Like arriving home to see a broken window, Holli knew something was wrong when she pulled up the statement from her new 401(k) account and saw a stranger's name there. Under her name and account information, she found a second name: Paulino Rodriguez. But was it an accident, random vandalism or a serious crime? She opened the virtual door to her account and sorted through the broken glass. Her worst fears would soon be confirmed.

After some frantic research, Holli pieced together part of the story. Rodriguez, the 401(k) Web site revealed, lived in Escondido, Calif., about 90 minutes south of Holli's home in Fountain Valley. He was a restaurant worker in an Escondido Burger King. This was no prank -- though Holli would soon feel like several government agencies, corporations and a criminal were having fun at her expense. She was a victim of something experts call Social Security number-only identity theft, generally committed by immigrants who don't have the necessary credentials to work legally in the U.S.

Holli wondered what else the imposter had done to her credit and her good name. (Msnbc.com has agreed to conceal Holli's identity in this story.)

Escondido is Ground Zero of the immigration debate. Just a few minutes north of the Mexican border, near San Diego, Escondido is home to thousands of Mexican immigrants who battle their way every day into the country and into gainful employment. Mexicans have been fighting in Escondido for a long time. Not far away, in 1846, U.S. forces were routed in the Battle of San Pasqual during the Mexican-American war, the worst American defeat of the conflict. Today, some say, Mexicans are again overwhelming American forces in a different kind of battle.

For the past three years, Paulino Rodriguez used Holli's Social Security number for the right to work at the Escondido Burger King. Recently, with his wife and four children, he took up residence in a middle-class subdivision on Espanas Glen Street in Escondido, a short block near Interstate 15.

Rodriguez, according U.S. immigration officials, is a Mexican national with no right to work in the United States. But thanks in part to Holli's Social Security number, he had found a decent life for his family in Escondido, which means "hidden" in Spanish. But that that life was safe only if no one found out he was sharing Holli's identity.

Across America, perhaps millions of U.S. citizens are sharing their identities with undocumented workers who are virtually hiding behind Social Security numbers like Rodriguez. The data on the subject are incomplete, but each year nearly 10 million workers pay their taxes using the wrong Social Security number. While this can happen for a variety of reasons, most often it involves restaurant and farm workers, suggesting many of those 10 million workers are employees who are using someone else's SSN to satisfy federal employment requirements.

Information at her fingertips
Holli, a woman in her 50s, panicked one month ago when she saw Rodriguez's name on her 401(k) account, then she started putting the pieces together. It wasn't hard -- she had all of Rodriguez's personal information right there on her screen, including his age: 38. She called his employer, Reddy Restaurants Inc., which supplies workers to Burger King. Holli says she was told that nothing could be done because Rodriguez fulfilled the requirements for employment when he started work -- namely, he supplied what appeared to be a valid Social Security card.

Mike Holly, owner of Reddy, confirmed that Rodriguez was an employee but refused to otherwise discuss the situation.

Holli then called the local police, who took a report but said nothing could be done. She contacted the Social Security Administration, the Federal Trade Commission, even her 401(k) administrator. The message she heard from each was the same: We can't help you. She even went to an attorney, who delivered bad news.

"(He) said since my credit hadn't been affected, they couldn't do anything for me," Holli recalled.

But Holli was persistent. She eventually convinced her local police department to take a report, and to forward it to Escondido police. Then, she pestered the dispatcher in Escondido enough that the file was passed on to the investigations department. Detective Damon Vander Vorst took an interest in the case.

Rodriguez entered the country nearly 20 years ago, public records suggest. It's unclear where in Mexico he grew up, or how he crossed the border. At about the same time, Holli was just starting her career.
Precisely when their lives were blended isn't clear. But about three years ago, Holli remembers getting a funny look from a clerk while she was filling out insurance paperwork at an optometrist's office. "There's someone else's using that (SSN) number," she remembers being told. Then, "I'm not supposed to tell you this, but the name Paulino Rodriguez."

