxes

The top estate-tax rate falls to 35 percent and the exemption rises to $5 million an individual. The bill also allows executors of 2010 estates to elect whether to use 2010 rules or 2011 rules. The choice will help heirs who would pay more as a result of the lapse of the estate tax in 2010 and a corresponding rise in capital-gains taxes.

The new provisions will cut by at least a third the number of estates subject to the tax, which was paid by about 5,500 estates in 2009, according to Tax Policy Center estimates.

Also for the first time, estate, gift and generation-skipping taxes will be "unified" so that one $5 million exemption per individual applies to all three. This will make it much easier for wealthy taxpayers to make gifts during life to grandchildren.

Other benefits

Here are some other benefits of the tax bill:

• You could make tax-free distributions of up to $100,000 of IRA assets to charities per year. The bill allows donations made in January, 2011, to be treated as if made in 2010. By giving their IRA assets to charity, taxpayers don't have to claim the distributions as income, so they avoid being disqualified for other tax breaks and deductions.
• Through 2011, teachers will still be able to file for up to $250 in deductions for classroom expenses related to books, supplies, computer equipment and other materials. This is an above-the-line deduction, which lowers adjusted gross income. For teachers, the deduction takes a small bite out of the reported average of $356 teachers spend out-of-pocket on average for school supplies and other resources, according to the National School Supply & Equipment Association, a trade association for educational product companies. The extension would apply to elementary and secondary school teachers, and doesn't include non-athletic supplies used in health and physical education courses.
• Taxpayers who itemize deductions will be able to deduct state and local sales taxes through 2011. This helps residents of states that don't have an income tax because they can use it in place of the itemized deduction currently allowed for state and local income taxes.
• Several education credits and breaks would be extended. Families of college students would be able to claim a deduction of up to $4,000 for qualified education expenses through 2011. The American Opportunity Tax Credit would be extended through 2012, and allows taxpayers to claim a credit of up to $2,500. Taxpayers can only use one and both have specific income requirements.
• The annual contribution amount for Coverdell Education Savings Accounts, tax-exempt savings accounts, would also stay at $2,000 through 2012 and money from the accounts could still be used for elementary and secondary school expenses; without the extension the contribution limit would fall to $500 and money could only be used for post-secondary expenses.
• Also extended is the higher phase out levels for the up to $2,500 above the line student loan interest deduction. They'll remain $55,000 to $70,000 or $110,000 to $140,000 for joint filers.
  

Is there any wonder why so many people go to Florida or Arizona to retire? The beautiful weather, the friendly tax laws and easy laid back life styles.

But what about the worst states in the country to retire? Do you know what they are?

Worst of the worst

According to TopRetirements.com Illinois leads the ten worst states for retirement, followed by California, New York, Rhode Island, New Jersey, Ohio, Wisconsin, Massachusetts, Connecticut and Nevada.

John Brady, president of TopRetirements.com says states are rated on three factors: fiscal health, taxation, and climate. As for fiscal health, six of the 10 worst states for retirees are also among those identified by a Pew Center for States report as being in "fiscal peril."

They include California, Illinois, Nevada, New Jersey, Rhode Island and Wisconsin. Each shows some of the same pressures that have pushed California toward economic disaster.

Interestingly, two of the states on the Pew list are also where ten of the best cities to retire in are located, Arizona and Florida.

TopRetirements.com suggests that retirees may want to avoid states in fiscal peril because they could face decreasing services and increasing taxation.

Topping the website's list, Illinois's fiscal health could be the worst of any state. Brady points out that it even borrowed money to fund its pension obligations. As for California, although it does have a warm climate, it is expensive and its finances are in disarray.

New York wasn't mentioned as being in fiscal trouble by the Pew Center, but it does have very high taxes, including property taxes. In fact, Brady said New York has the second-highest tax burden and fifth-highest per capita property taxes. As if that wasn't enough, it's also very expensive to live in New York.

As for Rhode Island, Brady said it's probably the worst-off state in the Northeast from a financial viewpoint. It also has high taxes, though he noted that the state does boast some great places to live.

New Jersey has the highest property taxes in the U.S., as well as the highest total tax burden of any state. Plus, New Jersey has serious pension-funding issues. Brady says states with the greatest tax burdens after New Jersey were New York, Connecticut, Maryland, Hawaii, California, Ohio, Vermont, Wisconsin and Rhode Island, as well as the District of Columbia.

