Current Events in February 2011

The Cornucopia Institute, an organization that calls itself a watchdog of the organic food industry hasfiled a complaint with the Federal Trade Commission, alleging that Hearthside Food Solutions, which manufactures Peace Cereal, is misleading consumers by suggesting that its “natural” breakfast cereals are grown and processed without pesticides.

The Peace Cereal website states that “natural foods are foods without pesticides or artificial additives, as well as being minimally processed and preservative-free,” Cornucopia said.

But Cornucopia said that unlike organics, there is no federally regulated standard for the term “natural” on foods, which may contain conventional, non-organic ingredients.

“Natural foods are essentially conventional foods with a higher price tag, whereas organic foods are grown without the use of toxic pesticides, herbicides, fungicides and chemical fertilizers,”saidCharlotte Vallaeys, Farm and Food Policy Analyst with Cornucopia. “Stating that ‘natural foods’ are ‘without pesticides’ is completely without basis, and highly misleading to consumers.”

Peace Cereal, whose products were formerly certified organic, has been using conventional ingredients since 2008, Cornucopia said. Conventional ingredients are routinely sprayed with toxic pesticides and herbicides. Without organic certification, consumers cannot be assured that ingredients used in conventional products like Peace Cereal are truly “without pesticides.”

The Cornucopia Institute is a Wisconsin-based farm policy research group. The group recently conducted an investigation which found numerous stores in several states that carried “organic” signs on shelves of the non-organic Peace Cereal, as well as mislabeled bulk bins with non-organic granola made by the same company as Peace Cereal.

“We view this company as a’ bad actor,’” states Mark A. Kastel, Codirector of Cornucopia. “This company is clearly trying to profit from the good name and reputation of organics, and exploiting consumer trust.”

Cornucopia noted, that, “adding insult to injury,” non-organic Peace Cereal is often priced higher than name brand certified organic breakfast cereals on supermarket shelves.

Consumers confused

Recent polls show that consumers are already confused about the difference between the terms “natural” and “organic.” The “organic” term carries real meaning and legal weight, since organic producers must, by law, adhere to a congressionally-mandated uniform set of federal standards. Meanwhile, the term “natural” is unregulated.

Despite this difference, a survey of 1006 consumers by The Shelton Group, a Tennessee-based research firm, found that 31 percent of respondents said “100 percent natural” is the most desirable eco-friendly product label claim.

“This misinformation has been a key component of corporate agribusinesses’'natural'marketing blitz for years. Companies like Hearthside, which makes Peace Cereal, are contributing to this consumer confusion by pretending that ‘natural’ is equivalent to ‘organic,’” saidVallaeys.

Cornucopia says that Hearthside has “stepped over a line,” doing more than engaging in marketing hyperbole, by disseminating factually inaccurate statements that economically disadvantage organic competitors.

Six individuals, including a securities attorney, have been charged in an indictment with defrauding investors in a stock manipulation scheme from 2003 to 2008.

According to the indictment, Jonathan Randall Curshen, 46, of Sarasota, Florida was the principal behind Red Sea Management and Sentry Global Securities, two companies located in San Jose, Costa Rica, that provided offshore accounts and facilitated trading in penny stocks.

(Read more consumer complaints about investment companies).

The indictment alleges that Eric Ariav Weinbaum, 37, and Izhack Zigdon, 47, of Israel took control of the outstanding shares of a company called CO2 Tech, which traded in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system.

Weinbaum and Zigdon allegedly obtained the shares by retaining Krome who allegedly employed a method to evade federal securities registration requirements in order to provide co-conspirators with millions of unregistered and "free-trading" shares of CO2 Tech that the co-conspirators could not have otherwise legally obtained.

"The indictment unsealed today alleges that the defendants used their access and training to illegally manipulate stock prices for their own advantage," said Lanny A. Breuer. "Pump-and-dump schemes like the one alleged in this case leave legitimate investors holding worthless stocks.”

The indictment alleges that the shares were subsequently sold to the general investing public through Sentry Global's stock trading floor in Costa Rica. According to the indictment, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the company by evading the registration requirements.

The indictment also alleges that Robert Lloyd Weidenbaum, 44, of Miami was paid approximately $1 million by Weinbaum and Zigdon to participate in sham stock trades of CO2 Tech to make it appear that there were genuine investors in the market that were buying the shares.

As alleged in the indictment, coordinated trades were often made between the co-conspirators in conjunction with the issuance of false and misleading press releases that were designed to make CO2 Tech appear that it had significant business prospects. According to these press releases, CO2 Tech purported to have a business relationship with Boeing to reduce polluting gases emitted from airplanes. The indictment alleges that these relationships never existed.

After fraudulently "pumping" the market price and demand for CO2 Tech stock through these press releases and coordinated trades, the defendants "dumped" shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets. These shares were allegedly purchased by unsuspecting investors, including in the Southern District of Florida, and were often rendered virtually worthless.

If “five more minutes” is part of your normal morning routine, you can blame it on the absence of the “24” gene -- one of the core genes of the circadian clock. 

The circadian clock drives -- among other things -- when an organism wakes up and when it sleeps. According to new research, the absence of the gene confuses the rhythm of the common fruit fly’s sleep-wake cycle, making it harder for the flies to wake up. 

The research, published in the journal Nature, has implications for humans. 

The 24 gene

“The function of a clock is to tell your system to be prepared, that the sun is rising, and it’s time to get up,” says Ravi Allada, professor of neurobiology and physiology at Northwestern University. “The flies without the 24 gene did not become much more active before dawn. The equivalent in humans would be someone who has trouble getting out of bed in the morning.” 

Period (per) is a gene in fruit flies that encodes a protein, called PER, which regulates circadian rhythm. Twenty-four is critically important to producing this key clock protein -- when it isn’t present, very little PER protein is found in the neurons of the brain, and the fly’s sleep-wake rhythm is disturbed. 

It seems it was fate that the gene would be important in regulating the 24-hour sleep-wake cycle. The gene’s generic name is CG4857, and the numbers add up to 24, earning it the 24 nickname. (The fruit fly’s genome was sequenced in 2000, but until now the function of this gene was unknown.) 

The known core mechanisms of the circadian clock -- both in flies and humans -- involve the process of transcription, where RNA is produced from DNA. A portion of the control system called a transcriptional feedback loop also is important. 

Clock components

In trying to identify new clock components, a new player in the system was identified --  the gene 24. But instead of operating in the process of transcription, it operates in the process of translation: translating proteins from RNA. 

Twenty-four appears to be a protein that promotes translation of period RNA to protein.