Holli assumed it was an error. But around that same time, Rodriguez signed up with Reddy Restaurants and began working -- using her SSN -- at Burger King.

Holli has no solid information on how her number was stolen, but she has one guess: About five years ago she was laid off from her job and went back to school to finish her college degree in finance. Her school, Long Beach State, used her SSN as her ID number during that time. Her first brush with Rodriguez happened within a few months of her graduation.

Three years passed without incident. Then in April, she opened up the Web site for a new company benefit – a 401(k) plan – and saw the name Paulino Rodriguez again. Holli's heart sank and her quest began. It ended a month later when she talked to Vander Vorst. On May 13, Vander Vorst staked out a home in a gated subdivision named Villas Espanas, waiting for his suspect.

While there is an obvious Latino majority, the neighborhood looks just like any other middle-class San Diego suburb, full of neat white stucco townhomes with red-tile roofs. Most store signs are in English only. A dry cleaner, grocery store, and school are just a few blocks away. During a recent visit by an msnbc.com reporter at midday, the neighborhood was quiet. The subdivision has a large pool; hanging in Rodriguez's front window, three pairs of child-sized goggles were visible from the sidewalk.

Just outside the home, Vander Vorst arrested Rodriguez. Police allege he had falsified Social Security card and work visa.

Getting such documents is hardly an obstacle for illegal immigrants seeking work. Fake Social Security cards and work visas can be purchased in Los Angeles for around $200, law enforcement officials say -- a small investment for the opportunity to work in the United States.

Rodriguez was charged with identity theft and with falsifying government documents, according to Escondido police spokesman Lt. Craig Carter. He was shipped to nearby Vista Detention Facility, where he awaits his fate on the criminal charges. meanwhile, the Immigrations and Customs Enforcement agency has placed a "hold" on him. That means he is "subject to deportation," according to Lauren Mack, a spokeswoman for ICE.

Rodriguez refused an interview request by an MSNBC.com free-lance reporter who visited the jail.

Mixed feelings
Holli had mixed feelings when she began her quest to track down her imposter.

"When all this began a month and a half ago, I was worried I might be ruining his life when all he wanted to do was work," she said. But the bureaucratic tangle had changed her. "Now after spending numerous hours of my time trying to find out what is going on as well as worrying, losing sleep and using my work vacation time, I no longer feel bad for Paulino. He made the choice to steal my number. And the fact that privacy laws keep me from being able to see what he is doing with my number infuriates me."

She also fears possible retribution for her actions; that's why she insisted that msnbc.com preserve her anonymity. She also wants to prevent Rodriguez from finding out who she is. Generally, SSN imposters don't commit full-blown identity theft, and don't know who their victims are – Rodriguez likely never even knew Holli's name.

Immigrant imposters usually just provide a Social Security card to their employer on their first day of work to fulfill what's known as the "I-9" requirement. Since new employment rules took effect in 1983, U.S. workers must supply documentation to prove they are eligible to work; nearly always, a Social Security number is used. While employers can call the Social Security Administration to perform limited verification of the information, that's seldom done. So it's possible -- in fact common -- that employees' names and numbers don't match. When that happens, no one gets credit for the taxes paid by the worker. The money simply ends up in the U.S. Treasury. Since 1983, more than $500 billion in uncredited Social Security wages have been earned by so-called "no match" employees like Rodriguez. That hidden financial benefit for the government is one reason, Holli suspects, that agencies don't act more quickly on reports of SSN-only identity theft.

San Diego-based immigration rights advocate Lilia Velasquez sees similar cases in her practice all the time. Imposters run the spectrum from hardened criminals who ultimately take out loans in the victim's name to well-intentioned Mexicans who are simply doing what they need to do to get a job and feed their families.
"It's not that these people intentionally and maliciously stole someone's name and identity. ... They may feel that they are using the number out of sheer need," she said.

But victims like Holli should do what they need to do to protect their identities, Velasquez said. "That's a situation which needs to be investigated until the issue is resolved."

