Current Events in May 2012

A U.S. District Court judge today denied petitions by several of the nation’s largest book publishers and Apple seeking to dismiss a nationwide class-action lawsuit that accuses the companies of conspiring to illegally fix the prices of e-books. 

The 56-page ruling, issued by Judge Denise Cote of the United States District Court for the Southern District of New York, is the first substantive ruling in the litigation. It denies the companies’ motion to dismiss the case, allowing the case to move forward.

The lawsuit was filed on Aug. 9, 2011, and seeks to represent purchasers of e-books who the complaint says were forced to pay tens of millions of dollars more for their favorite titles because of a price-fixing scheme organized by the e-book publishers and Apple.

“We thought that Judge Cote’s ruling was spot on, especially when she noted that we’ve gone above and beyond in illustrating the legitimacy of our case,” said Steve Berman, lead counsel representing consumers in the nationwide class action and managing partner of Hagens Berman, a consumer-rights law firm. “We are eager to push forward with the case.”

In April, the U.S. Justice Department filed a lawsuit in U.S. District Court in New York making very similar allegations to the civil case and citing much of the same evidence. It describes Apple and the publishers actively conspiring to wrestle control of the e-book market from Amazon while artificially driving up prices for consumers.

“We look forward to uncovering additional evidence in the discovery phase of this litigation,” said Berman. “We litigated this case because we strongly believe that consumers were harmed by Apple and the publishers’ tactics and we will not settle without an effective plan to repay consumers for their losses.” 

According to the class-action suit, the publishers believed that Amazon’s wildly popular Kindle e-reader device and the company’s discounted pricing for e-books would increase the adoption of e-books and permanently set consumer expectations for lower prices, even for other e-reader devices.

“Fortunately for the publishers, Apple was also terrified of Amazon’s pricing and the popularity of its Kindle device,” said Berman. “Rather than compete on merit, price and convenience, we intend to prove that the cabal simply tried to game the system.”

The case seeks to compensate e-book purchasers for losses incurred as a result of the alleged price-fixing scheme.

Free music sites are popping up faster than artists can make the music. Between Spotify, Grooveshark and Mixcloud, customers can choose not to buy new music ever again. Kind of sad but true.

The newest site to emerge is MoodMusic, which is creating a new Internet radio application for iTunes. MoodMusic isn't actually new, as the company introduced a free music application through Facebook back in 2010, but had to shut down in order to re-code the app.

In its new go-around, MoodMusic is trying to pull in users through a pretty creative marketing idea. The first 100,000 people to download the application will receive a share of stock in the company, by completing an email verification. The app will remain free until June 1, 2012, then customers will have to pay a 99-cent charge to access it.

The company said it's eager to enter into its second phase of business after partnering with iTunes, and are attempting to return to its digital glory days, when the company achieved 20,000 downloads in just the first couple of months.

"Facebook threw us a bit of a curveball by returning to Java, which has left our $85,000 Facebook app on the sidelines but ready for a re-launch. This has been a bit painful because this application along with a MoodMusic.fm website allows for the service to be completely cloud-based which of course is what our customers are asking for," the company said in a statement.

The goal of MoodMusic is to allow each member to become a DJ, by allowing users to share their favorite tunes to other MoodMusic customers. The app will allow members to connect with online friends in order to listen to the songs they've posted. Friends can also access the songs that you've posted. It's all pretty similar to what SoundCloud does.

In addition to its social music station, MoodMusic is also trying to tap into the underground music scene. In 2011, the Internet company bought BuildingBands.com, which allows musicians to post their music for potential discovery.

Aside from the free share of stock that people will receive from downloading the music app, there isn't anything that is vastly different about MoodMusic from other social radio stations.  However consumers have about two weeks to give the application a free whirl.  After that it'll cost you.  Those interested can find the app here.

Most of us are familiar with the Hip-Hop mogul Jay-Z. Whether it's for his 16-year plus music career (the guy outsold the Beatles for Pete's sake), or whether it's for his impressive business acumen. Either way, the Brooklyn rapper has gone from corner street hustler to hanging out with Warren Buffett. Not bad.

In his recent dealings, Jay-Z has partnered with Budweiser to organize and headline a summer music concert in Philadelphia. The mega concert being dubbed "Made in America," kills two marketing birds with one stone, as Jay-Z's 2011 song with Kanye West shares the same name, and it's also perfect for Anheuser-Busch's all-American branding image.

If you're of a certain age, then you'll remember the Budweiser Superfest which was a summer staple for music lovers from 1979 to 1999, linking itself with the industry's biggest acts like Aerosmith and Michael Jackson.

In recent years Budweiser has lost some of its youthful coolness, with newer, younger and seemingly hipper beer brands popping up a mile a millisecond, so the self proclaimed King of Beers is trying to reclaim its throne to a new generation of consumers. And Budweiser's efforts could be the music consumer's gain.

As part of the concert deal, Jay-Z will hand-pick each act to create a unique concert experience for the consumer who seeks out the best in summer concerts each season. As rosters for mega-concerts are usually put together solely by corporate entities, who may not have its finger on all that is hot and current, the "Made in America" concert will showcase 30 artists selected by someone who couldn't be more knowledgeable of what listeners want to hear.