“This really defines a new mechanism by which circadian clocks are functioning,” Allada says. “We found that 24 has a really strong and critical role in translating a key clock protein. Translation really wasn’t appreciated before as having such an important role in the process.” 

The researchers believe it is likely that a mechanism similar to that described for the fly gene 24 will be evolutionarily conserved and found in humans. 

Disturbed sleep cycles

Working with scientists at the Korea Advanced Institute of Science and Technology (KAIST), Allada used a Drosophila library at KAIST to screen the behavior of 4,000 different flies looking for flies whose sleep-wake cycles were awry. 

Each fly had a different overexpressed gene and thus different behavior. The fly with the most dramatic change was one with a longer cycle than normal, 26 hours instead of 24.

The overexpressed gene in this fly was CG4857, which was then removed, or knocked out in the flies. These flies had poor sleep-wake rhythm and would sleep and wake at all times of day. 

The researchers found very little of the critical PER protein in the brain neurons despite the fact that per RNA is likely produced in the neurons. Without 24 the RNA was not translated into the PER protein, leading to dysfunction. 

The study was supported by the National Institutes of Health and the National Research Foundation of Korea.

There were many fingers of blame when the housing market collapsed, but one was pointed squarely at the mortgage industry -- mortgage brokers in particular.

As part of it attempt to reform the industry, the U.S. Federal Reserve drafted new compensation rules for mortgage brokers, and those new rules go into effect April 1. The basic aspect of the new rule requires consumers getting a mortgage through a broker must be offered the lowest possible rate and fees for which they qualify.

The Fed's new rules is known as the Loan Originator Compensation amendment to Regulation Z. Regulation Z prohibits certain practices relating to payments made to compensate mortgage brokers and other loan originators. The goal of the amendments is to protect consumers in the mortgage market from unfair practices involving compensation paid to loan originators, according to the Fed.

In the middle of the transaction

Mortgage brokers are loan originators who market their lending services directly to consumers, except they have no money to actually pay the loans. They arrange with a bank or mortgage lender to actually provide the funds. They are in the middle of the transaction, earning commissions and fees from the entity that actually makes the loan.

During the housing boom, some mortgage brokers steered customers to loans that were the most lucrative for them, and might not have been in the best interests of the consumer.

The new prohibitions related to mortgage originator compensation and steering apply to closed-end consumer loans secured by a home or real property that includes a dwelling. The rule does not apply to open-end home equity lines of credit (HELOCs) or time-share transactions. It also does not apply to loans secured by real property if the property does not include a dwelling.

Definition of loan originator

"For purposes of these rules, loan originators are defined to include mortgage brokers, who may be natural persons or mortgage broker companies," the Fed said in an explanation of the new rule. "This includes companies that close loans in their own names but use table-funding from a third party.  The term loan originator also includes employees of creditors and employees of mortgage brokers that originate loans."

Creditors are excluded from the definition of a loan originator when they do not use table funding, whether they are a depository institution or a non-depository mortgage company, but employees of such entities are loan originators.

Table funding is an option that allows brokers approved for Wholesale Traditional Lending to originate, process and close loans in their name. But at the time of settlement, the loan is transferred to the lender. And the lender simultaneously advances funds for the loan.

Regulates compensation

The new rule prohibits a creditor or any other person from paying, directly or indirectly, compensation to a mortgage broker or any other loan originator that is based on a mortgage transaction's terms or conditions, except the amount of credit extended. The rule also prohibits any person from paying compensation to a loan originator for a particular transaction if the consumer pays the loan originator's compensation directly.

The rule also prohibits a loan originator from steering a consumer to consummate a loan that provides the loan originator with greater compensation, as compared to other transactions the loan originator offered or could have offered to the consumer, unless the loan is in the consumer's interest. The rule provides a safe harbor to facilitate compliance with the prohibition on steering.

Creditors who compensate loan originators must retain records to evidence compliance with Regulation Z for at least two years after a mortgage transaction is consummated.

Compliance with these rules is mandatory beginning on April 1, 2011. the House Financial Services Committee has said that it will examine how these rules will be implemented, and what effect they will have on consumers. Mike Anderson, a spokesman for the National Association of Mortgage Brokers, says the effect of the new rule will be higher costs for consumers and lower compensation for independent mortgage brokers.

Whether it’s fake checks, bogus products and services or identity theft, it seems there’s always someone out there trying to make suckers out of us. Scams can cost consumers hundreds, if not thousands, of dollars. 

It’s not easy to spot a scam, even for savvy consumers. The editors of Consumer Reports Money Adviser point out some common schemes and the precautions you can take: 

Merchandise fraud

Say you find a really great deal on a digital camera at an online retailer. But shortly after placing your order, you get a phone call from a company representative trying to sell you extra lenses, a fancy case, and other pricey add-ons. You refuse the high-pressure sales pitch, and later you’re notified that the camera is no longer in stock. Or it never arrives.     

What to do. Check out sellers you’re unfamiliar with before buying anything from them. To start, find out whether a company has a report and rating with the Better Business Bureau (BBB). If you’re victimized after paying with cash or by check, you could be out of luck. So use a credit card, especially when buying online or over the phone. 

If the order doesn’t arrive, you can challenge the purchase under federal credit-card rules. Debit-card purchases offer less protection, although some banks voluntarily provide additional safeguards. 

Phishing, spoofing, and identity theft

Scammers use e-mail messages, phone calls, and other ways to trick people into revealing their passwords, credit-card and Social Security numbers, and other personal information they can use to steal identities, open credit lines, and the like. 

What to do. Don’t respond to e-mail messages or phone calls asking for your passwords or other personal information, no matter how urgent the appeal. Instead, contact your bank or other party to see if it made the request. Don’t click on hyperlinks you receive in e-mail messages, and carefully type Web addresses into your browser to avoid typos. 

Scammers sometimes set up bogus sites using common misspellings of legitimate web addresses, a practice known as “typosquatting.” Keep your computer’s antivirus and antiphishing software up-to-date. 

Phony charities 

It could come as e-mail or a phone call urging you to help some cause that might be in the news or tugs at your heartstrings. Some charities are outright frauds; others do little, if anything, to help a cause. 

What to do. Don’t respond immediately to a solicitation. Instead, check out the group with the major charity watchdogs: the American Institute of Philanthropy; the BBB’s Wise Giving Alliance; and the Charity Navigator. And make sure you’re dealing with the right group. Many con artists use names similar to legitimate charities. 

For local groups that don’t appear on watchdog reports, ask the charity for further information, or donate through a local fundraising federation, such as the United Way, that screens groups. 