Ohio has high taxes and high unemployment (9.9 percent in October). Plus, it has cold winters. Of the 40 largest cities in the United States, Milwaukee has the coldest winter weather, based on normal daily temperatures, according to Current Results, a website that tracks weather trends. Cleveland is the fourth-coldest U.S. city.

Wisconsin is doubly cursed in the rankings as a high-tax state with cold weather. Plus, it has high property taxes. The only good news, at least for those to whom it applies, is that the Badger State doesn't tax military pensions.

Best of the best

In a related survey, USAA and Military.com announced this week that Waco, Texas, tops the first-ever "Best Places for Military Retirement" list. In its report, USAA and Military.com focused on U.S. communities that offer "a high quality of life and help maximize military retiree benefits as service members manage their 'first retirement' from the armed forces and begin planning their 'second retirement' from civilian life."

Other places on that list included, in order, Oklahoma City; Austin, Texas; College Station, Texas; Harrisburg, Pa.; San Angelo, Texas; Madison, Wis.; Pittsburgh; New Orleans; and Syracuse, N.Y.

Stretching your dollars

New England had two other states on the worst places for retirees: Massachusetts, which has high taxes including high property taxes and a very high cost of living, and Connecticut, which has the third-highest tax burden of any state as well as high property taxes.

States with the highest cost of living in the third quarter of 2010 were Hawaii, Alaska, California, New Jersey, New York, Connecticut, Rhode Island, Maryland, Vermont and New Hampshire, according to a Missouri Economic Research and Information Center analysis. The District of Columbia also makes the list.

Ironically, the 10th-worst place to retire is the one state where it's easy to find a cheap place to live, Nevada. But Nevada is presently the home-foreclosure capital of the world. In fact, it continues to lead the nation in terms of foreclosure filings per household. Although it is having financial problems, but the good news for retirees living there or contemplating a move there is that it doesn't have an income tax — at least not yet.

Still, Money-Rates.com, which examined such factors as crime rates, climate, longevity and economic conditions, including taxes, job opportunities and cost of living, found Nevada leading the list of worst states for retirees.

Picking your spot

Now, this doesn't necessarily mean you shouldn't retire to these poorly ranked states. Brady says everyone has to consider his or her own criteria for selecting the best or worst places to retire. To start your individual list, think about your most important criteria.

Brady focused mostly on fiscal health, taxation and climate but some other factors to consider are taxes, climate and topography; crime; fiscal health of the state; recreation; transportation; health care; cost of living, including housing; education, including college; cultural resources; susceptibility to natural disasters; proximity to friends and family; and fitting in socially, politically and religiously.

And of those, taxes might be the most important. Retirees are affected in different ways by taxes, he said. For instance, the taxation of pensions and Social Security might be better or worse in different states. Same for sales taxes.

Property taxes can vary widely, as well. For instance, Brady said, property tax can be one of the biggest bills for retirees and it's a category of taxation that's not progressive. You might not have any income, but you will still get taxed on the full value of your house, he said.

Some states do have programs to help seniors control their property taxes. Inheritance and estate taxes are also to be considered, though he said such taxes might be viewed as the tax tail wagging the state-of-residence dog.

Choosing the best state in which to retire depends on many individual factors, and for any two people, the 10-worst-states-for-retirees list might be a good list for one person, but not for the other.

Top cities

As for the best cities for retirement, Portfolio.com study lists Bradenton-Sarasota, Florida, Prescott and Lake Havasu City, Arizona, Cape Coral-Fort Myers, Naples, Palm Bay-Melbourne, Homosassa Springs, Ocala, Punta Gorda, and Port St. Lucie all in Florida.

The study used a six-part formula to rank 157 areas with at least 40,000 seniors. It named Bradenton-Sarasota, Florida as the number one choice for seniors' post-retirement plans.

Beginning next year, an unprecedented three million Americans will turn 65. While most of these seniors are expected to stay in their current homes, a significant number will decide to seek new places to live in other parts of the country.

J. Jennings Moss, editor of Portfolio.com says in addition to warm cities, we've also seen that seniors are attracted to communities that already have a significant population of retirees. This demonstrates that seniors will go to places that already have a comfortable infrastructure in place.

If you're one of those investors who goes for safety over risk, and wants a little income or cash flow thrown into the mix, stocks that offer high dividends might be the place for you. In fact, some investment strategists believe high-dividend stocks offer much better value right now than fixed-income alternatives.

However, investing in high dividend stocks can be tricky. You need to find a balance between a company that is doing very well financially, and will be paying dividends for the long term, but also has a high yield. Generally, the higher the dividend yield of a stock, the more risky the company is going to be. So a high dividend stock is a good investment only if the company is stable.

