Criminals are stealing the Federal Trade Commission's identity and using it to scam consumers around the country, the agency warned on Thursday.  Scam artists are even impersonating individual FTC employees -- in one case, a criminal posed as a recently deceased press officer -- to enhance their deception.

"Our good name is being used to defraud people, and that's very disturbing," said Betsy Broder, head of the FTCs privacy and identity theft division. But the use of individual FTC employees' names as bait is particularly worrisome. "Some of our people have been very shaken up once they find out their personal names were used. ... This is particularly pernicious because it gives people a sense that this is legitimate and reliable."

In one case, a 67-year-old building inspector from Washington state named Ralph (he requested that his last name not be used) sent $1,300 to a criminal who identified himself as FTC Secretary Donald Clark from the "fraud division." The imposter said the agency was overseeing a sweepstakes, and the money was needed to pay for insurance on delivery of a $500,000 prize that Ralph had won.

---

To add to the air of legitimacy, the imposter left a call-back number in Washington D.C.'s 202 area code.

In similar cases, caller ID indicated the call had originated from the Federal Trade Commission, Broder said. The criminals used Internet-based telephone services to perform the caller ID trick, she said.

When Ralph called the number supplied to him, an answering machine message announced that the caller has reached the FTC.

"It was very believable," Ralph said. He said he didn't know how the criminals got his phone number in the first place, but thought it might be related to a sweepstakes entry form he'd filled out. He sent the money via Western Union to an address in Florida.

Silvia Westapher, 84, of Los Angeles, who said she fills out dozens of sweepstakes forms every week, sent about $1,100 via Western Union to an address in Jamaica after she got a call from someone claiming to be a "federal agent." Westapher was told she'd won a contest and had to pay a fee to collect her winnings.

"I'm really angry at myself for falling for it," she said. "I don't really have enough to get by to begin with, so this really hurt."

Fraudulent sweepstakes, many of them based overseas, consistently rank among the most persistent scams that target the elderly, Broder said.    

Recently, con artists have honed their techniques to invoke the names of federal agencies.  In turn, the U.S. Justice Department has begun aggressively prosecuting such crimes. Last month, the agency announced that four telemarketers in Costa Rica who had stolen $20 million from U.S. citizens had been convicted and sentenced to 50 years in jail. In many cases, the criminals used the name "Sweepstakes Security Commission" to gain the trust of victims.

Wire transfers -- which are almost always non-refundable -- are usually at the center of such scams.  Last week, MoneyGram International paid $18 million to the FTC to settle charges that it ignored use of its service by criminals to steal $84 million from U.S. consumers between 2004 and 2008. MoneyGram admitted no wrongdoing and agreed to beef up security.

Broder said consumers should be very wary about wiring money to any organization, and most important, should never wire funds in anticipation of receiving a payment.

"Never pay up front in a sweepstakes.  If someone asks for an upfront payment, that's a sure sign it's not legitimate," she said.

Stephanie Skinner recently received one of those letters that credit card account holders dread; her 11 percent rate had been raised to 29.99 percent. And when she called Citibank to complain, she was placed squarely between a rock and a hard place.

Accept the higher rate, she was told, or close the card and accept the damage to her credit score.

"I said to them, 'You're giving me the option to either shoot myself in the foot or shoot myself in the hand. That's just unacceptable,'" said Skinner, from Greenville, S.C.

She holds only two credit cards, so the hit to her credit score from closing one would be significant.  "What am I supposed to do?" she wondered.

It's a frequent question for American consumers these days.  Half of all account holders say they've been hit either with a higher rate or a lower limit in recent months.  While consumers are customarily given the choice to decline the new terms and close the account, doing so flies  in the face of all standard advice from personal finance experts because closing credit cards usually has a negative impact on credit scores.

"Credit utilization" is one of five important factors used to determine a consumer's score. Closing a card with a $10,000 limit means the consumer has $10,000 less in credit.  If that consumer owes $5,000 on a second card with a $10,000 limit, their utilization just shot from 25 to 50 percent, a credit score killer.

---

So which bad choice is right for Skinner and other consumers facing the same conundrum? The answer is perhaps even more maddening than the question: "It depends" and "there's no surefire way to know ahead of time." But there are some clear guidelines that can help.

For starters, closing an account will never help your credit score, despite persistent mythology to the contrary.  The only time closing a credit card account is a good idea is when keeping it open will do even more damage than the lowered credit score.