Sweepstakes scams

Who doesn’t want to win a big prize? But if you respond to mail declaring that you’re a finalist, or even a winner, the only ones who’ll be stuffing their pockets will be the scammers who sent it to you. Many of these mailings or prize-related phone calls imply that buying something increases your chances of winning. 

In another variation, you might be told that you have to mail an advance payment to cover taxes, shipping and handling, or other incidental costs of processing or delivering your fabulous prize. Of course, you’ll get nothing in return. 

What to do. By law, buying services or merchandise can’t increase your odds of winning a sweepstakes. Just saying no if you’re asked to respond to a prize or sweepstakes promotion will increase your odds -- of not getting ripped off. 

Advance-fee loans

This one involves companies promising to get you a loan or credit card even if you have bad credit. But after paying the required fee, you might not hear from the company again, or you might be offered a debit or stored-value card. 

Such offers appear in ads or on Websites run by companies that engage in this type of “service.” It’s illegal for a company doing business by phone to promise a loan and require a fee before it’s delivered. 

What to do. Avoid companies that promise to get you a loan but don’t seem interested in your credit history, the FTC warns. And never pay an advance fee for a loan, even if it’s for “insurance,” “processing,” or “paperwork.”

The Transportation Department (DOT)already has toughened rules for airlines regarding tarmac delays. Now the U.S. Senate is seeking to codify those changes into law, enacting the Airline Passengers Bill of Rights.

The measure, authored by Senators Barbara Boxer (D-CA) and Olympia Snowe (R-ME), was included as an amendment to the Senate Federal Aviation Administration (FAA) Reauthorization bill.

Three-hour rule

The protections include the so-called  "three-hour rule," which requires airlines to give passengers the option of returning to the terminal if they have been stuck on a plane for longer than three hours.

The FAA bill also would require airlines to develop contingency plans -- approved by the FAA -- to ensure that passengers are provided with adequate food, water and restrooms, and allowed to deplane in the event of a lengthy tarmac delay.

In addition, the Boxer and Snowe added an amendment that would require air carriers to post up front the dimensions of a child safety seat that can be used on each aircraft operated by the air carrier to enable passengers to determine which child safety seats can be used on those aircraft.

Consumer victory

"The Senate's vote is a huge victory for job creation, for the safety of air travel and for protecting the rights of airline passengers nationwide," said Kate Hanni, president of FlyersRights.org, a consumer group. "The new Boxer-Snowe amendment for protecting our most vulnerable infants in FAA approved CRS restraints, is a giant step forward in protecting those who cannot advocate for themselves."

The FAA Reauthorization Act will support 280,000 jobs nationwide, according to the U.S. Travel Association, while helping airports modernize their facilities and  improve safety.

FlyersRights.org, and other airline passenger advocacy groups, were founded after a series of highly publicized tarmac delays in which passengers were kept on board planes for hours, while sitting on airport tarmacs.

If you estimate your taxes and estimate low, or pay a lower of higher amount than you are required to pay, you'll now pay more in interest rates.

The Internal Revenue Service (IRS) has announced that interest rates for the calendar quarter beginning April 1, 2011, will increase by one percentage point.  The rates will be:

• four (4) percent for overpayments (three (3) percent in the case of a corporation);
• four (4) percent for underpayments;
• six (6) percent for large corporate underpayments; and
• one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points. (Read consumer complaints about tax preparation companies).

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points.  The rate for large corporate underpayments is the federal short-term rate plus three percentage points.

The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.  Additionally, the rate for determining the addition to tax for failure to pay estimated tax for the first 15 days in April 2011 is the four percent rate that applied to underpayments of tax during the first calendar quarter in 2011.

The interest rates are computed from the federal short-term rate during January 2011 to take effect February 1, 2011, based on daily compounding.

In addition to paying interest, you usually will face a financial penalty for underpaying, or not paying your taxes on file. If fraud is involved, the penalties are more than financial and involve criminal prosecution. Penalties are generally payable upon notice and demand and are generally assessed, collected and paid in the same manner as taxes.

Estimated Tax-Related Penalties

Employees have taxes withheld from their paychecks by their employer. When you have income that is not subject to withholding you may have to make estimated tax payments during the year. 

This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount being withheld from your salary, pension, or other income is not enough to pay your tax liability.

Estimated tax payments are used to pay income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may have to pay a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

Penalties for filing or paying taxes late

The most common penalties are for filing late or paying taxes late. If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. The penalty is usually five percent for each month or part of a month that a return is late --but not more than 25 percent. The penalty is based on the tax not paid by the due date (without regard to extensions).

If you file your return more than 60 days after the due date, the minimum penalty is $100 or, if less, 100 percent of the tax on your return.

You will have to pay a failure-to-pay penalty of one-half of one percent (0.5 percent) of your unpaid taxes for each month, or part of a month, after the due date that the tax is not paid. This penalty does not apply during the automatic six-month extension of time to file period if you paid at least 90 percent of your actual tax liability on or before the original due date of your return and pay the balance when you file the return.

The failure-to-pay penalty rate increases to a full one percent per month for any tax that remains unpaid the day after a demand for immediate payment is issued, or 10 days after notice of intent to levy certain assets is issued.

For taxpayers who filed on time, the failure-to-pay penalty rate is reduced to one-quarter of one percent (0.25 percent) per month during any month in which the taxpayer has a valid installment agreement in force.

For any month both the penalty for filing late and the penalty for paying late apply, the penalty for filing late is reduced by the penalty for paying late for that month, unless the minimum penalty for filing late is charged.

Accuracy related penalties

The two most common accuracy related penalties are the "substantial understatement" penalty and the "negligence or disregard of the rules or regulations" penalty. These penalties are calculated as a flat 20 percent of the net understatement of tax.

Understatement of tax means the tax shown on your return is less than the correct tax. The understatement is substantial if it is more than the larger of 10 percent of the correct tax or $5,000 for individuals. For corporations, the understatement is considered substantial if the tax shown on your return exceeds the lesser of 10 percent (or if greater, $10,000) or $10,000,000.

Penalty for negligence and disregard of the rules and regulations

"Negligence" includes (but is not limited to) any failure to:

• make a reasonable attempt to comply with the internal revenue laws
• exercise ordinary and reasonable care in preparation of a tax return or
• keep adequate books and records or to substantiate items properly

This penalty may be asserted if you carelessly, recklessly or intentionally disregard IRS rules and regulations -- by taking a position on your return with little or no effort to determine whether the position is correct or knowingly taking a position that is incorrect. You will not have to pay a negligence penalty if there was a reasonable cause for a position you took and you acted in good faith.