37 people shared one SSN
If not, what appears to be a simple bout of ID theft can spin out of control. Immigrant workers who successfully use someone else's identity can pass the information around. Three years ago, a Chicago-area victim named Linda Trevino discovered that her Social Security Number had been used by workers at 37 different companies.

When another person is using a consumers' Social Security Number for employment purposes only, there is almost no way to discover the identity theft. The misuse will not show up on a credit report; it won't be detected by credit monitoring. Because the wages earned are not credited to the victim, they won't show up on annual Social Security statements either. In fact, there is no way for anyone to inspect the history of their Social Security Number, or to find out where and when it's been used. Only an anomaly or coincidence – such as having an imposter show up on a 401(k) Web site -- betrays the theft.

That's why this is an important victory for Holli; she's among the first to find her SSN imposter and stop the ID theft. Of course, she has no way of knowing if her identity is now secure, because her number may have been used by other immigrants.

"The fact that I can check my credit but not my whole credit is absurd," she said. "In any case, this is my identifier that follows me around and I should be able to protect myself (and my identifier) by knowing what is attached to it." She plans on urging Congress to fix the problem. Meanwhile, she's left with a sour taste in her mouth -- she acted in self-defense, but worries that some will see her as a villain who caused Rodriguez's arrest. She's angry at the criminal who stole her identity and at the system which put her in this compromising situation.

The future of Rodriguez and his family is unclear. If his children are U.S. citizens, law enforcement officials say, he may be allowed to remain in the U.S.. Otherwise, deportation is a likely outcome, but not right away. Before the immigration issue is settled, he will likely face state criminal ID theft charges in state court.

Jacqueline Dizdul reported from San Diego.

Consumers love the savings that come with those plastic discount cards. But they have drawbacks. An MSNBC.com "Gotcha Room" report, by Bob Sullivan, with Producers Andy Gross and Colleen Sanvido, graphics designer Patrick Longstreth, and editor Nat Cohen.

A mistake last week by student loan firm Sallie Mae temporarily wrecked the credit scores of a million loan holders, with some victims saying their scores had sunk 100 points or more. While the scores have since been fixed, the Sallie Mae mishap provides a startling look at the impact of credit scores, how fragile the credit-scoring business is and how severe the punishment can be for one credit-related error: a potential cost of hundreds of thousands of dollars to individual consumers.

Earlier this week, Sallie Mae said it had changed the way it sends monthly payment information to the credit bureaus, and that change inadvertently caused about one million loan holders to end up with a serious blemish on the credit reports. The college lending giants offers borrowers graduated payment plans that allow former students to pay a little less in the initial years after they leave school, and a little more later. Sallie Mae's change caused the bureaus to view those on graduated payments as "arrangements made with credit grantor to make partial payments." That sounded to the credit bureaus as if the borrowers had signed up for a reduced payment plan after being delinquent, which carries with it a serious credit score stigma.

As to whose fault the errors ultimately were, take your pick: Sallie Mae, for changing the payment information provided to the bureaus; the bureaus for reporting the errors; or Fair Issac, the company that invented the formula used to calculate the scores?

Sallie Mae spokeswoman Martha Holler said the glitch affected "roughly 10 percent of our 10 million customers."

The impact was severe and immediate. Borrowers who discuss their credit scores on a message board created by credit score inventor Fair Isaac left panicky notes for each other all week, some claiming their scores dropped by close to 150 points after the glitch.

One victim who spotted the problem late last week said his credit report was pockmarked by errors.
"So I just ordered my new Score Watch report and under "Understanding your FICO Score" it says: 1 serious delinquency 60 days past due; Balances past due $3,013; Recently missed a payment 2 months ago. None of it is true."

'Sickening indeed'
Said another: "I was notified of a 140 pt drop in my credit score. Sickening indeed."

Holler said that the erroneous change only impacted Equifax credit reports and scores based on those reports. The error was fixed before Experian and Trans Union updated their files. And she said all the scores were fixed by Tuesday evening.