And with close personal friends of Jay-Z like Chris Martin from Coldplay or U2's Bono, there is no telling what concert goers will be in for this Philadelphia summer.

Deeper connection

"Budweiser is expanding into a bigger and deeper connection through music," said Rob McCarthy, vice president of Budweiser at Anheuser-Busch. He added that both the partnering and the concert is meant to "engage young adults who have a passion for music," and the company plans to create a roster that is "very diverse, touching all that make up America."

Budweiser said it is not only interested in pulling in younger legally aged consumers, but also would like the brand to reach across, ethnic, race, and class lines.

This is the brewmaker's second recent attempt at bringing back the concert series. In 2011, on a smaller scale, Budweiser attempted to headline soul singer Jill Scott for its new wave of concerts, but the Philly singer's demographic proved to be too 30-something, for the beer company that was aiming for a younger target.

This is also Budweiser's second goaround with Jay-Z, as the company named him a brand director for its Budweiser select product in 2006. However, that first partnering was not successful as Select suffered a loss in sales in 2007.

However, it wasn't just Budweiser that suffered from sales losses, as the entire beer industry has seen better days.  According to the American Consumer Satisfaction Index, Anheuser-Bush, Miller, and Molson Coors have all seen a decline in sales in recent years.

This year has seen the return of huge companies trying to realign themselves with the music loving public. Coca-Cola, Burger King and Pepsi have all recruited some of the musical elite to further strengthen their products with new consumers.

So, whether you are a beer drinker or not, or a Jay-Z fan or not, you'll be able to see one of the biggest and most diverse concerts this year. Now exactly how much those tickets are going to run you is a whole other story entirely.

It seems like today, brands don't need customers as much as they needs followers. Facebook or social media followers that is.

An incredible 96 percent of Americans regularly use social media, and whatever those other four percent may be doing, a report from both Leo Burnett Worldwide and its marketing service division Arc Worldwide, estimate that 42 percent of consumers incorporate social media into their shopping.

This is slightly different from customers simply going to other various sites to compare products, as the report entitled SocialShop specifically covers those who chiefly use their Twitter or Google Plus accounts to shop, for example.

Researchers pinpointed exactly what customers use social media for when it comes to shopping:

• To find cheaper alternatives.
• To learn of the trendiest products.
• To validate buying choices by reading ratings and reviews.
• To obtain fun and unexpected content or deals.
• To locate hard-to-find brands and products
• For broadcasting the latest trends, brands, and stores.

Leo Burnett also differentiates how each shopper uses social media, as each use changes depending on what the consumer is trying to accomplish. The business consultants also name the different type of shopper among today's consumers. 

Types of shoppers

For example, there is the "dollar defaulter", one who uses social media to locate cheaper items. Or the "efficient sprinter" shopper, who uses their Facebook page to buy whatever is most popular or convenient.

The "quality devotee" shopper is mainly concerned with reviews from their social media friends,  the "strategic saver" shopper is all about paying the absolute least for their desired brands. There's also the "savvy passionista". They're the ones who are pretty much un-paid brand representatives by tweeting, posting and sharing the latest and greatest in product information.

The report also includes some stern advice for brands about knowing which social platform to use, as different sites are used for different shopping goals.

"People assign a different purpose and expectation to each social media channel they use, said Marsha Sajdeh, senior vice president and strategy director for Leo Burnett/Arch Worldwide, in a statement. "Once marketers understand how people use social to shop, they can hone their marketing strategies and cater to different shoppers' needs to drive engagement now and in the future."

In addition, researchers recognized that shoppers have shifting needs depending on what they're shopping for, thus, the report lists four categories that consumers usually buy under:

• Burden -- The buying category when one purchases items of practical use like, washing machines, car insurance, or household furnishings.
• Passion -- A consumer is under this category when they're  buying items for fun, enjoyment or on impulse.
• Routine -- This category is used for shoppers when they're buying items they don't necessarily want but need, like gas, trash bags, light bulbs, etc.
• Fun -- Self explanatory. This category is heavily associated with entertainment purchases like, eating out, going to a ball game, or buying something unhealthy yet tastey from the grocery store.

Researchers emphasize that social media and the internet on a whole has changed the way companies must first approach the customer. No longer can brands provide a blanket marketing approach to a complexed buying public. Not only has the internet made the consumer more savvy, it has also birthed a desire within the consumer to be communicated to through social media.

U.S. Cellular has refunded $65,784 to Wisconsin consumers who were billed for unwanted text messaging services by Silicon Investments Group, Inc., a third-party vendor. The case, involving more than 6,500 transactions, was mediated by the Wisconsin Department of Agriculture, Trade and Consumer Protection.

U.S. Cellular also suspended all future billing of Wisconsin consumers by Silicon Investments Group, Inc. and suspended the company from running “Premium Text Messaging services” on its network. The refunds from U.S. Cellular were listed on consumers’ March or April 2012 bills.