Civil fraud penalty

If there is any underpayment of tax on your return due to fraud, a penalty of 75 percent of the underpayment due to fraud will be added to your tax. The fraud penalty on a joint return does not apply to a spouse unless some part of the underpayment is due to the fraud of that spouse. Negligence or ignorance of the law does not constitute fraud.

Typically, IRS examiners who find strong evidence of fraud will refer the case to the Internal Revenue Service Criminal Investigation Division for possible criminal prosecution. Keep in mind that both civil sanctions and criminal prosecution may be imposed.

Frivolous tax return penalty

You may have to pay a penalty of $5,000 if you file a frivolous tax return or other frivolous submissions. If you jointly file a frivolous tax return with your spouse, both you and your spouse each may have to pay a penalty of $5,000. A frivolous tax return is one that does not include enough information to figure the correct tax or that contains information clearly showing that the tax you reported is substantially incorrect.

You will have to pay the penalty if you filed this kind of return or submission based on a frivolous position or a desire to delay or interfere with the administration of federal tax laws. This includes altering or striking out the preprinted language above the space provided for your signature, This penalty is added to any other penalty provided by law.

Penalty for bounced checks

If you write a check to pay your taxes, make sure there are funds available to cover it. This is a check you don't want to bounce. If the check bounces, the IRS may impose a penalty. The penalty is either two percent of the amount of the check unless the check is under $1,250, in which case the penalty is the amount of the check or $25, whichever is less.

"The bottom line is that you must report all your income, file your return and pay your tax by the due date to avoid interest and penalty charges," the IRS says.

A class action lawsuit filed by service members and veterans says that the Pentagon needs to change the way it addresses complaint of rape and sexual assault.

The suit, filed by two men and 15 women, wants an objective third party to oversee complaints of rape and sexual abuse, contending that military commanders are unable to do a competent job. The complaint asserts that “servicemen get away with rape and other sexual abuse,” and that Defense Secretary Robert Gates and former Secretary Donald Rumsfeld “ran institutions in which perpetrators were promoted and where military personnel openly mocked and flouted the modest Congressionally mandated institutional reforms.”

The suit spells out in gruesome detail 16 incidents of alleged sexual assault, spanning nearly every branch of the military. According to the complaint, in many instances the victims of such abuse -- serving in the Army, Navy, Marine Corps, Coast Guard and the Reserves -- had to continue working alongside their attackers even after they formally reported the incident to their commanders.

According to ABC, last year the military reported a staggering 3,292 instances of alleged sexual assault. Victims can either file a “restricted” complaint -- one that remains confidential and doesn't spur an investigation -- or an unrestricted report, which allows officials to investigate but doesn't ensure that the victim will remain anonymous.

Rape is an obviously devastating experience in and of itself, but the plaintiffs say that the military's handling of the situation makes an already terrible problem much worse.

“The problem of rape in the military is not only service members getting raped, but it’s the entire way that the military as a whole is dealing with it,” Panayiota Bertzikis, who says she was raped in 2006, and who is a plaintiff in the suit, told The Boston Globe. “The entire culture needs to be changed.”

Sarah Albertson, another plaintiff, says she was raped in 2006 by a Marine who held a higher rank than she did. When a friend finally reported the incident to commanders, they forbade her from discussing it with anyone else and ordered her to “respect” her attacker, since he was also her superior.

“I had friends, even people who were supposed to have my back telling me, 'It sucks, and it's wrong what they're doing to you, but at the same time you need to suck it up and not tell anybody because it'll make the Marine Corps look bad and it'll hurt recruitment efforts,'” Albertson told ABC.

The suit, filed in federal court in Virginia, seeks monetary damages in addition to a structural overhaul.

When “The Help” was released in early 2009, the novel caused an immediate stir, with one reviewer calling it “cringeworthy” but going on to heap praise on the book.

Now the book has attracted some less positive attention, in the form of a lawsuit by an angry woman who says the book's main character is based on her.

Ablene Cooper, a 60-year-old African American who lives in Jackson, Mississippi, says that she has babysat for author Kathryn Stockett's brother. Cooper says that when she heard of Stockett's plans to write “The Help” -- featuring a main character named “Aibileen” -- she begged her to reconsider, but Stockett refused.

Cooper takes particular issue with passages detailing Aibileen's thick, hard-to-understand dialect; and describing her skin as the color of a cockroach, according to The Wall Street Journal.

Cooper's suit says that the experience has been “emotionally upsetting and is highly offensive.”

The suit, filed in Hinds County Circuit Court, seeks damages in the relatively low amount of $75,000.

Book about racial tensions

“The Help,” which sat on the bestseller list of The Los Angeles Times for more than a year, tells the tale of a white southern family in the early 1960s who hire two African-American maids despite the thick racial tension in their small Mississippi town.

In an interview several months after the book was released, author Kathryn Stockett said the main character was based in part on a woman named Demetrie, a maid who her family hired but who died in the mid-1980s.

“I'm so embarrassed to admit this,” Stockett told MSNBC, but “it took me 20 years to really realize the irony of the situation that we would tell anybody, 'Oh, she's just like a part of our family,' and that we loved the domestics that worked for our family so dearly, and yet they had to use the bathroom on the outside of the house.”

Blood is thicker than water?

Thickening the plot, as it were, is Cooper's assertion that Stockett's brother Robert, and his wife Carroll -- for whom she has worked for years -- support her in the suit.

“Ain’t too many Ablenes,” Cooper told The New York Times. “What she did, they [Robert and Carroll] said it was wrong. They came to me and said, ‘Ms. Aibee, we love you, we support you,’ and they told me to do what I got to do.”

The book achieved a sort of cult status due in part to its author's persistence -- Stockett was turned down by 45 literary agents before she finally persuaded Penguin Books to publish the book.

During the last few months, health officials have been paying close attention to the amount of babies born before they’re full-term and the associated risks for mothers and their newborns.

The March of Dimes gave America a “D” on its annual report card, finding more than half a million babies are born pre-term every year.

And researchers at Michigan State University recently found babies born even a few weeks early are at risk for any number of short-term medical problems and possible long-term behavioral and cognitive problems like lower IQs, higher levels of attention problems, and symptoms of anxious, withdrawn behavior.

This includes even healthy babies of mothers who elect to induce labor early.

Now, researchers at the University of Rochester Medical Center are hoping physicians and first-time mothers-to-be to understand the risks associated with elective induction, a procedure that continues to grow in popularity.