"Customers' credit scores were corrected (Tuesday) to what they ... should have been absent our error," she said. "We fully understand the importance of one's credit rating and that is why we worked with great urgency to fully resolve the situation. We sincerely apologize for this error."

Consumers worried about the Sallie Mae incident can examine their credit reports for free at AnnualCreditReport.com, if they haven't done so in the past year. But the only way to really make sure things are back to normal is to examine your credit score, which must be purchased at AnnualCreditReport.com or at various other outlets online.

The Sallie Mae mistake raises disturbing questions about credit scores. The most obvious is this: Why can one company, making one error, have such a devastating impact on consumers? A 100-point drop in a credit score can turn a prime mortgage borrower into a sub-prime borrower. Last month, I explained that a 100-point difference can nearly double the interest rate a mortgage borrower must pay, costing a consumer an astounding $750,000 extra in interest during the life of a $500,000 loan. Even a 50-point drop can cost a consumer about $150,000 more.

Can one blemish -- real or accidental -- cause that much of a penalty? Yes indeed, says John Ulzheimer, who helped design the credit score formula at Fair Issac and now runs consumer advice site Credit.com. He is also author of the book, "You're Nothing But A Number."

200-point drops
"One black mark can damage your score that significantly. In fact, we've seen many scenarios where scores have dropped more than 200 points because of something derogatory hitting the credit files," he said. Making matters worse, a single black mark will have a deeper effect on those with perfect credit that those with already damaged reports. "Higher scores will be damaged more by new derogatory information," he said.

Liz Pulliam Weston, MSN columnist and author of "Your Credit Score," says she has seen simulations showing that one late payment can knock 100 points off of a credit score in the 800s. Still, she says, it usually takes a series of events "to really trash a score." While the scroing system works well in general, accidents clearly happen.

"The scores are pretty robust on a macro level, but may not be on an individual level...Overall, the scores seem to do what they're supposed to do, but that doesn't mean individuals don't get unfairly punished for bad data," she said. "Bottom line, lenders don't care about individuals--they want to make a profit, and if they wind up excluding a few good risks because of bad credit info, oh, well."

While the Sallie Mae mistake was corrected quickly, the sheer volume of consumers it affected suggests at least some were directly harmed by the incident because they applied for credit last week while the lower score was in force.

"Who knows how many people were declined credit or approved at disadvantaged rates and have no idea why?" Ulzheimer said.

But the incident raises another issue that Ulzheimer frequently complains about. Credit reports are notoriously riddled with errors -- mistakes most people discover only when they are in the middle of a major purchase. At that point, it's often too late to get the scores fixed in time for a mortgage to close or a car to be purchased. Generally there's a 30- to 45-day lag time when fixing credit report errors, Ulzheimer said, because lenders send data to the credit bureaus in large batches, only once a month.

Bureaus could move more quickly
The Sallie Mae incident reveals that credit bureaus can update their files more frequently, and they should be willing to do that for any consumer who has a mistake in their file.

"Credit bureaus can update information in 24 hours when they're motivated to do so," he said. Right now, however, a consumer's only option to quickly fix a credit report error is to hire a third party "rapid rescoring" company. "You could spend $1,000 or more just to update your own credit reports," Ulzhwiemer says. "That's a joke." And consumers have little legal recourse against the furnishers of bad credit information or the credit bureaus that store it.

For Sallie Mae borrowers, there's nothing funny about last week's incident. Many reacted to the change by immediately changing their repayment plans to surrender the graduated payment advantage, thinking that would fix their score. Now, they must undo those changes. And of course, they live with the knowledge that their credit scores, and their financial lives, are indeed one corporation's mistake away from serious complications.

The next time you find yourself on the phone with a pushy customer service representative trying to sell you something, remember this: There could be serious cash incentives motivating that hard sell you're getting. And I do mean serious.

One consultant I spoke to recently said that some call-center employees for a national internet service provider were making six-figure salaries, thanks to aggressive bonuses. While customers were infuriated after being deceived while trying to cancel their service, the phone reps were raking in the dough, sometimes doubling or tripling their salaries with incentives.