“We appreciate the company’s cooperation with our mediation efforts,” said Sandy Chalmers, Division Administrator for Trade and Consumer Protection. “U.S. Cellular took steps to assist Wisconsin consumers who were billed for inappropriate and unauthorized phone services by a third-party company.”

Although text spam is becoming an annoyance for consumers nationwide, few states have taken any action against the perpetrators. In 2007, Illinois sued an alleged text spammer in 2007 and Texas filed a similar suit in 2009.

One Wisconsin consumer who filed a complaint with the Bureau of Consumer Protection received a series of unsolicited text messages from Silicon Investments advertising an entertainment message service called “Gossiptexts.” He received three messages from the company within two minutes on January 31st – the first was an opt-in message for the service, the second confirmed his participation in the program and the third was a text about the Super Bowl half-time show.

Despite ignoring the texts and taking no action to approve his inclusion in the program, he was charged $9.99 on his next monthly bill. According to U.S. Cellular, the guidelines from the Mobile Marketing Association would require that he take active steps such as entering a confirmation code on a separate website in order to approve this service on his phone.

Telecommunications companies allow third-party vendors to charge consumers on their monthly bills for services and applications they purchase for their phones. But through a process referred to as “cramming,” illegitimate third-party groups will charge false fees or will bill for services the consumer never knowingly purchased. Because monthly phone bills can be difficult to navigate, these companies expect that a large percentage of consumers will never notice that the fees are tacked to the accounts.

Consumer Protection provides the following tips to help consumers avoid falling victim to cramming:

• Review your monthly bills closely, looking for questionable or unauthorized charges.  
• Dispute any unauthorized charges with the third-party vendor through their contact number listed on the bill. 
• If this gets you nowhere, take your issue directly to the cell service provider.

With milder than normal winter weather, U.S. domestic airlines were able to compile their best on-time arrival rate for the first quarter of any year since the U.S. Department of Transportation began keeping records.

Normally, icy weather in January, February and March results in numerous delays. The on-time arrival rate in the first quarter this year was 84 percent. That beats the previous record of 81.3 set in 2002.

Airlines reported three tarmac delays of more than three hours on domestic flights and no tarmac delays of more than four hours on international flights in March. All of the long domestic tarmac delays took place on March 17 in St. Louis, a day when severe storms took place in the area.

Complaints about airline service

Even though more flights were on time, not everyone was happy in the passenger cabin. In March, the government said it received 1,117 complaints about airline service from consumers, up 39.1 percent from the 803 complaints received in March 2011 and up 61.6 percent from the 691 complaints filed in February 2012.

A total of 213 of the March complaints involved the charter operator Direct Air ceasing operations. For the first quarter of this year, the Transportation Department received 2,743 complaints, up 16.8 percent from the 2,348 filed during the first quarter of 2011.

Unhappy fliers also post complaints online, at sites like ConsumerAffairs.

“On March 18, 2012, I used my United flier miles for a business class upgrade for two seats and was charged an additional $150,” Scott, of Montclair, N.J., posted at ConsumerAffairs. “The requests were put on a wait list and we failed to receive the upgrades. Nearly a month later, the airline had not refunded the miles and did so only after I called, waited 20 minutes on the phone, and complained. They told me the $150 was an administrative fee and to go to another location to request the $150 refund. Calling them directly is impossible and their fax number has been busy for a week. I would not have even requested the upgrade if not for the fact that the website said upgrades were available. I fail to see how they can charge a fee for a service that they did not perform.”

Patsy, of Houston, Tex., complained about the service on Delta. And she says it's not just bad in coach.

“I flew first class to Milan,” Patsy writes. “The flight attendants spent the night talking. I asked if they would mind keeping it down. The flight attendant turned her back on me. The male flight attendant stood and watched me struggle to take my bag down with no offer of assistance. The return flight was cancelled without any communication. I lost my bag for four days. I have called numerous Delta numbers. I got told to call this number. I called and I got sent to another number. This customer service is the worst I have experienced from an airline.”

More bumping, fewer lost bags

Slightly more passengers on the 15 reporting airlines got bumped in the first quarter than in the first quarter of 2011, but the airlines did a better job of keeping up with bags.

The Department of Transportation report shows the airlines posted a mishandled baggage rate of 3.09 reports per 1,000 passengers in March, better than March 2011’s rate of 3.32 but up from February 2012’s rate of 2.64, which was the best mark for a single month since the Department began collecting this data in September 1987. For the first quarter of this year, the carriers posted a mishandled baggage rate of 3.01 reports per 1,000 passengers, an improvement over the 3.73 rate for the first quarter of 2011.

Defendants in a debt collection operation that allegedly sought payment for bogus magazine subscription debts have settled with the Federal Trade Commission.

The FTC alleged in its complaint that Luebke Baker and Associates, Inc. knew, or should have known, that some of the magazine subscription debts they were collecting were not valid. The defendants, who handle collection of hundreds of thousands of accounts each year, violated the FTC Act, the Fair Debt Collection Practices Act, and the Telemarketing Sales Rule, according to the complaint.

The proposed settlement order, filed by the Department of Justice on the FTC’s behalf, bars Luebke Baker, Kevin Luebke, and other defendants from representing that a consumer owes a debt without having a reasonable basis to do so, and from making any other misrepresentations when collecting debts or selling goods and services. 