No one can say precisely how much closing a credit card account will hurt your credit score -- too many other dynamic factors go into calculating the number. Fair Isaac, which owns the credit score formula, says the impact can range from zero points to "dozens of points," according to spokesman Chris Groppa.

Dozens of points doesn't sounds so bad, right? Wrong, says Credit.com's John Ulzheimer, himself a former Fair Isaac employee.

"The amount of their score drop isn't as important as whether or not they cross the lines between approved and declined, and better rate or not as good of a rate," he said.  "Example: If my score goes from 685 to 675 then that's only 10 points so no big deal, right?  But what if (the consumer) applied for a car loan and the lender offered 7.9 percent above 680 and 9.9 percent for someone below 680. Then the 10 points become very meaningful. This isn't unrealistic as all lenders use score-tiered decision tables."

In other words, if you are planning to buy a house or a car in the next month or two, closing a credit card is a terrible idea -- even if your interest rate is about to skyrocket.

But outside of that backed-into-a-corner situation, consumers should feel comfortable exercising their right to fire their credit card company and accept the consequences.

"People shouldn't let worry over FICO scores rule their lives," Groppa said.

RED TAPE WRESTLING TIPS

For starters, a higher rate will cost money today for anyone who doesn't pay their balance in full. A credit score drop of 20 points or so might cost you money tomorrow. But you don't know how much, and you don't know how long the credit score hit will last. It's smart to take the sure savings today and close the card.

There are strategies for minimizing the negative impact once you do so. First, carrying a low balance or paying off your cards is the best insurance against the penalty of closing a card, Groppa said. If a consumer closes a card and loses $10,000 in available credit, but pays off $10,000 in debt on other cards, the available credit would remain equal and there would be no or minimal impact on a credit score, he said.

Of course, that's not always realistic. A second route to a similar result is to open new credit cards with limits that replace the lost credit. Opening new accounts can also negatively impact a credit score, but not as much as losing available credit.

Credit.com's Ulzheimer recently had to do just that to protect his credit score.

"Bank of America and Barclays slashed a combined $25,000 in credit limits for me,” he said. “My score went from 809 to 757. I opened two new cards and replaced the $25,000 and added an additional $10,000.  My scores went back up to 790s. So I didn't get back all that I lost, but I will eventually because inquiries and new account damages reduce with time."

Planning ahead works, too. Open the new cards before closing the old, he said. That'll give you more time, and less pressure, while you shop around.

He also recommended getting new credit cards from credit unions instead of large banks, because they aren't "doing the same things that the big 10 (banks) are doing."

Skinner found an even better solution. After a half-day of phone calls, she managed to score a stay of credit card execution: Citibank postponed her rate increase until May 2010, thanks in part to her perfect payment history and a credit score in the high 700s.  That'll give her time to shop around, and also might give Citibank an opportunity to reconsider.

"I'm not a person who accepts no for an answer the first time or even the second time," she said.

For additional discussion on the impact of closed credit cards on credit scores, Fair Isaac has two lively discussion boards devoted to the topic here and here.

 

Congress took a major step toward restricting the way banks charge overdraft fees this week with the introduction of legislation in both the House and Senate.

It was an active week for Congress and banking legislation: on Thursday, a House committee also approved a bill to create a Consumer Financial Safety Commission, and passed another measure designed to speed up enactment of new consumer protections for credit card users.

But overdraft fees are a particular sore spot with consumers, who will pay $27 billion to banks for overdrafts this year, according to research firm Moebs Services Inc.  The Center for Responsible Lending says one in six U.S. consumers were hit by overdraft fees last year.

Earlier this week, Sen. Chris Dodd, D-Conn., introduced the Fairness and Accountability in Receiving Overdraft Coverage Act, or "FAIR Act",  which would require financial institutions to obtain explicit permission from all their customers before enrolling them in a system of fee-based overdraft protection for debit card and ATM transactions.

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On Thursday, Rep. Carolyn Maloney, D-N.Y., who has proposed overdraft legislation for several years, introduced a new version of her bill to match Dodd's proposal.  The updated bill is co-sponsored by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

The House version could be debated as early as next week, and aides said they hope the legislation could be sent to the White House before the end of the year.

This latest overdraft legislation would add a series of new consumer protections related to overdraft fees. Both bills would:

*Require new systems to warn consumers who are about to make a withdrawal at an ATM that would lead to an overdraft, and give consumers a chance to back out of the transaction.

*Mandate that overdraft fees be "reasonable" and "bear some relationship to the cost of covering the overdraft."

*Prohibit reordering of customer transactions to trigger otherwise avoidable overdraft fees -- sometimes known as high-low check processing -- a particularly irksome practice for consumers whose checking account balances hover near zero.

