Current Events in December 2011

Consumers will tell you customer service has all but disappeared these days and that nowhere is that more apparent than in the banking industry. Jeffrey, of Madison, Ala., wrote to recount how he was hit with a series of $36 fees after depositing a check in his Regions Bank account from a client that turned out to have insufficient funds. He then made this observation.

"When I was a kid, if there was a problem at the bank, the president of the branch or manager would call my folks and advise them and afford them an opportunity to correct it," Jeffrey told ConsumerAffairs.com. "That was customer service. There is nothing remotely resembling customer service at Regions bank these days. I spoke to my branch manager who informed me that 'there was nothing they could do' since it 'wasn't a bank error.' So much for empathy."

Perhaps in a small town, where everyone knew everyone else, that was common practice. Today's bankers would probably tell you that such a practice isn't practical in a huge bank. But there's something else. The world Jeffry remembers was one in which businesses took the long view; take care of the customer and you'll have their loyalty forever. Today's practices are very short-term in nature. Charging fees at every opportunity will make the current quarter look better. But the next quarter might not look so good if customers start leaving in droves.

Will this movie ever end?

Former Hollywood Video customers are still hearing from debt collectors who claim they still owe money to the defunct DVD rental chain. Angelita, of Sacramento, Calif., said she just heard from West Bay Acquisitions.

"They say I owe $73.36, which is not true," Angelita said. "I kept my account clear always, I even had a monthly plan where Hollywood Video would withdraw for my rental rates from my bank card account."

Not only that, Angelita says Hollywood Video still owed her money when it close, and sent her a gift card to clear the debt. She thinks the whole thing smells like a scam. Reacting to similar complaints, attorneys general around the country in May reached a settlement with the original debt collector working for Hollywood Video. Angelita should report her experience to California Attorney General Kamala Harris. 

Doesn't add up

Richard, of Kiswick, Va., is justifiably proud of his credit rating. At one agency he says it's 782. At another it's 760. But lo and behold, he says Experian has given him a credit score of 687. What gives?

"I looked back several years and my Experian rarting was also in 750 range," Richard told ConsumerAffairs.com. "The only thing that has changed is that I have paid off my house and both family cars--I have NO debt!"

Normally, paying down debt will improve your credit score. But having no debt at all can actually negatively impact it, though in this case it's unlikely since it hasn't affected his Equifax and TransUnion scores. It's possible Experian has obtained some erroneous information. Richard should go to www.AnnualCreditReport.com and download a free copy of his Experian credit report to make sure it is accurate.

Advanced Animal Nutrition has announced a voluntary recall of its dry Dog Power Dog Food due to aflatoxin levels that were detected above the acceptable limit. The affected products were manufactured between Jan. 4, 2011, and Nov. 18, 2011.

No illnesses have been reported in association with these products to date, and no other Advanced Animal Nutrition pet food products are involved in this recall. Affected products are:

• DOG POWER ADULT MAINTENANCE FORMULA 21-12 Dog Food, 50 pound bags
• DOG POWER HUNTERS FORMULA 27-14 Dog Food, 50 pound bags
• DOG POWER HI-PRO PERFORMANCE FORMULA 26-18 Dog Food, 50 pound bags

The recall only applies to the above products with the following Packaging Date Codes (lot numbers):  K0004 through K1322.

The affected dry dog food products were distributed in the following states – Missouri, Arkansas, and Louisiana.  Retailers have already been instructed to remove the affected brands and products from store shelves.

Consumers are urged to return affected products – whether in opened or unopened packages – to their place of purchase for a full refund.  For more information, contact 866-648-7646.

Aflatoxin is a naturally occurring mold byproduct.  Pets that have consumed any of the above recalled products and exhibit symptoms of illness including sluggishness or lethargy combined with a reluctance to eat, vomiting, yellowish tint to the eyes or gums, or diarrhea should be seen by a veterinarian.

Consumer advocates are celebrating the end of high-cost refund anticipation loans (RAL), often presented as "instant refunds" by tax preparers.

The last bank offering the loans has been forced out of the business by a settlement with the Federal Deposit Insurance Corporation (FDIC). 

The settlement between the FDIC and Republic Bank & Trust requires the bank to terminate its RAL program after the end of the next tax season -- April 30, 2012, in other words.

The FDIC’s agreement imposes a $900,000 civil penalty on Republic. It also incorporates a plan for Republic to implement a system of verifications to ensure that its partner tax preparers operate their future tax settlement activities with appropriate safeguards.

Republic will have to review all advertising for tax settlement products at the partner preparer’s offices, and conduct audits, including surprise on-site visits and mystery shopper surveys, at ten percent of preparer locations.

“Mark Pearce and his team at the FDIC have delivered a big win for low-income tax payers today. Their determined efforts to finish the job reflect a commitment to protecting consumers from predatory loan products,” said Peter Skillern of the Community Reinvestment Association of North Carolina.