It also requires the defendants to conduct a reasonable investigation when a consumer disputes a debt or when the defendants otherwise have reason to question whether the debt is valid.

Under the proposed settlement order, when the defendants attempt to collect debts, they must provide consumers with disclosures about their rights under the Fair Debt Collection Practices Act.  The proposed order also requires the defendants to inform their collection employees of their personal obligations under the Act.

The Luebke defendants allegedly collected on debts for magazine subscriptions despite the fact that the FTC had successfully sued the company that originally sold the magazine subscriptions for deceptive marketing.  The defendants were notified of a 2003 federal court order against Cross Media Marketing Corp. that placed special requirements on anyone attempting to collect payment for these magazine subscriptions.

The FTC alleged that the Luebke defendants ignored these requirements and repeatedly told consumers the debts were due and payable.

The complaint also alleges that the Luebke defendants:

• illegally masked their identity and sent false information over caller ID, falsely posing as Ed McMahon, attorneys from a law firm, and other entities;
• falsely told consumers that magazine subscription debts are exempt from the statute of limitations; and  
• illegally threatened to garnish wages and take other unintended legal actions.

The defendants also marketed a credit repair CD titled “Credit Solutions,” allegedly collecting an up-front fee before providing any goods or services, in violation of the Telemarketing Sales Rule, which bans advance fees imposed by companies selling credit repair goods and services, according to the complaint.

The proposed settlement imposes monetary judgments totaling $3.1 million – $2.3 million in civil penalties for violations of the Fair Debt Collection Practices Act, $730,000 in disgorgement for collecting Cross Media Marketing Corp. accounts in violation of the FTC Act, and $45,000 in restitution to consumers for charging an advance fee for a credit repair product in violation of the Telemarketing Sales Rule.

Many consumers are still recovering from being in the throes of some very challenging economic times. A lot of the buying public have chosen to cut down on that favorite restaurant they frequent, or decided to give that poor delivery guy a break from trekking to their house three times a week.

This is all confirmed by a report from MaxPoint Interactive, which suggests that consumers are heading back to the supermarket in very large numbers. But the report also shows that customers have developed a behavioral shift when it comes to saving money at the grocery store.

The study entitled "Reaching Today's Cost-Conscious Consumer" reports that almost three in four respondents have changed the way they grocery shop within the last year, and they also have become more cognizant of food costs.

Researchers found that over 40 percent of mothers and shoppers aged 25 to 54 save money by shopping at multiple grocery stores to locate the best savings, and 50.4 percent of mothers admitted to clipping coupons, while steadily using their store-membership cards for extra deals.

It also seems that coupons dictate what items will be purchased for most consumers, as many have put savings over brand loyalty. Three in four respondents said they were more apt to experiment with a new grocery product if they had a coupon for it.

And nearly gone are the days of going to the grocery store with only a mental list. The survey indicates that 62 percent of respondents now create a food list before going to the store, and that same percentage is willing to deviate from name brand products in replace of generic store brands.

Behavior shifting

"Due to the economy, consumers are shifting their shopping behaviors to get more for their money," explained Dianne Kremer, Senior Analyst at BIGinsight. "As consumers feel a pinch from rising gas and food prices, they are becoming more creative with how they spend their grocery budgets--shopping closer to home, going to multiple stores to get the best deals and looking online for coupons and offers."

Other findings of the report show that:

Average monthly spend on groceries has steadily increased among the general population from pre-to-post recession from $250.94 in August 2007 to $277.00 in August 2011. Among mom, it has steadily increased from $311.95 to $341.14 during the same timeframe.

Two in five respondents indicate they are purchasing more store brand or generic items now than compared with this time last year. 53.4% are purchasing the same amount.

Three in 10 respondents have cut back on purchasing bakery items, candy, dessert items and magazines/books/DVDs over the past year. One in four have cut back on prime cuts of meat/seafood.

"Digital is reshaping the grocery shopping experience in the post-recession economy, as consumers turn to new channels to help plan their shopping trips," said chief operating officer at MaxPoint Interactive, Gretchen Joyce. ""By understanding what motivates today's consumer, brands can tailor their shopper marketing strategies to ensure they are gaining mindshare and winning at the shelf-level."

Genetically altered foods have been a hot topic in the media in recent months. Whether it's  the California Right to Know campaign, that obtained enough signatures for a ballotto be voted on, that could force manufactures to label when foods are being altered. Or, whether it's the recent backlash from watch groups that protest the new additive "meat glue" being added to beef products, people have expressed their lack of trust in the the concept of biotechnology.

But according to a recent survey, most consumers are supportive of food biotechnology.

The survey conducted by the International Food Information Council (IFIC) found that 38 percent of those surveyed have a good opinion about plant biotechnology, which is up from 32 percent two years ago. Researchers also report that many consumers believe that genetically altered foods do not require any labeling. Only 24 percent of the respondents said they required additional information on food packaging.

Out of the 750 participants of the survey, 69 percent said they were somewhat or very confident in the level of safety in today's foods, compared to merely 18 percent that said they wanted better labeling.