Just so we're clear, dividends from a stock are cash payments that a shareholder receives from the company, usually on a quarterly basis. Typically, the dividend is a fraction of the company's profits and given out to shareholder as a reward for investing in the company. As for what you should look for, bigger companies are usually more preferable than smaller ones because they're more likely to be able to survive the ups and downs of the economy.

Another thing to check is their dividend payment history as well as future earnings estimates. Rising or stable dividend payment histories are good signs.

In this particular climate you may want to consider this. The yield on 10-year Treasuries is 3.28%, and while that may be higher than the average dividend-paying stock in the S&P 500, which is 2.4%, it comes without the potential upside of price appreciation or future dividend increases.

According to the wise folks at Fortune magazine, one key to identifying a safe dividend investment is to target companies that have abundant free cash flow and low debt ratios. That means they have a lot of cash on hand and don't owe that much money relative to what they earn.

Fortune surveyed some top dividend-focused mutual fund managers and came up with four stocks with above-average yields, strong balance sheets, and good growth prospects.

So here they are:

Bristol-Myers Squibb, which has the ticker symbol BMY, offers a dividend yield of 5%. With $8.5 billion in cash on its books, the big pharmaceutical company is considered a safe dividend play, according to Jim Cullen of the Cullen High Dividend Equity Fund. He also likes its drug pipeline, which is stocked with cancer treatments.

Second is National Grid, with a ticker symbol NGG. The British utility has a dividend yield of 4.7%. It derives over half of its sales from its U.S. operations. It has significant growth potential in the U.K., where a friendly regulatory environment gives it strong pricing power.

Third is People's United Financial, ticker symbol PBCT. The New England Bank has a dividend yield of 5% and actually grew its dividend yield through the financial crisis.

Finally, Unilever, with the ticker symbol UL, has a dividend yield of 4%. The consumer goods giant has $57 billion in sales and is growing rapidly in emerging markets, which now generate about half of the company's total sales.

Picture this. You're sitting at your desk and a co-worker drops by but before you can say hi, they start coughing all over you.

If you think this scenario seems to be happening more frequently lately, you'd be right. A new survey finds that nearly one out of every two (46%) employees come to work even though they have a cold or fever and should be home in bed. It would be better for them as well as you. Who needs to get sick unnecessarily?

Apparently, it's going to take more than a cold or flu to get between them and their jobs this cold and flu season, according to a new survey conducted by the cough drop company, Halls.

The national telephone survey found that 46% of working Americans refuse to sacrifice a sick day this year for most cold and flu symptoms, including a cough, sore throat, body aches and sinus headache.

In fact, nearly half of Americans (44%) would consider going to work with a fever, and about a third of Americans (32%) said they would show up to work no matter how sick they get. Isn't that great? Someone with a highly contagious disease decides to show up at the office because he or she is afraid of their boss.

That's right. According to the latest U.S. Bureau of Labor Statistics, one in five Americans (19 percent) feel pressure by their boss or supervisor to go to work even when they're sick. One in three (31%) Americans said they wouldn't get paid for taking off on a sick day, and one in 10 (11%) said they would likely fall behind on their bills by taking a sick day. Additionally, more than 10% thought they would not likely receive their next pay raise or promotion, or worse, would even lose their job for calling out sick.

So what should you do to protect yourself from a medically unsafe workplace?

Get your flu shot. The Centers for Disease Control (CDC) recommends a yearly seasonal flu vaccine as the first and most important step in protecting against seasonal influenza.

Wash your hands and wash them often. You should do what doctors do. Wash your hands frequently with soap and warm water for at least 20 seconds. If soap and water are not available, an alcohol-based hand sanitizer is a good alternative.

If you have to cough or sneeze, do it into your elbow. That's if you don't have a tissue. This will help prevent the spread of germs.

Disinfect common surfaces. Germs can live for hours, and in some cases weeks, on common surfaces. Use a disinfectant regularly to wipe and clean doorknobs, phones, remote controls, toys, computer keyboards, and any other items that are shared at home or at the office.

Practice general good health habits. Eat right and exercise. Diets rich in fruits and vegetables provide a loaded source of immune boosting nutrients. Exercising, whether you're walking or playing outdoor games, builds up immune cells in the body and can help you feel more energetic and healthier while increasing your immunity to certain illnesses.