The study found inducing labor without a medical reason is associated with negative outcomes for the mother, including increased rates of cesarean delivery, greater blood loss and an extended length of stay in the hospital, and does not provide any benefit for the newborn.

Benefits vs. risk

 “The benefits of a procedure should always outweigh the risks. If there aren’t any medical benefits to inducing labor, it is hard to justify doing it electively when we know it increases the risks for the mother and the baby,” said Christopher Glantz, M.D., M.P.H., study author and professor of Maternal Fetal Medicine at the University of Rochester Medical Center.

In the past decade, scheduled deliveries have become commonplace, with physicians making elective inductions part of their routine obstetric care. Study authors cite social reasons, such as convenience and patient requests to deliver with their physician, for the ongoing increase in purely elective inductions.

While physicians and patients alike may assume that inducing labor is harmless, it does not work as well as natural labor: inducing is essentially starting the birthing process from ground zero and because of that, more problems are likely to arise.

“As a working professional and a mother, I know how tempting it can be to schedule a delivery to try to get your life in order, but there is a reason that babies stay in the womb for the full term,” said Loralei Thornburg, M.D., an assistant professor who specializes in maternal fetal medicine. “Why put you and your newborn at risk if you don’t have to?”

The study included 485 women who delivered their first child between January and December of 2007 at the University of Rochester Medical Center. The major strength of this study is that, unlike most prior studies, researchers reviewed each mother’s and baby’s medical chart, as opposed to relying on medical coding.

Evaluating each chart allowed researchers to figure out exactly why women were induced and what the complications were, catching subtle details that may have otherwise been overlooked. 

The researchers found approximately 34 percent of women who opted for elective induction of labor ultimately had a cesarean section, while only 20 percent of women who labored naturally underwent a cesarean delivery.

Like elective induction, cesarean delivery may be seen as routine and risk-free, when in fact it is a major surgery. And like all surgeries, cesarean delivery increases the risk of infection, respiratory complications, the need for additional surgeries, and results in longer recovery times.

Additionally, women who were induced had more bleeding, even after taking cesarean deliveries into account, and stayed in the hospital longer than women who delivered vaginally.

The study authors calculate for every 100 women who undergo elective induction, they spend an additional 88 days in the hospital compared to the same number of women who labor spontaneously. Although this may translate into only a matter of hours for some women, it represents increased costs for both the mother and the hospital when multiplied by large numbers of induced labors.

Eva Pressman, M.D., director of Maternal Fetal Medicine at the Medical Center said counseling women to steer clear of an elective induction can be challenging, but the bottom line is medical reasons trump social reasons.

“If physicians are armed with information about the risks associated with elective induction they have a better chance of convincing their patients to avoid this route,” said Pressman.

While scheduled deliveries present multiple risks for the mother, researchers also found that they did not improve the health of newborns either. When women were induced, their babies were more likely to need oxygen immediately following delivery. They were also more likely to require specialized attention from members of the neonatal intensive care unit (NICU).  

The new findings only apply to women having their first child, and may not pertain to women having their second or third child. In fact, Glantz said women who have already had a child may respond more favorably to induction.

“If you’ve delivered once before, your body knows the drill and can do it again,” Glantz noted.

Though elective inductions are not outside the standard of care, physicians should be cognizant of the associated risks and communicate these risks to women considering the procedure.

In an effort to better address this issue at the University of Rochester Medical Center, the department of Maternal Fetal Medicine is applying for a grant to help put procedures in place that will prevent elective induction of labor before 39 weeks.

“Past research has shown that inducing labor early without a legitimate medical reason is risky, and this study further validates these findings” said Thornburg.

The study is published in the February issue of the Journal of Reproductive Medicine.

Sometimes what's not said can echo as loudly as what is. That's how it's been around ConsumerAffairs.com for the last year, since the death last Feb. 18 of Martin H. Bosworth, our managing editor, resident idealist and dedicated champion of bombast.

Despite, or perhaps because of, being an alumnus of an elite private university, former aide to Sen. Edward Kennedy and onetime staffer at such establishment institutions as the Department of the Army, Walter Reed Army Medical Center and District of Columbia municipal (or, if you prefer, state) government, Martin had little use for accepting the accepted wisdom or bowing in whatever direction the powers-that-be decreed. He was a perennial and unwavering champion of the little guy; the workaday workers of the world never had a stronger ally.

No matter the issue – lending abuses, privacy invasions, consumer rip-offs – Martin could be counted on to have not only the strongest and most vociferous (though never personally abusive) opinions but also to argue them most convincingly and to have more facts at his disposal than anyone ever dreamed existed.

He could then turn around and, without taking a breath, write a story that was not only stunningly accurate but completely fair and balanced, though always seen through the prism of the consumer.

Martin was one of those people who had to be chased out of the office at night. In a world where everyone talks about working 24/7, Martin actually did it. His desk, home and car were all buried beneath piles of documents, reports, theses, notes and soon-to-be-finished stories, books and articles.

So the world lost a lot when Martin died at the tender age of 35, the victim perhaps of too much time sitting in front of keyboards and not enough time pursuing life's other pleasures.

Editors usually have to prod their charges to spur them into action and then, all too often, must nag them to clean up the loose ends. All it took with Martin was a brief hint that this story needed to be pursued, that wrong needed to be righted. There were never any loose ends. Martin is the only journalist I have ever worked with who footnoted everything.

The last year has been difficult, not only because we lost our friend but because all of us lost the energy, wit and wisdom Martin would have brought to all that has transpired in the last year. We do our best every day but not a day goes by that I don't look at one pending story or another and say, “If only Martin were here to write this.”

That's probably the best tribute one can pay a journalist, so I'll leave it at that. Thanks for listening.

---

James R. Hood is the founder and editor in chief of ConsumerAffairs.com.

When the United States Consumer Product Safety Commission (CPSC) announced a ban drop-side cribs in December 2010, after millions of these products had been recalled, many parents and caregivers of small children began to question the safety of cribs, playpens and bassinets.

A new study conducted by researchers at the Center for Injury Research and Policy of The Research Institute at Nationwide Children's Hospital examined injuries associated with cribs, playpens and bassinets among children younger than two years of age from 1990 through 2008.

What the found might upset even the most experienced parents.

During the 19-year study period, an average of 9,500 injuries and more than 100 deaths related to these products were seen in U.S. emergency departments each year.

According to the study, the majority of injuries – 83 percent -- involved cribs. The most common injury diagnosis was soft-tissue injury (34 percent), followed by concussion or head injury (21 percent).