And the high levels of customer-trust can't be chalked up to consumer ignorance, as 57 percent of Americans have some awareness of biotechnology being used in foods, and 33 percent said they perceive the entire concept of biotechnology to be okay.

And just who, you might ask, is this IFIC? Another food-industry group claiming to be a research organization? Maybe, but the group's chair is a Cornell University professor and its board consists largely of academics so its findings probably shouldn't be viewed too skeptically.

Sustainability

The IFIC report also showed that food sustainability is extremely important to the consumer. It was learned that 56 percent of respondents have heard or read something about sustainability in food production, compared to 2010 when only 50 percent were knowledgeable of it.

But only 33 percent of consumers said they would pay more for food items that fit their definition of food sustainability, which is the term for food that's self-sufficient and has the ability to be continually produced.

Of those respondents that consider sustainability of crucial importance, 35 percent believe conserving the natural habitat should be top priority, 32 percent of those surveyed desire a sufficient food supply for the swelling population, 32 percent would like the amount of pesticides in foods reduced, and 24 percent of respondents wants to ensure that food remains affordable.

"Not surprisingly, awareness of sustainability among consumers is high," said Marianne Smith Edge in a statement, who is Senior Vice President of Nutrition and Food Safety at IFIC. "The catch is that we see from survey responses that consumers have many different definitions of sustainability, which can make meeting that expectation a challenge."

It's a tough job market out there, as many newly-minted college graduates are about to discover. But before they get discouraged about their prospects in their chosen field, the retail industry would like them to consider working in retail.

Maybe that's a depressing thought for someone who just spent $50,000 on a bachelor's degree, but it shouldn't. At least that's the view of Ramon Winemberg, a sales and operations executive with more than three decades of experience.

Winemberg, a former regional vice president for Brookstone stores in the western United States who also ran field operations for T-Mobile in Southern California and Nevada, says not all retailers and retail jobs are alike. High-end brands, especially, are in need of well-educated, capable employees. The sector, he says, is where the jobs are.

“The retail trade sector is the largest employer in the United States,” Winemberg said. “Even more compelling, the retail industry is expected to add even more sector jobs in the coming years and will continue to grow annually.”

While the current job market may not have openings in the field many graduates have chosen, chances are, Winemberg says, there's a retail outlet that can use their skills. For example, if you speak multiple languages, retailers with worldwide operations might find you attractive.

Help wanted

0Winemberg says retailers struggle to attract and retain the best and the brightest because of a misconception that all jobs in the industry are low-paying, entry level, or lack job potential.

“There are many great paying and challenging opportunities available in a wide variety of business disciplines,” he said.

In fact, national and global retailers are among the most aggressive recruiters in this job market. Most of the better retail companies have well-established college recruitment programs in place in order to bring on high potential candidates for key growth positions.

Not all the jobs are behind a counter, waiting on consumers. But Winemberg says even those jobs are not a bad place to start.

“Many successful executives point to the training and experience they gained in early career retail jobs and the lessons they learned in customer service and real consumer trade as compass points that still guide them today,” he said.

The National Center for Education Statistics (NCES) projects 1,781,000 students at the bachelor’s degree level will graduate as the college Class of 2012 and enter the labor market.

Back during the housing bubble, homeowners were treating their homes like ATMs. When lower rates offered opportunities to refinance, consumers often enlarged their mortgage, taking equity out in cash.

No longer. According to a report from Freddie Mac, consumers who are refinancing their mortgage are trying to get out of debt. The report shows 31 percent of those refinancing a mortgage in the first quarter replaced their 30-year mortgage with a 20-year or 15-year note.

In a significant reversal from the bubble days, two-third of the refinanced mortgages were for the same amount as the current mortgage. Not surprisingly, 95 percent opted for a fixed rate loan.

"Fixed mortgage rates averaged 3.92 percent for 30-year loans and 3.19 percent for 15-year product during the first quarter in Freddie Mac's Primary Mortgage Market Survey, well below long-term averages,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about 5.1 percent during the first quarter of 2012. It's no wonder we continue to see strong refinance activity into fixed-rate loans.”

Borrowers who replaced a 30-year fixed-rate mortgage with a 15-year note saved about three-quarters of a percentage point in interest in the first quarter. Despite the lower interest rate, however, the monthly payment on a 15-year loan is higher, but the consumer saves money over the term of the loan.

For example, if a consumer refinanced a $150,000 mortgage at 4 percent over 30 years, the monthly payment would be $716.12. At 3.75 percent over 15 years, the monthly payment would be $1,090.83, or $374.71 more per month.

But the loan would be paid off much sooner, with a maximum savings of more than $61,000.

Apple's iPhone may still be popular with consumers, as rising sales suggest, but evidence is growing within the industry that the companies selling the popular phone may be losing some of their enthusiasm.

In recent weeks there have been anecdotal indications that one carrier, Verizon Wireless, is actively discouraging consumers from buying the iPhone. There may be something to it because this reporter experienced it in March, when I decided to replace my aging Blackberry.

Since everyone else in my family has an iPhone, I thought I would try one as well. When I entered the Verizon store, the associate asked what I was interested in and I told him.