*Limit the number of overdraft fees per person to six each year, and no more than one per month.  At that point, financial institutions would have to enroll the consumer in a lower-cost program or stop charging for covering overdrafts.

Earlier versions of Maloney's bill would have required additional warnings for consumers at point-of-sale terminals in retail stores, where shoppers can incur overdrafts when using their debit cards for purchases.  Many store terminals don't currently have the ability to perform such calculations, however, so that provision was dropped and replaced with a mandate that the Government Accountability Office study the issue.

Already, some financial institutions have begun to voluntarily adopt some of the provisions in the overdraft legislation. Earlier this month, Bank of America said it would give account holders the choice to opt out of automated overdraft protection, and it announced plans to limit the number of overdraft fees each customer can be charged annually. JP Morgan Chase said it plans to discontinue high-low check processing. But Maloney said those steps didn't go far enough to stem the need for a new law.

"To be sure, some financial institutions have begun to take some steps to dial back the burden their overdraft policies have placed on consumers," she said. "But those steps have been small, and customers of all banks must be protected equally."

Consumer groups lauded the move.

"We are pleased that this bill would put long-overdue brakes on abusive overdraft practices by banks and credit unions, practices that make holding on to and managing the money in their checking accounts difficult for many Americans." said a coalition of consumer organizations, including Consumers Union and the Center for Responsible Lending.

The end of free checking?
Despite the voluntary steps banks have taken to curtail some overdraft practices, the industry is loathe to surrender what for some banks has become an essential revenue stream. The American Bankers Association released a survey earlier this year saying consumers prefer automatic overdraft protection.

ABA Senior Vice President and Kenneth J. Clayton said consumer would miss the account feature if legislation prevented banks made it infeasible for banks enrolling consumers during Congressional testimony on an earlier version of overdraft legislation.

"Consumers value banks' practice  of paying overdrafts," Clayton said.  "While this service may cost the customer money, as there are fees associated with its availability, in many cases it would cost the customer more to endure the inconvenience, embarrassment and fees charged by the merchant or payment recipient were the payment to be declined. It is important to remember that this cost is completely avoidable and consumers can take numerous steps to keep track of their balances and manage the risks associated with over-drafting their accounts."

Meanwhile, Michael Moebs, a banking industry advisor, told the New York Times last week that 1,000 to 2,000 banks and credit unions would fail if the overdraft legislation is approved.  Nearly half of all banks collect more in overdraft fees than they earn in profits, he said.

When Congress debated the new credit card consumer protection legislation earlier this year, bankers predicted the new law would lead to unpleasant consequences: higher interest rates, lower credit limits and other painful cost-saving measures by card issuers. Those predictions have come true, though some debate the direct cause-and-effect claims by the industry.

Similar dire predictions surround the overdraft law.  Many predict an end to free checking accounts, for example. Maloney said such warning should not deter Congress.

"Right now we have unpleasant consequences," she said. "We want charges and fees to be up-front and transparent to the consumer. We don't know if they'll start charging for checking accounts. What we do know is that overdraft programs as currently implemented are more like scams perpetrated on unknowing consumers, and they don't allow consumers to make their own decisions and allow the market to work."

While the struggling U.S. banking industry has shown signs of life, recent SEC filings reveal that banks are relying heavily on fees and other non-interest income -- not loans and interest -- to make their comeback. Some say this trend is bad for consumers, and shows banks are still unnecessarily fragile, but the banking industry said it's just good business sense to diversify their revenue streams during tough times.

An analysis of the banks' quarterly filings with the Security and Exchange Commission since 2006 by the investment research firm EDGAR Online also shows a clear correlation between non-interest income and employee compensation. In other words, the higher a bank's fees, the more money its workers make.

Of the nation's top 500 banks, 384 have increased so-called non-interest income – dramatically in many cases. Considered on a per-employee basis, Wells Fargo has increased its non-interest income by 80 percent since the first quarter of 2007, for example, while Bank of America and Fifth Third Bank have seen non-interest income rise by 28 percent and 26 percent, respectively.

---

Only 80 of the top 500 banks showed a drop in fee-based income, while fewer than half of all banks reported an increase in interest earnings over the same period.

And some banks with high non-interest income increases have seen drops in interest income. BB&T Bank saw a 33 percent increase in fee-based revenue at the same time its lending-based revenue declined 6percent. Bank of America's interest income dropped 12 percent during the same stretch.