Drink plenty of non-alcoholic fluids. Hydrate your body by drinking 8-10 glasses of water a day to help flush out the system, and to keep your throat moist.

Get as much rest as possible. Try to sleep at least 8 to 9 hours per night to rejuvenate your body. In addition, try using relaxation techniques that are at your disposal, such as massage, yoga, and meditation. Stress and fatigue can lower your immune system.

Get plenty of fresh air. A regular dose of fresh air is important, especially in cold weather when central heating dries you out and makes your body more vulnerable to cold and flu viruses. Also, during cold weather more people stay indoors, which means more germs are circulating in crowded, dry rooms. 

The Obama administration is calling for creation of a Privacy Policy Office that would help develop an Internet "privacy bill of rights" for U.S citizens and coordinate privacy issues globally.

A report compiled by the U.S. Commerce Department stopped short of calling directly for specific privacy legislation. Instead, it recommends a "framework" to protect people from a burgeoning personal data-gathering industry and fragmented U.S. privacy laws that cover certain types of data but not others.

"America needs a robust privacy framework that preserves consumer trust in the evolving Internet economy while ensuring the Web remains a platform for innovation, jobs, and economic growth. Self-regulation without stronger enforcement is not enough," said Commerce Secretary Gary Locke. "Consumers must trust the Internet in order for businesses to succeed online."

The 88-page report, which observers say marks a turning point for federal Internet policy, states that the use of personal information has increased so much that privacy laws may now needed to restore consumer trust in the medium.

The Federal Trade Commission reached a similar conclusion earlier this month and issued a report of its own, calling for the Internet industry to develop a "do-not-track" mechanism in browsers that would stop Web sites from following their visitors around the Web.

Neither report makes specific recommendations for legislation, although the Obama Administration is expected to do so next year. Both Commerce and the FTC are calling on industry to voluntarily develop guidelines and, perhaps, technology that would enable consumers to opt-out of data collection activities.

Key recommendations include:

• Consider establishing fair information practice principles comparable to a "Privacy Bill of Rights" for Online Consumers;
• Consider developing enforceable privacy codes of conduct in specific sectors with stakeholders;
• Create a Privacy Policy Office in the Department of Commerce;
• Encourage global interoperability to spur innovation and trade;
• Consider how to harmonize disparate security breach notification rules; and
• Review the Electronic Communications Privacy Act for the cloud computing environment.

Consumers object

The report didn't go over well with at least consumer groups, who said it was too vague and too friendly to industry.

"Instead of real laws protecting consumers, we are offered a vague 'multi-stakeholder' process to help develop 'enforceable codes of conduct,'" Jeff Chester, executive director of the Center for Digital Democracy told the Los Angeles Times.

Chris Calbrese, the ACLU's legislative counsel, said the Commerce department had finally recognized what consumer groups have been saying for years.

"It's the wild wild west out there and consumers have no privacy online," Calebrese said. "FIPPS is a good place to start and Congress needs to act and give us an enforceable regime."

But it's hardly likely that the advertising industry is eagerly awaiting new rules. The Internet Advertising Bureau, a trade group, defends the use of anonymous consumer data to support ad-targeting, a process it says produces ads that are more useful for both consumers and advertisers.

"Publishers utilize third-party analytics services, marketers and agencies collect metrics on campaign performance, and small businesses are especially dependent upon ad networks, all of which function based upon the free flow of information among trusted partners," said Mike Zaneis, IAB's general counsel in a recent blog posting.

"The IAB tries to convey the ubiquity of such practices and the value our industry delivers to consumers, all while respecting their privacy and protecting the security of such data," Zaneis said.

Wal-Mart is recalling about 2.2 million electric heaters sold under the Flow Pro, Airtech, Aloha Breeze & Comfort Essentials brand names. The heaters can malfunction resulting in overheating, smoking, burning, melting and fire.

Wal-Mart has received 21 reports of incidents, which included 11 reports of property damage beyond the heater. Injuries were reported in four incidents, three of which required medical attention for minor burns and smoke inhalation. The remaining incidents included smoke irritation, sparking or property damage beyond the heater.

This recall involves Flow Pro, Airtech, Aloha Breeze and Comfort Essentials 1500 watt heaters. The heaters are grey with a metal handle on the top with vents and grey control knobs on the front. The model number is 1013 and can be found on a label on the lower left corner of the back panel of the heater.

Walmart stores sold the heaters nationwide from December 2001 through October 2009 for about $18. They were made in China.

Consumers should immediately stop using the recalled heater and return the product to any Walmart store for a full refund.

