Current Events in August 2012

Oklahoma City has seen some pretty good days in the last few years, and not just because of its successful NBA team, the Oklahoma City Thunder. Nationally, the city has been known to be pretty much recession-proof, with one of the lowest unemployment and home foreclosure rates in the country.

In addition, Oklahoma City has created a $700 million educational campaign to either renovate or build over 70 schools throughout the evolving city. The construction campaign is one of the biggest education initiatives in the country.

With Oklahoma City's steadily growing economy and its extremely rapid pace of development, other areas are looking to the city for both ideas and inspiration when it comes to avoiding the full impact of the nation's recession.

But not only is Oklahoma City considered one of the best places to live and start a business, its residents were also able to lose one million pounds collectively, after being challenged by the city's mayor. The city was also recently named one of the "seven worst places to smoke weed," which is either a big plus or a big minus, depending on your point of view.

The missing million

ConsumerAffairs spoke with the Oklahoma City Mayor Mick Cornett about how his city has thrived during recessionary times, and how its residents lost those million pounds in a relatively short period of time.

“In the winter of 06/07, there was a story in Men's Fitness Magazine that went and called the city one of the most obese cities in the country, one of the fattest cities in the country,” he said.

 “It was about the time that we were starting to show up on a lot of complimentary lists -- best places to get a job -- those types of lists, and I was doing my best traveling the country and speaking inside the city talking about Oklahoma City's kind of emerging economy and [how] we're rising up to a new position. And that obesity list really bothered me,” he said.

 “And I kind of went through some personal reflection at the time, and got on the scales one day and went to a website and found out that I was obese. I didn't even know."

"So I decided to lose some weight and I lost a pound a week for about 40- weeks. During that time frame I studied the city’s infrastructure and culture and why we have a problem, and came up with an idea of trying to create awareness about obesity, [because] we weren't talking about it, we were in denial,” he explained.

“So I came up with the idea of putting the entire city on a diet and announcing that we were going to lose a million pounds. And got a private sector donor to put a website together so we can kind of collect the information from everybody. So there was no government money spent on it.”

“And as of January we reached the million-pound mark," he said. “We had 47,000 people sign up and we reached our goal. It took four years and three weeks.”

Self-inventory

Mayor Cornett said that during that time, the city was able to take a look at itself and reexamine how its infrastructure was leading to the high obesity rate.

After the city's self-inventory, the Mayor was able to include jogging, and biking trails, sidewalks, senior health and wellness centers, and other additions to the city that helped residents remain active.

The Mayor admitted that if it wasn't for the million pound weight loss challenge, the additions to the city may not have been included in the development.

“Once we went through the awareness campaign, we saw what we had to correct,” he said.

Although a city losing one million pounds is a huge challenge, a bigger challenge may have been for the Mayor, when he had to tell the same people who voted him into office, that they needed to lose a bit of weight.

And what was the initial reaction?

“I think most were stunned,” the Mayor said. “I think it was 'check-out what the crazy mayor did'. I think that was the first reaction. But even if that's what it was, it got people talking about it. And obesity became the sort of topic in Oklahoma City that no one was comfortable talking about.”

“I think it’s because we consider ourselves nice people and obesity can affect the way you look,” he added. “And it's not nice to talk about the way people look, it's an unflattering situation.”

“I think when I went public with my story and my personal struggles, and announced this was going to be a topic of public debate -- and we're not going to hide it anymore -- I think it freed up everybody to talk, inside their home, inside their businesses, inside their church. Many, many people jumped on board. It just took off,” he said.

Weight loss, economic growth

But has the city been able to maintain its new healthier lifestyle?

Mayor Cornett says there is a definite link between Oklahoma City's economic growth and its ability to keep improving its obesity rate.

“Our per capita income is going up because of the jobs we created, and with the per capita income on the rise, it will lower those obesity rates.” It all comes back to economic development and creating a city where they want to live,” he said.

And so far, the Mayor has been praised by Oklahoma City residents, as well as the entire nation for doing just that. Building a city that people are enthused to move to and reside in.

In fact, he says the old order of people moving to cities to follow certain jobs has changed. Nowadays people first determine where they want to live, then the jobs will follow them.

“Jobs follow people, people don't follow jobs anymore,” he says. "If you can create a city where highly educated twenty-somethings want to live, the jobs will follow. It was announced that we were the most entrepreneurial city in the country in terms of start-ups per capita.”

Mayor Cornett also says what makes Oklahoma City a great place to start a small business is the residents and their level of consumer confidence.

“People are spending money,” he said. “We have the lowest unemployment in the country. Our cost of living is low and is about 90 percent of the national average, and our wages are higher than the national average, so that creates a discretionary opportunity for people to spend money on things like, restaurants or NBA tickets or whatever they choose.”

“What it boils down to, if you're not spending all of your money on housing, and in many communities that's what it feels like, [then] you have money to do other things. And that option is one of the things that leads to the quality of life living in Oklahoma City.”

“Life is easy here,” he added. “Life can be a struggle in a lot of places, but life is not a struggle here on a daily business.”

The Mayor also says that because land is still very affordable in Oklahoma City, people are purchasing it in various areas, which will avoid any one area from becoming overpopulated.

In essence, the city has developed the best of both worlds. It's become a faster-paced city with more to see and do, but sprawled out enough so residents still have ample space.

So what's next for the country's number one developing city in the next decade or so?

“I think the next ten will be better than the last ten, with all of the projects we're building right now,” said the Mayor.

“We're building a new convention center and a new downtown street car, a new park, the new senior health and wellness centers, improvements on the river, the fairgrounds. We got a billion dollars of construction in the pipeline coming in, and almost all of it is in the inner city. You need to develop downtown.”

“We've convinced suburbanites that the quality of their life is directly related to the intensity of the core," he said. "You can't be a suburb of nothing. And that's been kind of the key to getting these tax generated infrastructure projects in line.

"We also pay cash; we don't go into debt for most of the stuff I just talked about. It takes us quite a while to build them, but I like that pay as you go philosophy."

Also,“We have another 10 years of projects to build. So you ask about the next ten years, the dirt is going to be flying from now on,” he said.

Square seems to be on a roll. Less than a week after closing a blockbuster deal with Starbucks for mobile payments, it's fired another warning shot across the bow of credit card processors.

Any business that does $250,000 a year in credit card transactions can eliminate the 2.75 percent swipe fee and pay a flat fee of $275 a month. For a business doing just the minimum $250,000 in credit charges a year, it's a savings of about $3,000 a year.