Benefits that encourage employees to lie for profit are called "perverse incentives." Call centers are awful places to work, so employers have developed elaborate incentive schemes to keep workers returning to the phone banks. In some cases, they are simple or silly -- pizza parties for the top selling groups or free game consoles. But in their most extreme, perverse incentives can encourage outright fraud.

For example, many cell phone reps get bonus points for persuading consumers to extend their contracts, so some will lie to callers, extend their contracts without their knowledge and collect the bonuses.

Many similarly poorly designed incentive programs also turn sour, said Matthew Katz, vice president of business consulting at Merced Systems, which helps firms set up productive incentive programs.

"If you pick the wrong behavior to motivate you can have a big negative impact," Katz said. "It can get ugly."
Companies keep their call center incentive programs close to the vest, and many call center consultants won't discuss them. But there are hints to be had on the Internet. One credit union which has its reps sell auto mechanical breakdown protection doles out $30 per sale, for example.

'Cancel the account...cancel the account...cancel the account'

Two years ago, an America Online customer who wanted to cancel his service revealed just how ugly it can get. He recorded a 5-minute segment of his customer service experience -- during which he says "cancel the account" two dozen times, but still can't close the deal -- and posted it online. The audio file was an Internet sensation, with thousands of customers piling on, leaving "me too" comments on the caller's Web site.

But AOL is far from the only firm that makes breaking up hard to do. Cable and satellite television companies also have well-earned reputations for not taking "no" for an answer. Katz said these companies almost certainly have a "perverse incentive" problem; the rep can earn big bucks by talking consumers into staying, so they sometimes use overly aggressive tactics. And sometimes, they just plain lie.

"We've heard ugly words or phrases like, 'courtesy disconnect,' and things like that," he said. In other words, phone reps sometimes intentionally hang up on callers. Other times, phones reps use their position of power (after all, they have your credit card number) to be domineering. During the AOL call, when the operator tries to read his sales pitch and the caller refuses to listen, the AOL rep plays the bully, saying, "If you want me to cancel your account, you're going to let me speak...you're going to listen to me."

The problem is not incentive programs, Katz said, but the metrics used to grant prizes and bonuses. It's easy to measure the number of customers who have been stopped from canceling their accounts; it's harder to measure true customer satisfaction.

Almost all call centers measure call quality now," he said. "But you have to have the right tools in place to track what people are doing."

Most calls recorded now

Some call centers look at call length, for example -- an agent that typically has very long calls or very short calls might be badgering consumers or simply hanging up on them, for example. That's often a signal to a manager that the agent's calls should be monitored directly. Meanwhile, software can be used to monitor the calls and listen for key phrases, like repetition of the words "cancel my account."

Other new software lets call centers literally recreate calls from the past. Thanks to the continually shrinking cost of storage space, and the rising costs of litigation, many call centers now save recordings of customer calls for up to a year. Software packages also allow companies to record the keystrokes a rep made while on the phone, giving them to ability to see and hear exactly what occurred during a call. And, to our point, that enables them to see if the phone rep defrauded a consumer in pursuit of a big bonus.

Scott M. Broetzmann, president and EO of Customer Care Measurement & Consulting in Alexandria, Va., says consumers should use the new technology to their advantage. He says that because many calls are recorded, especially calls involving financial transactions and contract-related calls, it's a good idea to repeat at the end of each call precisely what your understanding is, like this: "OK, I understand I have added a text message plan to my phone, but my contract end date has not changed, it remains May 2009. Is that right?"

If there is a dispute, a manager can in many cases access the call and listen to its contents. This avoids "he said, she said" arguments, which are rarely settled in the customer's favor.

When calling with a problem, consumers also can ask for a call to be replayed, although the company may not consent to that without a court order.

Still, Broetzmann said, the line between good, aggressive sales techniques and outright fraud can be fuzzy. For him, that line is crossed when a consumer is confused at the end of a call.

"Sometimes by the time you get to the end of the phone call a person doesn't really know what they've agreed to," he said. "Then you have to think about what's going on."