For additional information, contact Wal-Mart toll-free at(800) 925-6278 between 7 a.m. and 9 p.m. CT Monday through Friday, or visit the firm's website atwww.walmart.com

That is one conclusion drawn by researchers at the Salk Institute for Biological Studies, who recently showed that mice lacking a gene regulating energy balance are protected from weight gain, even on a high fat diet.

These findings have implications for the worldwide obesity epidemic and its consequences, such as type two diabetes.

In the December 16, 2010 issue of Nature, a team led by Marc Montminy, M.D., Ph.D, professor in the Clayton Foundation Laboratories for Peptide Biology, reports that a gene known as CRTC3 decreases energy expenditure by fat cells.

"Ideas about obesity are based on concepts of feast or famine," said Montminy. "As humans, we developed ways of coping with famine by expressing genes like CRTC3 to slow the rate of fat burning. Individuals with these active 'thrifty genes' had an advantage -- they could survive long periods without food."

Back in the 1960's, scientists theorized humans had specialized genes that slowed our fat-burning capabilities. During prehistoric times, these genes were crucial to our survival, as we never knew when, or how much, we were going to eat on any given day.

Fast forward to 2010, when finding food has never been easier. We don't need those ancient genes anymore, but our bodies haven't gotten the memo.

Mouse diets

To analyze its role in fat metabolism, the researchers bred mice lacking the CRTC3 gene and put them on varying diets -- some moderate, some high fat.

Normal mice and the mice lacking the CRTC3 gene appeared similar when fed a moderate fat diet. But when fed the mouse version of the Philly cheese steak diet, only the normal mice became obese.

The mice lacking CFTC3 stayed slim and didn't gain weight.

"They also had about twice as many brown fat cells than did normal mice," said Montminy.

Our bodies also have two different types of fat cells -- white and brown; bad and good.

The white fat cells (also called WAT for "white adipose tissue”) serves as fat storage about bellies and hips -- that's the bad stuff.

However, the brown fat (BAT; "brown adipose tissue") is downright desirable.

"Brown fat is very different from white fat," says Youngsup Song, Ph.D., a postdoctoral fellow in the Montminy lab and the study's first author.

According to Song, brown fat tissue burns fat that has accumulated in white fat tissue to generate heat as a way to maintain body temperature.

In fact, some evidence suggests that humans with a genetic propensity to leanness have more brown fat cells than do "ample" individuals.

As desirable as that trait may seem now, those folks likely struggled mightily to stay alive during the Paleolithic era.

Although the researchers found that CRTC3 loss also perturbs how all fat cells respond to brain signals controlling energy expenditure, they remain particularly intrigued by the brown fat connection.

"CRTC3 could be a switch controlling the number of brown fat cells, " says Montminy. "That is key, because if you could make more brown adipocytes, you could potentially control obesity."

What about humans?

This is all well and good for mice, but what about people?

To explore how relevant these studies are to humans, Montminy asked clinicians at Cedars-Sinai Medical Center in Los Angeles to search databases of patient genetic information for a particularly interesting human CRTC3 gene mutation, which appeared to represent a more potent form of the normal gene.

Since mice lacking CRTC3 resist obesity, the researchers figured humans carrying a revved-up version of the gene might show the opposite tendency.

Indeed. genetic testing of two groups of Mexican-American patients revealed that individuals harboring the active CRTC3 mutation showed increased incidence of obesity.

"This is an example in which findings from rodent research led to a novel discovery in humans," says Mark Goodarzi, M.D., Ph.D., an endocrinologist at Cedars-Sinai and collaborator in the study. "Not all Mexican-American individuals with the variant will develop obesity, but those carrying it are at higher risk."

Interestingly, non-Hispanic Caucasians carrying the variant do not show increased obesity, a difference likely related to environmental or lifestyle factors.

Overall this study illustrates an important principle: that what is genetically advantageous in one cultural or historic context may not be in another.

In fact, Montminy does not view obesity as an aberration or a "disease."

"Storing fat in adipose tissue is a normal response. A lot people are obese but do not develop type 2 diabetes," he says, suggesting that genes like CRTC3 could serve as diagnostic tools as well as drug targets.

Even though widespread foodborne illness outbreaks seem to make the news more than they used to, individual cases of food poisoning are even more common.

About 48 million people -- one in six Americans -- get sick from tainted food. Most of these cases go unreported.