Square made credit card acceptance more accessible for small and micro businesses with its small card reader that plugs into a smartphone. Any business, anywhere could accept credit and debit cards with the device and pay a 2.75 percent swipe fee.

Its new pricing plan, the company says, will give small businesses a big advantage when it comes to lowering the cost of accepting a credit card.

“For 62 years, merchants have suffered complicated, expensive processing fees,” said Square CEO and co-founder Jack Dorsey. “Square is the first company to rethink electronic payment pricing with the merchant in mind. We are giving merchants affordable, predictable pricing. With one monthly price, merchants know that the sales they’ve processed in a day is the same amount deposited in the bank.”

Square was founded in 2009 in San Francisco and its services currently are only available to businesses in the U.S. It's an upstart competitor in an industry dominated by Visa, MasterCard and American Express.

Motorists faced another week of rising gasoline prices, though the increases moderated in parts of the Midwest affected by regional pipeline and refinery issues.

The national average price of self-serve regular today is $3.716 per gallon, compared with $3.673 last Friday, according to AAA's Fuel Gauge Survey. The price has jumped 29 cents a gallon in the last month.

Diesel fuel is going up even faster. The average price today is $3.960 per gallon, versus $3.878 a week ago.

What's behind the summer gasoline hikes, that started in early July? Economist Joel Naroff of Naroff Economic Advisors, in Holland, PA, says blaming it on recent refinery problems in the Midwest and California doesn't hold up since the hikes began long before the fires.

“And I just get tired of the argument that it is either distillates or crude or politics or growth or geopolitical risks or whatever is the excuse du jour for the latest round of energy price increase,” Naroff said. “Very simply, even after the fire, we were not going to get any shortages if the price of gasoline remained where it was. Thus, the surge in prices makes no real economic sense given actual supply and demand. Buy hey, why let economics get in the way of a good trade?”

Among the states, meanwhile, some of the lowest prices in the country are centered in a five state pocket of the mountain west and southwest. The states along both coasts continue to have some of the highest pump prices in the land.

The states with the highest gas prices this week are:

• Hawaii ($4.201)
• California ($4.115)
• Illinois ($4.050)
• Connecticut ($3.978)
• Michigan ($3.951)
• Oregon ($3.936)
• Washington ($3.936)
• New York ($3.928)
• Wisconsin ($3.907)
• Alaska ($3.904)

The states with the lowest gas prices this week are:

• South Carolina ($3.422)
• Arizona ($3.445)
• Mississippi ($3.472)
• New Mexico ($3.478)
• Tennessee ($3.490)
• Alabama ($3.495)
• Utah ($3.517)
• Arkansas ($3.517)
• Colorado ($3.519)
• Wyoming ($3.527)

Even though they began shopping for back-to-school and college items earlier than ever this year, families with school and college-aged students said that as of August 7 they have more than half of their shopping lists to complete.

According to National Retail Federation's (NRF) 2012 Back-to-School and College Surveys conducted by BIGinsight, the average person with children in grades K-12 has completed 40.1 percent of her shopping, while college shoppers and their families have completed slightly more at 45.3 percent. Overall, school and college shoppers this year are expected to spend a total of $83.8 billion.

Last minute shopping

“It’s evident that there are plenty ‘last minute shoppers’ this year and for retailers these next two weeks are of utmost importance when it comes to attracting families who still have apparel, electronics and school supplies to stock up on,” said NRF President and CEO Matthew Shay. “Given how much of an impact the economy is having on consumers’ buying decisions, retailers will remain competitive up through the final sale after Labor Day, rolling out web, in-store and even mobile promotions to entice children and their parents.”

The survey found that more college students and their families have already finished their shopping (16.4%), than school shoppers (7.8%). Additionally, there are fewer school and college shoppers who say they have not started their shopping yet (28.5% vs. 31.1% of college shoppers last year, and 26.9% vs. 28.3% of K-12 shoppers last year.)

When it comes to how families will pay for their school and college merchandise, the survey found debit/check cards are the preferred payment method for shoppers this summer. Four in 10 (42.5%) with children in grades K-12 will use their debit cards most often, similar to the 39.4 percent of college students and their families. More than one-quarter (28.4%) of those shopping for school items prefer to use cash and another 25.6 percent prefer credit cards. College shoppers are more likely to use their credit cards (29.4%) over cash (26.7%).

Economy a factor

With eight in 10 shoppers saying the economy will affect their school and college spending plans, it’s no surprise promotions and coupons are popular with families this summer. According to the survey, of those who have already begun shopping, two in five (38.5%) with children in grades K-12 say at least half of the school-related purchases they made were influenced by coupons, sales and promotions, down slightly from 41.5 percent last year. The same number of college shoppers (38.6%) said at least half of their purchases were influenced by sales and promotions, up from 34.2 percent last year.

To wrap up their shopping lists, school and college shoppers will continue to look for bargains as they comparison shop in stores and online. Back-to-school shoppers will do the remainder of their shopping at discount stores (59.6%), department stores (54.4%), clothing stores (42.9%), electronics stores (13.7%), and online (27.2%). College students and their families will head to discount (47.6%), department (41.1%) and clothing stores (30.1%). More than one-third (34.6%) of college shoppers will do the remainder of their shopping online.

“Smart shoppers are utilizing every channel they can to find the best back-to-school deals, which this year includes comparison shopping through traditional and non-traditional outlets like catalogs and drug stores,” said BIGinsight Consumer Insights Director Pam Goodfellow. “With so many shoppers relying on debit cards and cash this year, it’s clear that parents are determined to send students back to class on budget.”

Smartphones, tablets play big role

Nearly seven in 10 tablet owners will utilize their tablets to shop for school and college items, and more than half of those who own smartphones will shop in some way via their mobile device for both school and college merchandise. Specifically, 68.9 percent of college students and their parents and 67.0 percent of school shoppers will use their tablets; 58.7 percent of smartphone owners looking for school merchandise will use their mobile device, compared to 51.6 percent of back-to-college shoppers.

“Mobile continues to drive the conversation in the retail industry, and when it comes to back-to-school, retailers have spent months preparing their mobile promotions in anticipation of one of the biggest mobile shopping seasons we’ve seen yet,” said Shay.

Of those who own tablets, most (43.8%) will use their tablet to research products and compare prices, Four in 10 (40.6%) college students and their families will use their tablet to research products and compare prices.