“The FDIC action is an important step toward protecting families who struggle to make ends meet from unfair bank credit products and practices,” said Jean Ann Fox of the Consumer Federation of 
America.

149% APR

RALs are one- to two-week loans secured by the taxpayer’s refund. RALs can be expensive; this year, Republic Bank is charging $61.22 for a RAL of $1,500, which translates into an APR of 149%.

RALs target low-income taxpayers, especially recipients of the Earned Income Tax Credit, a special tax break for working poor families. In 2009, RALs skimmed over $600 million from the refunds of 7.2 million American taxpayers.

“We are pleased see the last of the RAL banks forced out of the business,” said Chi Chi Wu of the National Consumer Law Center. “We also commend the FDIC for a settlement that includes a plan for
Republic to institute safeguards for its remaining refund anticipation check program.”

Going forward, consumer advocates expressed a desire for the FDIC to develop a regulatory standard for the sale of refund anticipation checks (RACs), particularly that the FDIC should be vigilant to make sure that pricing of RACs remains appropriate and consumers are not charged abusive extra fees by partner tax preparers.

Absent a decision to terminate those products as well, the key priority should be to establish a balance between the need to help people avoid paying out-of-pocket for tax preparation and being able to purchase a RAC at a fair price, the consumer groups said.

There are those who see the world as black and white, ignoring all those shades of gray.  You might say the same about cars -- they're no longer neatly divided into gas, electric or hybrid. A growing number of models are a little of each.

While everyone knows about General Motors' big-stakes bet on the Chevy Volt, most of us are clueless about the "mild hybrids" that GM is introducing across its product line.  

Unlike the Toyota Prius or the Volt, the mild hybrids don't proclaim themselves as the latest and greatest and they don't add a huge chunk to the price.  So what are they?

Get rolling

A mild hybrid is simply a gas-powered car that uses an electric motor to help get things moving.  After all, it's providing the torque that's required to start a car rolling from a dead stop that generally takes the most energy.  By providing a mild boost from a small electric motor, GM says it can inexpensively squeeze an extra 5 or 6 miles per gallon out of most cars.

This is especially good news for motorists who mostly make about-town trips that involve lots of stopping and starting.

GM calls the technology eAssist. It has just started selling it on the 2012 Buick LaCrosse and Regal and plans to introduce it as an option on the redesigned Chevrolet Malibu this spring.

In the case of the LaCrosse, GM says the eAssist model with the four-cylinder engine gets 25 mpg in the city and 36 on the highway, compared with 19/30 for the previous four-cylinder model. GM says the 2012 LaCrosse gets better highway fuel economy than the much more expensive Lexus HS and Infinity M Hybrid.

Although other manufacturers have been their own mild hybrid technology, none is deploying it as quickly as GM.  Honda makes it available on a single model, the CR-Z coupe.  BMW and Mercedes-Benz offer it on a few models, admittedly more to avoid gas-guzzler penalties than to appeal to the pennywise. 

How it works

The GM light hybrids use several relatively modest technologies to conserve fuel, including:

• An automatic start/stop technology that shifts from gas to electric power and back seamlessly -- conserving fuel. When you step off the brake, the engine restarts instantly -- lag free. 

• A process called regenerative braking, which transforms your vehicle’s forward momentum into energy when you slow or come to a stop. 

• A lithium-ion battery pack stored in the trunk, which uses the energy created via regenerative braking to power the radio, climate control, and other accessories whenever the engine operates in auto-stop mode.

 D’Orazio Foods, Inc., a Bellmawr, N.J., establishment, is recalling approximately 161,000 pounds of frozen stuffed pasta products that were produced without the benefit of federal inspection, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) announced today. 

The following products are subject to recall: [View Labels(PDF Only)]:

• 25-ounce poly bags of “ALBERTSONS’ SAUSAGE RAVIOLI”
• 25-ounce poly bags of “JEWEL SAUSAGE RAVIOLI”
• 25-ounce poly bags of “ALBERTSONS’ BEEF RAVIOLI”
• 25-ounce poly bags of “JEWEL BEEF RAVIOLI”
• 25-ounce poly bags of “OUR FAMILY BEEF RAVIOLI”

The products listed above bear the establishment number “Est. 20146” inside the USDA mark of inspection on the product label and a “Best If Used By” date ranging from “12/01/11” to “12/01/12” ink-jetted on the back of each bag. The frozen products, which were produced between December 1, 2010 and December 1, 2011, have a shelf-life of one year.

The products were distributed to distribution centers in California, Illinois, Indiana, Ohio, Oregon, Texas and Utah. FSIS routinely conducts recall effectiveness checks to verify recalling firms notify their customers of the recall and that steps are taken to make certain that recalled product is no longer available to consumers.