On the other hand, about 128,000 are hospitalized, and 3,000 die each year from foodborne diseases, according to new estimates from the Centers for Disease Control and Prevention. The CDC says the figures are the most accurate to date due to better data and methods used. The data are published Wednesday in two articles in the journalEmerging Infectious Diseases.

The papers provide the most accurate picture yet of what foodborne pathogens are causing the most illness, as well as estimating the proportion of foodborne illness without a known cause. The reports are the first comprehensive estimates since 1999and are CDC's first to estimate illnesses caused solely by foods eaten in the United States.

"We've made progress in better understanding the burden of foodborne illness and unfortunately, far too many people continue to get sick from the food they eat," said CDC director Dr. Thomas Frieden."These estimates provide valuable information to help CDC and its partners set priorities and further reduce illnesses from food."

Better data

CDC's new estimates are lower than in the 1999 report. The difference is largely the result of improvements in the quality and quantity of the data used and new methods used to estimate foodborne-disease.

For example, it is now known that most norovirus is not spread by the foodborne route, which has reduced the estimate of foodborne norovirus from 9.2 to approximately 5.5 million cases per year. Because of data and method improvements, the 1999 and current estimates cannot be compared to measure trends.

CDC's FoodNet surveillance system data, which tracks trends among common foodborne pathogens, has documented a decrease of 20 percent in illnesses from key pathogens during the past 10 years. However, these FoodNet pathogens make up only a small proportion of the illnesses included in the new estimates.

Of the total estimate of 48 million illnesses annually, CDC estimates that 9.4 million illnesses are due to 31 known foodborne pathogens. The remaining 38 million illnesses result from unspecified agents, which include known agents without enough data to make specific estimates, agents not yet recognized as causing foodborne illness, and agents not yet discovered. In both the 1999 and current estimates, unspecified agents were responsible for roughly 80 percent of estimated illnesses.

"Foodborne illnesses and deaths are preventable, and as such, are unacceptable," said Food and Drug Administration Commissioner Margaret Hamburg."We must, and can, do better by intensifying our efforts to implement measures that are prevention-oriented and science-based. We are moving down this path as quickly as possible under current authorities but eagerly await passage of new food safety legislation that would provide us with new and long overdue tools to further modernize our food safety program."

Slow-moving legislation

That legislation, the Food Safety Modernization Act, has been moving slowly through Congress for a year and a half. While the House passed the measure in July 2009, the Senate only gave its approval November 30, in the current lame duck session of Congress.

Efforts are underway to reconcile the two versions before the end of the year. If efforts fail, the process will have to start all over in the 112th Congress in January.

Following recalls of millions of cribs due to entrapment deaths and injuries, the Consumer Product Safety Commission (CPSC) has adopted new rules designed to insure that new cribs have been tested for safety to rigorous standards.

The Consumer Product Safety Improvement Act (CPSIA), signed into law in August of 2008, requires the agency to issue mandatory standards for infant durable products. This provision of the CPSIA was named in honor and in memory of Danny Keysar, who was 16 months old when he died in his Chicago childcare home because a portable crib collapsed around his neck.

The CPSIA requires mandatory standards and testing for durable infant and toddler products, product registration cards and a ban on the sale or lease of unsafe cribs. Cribs are among the first products for which mandatory standards have been promulgated under this provision.

"This new mandatory standard, the strongest in the world, will ensure that new cribs coming onto the market will provide safe haven for babies and their families," said Nancy Cowles, Executive Director of Kids In Danger. "We applaud CPSC for their hard work and tenacity in developing and adopting this landmark rule."

Requirements

The new rule puts many new tests and requirements in place:

• Cribs with full side drop-sides will not be allowed -- the bottom 20 inches of the crib rail must be fixed to eliminate the entrapment hazards seen when the hardware fails.
• All cribs must undergo rigorous testing for slat strength, durability and mattress support strength. The series of testing is conducted on one crib to simulate a lifetime use of a crib. This is the key to the new standard. Most of the 10 million cribs recalled since 2007 were able to meet the weak industry standards that were in place.
• Warnings and labeling have been improved, both to make parents more aware of when a crib is mis-assembled and to alert them to developmental signs to stop using a crib (when the child attempts to climb out). While most attention has been rightly focused on entrapment deaths in cribs, most injuries are as a result of children falling out of cribs

Higher standards

The new requirements are mostly part of the ASTM International voluntary standard that has been adapted to serve as the CPSC mandatory rule. Over the past two years industry, consumer advocates and safety experts have worked to update the voluntary standard to provide real assurances of a safe product. Prior to the recent rewrite, the most recent significant changes to the voluntary standard were made in 1999.