The survey also found that nearly three in 10 (28.4%) shoppers with children in grades K-12 will make an actual purchase with their tablet; slightly more (34.5%) will commit to purchasing college items via their device. Adults 25-34 are among the most likely to utilize tablets for back-to-class purchases. Four in 10 (42.8%) 25-34-year-olds who own a tablet will make a back-to-school purchase using their device, while nearly half (46.7%) who own a tablet in that same age group will purchase college merchandise via their tablet.

When it comes to smartphone usage, most back-to-school (33.3%) and college (31.5%) shoppers will use their smartphones to research products and compare prices, while fewer school (19.2%) and college (20.9%) shoppers will commit to buying something on their handheld device.

These numbers rise among 25-34-year-olds, with the majority of smartphone owners in this age group using their devices to research products and compare prices for back-to-school (54.2%) or college (50.1%).

“There’s no question that mobile technologies have changed the game for shoppers, especially when it comes to bigger shopping trips that require higher budgets,” said Goodfellow. “Savvy shoppers are learning how to seek out coupons, sign up for text alerts from their favorite companies to receive instant rebates, and even download applications that enhance the shopping experience.” 

You wouldn't think a mouthguard would prevent brain injuries, and the Federal Trade Commission (FTC) doesn't think so either.

The agency has reached a settlement with mouthguard marketer Brain-Pad, Inc. and its President Joseph Manzo, barring them from making unsupported claims that their mouthguards reduce the risk of concussions from lower jaw impacts, reduce the risk of concussions generally, or have been clinically proven to do either. 

The settlement also prohibits Brain-Pad and Manzo from misrepresenting the health benefits of any mouthguard or other athletic equipment designed to protect the brain from injury.

According to the FTC, Brain-Pad and Manzo made their claims about the mouthguards’ concussion-protecting qualities on product packaging and in Internet and print advertisements. The Brain-Pad website now refers to the mouthguards as "the original jaw-joint protectors."

On packaging for the Brain-Pad Pro-Plus Junior mouthguard, the defendants claimed the device “creates new brain safety space!” and “Reduces Risk of Concussions!  From Lower Jaw Impacts.”  Similarly, packaging for the adult-size Brain-Pad Double Mouth Guard proclaims that the device, “Reduces risk of CONCUSSIONS! Protects Upper AND Lower Teeth!”  The mouthguards retail for $10 to $30.

Mouthguards can help to shield a person’s teeth from being injured, and some can reduce impact to the lower jaw,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.  “But it’s a big leap to say these devices can also reduce the risk of concussions.  The scientific evidence to make that claim just isn’t adequate.”

The FTC administrative complaint charges the Conshohocken, Pennsylvania-based Brain-Pad and Manzo with deceptive advertising for claiming that their mouthguards reduce the risk of concussions from lower jaw impacts, reduce the risk of concussions generally, and have been clinically proven to do both. 

Things are tough in the newspaper business.  Well, actually, things have always been tough in the newspaper business, at least for the reporters, editors, pressmen, compositors, printers and back-office staff. Publishers maybe had to buy cheaper Cuban cigars, which was a sacrifice no doubt much admired by the grunts on the lower floors.

Newspapers have always poor-mouthed their situation when holding down, turning back or simply ignoring staff demands for more pay, whe mercilessly raising classified ad rates and when raising the newsstand price to keep up with the price of a grande Starbucks concoction. Actually, Craigslist took care of the classified ad problem, but we're getting ahead of ourselves.

Thanks, Congress

We've all heard about the problems the poor publishers face -- the rising cost of newsprint, the rising cost of ink, the rising cost of diesel fuel, the exorbitant demands of the mailroom staff, the difficulty getting a good cigar. Never discussed, of course, was the protection from the anti-trust laws daily newspapers were awarded decades ago. After all, when you buy ink by the ton, you can pretty much get what you want out of Congress. Until recently, anyway.

By buying up and closing down their local competitors, daily newspapers aimed to sew their markets up tighter than a tomb, which turned out to be ghoulishly prescient. Being a monopoly nearly always turns out to be a bad long-term strategy. Companies get flabby, bureaucratic and set in their ways.

So when something new comes along -- like, oh, the Internet -- big autocratic newspapers tend to ignore it.  After all, it worked with television, cable, radio and all those other new-fangled innovations.

Eaten alive

But as we know, it hasn't worked out so well this time around and now we have the sorry spectacle of big, clumsy newspapers being eaten alive by all those nasty little Internet sites. Why, even The New York Times is feeling the heat.

The Times had no sooner built a monument to itself than business went south and it had to sell its brand-new building and lease it back.  Then it sold a bunch of regional newspapers and television stations. Then it sold WQXR, the classical music stations that lulled generations of New Yorkers to sleep. Then its CEO, former school teacher Janet Robinson, quit. The Times felt bad and gave her a $23 million exit package. It's expensive to live in New York, after all.

But now, the Times has pulled itself together and hired what the board is convinced is just the right guy to turn things around.  Some nimble entrepreneur fresh from Silicon Valley maybe? Or perhaps a hotshot journalist who's been running a successful Web start-up? Or an advertising whiz from Madison Avenue? 

Well, no. Marissa Mayer had already been snagged by Yahoo. So the new Times CEO is one Mark Thompson, most recently the director general of the British Broadcasting Corp., a government entity that's supported largely by mandatory license fees levied on Her Majesty's subjects.

He's being paid $10.5 million for coming aboard and will get an annual salary of $1 million, which is only fitting. After all, who better to turn around what is arguably the flagship U.S. newspaper than a Brit from a government entity that is not supported by advertising and that is nearly as old and hidebound as the Times?

There's been some mention of Thompson leading an "international expansion" of the Times.  After all, there are hardly any newspapers in Great Britian, 
Australia, Canada or other English-speaking venues. The Times does own the International Herald Tribune so perhaps they could shut that down, hoping to aid sales of the Times?

Insanely innovative?

OK, so he hasn't worked for an agile start-up that revolutionized the journalistic and advertising worlds. But at least Thompson has been a trailblazer on the Internet, which is arguably what the Times really needs. Right? Well, the Beeb has a Web site and runs video over the Web. They're not exactly Google, though, or even AOL.

This is all going over really well in the threadbare offices of the Newspaper Guild of New York, which represents almost 1,100 employees at the Times. They've been without a contract for more than a year.

An information company's primary assets, besides its brand, is its people but the industrial nature of the newspaper business leads to the same kind of cutthroat labor relations that typify industries that employ stevedores and teamsters.  Employees get a free lunch at Google and Yahoo. They're lucky to get time off for lunch at most newspapers.  