The problem was discovered as part of a routine food safety assessment conducted by FSIS at the facility. While conducting the assessment, the Agency determined that the pasta products were produced during a second shift when FSIS inspection personnel were not on-site, as required, during operating hours. FSIS has received no reports of illness due to consumption of these products. Anyone concerned about an illness should contact a health care provider.

Consumers with questions regarding the recall should contact the company’s President, Anthony D’Orazio, at (856) 931-1900, ext. 117. Media with inquiries about the recall should contact Edward Sheehan, Esq., at (856) 365-7665. 

Consumers with food safety questions can "Ask Karen," the FSIS virtual representative available 24 hours a day atwww.AskKaren.gov. "Ask Karen" live chat services are available Monday through Friday from 10 a.m. to 4 p.m. ET. The toll-free USDA Meat and Poultry Hotline 1-888-MPHotline (1-888-674-6854) is available in English and Spanish and can be reached from 10 a.m. to 4 p.m. ET Monday through Friday. Recorded food safety messages are available 24 hours a day.

Increasingly consumers report being contacted by a debt collector about an obligation they insist they do not owe.

"On November 9, 2011 I received a bill for $7.45 for Parlee Tatem Radiologic Associates dated November 17, 2010," Alice, of Doylestown, Pa., told ConsumerAffairs.com. I don't recall such a debt; never received a bill previously for this. I call the number on the letter both that evening and the following Monday morning. Both times were when their office was listed on the letter as being open. But there were just recordings and then a hang-up."

Alice believes the request for payment is a scam, since she says she would certainly remember if she had used the medical services company. It could be a scam, or it could simply be a mistake. Either way, she should not pay it until she gets more information, and under the Fair Debt Collection Practices Act, she is certainly entitled to more information.

Alice's rights

According to the Federal Trade Commission (FTC), which drafted the law, every debt collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that debt collector must stop contacting you. You must send that letter within 30 days after you receive the validation notice.

But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

Assuming Alice determines she does not owe the debt but the debt collector does not agree and refuses to stop calling her, is there any way for her to make them stop? Yes.

Stopping the calls

According to the FTC, Alice should write a letter to the debt collector explaining that she does not owe the money and insisting that they stop contacting her. She should make a copy of the letter, sending the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received.

Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Since the amount is less than $8, why not just send them a check? If the debt collector is, in fact, a scammer, sending them a check could give them access to Alice's bank account.

Unemployment remains stubbornly high and the economy is producing jobs at an agonizingly slow pace. The impact falls most heavily on young adults, who increasingly find it harder to match their skills with employment.

At the end of the Civil War, nearly 150 years ago, America faced similar circumstances as war veterans returning to civilian society found jobs hard to come by. Newspaper icon Horace Greeley famously advised them to "go west, young man," and seek opportunity in America's unsettled territories.

Today, despite the depressing headlines, there are still places in the U.S. where jobs and economic opportunity appear to exist for those willing to pack their belongings and relocate. In fact, some states are  doing a lot better economically than the rest of the country.

In the early 1980s workers abandoned the "Rust Belt" of the upper Midwest for the "Sun Belt" of the American south and southwest. Today, however, the opportunity may call for movement in the opposite direction.

North Dakota?

In a state-by-state breakdown, the Financial Times has found that the economy in North Dakota, of all places, is booming. The unemployment rate is only 3.5 percent, thanks almost entirely to the booming oil sands industry. There appear to be plenty of high-paying jobs and even fast-food restaurants are offering $15 an hour to lure workers.

The North Dakota real estate market has largely recovered as well. Home values are rising in the state and there were only 32 foreclosures in the entire state between October 2010 and October 2011.

The other states in the upper Midwest also appear to be recovering faster than the rest of the nation as a whole. While manufacturing jobs are still declining, states are seeing growth in other sectors. Minnesota, for example, has seen a nine percent gain in "educational services" jobs. Nebraska, bolstered by this year's boom in agriculture, has recorded a nine percent gain in "business services" jobs.

Entire northeast

The entire northeast -- New England and the Mid-Atlantic states -- are also doing better economically than the rest of the nation as a whole. According to the Financial Times breakdown, Massachusetts' economy has led the nation in terms of recovery, showing the most overall improvement in terms of employment, foreclosures, Gross Domestic Product (GDP), home price stability, and the poverty rate.

While Massachusetts has recorded double-digit declines in manufacturing, mining and construction, its GDP has surged five percent in the last 12 months.

In the west, Utah appears to be an economic oasis in an otherwise struggling region. Again, heavy industry is not the economic driver. In Utah, the two hottest sectors are "educational services," up 19 percent, and "arts and entertainment," up 13 percent. The state has a seven percent unemployment rate but its GDP has risen nearly three percent in the last 12 months.