He asked if I was dead set on an iPhone or if I would consider an Android model. I replied I wasn't convinced either way and was open to an Android phone. That's what I ended up purchasing. I'm sure if I had really wanted an iPhone he would have been happy to sell me one but it was clear he preferred to sell me an Android.

3G vs. 4G

After lobbying long and hard to break AT&T's exclusive agreement to sell the iPhone, why would Verizon now try not to sell it? There could be several reasons, but some industry insiders speculate it has to do with the fact that the iPhone 4S is still a 3G phone.

Verizon has spent a fortune building its 4G LTE network and would like to move subscribers off its overcrowded 3G network. The last thing Verizon wants to do, the reasoning goes, is add new subscribers to 3G – especially iPhone users, who tend to use the most data.

Another reason might be the subsidies Verizon Wireless and other carriers must pay for the iPhone. Most wireless customers don't pay the full retail price for a mobile phone. If they do, they pay $649 for an iPhone. If they buy it with a two-year service agreement with a wireless carrier, the price is $199. The carrier makes up the difference.

Business news channel CNBC recently noted that wireless carriers appear to be actively pushing back, becoming more disciplined about how much they pay in subsidies, not just to Apple but all mobile phone makers.

Some carriers have also made noises about extending the life-cycles on their contracts, meaning consumers would be paying longer for their phones. That could end up making prepaid phones a more attractive option.

Nobody likes commercials, right?  So everybody should be ecstatic about DISH Network's new "Auto Hop" DVR. It lets you automatically "zap" commercials from  most recorded primetime HD programs shown on ABC, CBS, FOX and NBC when viewed the day after airing.

And maybe everyone will be. But for now, DISH has a relatively lukewarm standing among its customers, at least according to a ConsumerAffairs computerized sentiment analysis of about 180,000 comments on Facebook, Twitter and other social media.

Over the last 12 months, net sentiment for DISH peaked at 59% positive in February and now stands at 52%.

Social media analyses can reveal trends but often are not great at pinpointing specific likes and dislikes, as in this analysis of the most common positive and negative emotions:

DISH obviously thinks its Auto Hopper will change all that. It should make Cris of Minnesota happy. He wrote to ConsumerAffairs to complain about all the commercials on the TV programs he watches.

"The commercials take up over 50 percent of the programming so you pay to listen to that stuff being forced down your throat with no compensation," Chris said, implying that viewers should be paid for watching commercials.  If there's an idea that would be even less popular with the networks than the Auto Hopper, this is surely it.

"Easier than ever"

"Viewers love to skip commercials," said Vivek Khemka, vice president of DISH Product Management.

"With the Auto Hop capability of the Hopper, watching your favorite shows commercial-free is easier than ever before," Khemka said. "It's a revolutionary development that no other company offers and it's something that sets Hopper above the competition."

While this may be just what consumers have been waiting for, it's not going over well with the TV networks that make their billions by airing commercials.

NBC Broadcasting chairman Ted Harbertis called it "an insult to our joint investment in programming" as he addressed advertisers Monday morning, the Wall Street Journal reported. 

In effect, this puts the TV networks in the same predicament as newspapers and other publications that have seen much of their prized content lifted by renegade Web sites. But whether there's much networks and other program producers can do about it is another question.

DISH emphasizes that the Hopper does not physically delete the commercials.  It simply skips over them automatically if the consumer enables the auto-skip feature. So it can't easily be accused of altering copyrighted material.

The "Hopper" DVR costs Dish subscribers $10 a month in addition to a $99 upfront fee. Dish also offers a less-expensive traditional DVR with no upfront charge and a $6 monthly fee.

DISH is the nation's third-largest pay-TV provider. "Auto Hop" is an extension of the Hopper's PrimeTime Anytime capability, which allows viewers to record all of the primetime TV programming on ABC, CBS, FOX and NBC in HD. The Hopper automatically stores these shows for eight days after they have aired, creating an on-demand library of approximately 100 hours of primetime TV shows.

Do you trust the brands that you use? If not, you may not be alone, as a new report from Australia shows that the consumer's trust of major brands is lower than ever.

Whether it's consumers having less money to spread around, or whether there's a real decline in the quality of customer goods and services these days, companies across several industries don't rank very highly with consumers Down Under.

The report from Brand Asset Valuator showed that trust in retail, financial services, insurance and utility companies have dropped to 20 percent in the last two years, with bad customer service, raised prices, and questionable deal-offerings being the main reason.

"Trust can be lost very quickly if a brand doesn't behave the way it promises it will, which can happen to even large brands. You've absolutely got to stick to your promises, warned Andy Pontin chief executive of Australia-based ad agency Clemenger BBDO.

Consistency is vital

In an interview with a Sydney news outlet, Clemenger explained that "consistency is also extremely important when establishing trust. Once people have a strong perception of a brand, they find it very unsettling if the brand changes its approach."

Pontin also said it's all about brands sticking to its promises and always keeping the consumer in mind. Today's customer has a high level of buying-intelligence, and with a plethora of physical and online store options, businesses are being held more accountable for their everyday practices.