There are those who think it's too late -- that newspapers, like the global climate, have reached the tipping point and can't be saved. The Ford Foundation apparently buys into this view. It's started making grants to the likes of the Washington Post and Los Angeles Times. 

So the next time you're tempted to give a few bucks to a street person, ask yourself -- would it be better to go stuff a few dollars into the nearest newspaper box instead? Those Cuban cigars aren't getting any cheaper, after all.

Need a lift to the airport? A ride across town? Normally you would hail a cab but with the growing use of smartphones and social media apps, unlicensed and unregulated car services are competing with taxi companies.

They're called “grey area services” and are marketed to consumers through personal technology applications via smartphones and tablet devices, and sites such as Uber and ZoneRide. Regulators in major cities say they are conducting significant hackney-related commerce in cities without public safety and consumer protection oversight.

Consumers might like the convenience and lower prices but some cities and states are cracking down, saying unregulated car services pose a threat to public safety.

Bypassing the rules

"No one likes regulations but we have to work under a broad set of safety requirements that have evolved over decades of operation and are intended to protect the passengers and drivers," said Oleg Uritsky, a spokesman for Fleet owners in Boston. "Technology companies have recently found ways to bypass those rules and the result is a growing number of unlicensed cars that are operating with no accountability."

The technology companies don't hire drivers or purchase cars but instead market their software and applications to independent drivers who aren't subject to the rules and regulations of taxi companies. These regulations can cover safety inspections, fuel efficiency, pollution standards and criminal background checks for drivers.

Escape taxes

Adding insult to injury, as far as city regulators are concerned, they often garage the vehicles outside city limits to escape applicable excise taxes and other fees. And while consumers may think they're getting a better deal, officials say they usually don't. They point out that grey area services are free to charge consumers whatever they want and frequently jack up fares during rush hour, holidays and other busy periods using uninspected and unapproved meter-like devices.

Physical safety can also be an issue, officials say. They note grey area services don't follow the requirements for partitions or emergency buttons in the unlicensed vehicles. There are no GPS requirements to record the exact location of a vehicle during an emergency and no ID or consumer contact information requirements.

Unfair competition

There's also no question that licensed limo and taxi companies and the government agencies that regulate them view smartphone-marketed services as unfair competition. Even if they charge the same as a licensed company, they don't have to follow burdensome and costly rules.

Both ZoneRide and Uber advertise convenience, efficiency and lower costs. Uber, for example, offers “hassle free payment” that charges your ride, including tip, to your credit card on file.

In a recent report on the issue, Mathew Daus, the former commissioner of the New York City Taxi and Limousine Commission, says that while consumers may find some temporary advantages that these companies have exploited, their innovations may simply illustrate how the industry can improve its services within the current system.

In other words, regulated taxi and limo services should adopt the mobile technology systems the grey area services use or risk getting left behind in traffic.

If you were born between 1946 and 1964 -- the huge population group known as baby boomers -- you should get screened for hepatitis C.

The advice comes from the Centers for Disease Control and Prevention (CDC), who warns this generation, which widely experimented with sex and drugs, is especially vulnerable to this liver-destroying disease.

According to the health agency, one in 30 baby boomers has been infected with hepatitis C, and most don’t know it. Hepatitis C causes serious liver diseases, including liver cancer -- the fastest-rising cause of cancer-related deaths -- and is the leading cause of liver transplants in the United States.

The CDC included the advice in its regular Morbidity and Mortality Weekly Report. Draft recommendations were issued in May, followed by a public comment period.

Getting checked for hepatitis C is simple

“A one-time blood test for hepatitis C should be on every baby boomer’s medical checklist,” said CDC Director Thomas R. Frieden, M.D., M.P.H. “The new recommendations can protect the health of an entire generation of Americans and save thousands of lives.”

Previously the CDC only called for testing on individuals with certain known risk factors for hepatitis C infection. Risk-based screening will continue to be important, but is not sufficient alone, the agency said.

According to estimates, more than two million U.S. baby boomers are infected with hepatitis C, accounting for more than 75 percent of all American adults living with the virus. Studies show that many boomers were infected with the virus decades ago but don't know it and do not perceive themselves to be at risk, and therefore have never been screened.

Death toll

More than 15,000 Americans -- most of them baby boomers -- die each year from hepatitis C-related illness, such as cirrhosis and liver cancer, and deaths have been increasing steadily for over a decade. The CDC is worried the death toll will growing quickly in coming years.

If every baby boomer got tested, the CDC estimates it could identify more than 800,000 additional people with hepatitis C. That would likely save many lives. With newly available therapies, up to 75 percent of infections can be cured. The CDC says it would prevent the costly consequences of liver cancer and other chronic liver diseases and save more than 120,000 lives.

The problem with hepatitis C is a lot of people can have the virus and not realize it. According to the U.S. National Institutes of Health, most people who were recently infected with hepatitis C do not have symptoms. About one in 10 have yellowing of the skin that gets better.

Of people who get infected with hepatitis C, most develop a long-term infection. Usually there are no symptoms. If the infection has been present for many years, the liver may be permanently scarred. In many cases, there may be no symptoms of the disease until cirrhosis has developed.

It's no secret that senior citizens are a con artist's favorite target. They seem more trusting and more likely to fall for a scammer's pitch.

But why, exactly? Conventional wisdom holds that older people are more trusting and, because they are from a generation that came of age at a time when people were more honest, they don't question a scammer's “too good to be true” promises.

But maybe there's something more at work here. Researchers at the University of Iowa believe it all has to do with deteriorating brain function, a product of advancing years.

They say they’ve pinpointed the precise location in the human brain, called the ventromedial prefrontal cortex (vmPFC), that controls belief and doubt, and that is what explains why some of us are more gullible than others.

Direct evidence

“The current study provides the first direct evidence beyond anecdotal reports that damage to the vmPFC increases credulity. Indeed, this specific deficit may explain why highly intelligent vmPFC patients can fall victim to seemingly obvious fraud schemes,” the researchers wrote in the paper published in a special issue of the journal Frontiers in Neuroscience.

Statistics tend to support their conclusions. A study conducted for the National Institute of Justice in 2009 concluded that nearly 12 percent of people 60 and older had been exploited financially by a family member or a stranger. And a report last year by insurer MetLife Inc. estimated the annual loss by victims of elder financial abuse at $2.9 billion.

In 2006, ConsumerAffairs reported the case of an elderly Kansas man who lost $300,000 to the Canadian lottery scam over a four-year period. In an interview, his daughter said repeated intervention by family members and the police did little good, that her father could not conceive that someone would lie to him.  