America has always been a mobile society and today, young adults who are more mobile than their older, more settled fellow Americans are best able to go where opportunity beckons.

People who own homes in stagnant real estate markets are less free to pick up and move. Renters, however, are not encumbered. Those willing to relocate, and put up with colder winters, just might find economic opportunity by moving north.

The Amazon Kindle Fire is  taking heat from consumers who find it clunky and hard to use. Worse yet, it's getting a bad review from usability guru Jakob Nielsen who says the Fire provides "a disappointingly poor user experience."

"Using the web with the Silk browser is clunky and error-prone. Reading downloaded magazines is not much better," Nielsen said in a recent review.

Most glaring was what Nielsen described as the "fat-finger problem," a phenomenon familiar to anyone who uses a smartphone touch screen.  

Nielsen described the problems of subjects who participated in a test he conducted: 

"You haven't seen the fat-finger problem in its full glory until you've watched users struggle to touch things on the Fire. One poor guy spent several minutes trying to log in to Facebook, but was repeatedly foiled by accidentally touching the wrong field or button — this on a page with only 2 text fields and 1 button." 

Volume control

A consumer who posts under the name "jocampo" on MobileRead.com echoed Nielsen's comments and added a few of her own:

"The lack of volume button is a negative point to me. And I would re-locate the power button or make it a slider (I've found myself pressing it by accident while using the unit) same for speakers, both are on same side, you cover those frequently while holding; I would put both speakers on the back, like the Nook Tablet."

It's not ink 

Several users posting to various sites commented on the Fire's weight, which also bothered Nielsen:

"The Fire is a heavy object. It's unpleasant to hold for extended periods of time. Unless you have forearm muscles like Popeye, you can't comfortably sit and read an engaging novel all evening," Nielsen said. "The lack of physical buttons for turning the page also impedes on the reading experience for fiction. On the older Kindles, it's easy to keep a finger on the button when all you use it for is to turn the page. In contrast, tapping an area of the screen disrupts reading enjoyment, is slightly error-prone, and leaves smudges on the screen. The Fire screen also has more glare than the traditional Kindle."

In fairness to the Fire, many of these comments also apply to the iPad, which this reviewer found to be inferior to the original Kindle for reading books.  The extra weight, the super-sensitive touch controls and the glare from the shiny screen were all negatives when reading text-heavy materials that don't benefit from the gee-whiz colors and other whoop-dee-doo features. 

"Most successful"

Amazon, meanwhile, says the Fire is the "most successful" new product it's ever launched but hasn't revealed any numbers.  

There's no question the Fire is low-priced.  It's hundreds of dollars less than the iPad.  And there's no question that Amazon has a huge and constantly-growing trove of books, magazines, movies and so forth -- all floating along in the cloud just waiting to be downloaded by some lucky consumer whose account will be debited instantly for each purchase.

And therein may lie the rub.  While one can quibble all day about weight, brightness and so forth, the Fire is a lot of tablet for the money.  Many speculate Amazon is selling the device at or below cost, just as in the legendary marketing strategy that supposedly led Gillette to sell its spiffy razors for less than cost so that it could sell a constant stream of blades.

The real question for consumers then becomes: what happens down the road, when just about everyone has a Kindle, Kindle Fire or whatever device the Amazon gods dream up next?

Will there still be 99-cent books?  Will Amazon still offer tens of thousands of free movies and high-def TV shows to its Premium customers?  Or will Amazon, once its user base reaches critical mass, simply put the hammer down and do what Economics 101 predicts -- namely, raise prices for consumers and take a bigger bite out of the authors, publishers, musicians and producers who supply its content?

Guess we don't learn the answer til the last chapter.

Is Amazon's price-comparison tool that lets shoppers check out prices at competing online and local retailers a boon for consumers or an evil plot against small business?

It depends on who you ask.  Sen. Olympia Snowe (R-Maine) is irate over Amazon's weekend promotion that offered customers 5% off if they checked the prices of goods on its Price Check app while browsing at a store, then ordered them online.

Retailers cried foul and Sen. Snowe took up the crusade, calling Amazon's promotion "an attack on Main Street businesses that employ workers in our communities.

"Small businesses are fighting everyday to compete with giant retailers, such as Amazon, and incentivizing consumers to spy on local shops is a bridge too far," Snowe said. "I urge Amazon to cancel its planned promotion, and look for ways to partner with Main Street, not promote anti-competitive behavior that could shutter the doors of America's small businesses." 

Amazon has defended the app as pro-consumer and has managed to  get at least one consumer group to come to its aid.

A spokesman for Consumer Watchdog in Santa Monica, Calif., said the Amazon app could benefit shoppers. "It could definitely be good price competition for consumers," Mark Reback said, according to the Los Angeles Times.

No comment

The National Retail Federation did not respond to a ConsumerAffairs.com request for comment but other industry groups took up the battle cry.