While some firms may tacitly endorse call center fraud, the majority actively fight it, Katz says. That's because customer representatives, who are often nomadic, are also defrauding their companies when they trick consumers. The rep gets a bonus, and the company gets a future customer service headache.
To solve its call center problems, America Online and many other firms now use "third party verification" firms to double-check its sales reps' work. Customers are transferred to a new agent after they agree to buy a new product or service. The record of third parties is spotty, however. Naturally, they get paid by the firm selling the product, so they have a perverse incentive, too.

Red Tape Wrestling Tips

How do you protect yourself from overly aggressive phone operators, who are fueled by big bonus programs?
1) We've already mentioned this one. Repeat your understanding of the conversation at the end of the call, knowing that the firm will likely keep the recording and it can be used during a dispute.
2) Be particularly wary at the end of the month, said Broetzmann, because many incentives are paid on a monthly basis. Sellers can become very aggressive during the last few days of an internal sales contest.
3) Make sure you are talking to the right person before launching into your story, said Katz. Many consumers explain their detailed version of events over and over again because they begin talking before they are connected to the right department. So always ask something like: Can you disconnect my account? Can you grant a refund?

It's been 25 years since the U.S. has grappled with high inflation -- or has it? There are, after all, two ways to raise prices, but only one involves raising prices. The other involves reducing the value of what you get for your money.

That second method can involve packaging sleight-of-hand, such as reducing the size of a quart jar of mayonnaise by 2 ounces, to 30 ounces. But companies also have an even sneakier way of devaluing your purchases.

Edgar Dworksy, who publishes the Web site Mouseprint.org, chronicles such shrinkage. In a recent post, he reveals that Country Crock margarine recently changed the label on its tubs from "3 pounds" to "45 ounces." Sure enough, there's a 3-ounce shrinkage, the same as a 6.25 percent price hike.

One theory for the consistently small rate of inflation – which hasn't risen above 4 percent for a year since 1991, nor above 6.2 percent since 1982 -- would be that corporations have perfected the art of shrinking packages by these tiny, unnoticed amounts.

But product shrinkage is quantifiable. The Bureau of Labor Statistics' eagle-eyed data gatherers pick these kinds of things up, says Patrick Jackman, who runs the group that calculates the Consumer Price Index. The agency sends out armies of researchers every month who purchase a basket of goods and price them meticulously. It then calculates a price-per-ounce for goods like margarine, so Country Crock's inflation wouldn't go unnoticed, Jackman assured me.

Service 'shrinkage'
There is another way of raising prices that eludes the governments' secret shoppers, however. Let's call it service "shrinkage." When you are buying a service instead of a good, it's much harder to quantify when something is lost or degraded. But that doesn't mean it's not real.

This kind of inflation is most obvious in airline fares. Until recently, a $200 flight from New York to Chicago included meals and baggage handling. Now, meals can cost $10 and a second bag can cost $25. But if the price of the ticket has not changed, these tack-on fees will be missed by inflation spotters. Perhaps an enterprising economist could come up with some way to account for those fairly specific degradations, but there are many more ways airlines now ding you.

For instance, flight times are longer now, Jackman noted, but there's no credit for a passenger's lost time. What used to be a 90-minute flight is often now listed as a 110-minute flight by an airline, in part to account for air traffic control slowdowns and the like. That's fair, but it clearly devalues the ticket. Now, consider the miserable on-time ratings for most airlines. I was recently on a flight from New York to Utah that had a published on-time rating of 10 percent! Doesn't chronic lateness also devalue the service you've purchased?
Or more to our current topic, isn't that a form of inflation?

Inflation by degradation
Since I write a lot about broken technology, I think a lot about headaches that are caused by things that don't work. How many hours each month do you lose to dropped cell phone calls? Don't forget to factor in all the miscommunication caused by poor signals and the like. If your cell service has declined, the price of communicating has gone up.

Here's another example. How much time do you lose to long customer service calls each year? When you buy a product, you are paying for support too. If last year you spent 5 minutes on hold during a typical support call, but this year you spent 15 minutes, that's inflation. It just has a different, not-so-well-known name.