The Australian survey may provide insight to the findings in an April 2012 Nielsen report, suggesting that consumers have more trust from word of mouth advertising than traditional company advertising.

The Nielsen Global Trust in Advertising Survey revealed that 92 percent of customers around the world trusted "earned" media, compared to their 2007 study that showed only 18 percent trusted word of mouth advertising over other forms of marketing.

The Nielsen survey also showed that 70 percent of consumers chose online customer reviews to select a brand, company or product. This further supports the Australian report that the consumer's trust is moving further away from the company, and closer to the opinions of their peers.

If companies pay attention, they may be willing to shift some of their strategies. Paris Searson, vice president of PR firm Fleishman-Hillard, said that a brand can create all of the creative and ongoing advertising it wants, but if its actions don't consistently match its words, its promotional attempts are useless.

"Authenticity is vital when building trust", she said to the Australian press. "You've got to create a two-way dialogue both with staff and customers and speak the truth.

Panasonic, an electronics manufacturer specializing in flatscreen television sets, is the latest TV set maker to report a problem with red ink.

It reports an annual net loss of $10.2 billion, joining Sony and Sharp as companies struggling to find profits in the TV business.

Maybe it's just a coincidence, but the set manufacturers appear to be having difficulty at a time of rising consumer dissatisfaction with the performance of flatscreen TVs.

Specifically, consumers complain that the sets – regardless of the manufacturer – simply don't last as long as the old fashioned tube sets. Those big, boxy appliances typically lasted 20 years or more.

The new generation of flatscreen TVs, on the other hand, appear to have a much shorter life. Many people posting at ConsumerAffairs have complained their sets required expensive repairs almost as soon as the warranty expired.

“I have had the Panasonic LCD TV, model: TC-P50S30, for just over 12 months, when I was greeted one evening with the 7 blinking lights,” D, of San Ramon, posted at ConsumerAffairs. “A quick Google search led to numerous complaints and this page where I can see that I am hardly an exception.”

Picture problem

Janet, of Munhall, Pa., says she has a two-year old Sony Bravia set which also began having problems right after the manufacturer's warranty expired. She said the problem was with the picture.

“I contacted Sony who recommended an authorized repair dealer,” Janet wrote to ConsumerAffairs. “The problem is with the LCD panel. The LCD panel is no longer available through Sony. Sony's resolution was for us to purchase a refurbished TV for $675. This has apparently been an issue with all Sony televisions. Why was there not a recall or at least notification from the company prior to so many customers having their televisions going bad?”

That's another thing that consumers are upset about. These TVs are very expensive, compared to the older tube counterparts. It's very easy to spend between $1,000 and $2,000 on one of them.

The repairs are also very expensive, leading some consumers to conclude they would be better off buying a new TV. The only problem they have – which kind to get? Many are reluctant to spend another $1,000 to $2,000 on a TV that will require another expensive repair in a few years.

Ally Financial has put its troubled mortgage subsidiary, Residential Capital, into bankruptcy, hoping to rid itself of the litigation-plagued lender. Ally also said it will try to sell its international auto-finance and insurance businesses.

The company faces billions of dollars worth of lawsuits from mortgage insurers and investors over the many mortgage deals that went sour when the real estate bubble burst. It also owes billions to the U.S. Treasury, where officials have been growing impatient and reportedly thinking of breaking up Ally and selling off its parts.

Ally -- the former GMAC unit of General Motors that specializes in dealer floorplan financing and car loans -- is 74 percent-owned by the U.S. Treasury after receiving a $17.2 billion government bailout.

"We think the single most important thing we can do to preserve and enhance shareholder value is to distance Ally from the mortgage business," Ally Financial CEO Michael Carpenter said in an April 26 conference call with financial analysts.

Major distraction

Ridding itself of ResCap, as Residential Capital is known, would free Ally of a major distraction and reduce its cost of funds, which should free up more money to lend to GM and Chrysler Group dealers and car buyers.

In the April conference call, Carpenter said that dumping the mortgage business would create "a world-beating auto franchise, a leading direct-banking franchise."

Ally's direct-banking business already serves as a cheap source of funds for the company and Carpenter says getting rid of Rescap will make the company a "category killer."

The Chapter 11 bankruptcy filing has no direct effect on Ally Bank operations.

U.S. teenagers say they know texting while they drive is dangerous, but they do it anyway.

In a survey commissioned by AT&T, 97 percent of teens said they know the practice is dangerous but 43 percent admitted to doing it at least once. Seventy-five percent of those questioned said texting behind the wheel is common among their friends.

The main reason they do it, teens said, was pressure to respond to a text immediately. Almost all teens - 89 percent – said they expect a reply to a text or email within five minutes or less. Sixty-one percent of teens in the survey say they glance at their phone while driving, and 61 percent have seen their friends read or send an email, or text, while driving.

How did teenagers develop such a dangerous habit? Maybe by observing adults. According to 77 percent of teens, adults tell kids not to text while driving – yet adults do it themselves "all the time."

Forty-one percent of teens report seeing their parents read or send an email, or text, while driving. Sixty-two percent of teens feel that getting reminders from their own parents not to text and drive would be effective in getting them or their friends to stop texting and driving.