The Retail Industry Leaders Association said the app subverts shoppers into using retail stores as "showrooms" to check out a product before buying online.

"This is an underhanded way to send shoppers online," said Jason Brewer, the association's spokesman. "This app allows Amazon to exploit a loophole that allows them to sell the exact same product as brick-and-mortar stores and not charge sales tax."

Others saw Amazon's move as a clever promotion that would attract lots of free publicity.

"The stunt offers good value for money, particularly when you consider the price comparison app looks set to go mainstream as a new weapon in the war between bricks-and-mortar retailing and online retailing and Amazon will be leading the charge," said Gizmag.com. "The knowledge it gains will enable it to discern patterns on the exact deals their bricks and mortar competitors are prepared to do, and react in real time."

"Mobile phone retail is about to become a significant factor in purchasing decisions," Gizmag predicted.

Your local supermarket has plenty of ready-to-bake cookie products that come in sausage-shaped packages of cookie dough. These make baking easier, but just make sure you bake them. Eating the dough raw is a good way to get sick.

The investigation of a 2009 multistate outbreak of Shiga toxin-producing E. coli (STEC), an important cause of bacterial gastrointestinal illness, led researchers to a new culprit: ready-to-bake commercial prepackaged cookie dough.

Published in Clinical Infectious Diseases, a new report describing the outbreak offers recommendations for prevention, including a stronger message for consumers: Don't eat prepackaged cookie dough before it's baked.

Two conclusions

The researchers came to two key conclusions: food manufacturers should consider reformulating cookie dough products to make them safer if consumers eat them raw. In addition, the researchers said consumers need to be better educated about the hazards of eating an unbaked product.

During the 2009 E. coli outbreak, 77 patients with illnesses were identified in 30 states, and 35 people were hospitalized.

Previous E. coli-related food-borne illnesses have been associated with ground beef, leafy green vegetables, sprouts, melons, salami, and unpasteurized apple cider. The 2009 investigation, which involved extensive traceback, laboratory, and environmental analysis, led to a recall of 3.6 million packages of the cookie dough. However, no single source, vehicle, or production process associated with the dough could be identified for certain to have contributed to the contamination.

Eating uncooked cookie dough appears to be a popular practice, especially among adolescent girls, the study authors note, with several patients reporting that they bought the product with no intention of actually baking cookies. Since educating consumers about the health risks may not completely halt the habit of snacking on cookie dough, making the snacks safer may be the best outcome possible.

Joy, of Davie, Fla., says she finds online dating to be anything but a joy. After signing up with Match.com, Joy said it seemed all the men with whom she was matched were located outside the U.S.

“When I called to complain I was told that they know about the Nigerians but thought that situation was improving,” Joy told ConsumerAffairs.com. “I said no it's not. I'm also getting men claiming to be in my area but stationed overseas in the military and will be home soon. Then they ask for iPods, money and give you a list.”

People using any online dating service should be wary of scammers, who use any kind of social connection they can find online to lure victims. An increasingly common pitch is to pose as a U.S. serviceman overseas.

Heating up

Robyn, of Redding Calif., reports her Oster toaster caught and destroyed the kitchen in her apartment.

“I lost everything I owned in the kitchen,” Robyn said. “Most of my belongings throughout the house were ruined from smoke damage or from the firefighters tearing through it. I had to move out of my apartment witch was declared uninhabitable and was homeless for 3 months. On top of it all my landlord kept $1000 from my deposit for fire damage.”

We've receive a few other reports in the last year of Oster toasters catching fire, but keep in mind almost any electric appliance – especially one designed to produce heat – can be a potential fire hazard. It's a good reason to have renters' insurance.

It's also a good idea to have a fire extinguished mounted on the wall in your kitchen.  Putting it on the wall is important.  If you keep in a cabinet or a closet, chances are you won't be able to find it when you need it.

A former investment fund manager has been charged with defrauding investors out of millions of dollars by falsely promising investors their money would be used to purchase corporate bonds backed by the federally funded Troubled Asset Relief Program (TARP) and then collaborating with his corporate counsel to cover-up the fraud.

John Farahi, 54, of Bel Air Estates, Calif., was named in a 41-count indictment returned late Wednesday afternoon by a federal grand jury. The indictment charges Farahi – a former member of the Reno, Nevada, City Council and Farsi-language radio investment advisor – with various fraud offenses that include making false statements to TARP-funded banks in relation to multi-million dollar loans.

“Farahi exploited TARP to line his own pockets and fund his lavish lifestyle,” said Christy Romero, Deputy Special Inspector General for the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). “He is accused of selling investors fake securities that he called TARP-backed securities and committing loan fraud against TARP recipient banks to cover his losses. Investors should beware that there is no such thing as a TARP-backed security.”