The head or neck was the most frequently injured body region (40 percent), followed by the face (28 percent).

Two-thirds of the injuries were the result of a fall, and the percentage of injuries attributed to falls increased with age.

“Despite the attention given to crib safety over the past two decades, the number of injuries and deaths associated with these products remains unacceptably high,” said Dr. Gary Smith, MD, senior author of the study and director of the Center for Injury Research and Policy.

Smith, also a Professor of Pediatrics at The Ohio State University College of Medicine, said cribs, playpens and bassinets must be held to a higher standard than most baby products, which require parental supervision to maintain safety, because parents are expected to leave their child unattended in them and walk away with peace of mind.

“Educating caregivers about the proper use and potential dangers of these products is an important part of making cribs safer for children, but education alone is not enough,” said Smith. “Innovations in product design and manufacture can provide automatic protection that does not rely on actions of caregivers to keep children safe.”

In recent years, organizations such as the CPSC and the American Academy of Pediatrics have amplified their efforts to increase crib safety.

11 million recalls

The CPSC has issued recalls of more than 11 million cribs and has prohibited the manufacture, sale or lease of drop-side cribs starting in June 2011.

Continued strengthening and enforcement of crib safety standards will protect more young children from harm.

Despite the potential risks, cribs are still considered to be the safest location where parents can place infants to sleep. There are several steps parents and caregivers should take when selecting a crib for their child:

Pay close attention to the crib you select.

• Select a crib that meets all current safety standards, does not have a drop side and is not old, broken or modified.
• Avoid cribs with cutouts or decorative corner posts or knobs that stick up more than 1/16th of an inch
• Measure the slats to make sure they are not more than 2 and 3/8 inches apart
• Visit Recalls.gov to make sure the crib has not been recalled
• Make sure the mattress fits tightly into the crib. If you can fit more than two fingers between the mattress and the crib, you need a bigger mattress
• Frequently examine the crib to make sure it is in good repair and that there are no loose parts
• Carefully read and follow all assembly instructions

When putting your child in a crib to sleep, consider the following:

• Always place your baby on his or her back to sleep
• Remember that a bare crib is best. Do not add pillows, blankets, sleep positioners, stuffed animals or bumpers to the crib
• Crib tents and mesh canopies are not safe to use over cribs. Children can become trapped or strangle in them if they try to get out
• Avoid placing the crib near a window to prevent falls and possible strangulation from cords from window blinds or shades

Monitor your child's developmental milestones and make changes to the crib as needed.

• Once your child can push up on his hands and knees or is 5 months old (whichever occurs first), remove all mobiles and hanging toys
• When your child can pull herself up or stand, adjust the mattress to the lowest position. Having the crib sides at least 26 inches above the mattress can help prevent falls
• Check the manufacturer's instructions to know when your child will outgrow the crib. This generally occurs when your child reaches 35 inches in height

If using a bassinet or playpen, make sure they have a sturdy, wide base and that your child meets all height and weight limits.

Smith’s study will be released online on February 21 will appear in the March 2011 print issue of Pediatrics.

It hasn't been a very good year for Delta Air Lines or its passengers. Hoping for a better year in 2011, the airline is sending all 11,000 of its customer service agents back to school, hoping to retrain them to be at least civil if not downright polite.

Cynics would say it's about time. Delta had the highest rate of customer complaints filed with the U.S. Department of Transportation (DOT) in the first nine months of 2010 and was second-to-last in on-time arrivals and baggage handling through last November.

Delta is also the unquestioned leader in complaints to ConsumerAffairs.com, with more than 1,400 complaints, roughly twice as many as second-place American.

Cristina of San Diego is one of those disgruntled passengers. Cristina and her one-year-old baby showed up at the Minneapolis airport to board a 7:10 pm flight to Toronto. The flight was delayed and finally canceled. Cristina was stuck at the airport until 10:00 pm.

“I expressed to the gate agents that my baby was out of food and out of diapers and she was getting a cold. The gate agents showed absolutely no regard and actually ignored my concerns completely,” Cristina said in a complaint to ConsumerAffairs.com. “My flight was rescheduled for the next morning at 6:35 AM but it was delayed by 2 hours again

“My child caught a fever the next day, I also spent about $180 out of pocket for a hotel + cab + food. I submitted a complaint form to Delta over 1 month ago and never received a response,” she said.

Mistreating the disabled

Just yesterday, Delta was assessed a $2 million civil penalty for violating rules protecting air travelers with disabilities, the largest non-safety-related penalty ever assessed against a U.S. airline.

Delta not only produced a planeload of complaints from disabled passengers, it also failed to provide an adequate written response to many of them, DOT said.

The employee retraining may not be very long – just one day – but Delta promises it will be intensive. Employees will be reminded that their job is to assist passengers, not just get rid of them, a Delta official said.

Whether one day will be enough may be open to question. Delta has ruffled a lot of feathers among its customers.

“Delta obviously does not care about it's customers and actually went out of their way to screw me and many other travelers,” complained Ashley of Lakewood Ranch, Fla., after her flight was canceled and she was stranded in Atlanta with no assistance from Delta.

“Whether they were clueless or apathetic, either way it looks bad for Delta,”she said of the Delta workers who ignored her requests for information and assistance.

And then there are the “elite” passengers – the relative handful of frequent flyers who contribute more than a quarter of the airline's revenue. Employees will be reminded to treat road warriors like the professional travelers they are.

Other issues

Of course, not all of Delta's problems can be blamed on its employees. The airline has been trying to integrate the operations and staff of Northwest Airlines after their merger and it's been a year of bad weather, high fuel costs and so forth.

Delta admits it has sometimes been slow to repair airplanes because of a lack of parts, leading to flight cancellations. Also, airports have been under-staffed and Delta says it is hiring an additional 1,000 workers to bolster front-line customer service.

The No. 2 daily deal site on the Web, LivingSocial, has been hit with a class-action lawsuit similar to one recently filed against its much larger competitor, Groupon.

The suit, filed in U.S. District Court in Seattle, charges that LivingSocial is violating consumer protection laws by selling gift certificates with short expiration dates, knowing full well that many consumers won't use them in time.

Like Groupon, LivingSocial sells discounted gift cars for local businesses, so that a consumer might pay $20 for a $40 restaurant meal, or $40 for an $80 spa visit.

The suits revolve around state and federal consumer protection laws that restrict and, in some cases, prohibit expiration dates on gift certificates. Federal law requires gift certificates to be valid for at least five years.