Texting ranks as the No. 1 mode of communication among teens. On average, teens text five times more a day than a typical adult. When this habit hits the road, drivers who text are 23 times more likely to be in an accident or near-accident.

Texting is just one form of distracted driving that is increasingly blamed for accidents. According to the Center for Disease Control and Prevention, in 2009, more than 5,400 people died in crashes that were reported to involve a distracted driver and about 448,000 people were injured.

Among those killed or injured in these crashes, nearly 1,000 deaths and 24,000 injuries included cell phone use as the major distraction.

You've probably already heard of "pink slime", the beef-based  additive that's added to processed meats and beef products -- and, experts say, isn't as bad as it sounds -- but get ready to wet your palettes for the scrumptious sounding "meat glue."

The appropriately named additive is used to take smaller cuts of beef and pork and join them to larger cuts for a more uniform and better-looking steak, and it's used in meats from the finest restaurants and deli's to your local fast-food joint.

Industry experts say that 11 to 35 percent of all packaged beef, chicken, fish, ham, pizza toppings and other deli products contain the questionable meat adhesive. Although the U.S. Agriculture Department requires companies to disclose such information through labeling, many companies choose not to do so, and consider meat glue okay to consume.

Making more profit is also motivation for companies that choose not to list the enzymes on labels, as smaller inexpensive cuts of meat can be transformed into bigger and more expensive cuts and sold at a higher price.

To the rescue

But here comes the American Meat Institute to the possible rescue, as it initiated a conference call with the employees of Fibrimex, and Ajinomoto North America, which are the two companies that make the sticky additive.

Although the two meat glue companies said there are no harmful affects to eating the enzymes, it was used to combine two unshapely beef tenderloins together for a more uniform appearance, enhancing the meat's appeal so it can be can be sold at restaurants, cruise ships, banquets or other fancy eateries.

"If you've got a steak that has meat glued together, the only way you can make the product safe is to cook it well done," said William Marler, a Seattle based attorney for food safety cases. "But since consumers don't know that, they won't know they have to order it that way. That's the problem."

In a response given to a California news outlet, Janet Riley of the American Meat Institute did warn that names given to these additives paint a wrongful picture for the consumer, causing them to automatically consider them harmful without doing any background research.

"These terms are really unfortunate," she said. "They give people a false impression, for sure, and I am concerned about their use."

Los Angeles-based doctor Bruce Hensel told the buying public that meat glue is a "natural enzyme," not an artificial additive. "The FDA believes it's safe as long as it's handled properly," he said.

Michele Simon, policy consultant for the Center for Food Safety has more of a problem with the meat industry's decision not to be open with the public about its products.

"For decades, the meat industry has conveniently operated in the dark, not sharing the dirty details of their practices with the public, while the federal government looked the other way," she said. "But now, consumers are demanding to know the truth about what they are.

Thousands of college students graduated over the weekend and now face an economic double whammy -- a very tough job market and crushing debt from loans to pay for their education.

As ConsumerAffairs reported in 2007, college costs have skyrocketed over the last two decades, meaning most students now must take out college loans just to get a bachelor's degree. An analysis by the New York Times reveals 94 percent of students who receive a bachelor's degree go into debt to do so.

The average college debt last year was $23,000 but many students, especially those who attend for-profit schools, can rack up much higher debt loads. Carlos, of North Hollywood, Calif., admits he was naive when he, as a graduating high school senior, was shopping for schools. He eventually settled on Westwood College, a for-profit school.

Sticker shock

“I showed up the first week and during that week a finance rep from the school said 'once you're done with this program, this will be your total debt.' It was nearly $75,000 on my student loan,” Carlos wrote in a ConsumerAffairs post.

Students who graduate from college with significant debt – if they are fortunate enough to land a job – see a large part of their paycheck going to service their education debt. It can sometimes interfere with efforts to buy a home.

Robert, of Beverly. Mass., says he and his wife have three student loans between them, but felt they could afford to buy a house because they were making “deferred” payments on their loans. However, they discovered the credit bureaus weren't reporting it that way.

“They said they will continue to report the $1,008 a month figure, which is preventing us from qualifying for our home mortgage by less than $100 a month,” Robert wrote.

Poll

A poll last November by the The Institute for College Access & Success (TICAS) found 76 percent of young adults believe that college has become harder to afford in the past five years, and nearly as many – 73 percent - say that graduates have more student debt than they can manage.

When asked about the importance of college and other education and training after high school, about eight in 10 say it is more important than a generation ago. Whether or not they have a college degree or student debt, most young people share these views and concerns.

“This survey clearly shows how young adults view higher education today: it’s more important than ever but also less affordable, and it comes with too much debt,” said Lauren Asher, president of TICAS.

The new U.S. Consumer Financial Protection Bureau (CFPB) recently sounded the alarm over rising college loan debt, noting that the total now exceeds $1 trillion. Working with the Department of Education, CFPB launched its “Know Before You Owe” campaign to education prospective students and their families about the dangers of college debt.

The agency recently designed an online “Paying For College” tool to help students with financial decision-making.