Attorney named

The indictment also charges attorney David Tamman, 44, of Santa Monica, with conspiring with Farahi to obstruct a Securities and Exchange Commission (SEC) investigation into Farahi’s fraud scheme.

At the time of the alleged obstruction, Tamman, who is now a sole practitioner with offices in Century City, served as corporate counsel for Farahi’s investment company and was a law firm partner.

From 2005 until early 2010, Farahi ran the Beverly Hills-based New Point Financial Services, which he used to sell more than $20 million worth of investment instruments – which he called debentures – to more than 100 investors, most of whom are members of the Southland’s Iranian-Jewish community.

Farahi attracted many of the investors through his daily radio show in which he touted a conservative investment philosophy. When Farahi met with investors he falsely told them New Point Financial Services invested in low-risk investments like certificates of deposit, TARP-backed corporate bonds, and deeds of trust backed by substantial amounts of borrower equity.

The indictment alleges that Farahi did not make these types of investments and that he instead used investor money for a variety of personal purposes, including to support his family’s lavish lifestyle, to make Ponzi payments to early clients of New Point Financial Services, and to trade in high-risk and speculative future options trading.

$15 million

Starting in 2008, Farahi allegedly failed to tell New Point Financial Services investors that he had lost at least $15 million through his undisclosed options trading – even as he continued to solicit investors for New Point Financial Services.

In the face of huge trading losses at the end of 2008, Farahi allegedly tried to extend the scheme by drawing down extensively on lines of credit at banks while making false statements to those banks about his financial condition. The victim banks included Bank of America, U.S. Bank, and Sun West Bank. Bank of America and U.S. Bank were recipients of federal TARP funds.

When the SEC opened an investigation into New Point Financial Services in April 2009, Farahi allegedly conspired with Tamman, who was the company’s longtime securities counsel, to cover-up and conceal the fraud scheme from the SEC.

The indictment alleges that Farahi and Tamman engaged in a conspiracy to obstruct justice that involved, among other things, altering and backdating various documents to make it appear that New Point Financial Services investors were given full disclosures about the nature and risks of their investments, removing incriminating documents from investor files before they were produced to the SEC, and lying to the SEC in sworn testimony.

As a result of both his investment and loan fraud schemes, investigators believe that New Point Financial Services investors and financial institutions suffered losses of at least $20 million.

More bad news for the slow-selling Fiat 500: federal safety regulators have given it a three-star rating, the lowest of any new model tested so far.

The National Highway Traffic Safety Administration gave the two-door  four stars for frontal crash and rollover accidents but just two stars for side-impact crash safety.

The tests gave the car a combined overall safety rating of three stars, NHTSA reported.  The Insurance Institute for Highway Safety (IIHS) had earlier named the car a "Top Safety Pick."

NHTSA's side-impact crash tests involve both an impact with a side barrier and a stationary pole in a 38.5 mph simulated intersection-type crash. Though the vehicles tested had curtain airbags and torso/pelvis airbags, the rear-seat passenger position was rated at just two of five possible stars for safety in the side-barrier crash test, while the driver's seat position achieved a five-star safety rating in the same crash test.

In the side-pole crash, which simulates an impact at 20 mph with a narrow, fixed object, the driver's position achieved a three-star rating out of a possible five stars, NHSTA reported.

"Development of the Fiat 500, like all Chrysler Group LLC vehicles, makes safety and security a priority," Chrysler said in a prepared statement. "In fact, the Fiat 500 features more than 35 safety and security features including: driver and front-passenger advanced multi-stage air bags, driver's knee air bag, full-length side-curtain air bags and standard seat-mounted side pelvic-thorax air bags, all to offer enhanced occupant protection to all occupants in the event of a collision."

For years, the idea of harnessing energy from the sun has been a dream. Some say, a pipedream. But Joshua Pearce, an associate professor of electrical engineering and materials science at Michigan Technological University, isn't one of them.

While solar power currently produces less than one percent of U.S. electricity, Pearce says it can be much more than a boutique source of power.

A new analysis by Pearce and his colleagues at Queen's University in Kingston, Ontario, shows that solar photovoltaic systems – which convert sunlight directly into electricity - are very close to achieving the tipping point: they can make electricity that's as cheap—sometimes cheaper—as what consumers pay their utilities.

Pearce says he sees an approaching tipping point for two reasons. First, the price of solar panels has plummeted.

Costs drop 70 percent

"Since 2009, the cost has dropped 70 percent," said Pearce.

But more than that, the assumptions used in previous studies have not given solar an even break, he maintains.

"Historically, when comparing the economics of solar and conventional energy, people have been very conservative," said Pearce.

These comparisons, he says, don't take into consideration the declining costs of solar-generated electricity. Also, he notes, the price of solar equipment has been going down.