Caroline Baum, an economic columnist for Bloomberg and author of "Just What I Said," coined a term for this nearly 10 years ago -- inflation by degradation. She notes that because services make up about 60 percent of all economic activity, overlooking the impact of degraded services is a serious flaw in calculating the inflation rate.

In 2001, after a frustrating bout with a customer service representative, she ranted in her column that government statisticians "ought to seriously consider how to capture what every consumer knows is generalized deterioration in service in the information age."

If you think about it, you can probably find examples of reduced service and corner cutting all around your life. Share a few with other readers at the bottom of this story, if you like.

You are getting more for your money, so stop complaining
I'm not saying companies shouldn't save a few pennies here and there during difficult economic times. The problem is: How do we account for that? And how does our government account for that? If we are continually paying the same for less, it's insulting to be told we are in the golden era of low inflation.

The federal government explored this issue 10 years ago and concluded that Americans were actually getting more for their money as time passed. In fact, the research published by the Boskin Commission, which studied the impact of "quality changes" on consumer prices, concluded that inflation was overstated by 1.1 percent each year. The Bureau of Labor Statistics wasn't doing a good enough job giving companies credit for product improvements, it said. The commission argued that automobiles, for example, are a much better value today than 10 years ago because they break down less often, need fewer tune-ups and are safer, while prices have remained relatively constant.

In other words, you are getting more for your money, so stop complaining.

Partly as a result of the commission's work, the Bureau of Labor Statistics began using mathematical models called "hedonics" to reflect some of those quality improvements.

But, Jackman notes, nothing has been done to pick up service degradation and include it in the inflation calculation.

"There was an assumption (in the Boskin report) that all this quality change was one direction. It's not," he said.

No accounting for lost time
This is no esoteric, academic exercise. Major government expenses, such as Social Security payouts, are impacted by the inflation rate. A lower rate means lower cost of living adjustments. And when other government expenses indexed to inflation are considered, a lower inflation rate also has a big impact on the federal deficit and debt. That in turn, affects the stock market, the strength of the U.S. dollar, and many other important economic vital signs. So the federal government has some incentives to keep the rate low.
But don't instantly subscribe conspiracy theories about the alleged deflated inflation rate. There is a simpler explanation. Accounting for loss of services or lost time for consumers is an incredibly tricky proposition. In fact, Jackman says he really has no idea how to do it.

"In an ideal world you could treat these things by assessing the cost of time lost and that kind of thing, and value it, and incorporate it," he said. "But at this stage I don't think we have any idea of how to do that."
What price would you put, for example, on an hour of lost time? To a McDonald's employee, that's worth about $10; to a high-priced lawyer, about $300. Meanwhile, how would you count lost time? And, to be fair, how would you balance it with time gained that's not currently spent sitting in the waiting room at an auto-repair shop?

I've noted before that the most serious problem with consumer protection law is that it rarely makes any accounting for time. Sure, identity theft victims rarely lose money in the end, but they often lose countless hours to frustration, and receive no compensation. When a company causes a consumer harm by selling a defective product, and then forces that consumer to wait many weeks for a replacement and to spend hours filling out forms, the extra time is simply lost.

This same oversight applies to the problem of tracking prices. Companies now know that they can spend endless hours of our time without impunity, and so they do. When they look for ways to save money, they simply shift costs in the form of time onto consumers. And right now, there is little we can do about it.
Where does lost time go? Economists rather coldly talk about time choices that consumers make as a "labor-leisure" choices. Time lost to late flights and corporate fights generally eats into precious leisure time that would have been better spent having dinner with the family, gardening or getting exercise. That means inflation by degradation is a much more serious problem than simply an gap in government data.

Can you think of a way that companies have stolen your time recently that you might consider a hidden form of inflation? Share it below.