The Iowa authors say their research can explain why the elderly, like the subject of our story, are vulnerable.

Possible explanation

“In our theory, the more effortful process of disbelief to items initially believed is mediated by the vmPFC, which, in old age, tends to disproportionately lose structural integrity and associated functionality,” they wrote. “Thus, we suggest that vulnerability to misleading information, outright deception and fraud in older adults is the specific result of a deficit in the doubt process that is mediated by the vmPFC.”

The ventromedial prefrontal cortex is a part of the brain the size of a softball lodged in the front of the human head, right above the eyes. It’s part of a larger area known to scientists since the extraordinary case of Phineas Gage that controls a range of emotions and behaviors, from impulsivity to poor planning.

But brain scientists have struggled to identify which regions of the prefrontal cortex govern specific emotions and behaviors, including the cognitive seesaw between belief and doubt.

Tests with a deceptive ad

In a study 500 seniors with various forms of documented brain damage were shown advertisements mimicking ones flagged as misleading by the Federal Trade Commission (FTC) to test how much they believed or doubted the ads. The deception in the ads was subtle; for example, an ad for “Legacy Luggage” that trumpets the gear as “American Quality” turned on the consumer’s ability to distinguish whether the luggage was manufactured in the United States versus inspected in the country.

Each participant was asked to gauge how much he or she believed the deceptive ad and how likely he or she would buy the item if it were available. The researchers found that the patients with damage to the ventromedial prefrontal cortex were roughly twice as likely to believe a given ad, even when given disclaimer information pointing out it was misleading. And, they were more likely to buy the item, regardless of whether misleading information had been corrected.

“Behaviorally, they fail the test to the greatest extent,” says Natalie Denburg, assistant professor in neurology who devised the ad tests. “They believe the ads the most, and they demonstrate the highest purchase intention. Taken together, it makes them the most vulnerable to being deceived."

Process begins at age 60

The vulnerability begins as you get older. The ventromedial prefrontal cortex begins to deteriorate as people reach age 60 and older, although the onset and the pace of deterioration varies, according to Daniel Tranel, neurology and psychology professor at Iowa and corresponding author on the paper. He thinks the finding will enable doctors, caregivers, and relatives to be more understanding of decision making by the elderly.

“And maybe protective,” Tranel said. “Instead of saying, ‘How would you do something silly and transparently stupid,’ people may have a better appreciation of the fact that older people have lost the biological mechanism that allows them to see the disadvantageous nature of their decisions.”

Here's a statistic that may be surprising to some pet owners:

There has been a 32 percent rise in dogs being diagnosed with diabetes between the years of 2006 and 2010, according to a study released by Banfield Pet Hospital called the “State of Pet Health 2011 Report.”

The study shows that canine obesity was one of the leading factors in dogs developing Diabetes Mellitus, and it remained within the top five causes for the disease among young adult, mature adult and geriatric dogs.

The authors of the report advise owners to bring dogs to the vet twice a year as opposed to once, which will increase the chance of the illness being discovered in its beginning stages.

Also, pet owners should be engaging their dogs in the right amount of physical activity, while constantly managing their food intake, meal portions and other nutritional needs.

All of these methods combined will significantly lower the possibility of your dog developing diabetes or other dangerous illnesses, say experts.

Placing one hand on your dog's side is one quick way of checking to see if your dog is obese or not. If you're not able to feel your dog's ribs quickly and upon first touch, it's a good indication he or she may be overweight.

Other symptoms

There are also other symptoms that owners will notice when their dog is suffering from the disease.

“Polyuria, which means urination. Polydipsia, which is drinking more, is the first sign you see in dogs and weight loss,” said Dr. Sailendra Roy, a veterinarian at Ambassador Animal Hospital, located in Silver Spring, Md. in an interview with ConsumerAffairs.

“That's the characteristic or sign which prompts the owner to say 'hey something is going wrong here.' And then they bring the animals in, we do the blood work exactly the same way like humans. So that's the typical symptom. Once you get the blood work it tells you more if there are any other organs involved and things like that. But these are the primary symptoms," he said.

Experts also say if your dog is diagnosed with diabetes, but still able to hold down food and water without vomiting, they may be able to be treated as an outpatient and won't require an expensive and sometimes stressful hospital stay.

Of course this will be ultimately determined by the veterinarian during the initial diagnosis or within your pet's follow-up visits.

Insufficient insulin

Canine Diabetes is usually due to an insufficient amount of insulin being created in the dog's body, which is the Type 1 version of the disease, formerly known in humans as Juvenile Diabetes. In rare cases a dog may have enough natural insulin but the pancreas will process it in the wrong way, say experts. This can cause Type 2 diabetes, formerly known in humans as Adult Onset Diabetes.

Currently, there is no cure for the disease in animals, and although treatments vary, Dr. Roy says insulin has a far better success rate than other types of medicines, and really should be your first line of attack against dog diabetes.

“Once a dog is diagnosed, most dogs will be depending on insulin or medication,” he said. “In cats and dogs oral medication has questionable benefits.”

“So you start with insulin and there's a lot of foods out there which are designed as a prescription diet for diabetic patients,” he noted. “There are quite a few out there like Waltham. They have different kinds of diabetic diets that are normally recommended because home meds are kind of impossible [to properly treat the dog].”

The Banfield Hospital report also shows that geography may play a part in dogs being diagnosed with diabetes. In 2010, Rhode Island, Iowa, Idaho, Nevada, and Delaware had the highest rate of Diabetes Mellitus in dogs.

Although the reason why these states had a higher prevalence for Canine Diabetes wasn't revealed in the report, it could be due to the same reason diabetes numbers fluctuate between states among humans.

Awareness, lifestyle and overall culture have always impacted health and potential treatments in humans and their pets.

Chronic condition

Once a dog starts treatment, it's unlikely that the condition will reverse itself, and medication will be needed for the remaining years of the animal's life, Dr. Roy said.

“Once the insulin starts, spontaneous remission is non-existent,” he said. "Most dogs will be getting it for the rest of their lives. There are some reports that [show] sometimes dogs and cats get into remission, but it's so rare. I haven't seen that happen."

According to Michigan veterinarian Dr. Race Foster, who co-authored four books on pet health, certain dog breeds are more prone to getting diabetes than others.

Labrador and golden retrievers, German shepherds, Yorkshire terriers, the Keeshond, the beagle and poodles of various sizes all have a slightly greater chance of developing the disease, he says.