Out of date figures

Equipment costs are determined based on dollars per watt of electricity produced. One 2010 study estimated the cost per watt at $7.61, while a 2003 study set the amount at $4.16. The true cost in 2011, says Pearce, is under $1 per watt for solar panels purchased in bulk on the global market, though system and installation costs vary widely.

Solar costs also remain high in some areas because there aren't enough trained installers. Some contractors will limit the number of installation projects they will take on, charging more for the jobs they do take.

"If you had ten installers in Upper Michigan and enough work to keep them busy, the price would drop considerably," Pearse maintains.

Based on the study, and on the fact that the cost of conventional power continues to creep upward, Pearce believes that solar energy will soon be a major player in the energy game.

"It's just a matter of time before market economics catches up with it," he said.

So here's the latest entrant in the war for your smartphone and tablet: Google Currents.

It's a new ad-supported app for Android and Apple devices that displays magazines in a colorful, easy-on-the-eye format or, as Google put it, "swipable magazine format."

Most major publishers are represented, with titles including Forbes, Fast Company, The Daily Beast, Huffington Post and ABC News, among many others.

For anyone who has tried to read a text-only magazine on their smartphone, this should be a great leap forward.  Plain old text is OK for a few things but is a pretty dull way to read a magazine.

Colorful ads

Thanks in large part to the graphic display, there's room for colorful ads and therefore, subscriptions are free, since the project will be supported by advertising, with Google and the publishers splitting the proceeds.

Publishers, you'll recall, salivated when the iPad was introduced, thinking that at last they would once again be able to gouge both subscribers and advertisers.  Nice idea.  Too bad it didn't work.

Current's competitors include Apple's Newsstand, Yahoo's Livestand and a number of smaller players, including Flipboard.

We decided to take a look at it on our Samsung 'Droid.  Even with a strong Verizon 4G LTE connection, it took seemingly forever, about 20 minutes, to load the app and get it running. Once that was done, we paged through Fast Company, reading about -- what else? -- Currents.

The presentation is indeed easy on the eyes and the entire experience is much more like reading a magazine than staring beady-eyed at endless rows of unformatted text.  Pages load relatively quickly, although there are those pregnant pauses we have all come to anticipate.  Maybe someone should write an app to fill the idle seconds while pages and videos download? SuperQuickChess anyone?

Not too long ago, American workers looked forward to 20 or 30 years of retirement -- lounging around, playing golf, maybe moving to a warmer climate.

Now they increasingly expect to remain in the salt mines indefinitely, according to the nonpartisan Employee Benefit Research Institute (EBRI). 

Many 50+ workers say they expect to never retire, Data suggest the trend may be tied to the recent economic recession.

In 2006 (just before the recent recession), 11.2 percent of workers age 50 or over expected to retire at age 70, but by 2010 (after the recession had officially ended) that had increased to 14.8 percent.

Even at higher ages, the expected retirement age has jumped: Just 1.7 percent of workers age 50 or over planned to retire at age 80 in 2006, while that more than tripled to 5.2 percent in 2010, EBRI found.

Expected retirement at earlier ages (62 and 65) also steadily declined over the four-year period of 2006-2010, the study found.

“The general trend shows that older Americans are expecting to retire later,” said Sudipto Banerjee, EBRI research associate and author of the study. “But the most striking finding is that nearly 20 percent of the sample expects never to stop working and more than 15 percent of the sample don’t know when they are going to retire.”

In addition, in 2008, during the recession, 22.4 percent of the workers age 50 or over said they plan to never retire. That declined to 16.3 percent in 2010. Over the 2006–2010 period, another 14–18 percent of workers said they don’t know when they will retire.

Full results are published in the December 2011 EBRI Notes. The study examines data from the University of Michigan’s Health and Retirement Survey on how the expected retirement ages of older Americans changed during the period of 2006–2010, covering the periods just before, during, and after the recent economic recession.

The EBRI report notes that while the rising age of expected retirement may reflect a growing awareness of economic and fiscal reality among Americans workers (especially at a time of rising longevity), other research by EBRI indicates many of them will be unable to actually work longer: The 2011 Retirement Confidence Survey finds that a large percentage of retirees (45 percent in 2011) leave the work force earlier than planned, often for health reasons or the necessity to care for other family members.

Are you better off than you were three years ago?  Unless you won the lottery, chances are the answer is no.

The Federal Reserve reports that the total net worth of American households and nonprofit groups fell by $2.4 trillion in the third quarter of this year, a decline of 4.1 percent compared with the second quarter.

Why? Two primary reasons: the stock market did poorly and real estate values continued to fall.

Although nearly everyone inveighs against Wall Street, it's still true that when stocks and bonds have a bad quarter, it affects nearly everyone. The value of mutual fund shares and pension funds generally move up and down with the stock market.  With almost no interest being paid on savings and an anemic stock market, it's a difficult time for retirees and those who manage their funds. 