The CPSC mandatory standard was last changed in 1982. The new standards include two sets of similar rules: one for full-size cribs and one for non-full-size cribs. Non-full-size cribs can be smaller, larger or a different shape than a full-size crib, which is a standardized shape and size.

"The lack of durability of recently produced cribs is appalling and has put many babies at risk," said Don Mays, senior director of product safety and technical policy for Consumers Union/Consumer Reports. "These new regulations will ensure safe sleep environments by raising the bar for the safety and quality of cribs."

New and used covered

For the first time, this mandatory rule promulgated by CPSC applies to products already in use by some entities as well as to new products. Efforts will begin immediately to remove older unsafe products off store shelves, out of childcare homes, and out of hotels.

The CPSIA includes a section requiring that cribs that don't meet the new standard can't be sold -- new or used, used in child care, used by hotel guests, or used in other public accommodations. This measure alone will go far in removing unsafe cribs from use. This does not apply to already purchased cribs being used in private homes, except for barring their resale.

Six months after the publication of the standard, all cribs on the market must be in compliance. The Commission voted to give childcare facilities and hotels an additional 18 months after that date to replace any non-compliant cribs. CPSC has indicated that cribs currently being manufactured and tested that meet the new standard can continue to be used, even though their sale took place prior to the new rule being official.

"After years of foot dragging by the industry," said Elizabeth Hitchcock of US Public Interest Research Group. "CPSC has now approved a standard and testing regimen that will keep children safe -- avoiding the crib recalls, entrapment deaths and injuries that have plagued the industry."

The Dannon Company has agreed to pay $21 million to settle a lawsuit filed by 39 states, challenges health claims in the company's advertising of Dannon's Activia and DanActive products.

"With today's settlement we are sending a strong message to food manufacturers who continue to push the limits on health-related marketing claims," said Ohio Attorney General Richard Cordray. "Deceptive advertising is absolutely unacceptable and will not be tolerated."

"Dannon made up fancy names for bacteria in its Activia yogurt and dairy drink, marketed them as having unique health benefits, then milked the public's willingness to believe those claims," Washington State Assistant Attorney General Bob Lipson said.

The Federal Trade Commissionsimultaneously announced a settlementwith Dannon that addresses the same concerns but does not require a payment.

The lawsuit alleges that Dannon made unlawful claims in advertising, marketing, packaging and selling of Activia yogurts and DanActive dairy drinks, including claims that were not substantiated by competent and reliable scientific evidence at the time the claims were made.  

Dannon represented that Activia helped to regulate the human digestive system based largely on the presence of one ingredient, a bacterial strain with purported probiotic benefits that Dannon trademarked under the name Bifidus Regularis. The attorneys general allege that Dannon represented that Activia improved intestinal transit time when one serving per day was consumed for two weeks. However, a majority of studies demonstrated a benefit only for individuals who consumed three servings per day for two weeks.  

Dannon also produces and distributes DanActive dairy drinks. Dannon represented that DanActive provided consumers with "immunity" and cold and flu prevention benefits.

The lawsuit alleges that those claims are unlawful, and further, that Dannon lacked adequate substantiation to support those claims. As with Activia, Dannon's advertising and marketing emphasized that DanActive contains a probiotic bacterial strain. In DanActive's case, Dannon trademarked the bacterial strain under the fanciful name, L. casei Immunitas.  

The settlement terms limit the claims that Dannon can make regarding the covered products. Specifically, Dannon may not represent that the covered products can prevent, treat, cure or mitigate disease. Additionally, Dannon must possess competent and reliable scientific evidence to support otherwise permissible claims about the health benefits, performance, efficacy or safety of its probiotic food products.

Typical ad

In one TV spot for Activia yogurt, actress Jamie Lee Curtis lounges on a couch holding a newspaper. She tells viewers that many people suffer from irregularity, and that "our busy lives sometimes force us to eat the wrong things at the wrong time." She reassures viewers that Activia can help.

The screen then shows a woman's midsection, on which a clump of yellow-green balls is superimposed, representing the transit of food through the digestive system. The balls merge into a downward-facing arrow, which moves off the screen while a man's voice states, "With the natural culture Bifidus Regularis, Activia eaten every day is clinically proven to help regulate your digestive system in two weeks."