Although Dr. Roy agrees there are some key findings on the link between genetics and Canine Diabetes, there isn't enough large-scale research for veterinarians to make a full and absolute conclusion.

“In the same way that research has been done in humans you can see a familiar test result,” [in dogs] he says. “We ask the patient if their parents had diabetes. I don't think as far as my knowledge is concerned that there is any extensive research to find out whether there's an inherited gene that's possible for diabetes in animals.”

Experts also say that using a portable blood glucose meter for your dog as well as keeping an informational chart of the results is imperative once your dog is diagnosed, and it's also important not to change your pet's diet until you discuss it first with your veterinarian.

The late Steve Jobs didn't like using a stylus and so Apple gadgets didn't have one, even though they were widely sold as accessories in the after-market. Now Samsung is hoping a stylus-style pen and a split-screen function set off its Galaxy Note 10.1 tablet from the competition, most notably the Apple iPad.

What this means is that a user could be looking at one side of the screen while taking notes or sketching on the other side. Samsung designers think it brings new functionality to the tablet, which many consumers find hard to use because of the on-screen keyboard.

But while those features may be attractive, they don't come cheaply. With 16 gigabytes of memory and Wi-Fi only -- no cell connectivity -- the Galaxy Note is priced at $499. If that sounds familiar, it's because it's the same price as the similarly-equipped iPad.

Samsung is promoting the Android-based device as a game-changer -- as a completely new information appliance that goes beyond previous tablets, smartphones, laptops and other devices.

"It is the ultimate on-the-go device which consolidates core benefits of diverse mobile devices while maintaining smartphone portability," the company said in publicity matrials surrounding the launch.

"Consumer research indicates that people always want to do more tasks much better, even on the go, whether it is web browsing, email, games, or viewing photos and videos," Samsung said. "Even for consumers with multiple smart devices, they still carry around a notepad for writing down ideas."

Note-taker

Basically, once all the jargon and hype is taken away, the Galaxy Note is notable primarily for its ability to function as a note-taker that lets you look at something on one side of the screen while taking notes on the other. It sounds simple, but just try doing it on any other device.

Even a task as simple as jotting down a phone number or address from a smartphone requires either a dead-tree notepad or a pen that will write well on your sweaty palm. 

And yes, the Galaxy Note is capable of translating your written notes into text, although reviewers who've tried it say it works only moderately well. Of course, the same is said daily in much more emphatic language about the utilities that try to translate speech -- i.e., voicemail messages -- into text. The results are usually laughable, at best.

Reviewers have noted that the resolution of the Note's screen isn't as sharp as the iPad and the battery life isn't as good. But does any of that really matter if you're desperately taking notes or trying to make a quick sketch of the architectural concept that came to you on the subway?

The Note may catch on or it may not. But you've got to give Samsung credit for coming up with a new twist on what is by now an old idea.

The cost of a mortgage is going up, though not by much, with rates still near historic lows. But two weekly gauges of interest rates both reveal upward movement.

Freddie Mac reports the 30-year fixed-rate mortgage (FRM) averaged 3.62 percent with an average 0.6 point for the week ending August 16, up from last week when it averaged 3.59 percent. Last year at this time, the 30-year FRM averaged 4.15 percent.

The 15-year FRM this week averaged 2.88 percent with an average 0.6 point, up from last week when it averaged 2.84 percent. A year ago at this time, the 15-year FRM averaged 3.36 percent

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.76 percent this week with an average 0.6 point, down from last week when it averaged 2.77 percent. A year ago, the 5-year ARM averaged 3.08 percent.

Bankrate finds similar rate movement

At Bankrate.com there were similar results. The 30-year FRM averaged 3.86 percent; the 15-year FRM 3.05 percent and the 5/1 ARM 2.93 percent. Analysts say the rise, for the third week in a row, is actually a good sign for the housing market and the overall economy.

"The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates, said Frank Nothaft, vice president and chief economist, Freddie Mac. “For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June."

Why rates went so low

When it appeared that much of Europe was teetering toward default many international investors dumped money into U.S. Treasury bonds, driving yields to an all-time low. Because mortgage rates are tied to Treasury yields, that drove mortgage rates to an all-time low. As that crisis has lessened, investors have been selling those bonds, allowing the yields to rise. That, in turn, has lifted mortgage rates.

Whether the upward trend can be sustained depends on what happens on both sides of the Atlantic, with the European debt crisis and the path of the U.S. economy, analysts say.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 3.86 percent, the monthly payment for the same size loan would be $938.76, a difference of $303 per month for anyone refinancing now.

Ordinarily mortgage rates this low would set off a frenzy of home-buying and refinancing. It hasn't because lenders have significantly toughened underwriting standards, making it much harder now to qualify for a mortgage.

In a court case in Tacoma, Wash., three girls say they were raped multiple times after pimps advertised them as prostitutes on Backpage.com, the classified ad site owned by Village Voice Media.

The site has been the target of investigations and demands by state attorneys general and parents' groups. The site has also been implicated in a federal court case in Virginia, where prosecutors say gang members trafficked high school girls as prostitutes through Backpage.com

Two of the Tacoma girls were 13 and one was 15 when "professional adult pimps" advertised them as prostitutes on Backpage.com, which "at no time" tried to verify their ages or do anything to protect them, according to the complaint in Pierce County Court, Courthouse News Service reported.

"Two of the girls were 13 years old and one girl was 15 years old when they ran away from home and became controlled by professional adult pimps who posted advertisements for the girls on the Backpage.com escort website, a website owned, operated, designed, and controlled by the Backpage.com defendants. Hundreds of customers responded to the Backpage.com advertisements, and the girls were all raped by adults multiple times as a result," the complaint states.

"The Backpage.com defendants were well aware that their website was being used in this way because they developed and required content to ensure that young girls, like the plaintiffs, would continue to be advertised in this manner. The Backpage.com defendants did so because of the millions of dollars that they generated from the website every month."

The girls claim that Backpage "does more to promote illicit human sex trafficking than any other single entity in the United States," and has knowingly developed a reputation as a site where "pimps and prostitutes advertise commercial sex and where commercial sex customers can find it."

They claim that Backpage developed content requirements to "assist pimps and prostitutes in avoiding detection so that Backpage.com can continue profiting from their illegal activities."

For example, advertisers cannot offer "sex for sale," but can ask for "donations" for an "escort," and the site allows blurred photographs that conceal the escort's identity, the complaint states.

The girls, J.S., S.L. and L.C., sued Village Voice Media Holdings dba Backpage.com, and an alleged pimp, Baruti Hopson, who they say is in prison.