"LivingSocial just doesn't do enough to make sure that consumers are aware of what their rights are, and they're not doing enough to communicate with their merchants," attorney Christopher Carney said, according to the Seattle Post-Intelligencer.

The plaintiffs in both the Groupon and LivingSocial suits are arguing that the daily deal sites are selling gift certificates at a discount and that laws governing gift certificates apply to them regardless of whatever expiration date may appear on the certificates.

In addition, the LivingSocial suit argues that there is no cash-back provision on the certificates, which would be a violation of Washington state consumer laws under certain circumstances.

Not really

Both Groupon and LivingSocial are expected to argue that the certificates consumers buy on their sites are not actually gift certificates, but rather are vouchers that give the consumer the right to buy a gift certificate at a discount and that the business issuing the certificate – the Silver Diner, for example – is responsible for meeting legal requirements covering gift certificates.

Also, both sites try to address the issue in their terms of service, by saying that the expiration dates and other restrictions printed on the vouchers may be superseded by local and federal laws and that the merchant is “obligated to honor the voucher in compliance with law.”

But attorneys involved in the suit say that such legal mumbo-jumbo is doing consumers a disservice. They say that most consumers as well as merchants think the expiration dates are valid. Dropping a disclaimer in the fine print isn't enough, these attorneys argue.

The LivingSocial class action seeks to include all Washington residents who weren't able to claim the full value of their gift certificates. Consumers anywhere in the United States could joint the suit if their gift certificates expired before the five-year limit set by federal law.

If you have a smartphone, you may be more vulnerable to viruses and malware than you think. After all, these devices are connecting to the Internet all day long, with little or no protection.

Malware attacks directed at mobile devices rose 46 percent in 2010, according to McAfee, a security software maker, who predicts the threat will grow as millions of consumers begin using smartphones and tablet computers.

Phones using the Android operating system are among the fastest growing segment of smartphones, so it's no surprise that much of the new malware is targeting that segment of the market. This week, the security software firm Sophos noted that a variant of the Geinimi bug is attacking Android phones with abandon.

Poses as app

The Trojan horse, known as Hong TouTou and ADRD, poses in Chinese third-party stores as legitimate programs. When users download the apps, they are really loading the Trojan.

"The official Android Market, run by Google, does not appear to be carrying the malicious apps -- but if you go 'off-road' and choose to install software on your smartphone from elsewhere on the net, then you could be putting your device at risk," writes Graham Cluley, one of Sophos's security bloggers.

Cluley says Android users who steer clear of third-party apps probably have less to fear, but those who don't could be endangering data and, potentially finances if they use their phone for banking.

Emulates clicks

The bug doesn't just collect information about you. It can also emulate clicks on certain search results. A hacker whose malware gets downloaded on thousands of phones can earn hefty commissions by creating the impression that mobile phone users are visiting particular Websites.

Lookout Mobile Security, which first reported the new variant this week, said it has already delivered an over-the-air update for its Android users to protect them against known instances of HongTouTou.

How to stay safe:

• Only download apps from trusted sources, such as reputable app markets. Remember to look at the developer name, reviews and star ratings.
• Always check the permissions an app requests. Use common sense to ensure that the permissions an app requests match the features the app provides.
• Be alert for unusual behavior on your phone. This behavior could be a sign that your phone is infected. These behaviors may include unusual SMS or network activity.
• Download a mobile security app for your phone that scans every app you download to ensure it's safe. Lookout users automatically receive protection against this Trojan.
• As the number of malware exploits on smartphones increase, it is more important than ever to pay attention to what you're downloading, say the security experts at Lookout. Their advice? Stay alert and carefully review every app you

The presidents of two leading plastic surgery organizations urged members to downplay the significance of recent evidence about the risks of breast implant-related cancer when speaking to female patients, according to the transcript of portions of a Feb. 3 members-only Webinar sent to Public Citizen by a concerned plastic surgeon. 

Don’t use the word “cancer” -- instead use “condition,” one of the presidents is said to have advised. 

Public Citizen has sent a letter to the Food and Drug Administration (FDA) to alert it to the practice and to call for it to be stopped. 

Language battle

The FDA announced Jan. 26, a week before the Webinar, that there has been a growing number of published cases documenting an unusual kind of cancer surrounding the breast in women with implants. The American Society of Plastic Surgeons (ASPS) and the American Society for Aesthetic Plastic Surgery (ASAPS) held the Webinar partly in response to the announcement. 

When recommending how to respond to patients who were concerned about the growing number of cases of anaplastic large cell lymphoma (ALCL), Dr. Phil Haeck, ASPS president, said, “Yes, it’s classically a malignant tumor, but it has such a benign course that when we were discussing ways to talk to the media, we decided that we would call this a condition when we talked to the media -- not a tumor, not a disease and certainly not a malignancy … and I would recommend that you use the same terms with your patients rather than disturb them by saying this is a cancer, this is a malignancy.” 

ASPS responds

A spokesman for the American Society of Plastic Surgeons says the publication of a partial transcript of a conference call where Dr. Phil Haeck was quoted speaking to physicians about how to describe the ALCL condition has been taken out of context and misconstrued. 

"Far from intending to trivialize or minimize the issue," ASPS told ConsumerAffairs.com, "Dr. Haeck’s extemporaneous remarks were well understood by the physicians present to mean that the type of ALCL that has been observed in possible association with breast implants does not appear to have the malignant course of classic ALCL which is a systemic disease." 

ASPS says its position is and has always been that ALCL associated with breast implants is a serious, but an extremely rare condition. "The specific nature of this condition is unclear," the spokesman said, "and it is important that more research be conducted; however, it is clear that the condition is not breast cancer, and this was confirmed by the FDA in its announcement." 

A cure?

The Webinar also stated, “surgery [to treat the cancer] was curative,” which contradicts evidence, said Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group. “The ASPS and the ASAPS have chosen to ignore the currently available facts from published case reports of breast implant-associated ALCL.” 

Public Citizen’s analysis of the 34 reported cases of ALCL found that: 

• In half of the cases (17), the reported treatment included chemotherapy, a combination of chemotherapy and radiation therapy, or radiation therapy;
• In three of these cases, the cancer came back after the initial treatment; and
• Two additional patients (not included in the 17 mentioned above) saw their cancer come back after initial unspecified therapy, underwent stem cell transplantation and were disease-free two years after transplantation.

“These plastic surgery organizations claim that surgery cured women with ALCL, yet nearly 15 percent saw their cancer recur,” Wolfe said. “For most patients, chemotherapy and/or radiation therapy will be part of the recommended treatment plan. And for the organizations to refer to this cancer as ‘benign’ or as a ‘condition’ misleads both patients who may have received breast implant or those who may be considering undergoing breast implant surgery and the physicians who may provide care to such patients.” 