Meanwhile, real estate is still trying to find the bottom, as foreclosed homes sit vacant as would-be buyers try to find a mortgage. Household real estate assets fell by $98.3 billion (0.6 percent) from the previous quarter.

Then there's credit or, to be more precise, debt.  Some economists will tell you Americans cut their debt in the last quarter.  Others will say they did so unwillingly, as they failed to qualify for a new or refinanced mortgage.

Credit card debt, on the other hand, spiked during the last quarter,  as consumers piled on $16.8 billion in credit card debt, up 154 percent from the same quarter last year.

Food spending dips

Helping to put this in perspective, a new analysis of federal data (pdf) by the Food Research and Action Center (FRAC) finds that more and more Americans have been losing the struggle to afford an adequate and healthy diet.

Food spending by the average household fell dramatically over the past decade, with particularly dramatic drops in 2000-2002 and 2006-2010.

FRAC analyzed U.S. Department of Agriculture (USDA) annual reports that compare the amount of households’ median spending on food to the amount of the Thrifty Food Plan – the level the government defines as needed for a bare bones diet on an emergency basis, albeit a level that many experts consider to be inadequate for most families to obtain a healthy diet. The FRAC analysis found that:

• Spending on food by the median household fell from 1.36 times the Thrifty Food Plan level in 2000 to 1.19 times that level in 2010.
  

• By 2010 median spending on food by Black households and Hispanic households had fallen to the point where it was only a tiny bit above (101 percent for Black households) or was actually below (96 percent for Hispanic households) the bare bones Thrifty level.
  

• Spending by households with incomes less than 185 percent of the poverty level fell from 106 percent of the thrifty level in 2000 to 95 percent in 2010.

Fruit is good for you, right?  So Tropicana Twister Cherry Berry Blast should be really good for you.  Except for one thing.  Well, two actually.

First, it has no cherry juice.  Second, it has no berry juice. That dark red color?  Food dye.  Red 40, to be exact.

The Center for Science in the Public Interest says that’s deceptive. The nonprofit nutrition and food safety watchdog group is urging the Food and Drug Administration (FDA) to require food companies to disclose on the front of food labels whether a product is artificially colored.

It's not just a problem with soft drinks. Salad dressing, bread, breakfast cereals, candy, baked goods, and even mayonnaise and pickles may get their colors from additives.

Color additives are an inexpensive way to simulate absent fruit or vegetable ingredients, make white bread look more like whole wheat, or make sugary cereals more appealing to young children, according to CSPI.

Take Betty Crocker Carrot Cake, for example.  It has no carrots.  Instead, it has “carrot flavored pieces” made with corn syrup, flour, corn cereal, partially hydrogenated cottonseed and/or soybean oil, a small amount of “carrot powder,” unspecified artificial color, and Yellow 6 and Red 40.

Most varieties of Mt. Olive and Vlassic pickles appear greener and fresher thanks to Yellow 5. Kraft Light Catalina Salad Dressing contains Red 40. And caramel coloring and cocoa darken Pepperidge Farm Pumpernickel Bread.

“Betty Crocker is certainly free to make virtually carrotless carrot cake, and Tropicana is free to make berryless and cherryless juice,” said CSPI executive director Michael F. Jacobson. “But consumers shouldn’t have to turn the package over and scrutinize the fine print to know that the color in what are mostly junk foods comes from cheap added colorings.”

Food colorings—be they synthetic dyes or obtained from nature—deceptively enhance the visual attractiveness of products and imply greater product quality, according to a regulatory petition CSPI filed with the FDA. CSPI says the agency should require that the label of a food containing color additives state ‘Artificially Colored’ on the package next to the product name—something the agency already requires of many artificially colored products.

Health issues

There are also health reasons to be concerned about artificial colorings. The FDA has acknowledged that artificial food dyes, such as Red 40 and Yellow 5, trigger hyperactivity and behavioral problems in some children.

CSPI has also highlighted the cancer risks associated with certain caramel colorings, Yellow 5, and Yellow 6, which are contaminated with carcinogens. In addition, some consumers are allergic to natural or synthetic color additives.

“Companies substitute color additives for real food ingredients to lower their costs at the expense of consumers’ health and pocketbooks,” said CSPI litigation director Stephen Gardner. “We hope that the FDA requires companies to label artificially colored foods honestly.”

Currently, FDA requires manufacturers to list synthetic color additives, such as Blue 2 or Yellow 6, by name in ingredient lists. Companies must also declare by name two allergenic colorings, carmine and cochineal extract, which are made from insects. But other colorings may be listed as “Artificial Color,” “Color Added,” or similar terms.

Three-quarters of Americans favor the mandatory disclosure on front labels when foods have been artificially colored, according to a national public opinion survey commissioned by CSPI in 2010.