L.C. says she was 13 and "barely one month out of seventh grade" when her picture was posted as an escort on Backpage. L.C claims she "was raped by hundreds of adult prostitution customers - as many as twenty per day."

The girls call Backpage user requirements - that the advertiser must be at least 18 and may not post ads that solicit sex for money or exploit minors - a "fraud and a ruse that is aimed at helping pimps, prostitutes, and Backpage.com evade law enforcement by giving the appearance that Backpage.com does not allow sex trafficking on its website."

Backpage and its corporate parent Village Voice Media Holdings sued Washington State in June to stop enforcement of a new child sex-trafficking law that requires publishers to verify the age of people shown in sex ads. Enforcement of the law has been enjoined until the case is heard in Federal Court.

Attorneys general from 46 states last year demanded that Backpage.com  disclose information on its alleged attempts to remove sex trafficking advertising, especially that which could involve minors. 

In the past three years, there have been more than 50 cases in 22 states involving the trafficking or attempted trafficking of minors through the site, the AGs said.

Gangster Crips

In the Virginia cases, two men associated with the Fairfax County-based Underground Gangster Crips (UGC) gang pled guilty in May to participating in a prostitution business that recruited and trafficked high school girls.

Donyel Pier Dove, aka “Bleek,” 27, of Alexandria, Va., pled guilty to sex trafficking of a juvenile and use of a firearm during a crime of violence.  He also admitted to purchasing a credit card that was used to pay for advertisements on Backpage.com to solicit customers for the prostitution enterprise. He was recently sentenced to 23 years in prison.

Michael Tavon Jefferies, aka “Loc,” 21, of Woodbridge, Va., was sentenced  to 10 years in prison.

The latest Quinnipiac University poll finds New York City voters sour on Mayor Bloomberg's proposal to limit the size of sugary soft drinks. The poll finds voters oppose the plan 54-42 percent, stiffer opposition than a June 13 poll that found a 51-46 percent split.

By an even larger 56-24 percent margin, voters oppose another Bloomberg initiative to encourage breast-feeding by making baby formula less available to new mothers. Women oppose this measure 60-23 percent while men oppose it 53-24 percent.

However, by an intoxicating 56-17 percent, voters think a New York City crackdown on alcohol abuse would be a good idea. Support is 62-16 percent among parents of children under 18.

Voters approve 50-38 percent Bloomberg’s handling of public health. They are divided 47-49 percent on whether government should get involved in eating/drinking habits to fight obesity. But they say 48-38percent that these measures are not “nanny government.”

“Voters disagree with Mayor Michael Bloomberg’s push to increase breast-feeding and to limit the size of sugary drinks, but they like the idea of cracking down on alcohol abuse,” said Maurice Carroll, director of the Quinnipiac University Polling Institute.  

“Overall, New Yorkers give Hizzoner good grades on public-health as they reject the criticism that it's ‘nanny government.’”

From August 8–12, Quinnipiac University surveyed 1,298 New York City voters with a margin of error of +/- 2.7 percentage points. Live interviewers call land lines and cell phones.

Stop and frisk 

Black voters disapprove of stop and frisk 69-25 percent while approval is 57-37percent among white voters and 53-45 percent among Hispanic voters.

A decrease in police use of stop and frisk would not lead to an increase in gun violence, voters say 50-41 percent, again with significant racial division. Black voters say 63-28 percent the reductions would not lead to more crime. White voters believe it would 49-39 percent and Hispanic voters agree 52-36 percent.

“Public opinion is just about down-the-middle on the police tactic of stop and frisk. If the decline in such stops persists, will gun violence grow? On this question, too, New Yorkers are divided,” Carroll said.

“But we’re still a liberal city. If there’s a choice between taking all steps to end crime and protecting civil liberties, New Yorkers come down 78-16 percent on the civil liberties side.

“Police Commissioner Ray Kelly and his cops continue to get high marks.”

As kids head off to school with backpacks loaded with heavy books and college students shell out hundreds of dollars for text books they'll use for one semester, digital publishers are promising to make education less expensive and easier to carry.

The same technology that allows consumers to download and read their favorite mystery on their tablet or e-reader also lets college students access course material electronically. More and more distributors are getting into the game.

Amazon textbooks

Amazon, which sells all types of books through its Kindle device, is lately promoting the availability of textbooks. On its website, Amazon says it can save students up to 80 percent of the cost of their print textbooks.

Students choose a rental length between 30 and 360 days and pay only for the exact time they need a book. They can extend their rental for as little as one day or convert to purchase. If you make annotations, you can access your notes and highlights anytime, even after the rental expires, at kindle.amazon.com.

Accessing the texts does not require a Kindle. According to Amazon, you simply download the Kindle reading app and can access the textbooks on a Mac, PC or almost any kind of mobile device.

CourseSmart

Meanwhile, companies specializing in textbooks are also getting into digital distribution. CourseSmart, which bills itself as the world's largest provider of eTextbooks and digital course materials, says it has saved students more than $100 million on textbooks since the company was founded in 2007.

"CourseSmart was founded on the principal of expanding access to higher education by offering students significant savings on their required course materials, and as the cost of earning a degree continues to rise, it is essential that students have digital options,” said Sean Devine, CEO of CourseSmart. “CourseSmart's savings go beyond the textbook sticker price, because students can access their digital course materials without having to purchase a dedicated device or specific eReader."

Of course, studying using an eTextbook only works if the provider has the book you need. CourseSmart claims to have over 90 percent of the core textbooks in use today, or 30,000 titles from over 33 publishers.

Free services

Colleges and universities, meanwhile, are also getting involved in an effort to reduce the very high cost of college texts, which pose a significant financial burden to many students. MIT's Open Course Ware, for example, provides free lecture notes, exams and videos.

Rice University has something similar, called Connexions Consortium, offering open source educational technology and open access educational content.

College textbooks can easily cost between $100 and $200. The good news for students is this cost will probably come down as eTextbooks expand through the educational system. It'll make the backpack a little lighter too.

Gerber Legendary Blades, of Portland, OR, is recalling about 119,000 Gerber Bear Grylls Parang Machetes.

A weakness in the area where the handle meets the blade can cause the handle or the blade to break during use, posing a laceration hazard.

The firm has received 24 reports of breakages, including one report of a laceration injury in Canada, which did not involve stitches.

The recalled product is a curved blade machete with an overall length of 19.5 inches and a blade length of 13.5 inches. The handle is a dark gray textured rubber grip with wrist lanyard, orange trim and a stylized "BG" on it. The blade is marked with the "GERBER" trademark and a stylized Bear Grylls trademark. The machete comes in a black nylon sheath with orange and gray trim.