According to the FTC's complaint, the ads for DanActive conveyed to consumers that drinking the product reduces the likelihood of getting a cold or flu. In one TV commercial, a boy takes an exam at school, plays baseball in the rain, and gets thrown to a mat during a martial arts class. The color drains from his face and body as he arrives home, and his mother hands him a bottle of DanActive. A graphic shows Dannon's probiotic ingredient, L. casei Immunitas, plugging holes in the intestinal wall so that purple balls bounce off the wall rather than entering the holes.

As a voiceover assures that DanActive is "clinically proven to help strengthen your body's defenses," color returns to the boy's face and body and he is surrounded by a new, protective, yellow shield as he runs out of the house.

Settlement terms

Under the proposed settlement:

• Dannon is prohibited from claiming that any yogurt, dairy drink, or probiotic food or drink reduces the likelihood of getting a cold or the flu, unless the claim is approved by Food and Drug Administration  (FDA). Although companies usually do not need FDA approval of their health claims to comply with the FTC Act, the FTC determined in this case that requiring FDA approval will give Dannon clearer guidance in the future, and help ensure that it complies with the settlement order.

• Dannon may not claim that Activia yogurt will relieve temporary irregularity or help with slow intestinal transit time, unless the claim is not misleading and the ad conveys that three servings of Activia yogurt must be eaten each day to obtain these benefits. Dannon may claim that eating fewer than three servings a day provides these benefits only if the company is relying on two well-designed human clinical studies substantiating that the claim is true.

• Dannon may not claim that any other yogurt, dairy drink, or probiotic food or drink will relieve temporary irregularity or help with slow intestinal transit time unless the claim is not misleading and the company has two well-designed human clinical studies that substantiate the claim.

• Dannon may not make any other claims about the health benefits, performance, or efficacy of any yogurt, dairy drink, or probiotic food or drink, unless the claims are true and backed by competent and reliable scientific evidence. Dannon also is prohibited from misrepresenting the results of any tests or studies.

Dannon, which houses its largest manufacturing facility in Minster, Ohio, does not admit any wrongdoing and denies the factual allegations asserted in the states' complaint.

States participating in this settlement are Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Tennessee, Vermont, Washington, West Virginia and Wisconsin.

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Additional reporting by James Limbach

Photo credit: Dannon

The Transportation Department (DOT) has kicked off its annual "Drunk Driving. Over The Limit. Under Arrest" winter holiday crackdown involving thousands of law enforcement agencies across the nation.

At the same time Transportation Secretary LaHood is highlighting the new "No Refusal" strategy that a number of states are employing to put a stop to drunk driving.

New approach

Through the "No Refusal" strategy, law enforcement officers are able to obtain warrants quickly from "on call" judges in order to take blood samples from suspected drunk drivers who refuse a breathalyzer test.

"Drunk driving remains a leading cause of death and injury on our roadways," said LaHood."I applaud the efforts of the law enforcement officials who have pioneered the 'No Refusal' approach to get drunk drivers off our roads. And I urge other states to adopt this approach to make sure that drunk drivers can't skirt the law and are held accountable."

According to DOT's National Highway Traffic Safety Administration (NHTSA),a large proportion of people in many states pulled over for DUIs refuse to take an alcohol breathalyzer test.The latest data show that the states with the highest refusal rates included New Hampshire at 81 percent; Massachusetts at 41 percent; Florida at 40 percent; Louisiana at 39 percent and Ohio at 38 percent.

Good results

More guilty pleas, fewer trials and more convictions are reported in states that have adopted "No Refusal" programs.States already employing this strategy to get drunk drivers off of their roads include Texas, Louisiana, Florida, Kansas, Missouri, Illinois, Utah, Idaho, and Arizona.

"MADD is proud to support NHTSA, as well as our heroes in law enforcement, in their focus on 'No Refusals,'" said MADD National President Laura Dean-Mooney."Working together, we can make our roadways safer and eliminate drunk driving in the U.S."

"When it comes to drunk driving, we cannot afford to have repeat offenders," said NHTSA Administrator David Strickland."The 'No Refusal' strategy helps support prosecutions and improves deterrence, which means fewer drunk drivers on the road. I want to remind everyone this holiday season: if you're over the limit, you're under arrest. So please, for safety's sake, find a designated driver or take a taxi if you are under the influence."

It is against the law in all states and the District of Columbia to drive with a Blood Alcohol Concentration (BAC) level of .08 or higher.Yet, NHTSA data show that last year, 10,839 people were killed in alcohol-impaired driving crashes, including 753 in December alone.Agency trend data have consistently shown an increase in fatalities during the holiday season.