Federal regulators are taking a stab at reining in "unfair and deceptive" bank tactics. Three federal agencies, including the Federal Reserve, have issued proposed rules that would ban consumer-unfriendly credit card issuer practices like double-cycle billing and unfair interest rate hikes. Some unpopular bank overdraft fee policies would also be banned.

The Office of Thrift Supervision announced its proposals Thursday. The Federal Reserve Board and the National Credit Union Administration made their similar announcements on Friday.

Together, the agencies regulate most banks, meaning new rules would have wide impact. The proposal, however, faces what figures to be a testy public comment period, during which banks are expected to challenge any new rules and ask the agencies to scale them back.

According to the Office of Thrift Supervision, the proposed rules would address seven different credit card abuses: unfair time periods for making payments; unfair payment allocations; unfair interest rate increases on outstanding balances; unfair fees from credit holds; unfair methods of computing balances; unfair security deposits; and deceptive offers of credit.

The rules would also require banks to allow consumers to opt out of courtesy overdraft protection, the source of many overdraft fees, and it would prevent banks from charging overdraft fees when money is "held" by banks during debit card authorizations.

"It's about time federal regulators offered consumers some relief from unfair bank practices," said Consumers Union Financial Services Campaign manager Gail Hillebrand. "This proposed rule finally acknowledges that some practices just aren't fair. All the disclosure in the world can't make it fair to send the bill too close to the due date; to raise the interest rate on money already borrowed: or to charge a fee for a problem caused by the bank's practice to allow a credit hold or a debit hold."

Rep Carolyn Maloney (D-N.Y.), who has proposed legislation with similar bans, welcomed the proposal but urged Congress to move forward with a new law anyway.

"Just as we didn't wait for the regulators to deal with subprime mortgage reform, we shouldn't wait for them to deal with the pressing issues on credit cards," she said. "By the time they get around to finalizing these rules, they will be watered down and come too little too late to help struggling consumers."

The regulators have taken aim at some practices that are particularly irksome to consumers. One new rule would require banks to make sure cardholders have a "reasonable" amount of time to make their monthly payments, forcing banks to ensure that statements are mailed or delivered at least 21 days before the payment due date.

When banks advertise new credit cards with low rates, the rules say, banks will have to spell out what requirements consumers must meet to receive the advertised rate.

When consumers have multiple rates on different balances on the same card -- often the case when cardholders have used balance transfers to open new cards -- banks would be forced to apply partial payments in the way that is most beneficial to consumers. Currently, most banks use payments to reduce the balance with a lower interest, which allows banks to collect more revenue from the higher interest balances.

Double-cycle billing, which allows card issuers to charge interest on purchases dating back two months in some situations, would be banned.

The new rules would also clarify two rules governing bank overdraft policies. Banks would be banned from charging overdraft fees unless consumers are expressly given the chance to opt out of automatic payment of overdrafts. According to the proposal, consumers must be given "reasonable opportunity" to exercise that option.

Last year, consumers were assessed more than $17 billion in overdraft fees, according to the Center for Responsible Lending.

Also, a little-known cause of overdrafts -- debit card "holds" -- would be eliminated. Many consumers don't realize that when they use their debit cards to make certain purchases which require pre-authorization, such as gasoline, the retailer often widely overshoots the value of the transaction to ensure the consumers' bank account has enough money to cover the purchase. Gas stations routinely block off $50 to $100 at the beginning of a gas purchase, for example. Even if the consumer ultimately only buys $10 in gas, the pre-authorization of $100 results in a $100 "hold" being placed on the account for several days. Travelers driving off in rental cars can discover holds of up to $500, placed to ensure the consumers' card can cover potential damage to the car.

While the holds are generally invisible to consumers, they do result in overdraft fees. The new federal regulations would prohibit overdraft fees resulting solely from debit card holds.

Consumers Union cautioned that while the proposal offers hope for new credit card rules, consumers must be "vigilant" and make sure the rules eventually become law.

"The credit card rules are real progress for consumers, but the details will be very important, and there is much more to be done by both the agencies and Congress," said Hillebrand. "It's time to end all of the abusive credit card practices that trap Americans in debt."