The machetes were sold separately or as one of the products in Gerber's Apocalypse Survival Kit. The model numbers are on the package. Model numbers are: 31-000698, which has "Survival Series" printed on the package; and 31-001507, which was sold only at Walmart. Model number 30-0006010 is for the Apocalypse Survival Kit, which includes a Parang machete among other items in a foldable black cloth case with "GERBER" printed in orange on the inside right.

They were sold at sporting goods stores nationwide and online from January 2011 through June 2012 for about $43 for the individual Parang machetes and $349 for the Apocalypse Survival Kits.

Consumers should immediately stop using the recalled Parang machetes and contact Gerber Legendary Blades to receive a free replacement.

For additional information, contact Gerber Legendary Blades toll-free at (877) 314-9130 between 9 a.m. and 5 p.m. PT Monday through Friday, or visit the firm's Website.

When you think about it, 100 percent of the time you spend in a car is spent sitting down. So the fact that automakers would be putting more effort into making seats more comfortable should come as no surprise.

A study by J.D. Power and Associates find that vehicle owners have noticed the improvement. Satisfaction with seats is increasing, even among owners of compacts and subcompacts, which have been known in the past to skimp a bit on seating amenities. Seat satisfaction among compact and subcompact vehicle owners averages 7.5 points on a 10-point scale, which is significantly higher than the 2008 study, as are ratings for seat material conveying an impression of quality and seat styling.

Great expectations

"Owners have high expectations for their vehicle, and purchasing a smaller vehicle doesn't mean they want to forego amenities, especially regarding seats," said Mike VanNieuwkuyk, executive director of global automotive at J.D. Power and Associates. "A vehicle's interior has been growing in importance to vehicle owners, and seats are paramount to driver and passenger comfort."

The study finds that consumers now rank interior comfort as the second most important reason for selecting a particular car.

"Automakers are doing a good job of recognizing the importance of seat comfort and quality, identifying suppliers to provide the best seats available and integrating them into the vehicle," said VanNieuwkuyk. "That's evident by the steady increase in seat satisfaction since 2008."

That may be one reason -- that and the rising cost of gasoline -- why consumers are increasingly buying smaller vehicles. Market share for compact and subcompact models has grown to 35.4 percent in the first seven months of 2012 from 32.0 percent during the same period in 2008. At the same time, 27 percent of new-vehicle owners replaced their vehicle with a smaller 2012 model.

What consumers want

Just what makes for a comfortable automobile seat? Believe it or not, headrests and armrests figure prominently, according to J.D. Power. Simple and easy to understand controls are highly valued and have a significant impact on owner loyalty and satisfaction.

Other highly-prized qualities are memory seats, seats that are heated, cooled or ventilated, and adjustable sliding rear seats or adjustable reclining seats. Only 30 percent of current owners say their cars possess those features for 90 percent say they would like to have them.

In addition, the majority of owners who have fold-down rear seats, heated seats, power lumbar support or height-adjustable seat belts in their current vehicle indicate they would want these features again in their next vehicle.

So while engine performance, ride, color and styling all remain important features of a car, it appears consumers are growing more pragmatic about what really matters most.

"Seats are a constant touch point for vehicle owners, and is central to providing a comfortable experience," said VanNieuwkuyk. "Owners clearly are looking for more features and comfort from their vehicle seats, and it is evident there is an opportunity to raise the bar."

Six federal financial regulatory agencies have issued a proposed rule to establish new appraisal requirements for “higher-risk mortgage loans.”

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, mortgage loans are higher-risk if they are secured by a consumer’s home and have interest rates above a certain threshold.

For higher-risk mortgage loans, the proposed rule would require creditors to use a licensed or certified appraiser who prepares a written report based on a physical inspection of the interior of the property. It also would require creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

Additional appraisal

Creditors would have to obtain an additional appraisal at no cost to the consumer for a home-purchase higher-risk mortgage loan if the seller acquired the property for a lower price during the past six months. This requirement would address fraudulent property flipping by seeking to ensure that the value of the property being used as collateral for the loan legitimately increased.

The proposed rule is being issued by the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

The agencies are seeking comments from the public on all aspects of the proposal. The public will have 60 days, or until October 15, 2012, to review and comment on most of the proposal. 

Two states, New York and Connecticut, have reportedly launched investigations of seven major banks on charges of rigging the Libor Rate -- a rate used by international banks on money they lend to one another.

The Financial Times reports New York Attorney General Eric Schneiderman has sent subpoenas to seven major banks that have offices in New York. It's reportedly part of a probe Scheiderman has launched with Connecticut Attorney General George Jepsen.

The investigation reportedly centers on whether the banks conspired to fix rates set by Libor, causing harm to investors, including state governments.

Libor stands for London Interbank Offered Rate and is a composite rate formed from the various rates banks charge one another. $350 trillion in derivatives are reportedly tied to this interest rate.

An international scandal erupted in June when it was discovered that some major international banks were fraudulently raising or lowering the Libor rate in order to profit from trades.

The Libor rate is supposed to accurately reflect banks' borrowing costs, as well as providing a gauge of economic sentiment in the banking sector. If bankers are feeling confident, the Libor should go down. It they are worried about a bank's solvency, the Libor should go up.

Going on for years?

What New York and Connecticut may be concerned about is how any manipulation of this rate could affect U.S. derivatives investments which use the Libor rate. In addition, mortgages, student loans and other financial products can also be tied to the Libor rate. In previous reporting, The Financial Times interviewed a former trader who claimed rate manipulation was nothing new, that it had been going on for more than 20 years.

Any rigging of the Libor rate is a major concern for financial regulators because the rate, more than anything, is supposed to be the canary in the coal mine. Supposedly, no one knows a bank like other banks. If bankers are reluctant to lend money to a fellow banker, that shows up in the form of a higher Libor rate and alerts the financial community to possible problems at a bank.

But if bankers conspire to keep the Libor rate artificially low, that early warning system is gone. The June investigation of Barclays Bank focuses on allegations that happened in 2008, masking the approach of the credit crisis that hit in October.

In addition to that, any manipulation could cause unnecessary rate fluctuations on nearly one million U.S. mortgages that were indexed to the Libor rate.

None of the banks said to be under investigation by New York and Connecticut have commented on the report. Barclays, meanwhile, has agreed to pay $450 million in Britain to settle charges that it attempted to manipulate this key rate.