Public Citizen is calling on FDA to stop "this misleading effort to keep women in the dark about the dangers of breast implants so they will continue to ask for them."

Peer support offers promise as an effective, low-cost tool for fighting depression, a new study by the VA Ann Arbor Healthcare System and University of Michigan Health System finds.

Researchers analyzed 10 randomized trials of peer support interventions for depression dating from 1987 to 2009 and found programs in which patients and volunteers share information were found to reduce symptoms of depression better than traditional care alone and were about as effective as cognitive behavioral therapy.

Groundbreaking study

According to lead author Paul Pfeiffer, M.D., M.S., an assistant professor of psychiatry at the University of Michigan Medical School and researcher at the VA Ann Arbor Healthcare System, the study was the first of its kind to look at peer support specifically for depression, which is much less likely to be incorporated into the treatment of depression than for other conditions like alcohol or substance abuse.

"Our study combined data from small randomized trials and found peer support seems to be as effective for treating depression as some of the more established treatments," said Pfeiffer.

Peer support has been found to decrease isolation, reduce stress, increase the sharing of health information and provide role models, the study points out.

It can be cost effective, too. Pfeiffer said because peer support programs often use volunteers and nonprofessionals -- and can be done over the phone or Internet as well as in person -- they have the potential to be widely available at relatively low cost.

More assitance needed

Pfeiffer said the need for additional coping options is important, considering one third of patients taking anti-depressants for depression still experience significant symptoms after trying four medicines, and more than half of people who achieve remission of their symptoms relapse within a year.

"As a field, we should be looking at how to integrate peer support components into primary care and specialty treatment of depression," Pfeiffer said, noting that additional, larger studies could also provide more insight.

The study findings were recently published online ahead of print publication in General Hospital Psychiatry.

A national home security company has been accused in a consumer fraud lawsuit of ripping off customers by providing false and misleading information about the company’s cancellation policies, Cook County, Illinois, State’s Attorney Anita Alvarezsaid. 

CastleRock Security Inc., of Arlington Heights, Ill., is accused of violating the Illinois Consumer Fraud and Deceptive Business Practices Act as well as the Automatic Contract Renewal Act.  Also named in the lawsuit is Brian Johnson, president of the company. 

The suit was filed on behalf of four former customers who were fraudulently billed by the company despite having cancelled their service contract.   

“These individuals all believed they took the appropriate steps to cancel a service they no longer wanted,” said Alvarez. “Consumers should be aware that there are protections under the law that prevents them from being taken advantage of by unscrupulous practices.”

According to the lawsuit, CastleRockemployees are alleged to have routinely omitted or provided inaccurate information to consumers who called to cancel their service contracts causing them to incur thousands of dollars in unwanted charges and harassment from collection agencies.

Although automatic consumer contract renewals are allowed under Illinois law, a company is required to notify customers at least 60 days prior to expiration of the contract in order to provide the consumer with the opportunity to cancel the contract in writing or by telephone. 

In the last three years, the Better Business Bureau has logged over 750 complaints from consumers nationwide in relation to the business practices of CastleRock Security.

According to the lawsuit filed by the Cook County State’s Attorney’s Office, one of the victims was assured by a representative of the company that her service would be cancelled when her contract expired.

A few months later she received a bill from CastleRock and when she inquired was told that proper procedure to cancel her contract had not been followed and thus it had been automatically renewed for another year. When the victim refused to pay, the company sent her past due bills to a collection agency that continues to contact her to this day.

In another instance, a customer attempting to cancel her service was told that in order to cancel she was required to fax a letter to the company prior to the contract’s renewal date.  A few months later the victim discovered that the company had deducted money from her checking account despiteherhaving faxed the proper cancellation letter. 

When she called the company, another representative told her that the letter had to be received at least 30 days before the expiration of the contract and that her contract had been renewed for another year. 

All of the victims represented in the lawsuit had their bills referred to collection agencies that continue to contact them to this day. The disputed charges were also referred to credit reporting agencies.

In addition to seeking restitution for the victims, the lawsuit seeks to enjoin CastleRock Security from engaging in deceptive practices in the future.  Consumers who believe that they may have been victimized by this company can contact the Cook County State’s Attorney’s Consumer Fraud Unit for assistance at (312) 603-8700.

There's a lot of talk about the “underground economy” draining tax revenues from city, state and federal coffers. But the online economy may be an even bigger bonanza just waiting to be tapped.

The U.S. Commerce Department reported today that online retail sales totaled $44 billion in the fourth quarter last year, up from $38 billion a year earlier. E-commerce sales totaled $165 billion for all of 2010.

Perhaps even more startling, e-commerce now accounts for 4.3% of total retail sales, up from a scant 1% just a decade ago.

While this may be good news for online retailers and for consumers, who generally can find a wider selection at competitive prices online than they can in the “real” world, it's a growing source of angst for local governments, which rely heavily on sales taxes to fund their operations.

This is hardly a secret. In fact, numerous surveys have found that one of the things consumers like about shopping online is that they don't have to pay sales tax, which can be quite significant. Los Angeles, for example, imposes a 9.75% sales tax on most purchases, New York City charges 8.875% and some purchases in Chicago can go as high as 11.50%.

One recent study found that online shopping was growing faster in states and cities with a high sales tax rate than in states with lower rates or no sales tax. (Yes, there are such places. Alaska, Delaware, Montana, New Hampsire and Oregon have no statewide sales tax).

In theory, citizens of most states are supposed to report their purchases and pay the taxes on them if they're not collected by the merchant. This is about as widely observed as the speed limit and, except for New York and a few other states, no attempt is made to compel online retailers to collect the sales tax on purchases shipped into the state.

One reason for this is that, in a libertarian moment back in the infancy of the Internet, the U.S. Supreme Court ruled that states could not force retailers to collect sales tax unless they had a physical presence in the state where the order was being shipped.

This has led to some interesting stand-offs and some rapid decisions to move facilities around the country. Perhaps most notable is the recent dust-up between Texas and Amazon.com. Last fall, Texas decided that an Amazon.com distribution center in Dallas amount to a physical presence and sent Amazon a bill for $269.

Amazon responded by saying it will shut down the center and move its operations out of Texas.

As local governments become more desperate for money, it's likely there'll be more stand-offs like that between Amazon and Texas. It may be that the no-sales-tax states corner the market on e-commerce distribution centers.