Among the largest 85 U.S. banks, 55 have higher non-interest revenue since the beginning of 2007, while only 23 have increased interest income, the analysis shows. And at 65 of the 85 banks, non-interest income grew quicker than interest income on a per-employee basis.

Non-interest income is a catch-all accounting phrase for many sources of bank revenue, and should not be strictly equated with familiar consumer fees like overdraft or credit card fees. The category also includes investment banking services, mortgage origination, insurance sales, brokerage services and many other bank products.

Philip Moyer, CEO of EDGAR Online, said he's concerned that banks' reliance on fee-based income is a sign that they've gotten away from their core business of lending. And it indicates to him that banks are more concerned with earning fees than making loans

"They make fee after fee after fee, but if they are just collecting fees this is not a very healthy system," he said.

Loans spur additional economic activity, he noted, in some cases helping start small businesses or allowing families to move into new homes. Fees don't have the same multiplier effect.

Diversified revenue 'positive'
But Greg McBride, an analyst with Bankrate.com, said that banks are wise to diversify their revenue streams. He said healthy increases in non-interest income could be interpreted as a sign of strength for a bank.

"That trend is nothing new," he said. "The financial services industry has made a concerted effort to place emphasis on fee-based services. Why? Interest income is cyclical. Interest rates go up and down. How do you stabilize that? You add in some lines of business that offer more predictable revenue… (Lending) is a competitive business with low margins and banks have to look to other areas to fill their revenue gaps."

And Jim Cheesen, chief economist at the American Bankers Association, said the results are not surprising, given the weakness in demand for loans during the recession. He said strong non-interest income should be interpreted as a sign of strength.

"There's a whole host of other lines of business that banks have -- and those are doing better in this environment than the lending side is," he said. "... It shows that those institutions were diversified to begin with and have a balanced source of income and that's a very positive thing. I find it remarkable to jump to the conclusion that there have been efforts to drive more income through the non-interest channel. Those channels were already there."

He also said that when the economy recovers and loan demand increases, a similar study would show that interest income would climb faster than non-interest income.

Studies such as EDGAR Online's have been made easier by new rules requiring banks and other public companies to file electronic versions of SEC quarterly reports that make data mining easier.

EDGAR Online examined characteristics like FDIC premiums paid, gain or loss on asset sales and total deposits. Theonly close correlation found, according to Moyer, connected non-interest income and employee compensation.

The role of compensation in the recession
"We were trying to figure out how compensation may have figured into the financial crisis," Moyer said. The relationship between fee-based services and compensation suggests to him that banks have misaligned incentives. "It doesn't matter if banks are writing bad loans, buying and selling bad assets, or if deposits are going down or customers are angry ... compensation is based on fees," he said.

McBride, however, said he wasn't surprised by the connection, which he said has a logical explanation.

"When you run a business, you pay your salespeople based on commission, on the revenue they generate" he said.

The data provided by EDGAR Online generated additional curiosities.

Large banks were much more likely than small banks to show non-interest income increases. Capital One, Bank of America and Wells Fargo all were among the top 10 in fees per employee in the most recently reported quarter.  But none of those banks cracked the top 10 list for interest income per employee, which was dominated by relatively small banks, such as Astoria Financial, New York Community Bank and Hudson City Bancorp.  For example, Astoria Financial was able to generate twice as much interest income per employee as Bank of America during the quarter.

Again, McBride wasn't surprised: Most smaller banks have not made the same effort to add business segments like financial management or investment banking, he said. And a few large clients could skew such averages, McBride noted.

Cheesen offered another explanation: He said that smaller banks typically enjoy wider margins on loans than larger banks; often, they are competing for different kinds of loans.

The list of banks that increased non-interest income the most since 2007 proves less conclusive, with both large and small banks registering sharp gains. For example, First Horizon's non-interest income per employee jumped 137 percent; Fulton Financial jumped 49 percent; Fifth Third Bancorp jumped 26 percent.

It's been well documented that fees contribute mightily to most banks' bottom lines.  This is obvious from the data: On a per-employee basis, most large banks – including Wells Fargo, Capital One, Fifth Third and SunTrust -- earn about 50 cents from fee-based services for every dollar received from interest income.

Moyer said he raised concerns about fee-based income because he's worried that banks are still overly focused on short-term gains.  Many fees -- such as mortgage origination fees -- generate immediate revenues but do not foster good long-term investment practices, such as sound mortgage lending, he said.

"It simply tells me nothing has really changed in terms of the pervasiveness of generating fees inside of banks," he said.  "For a lot of that activity, no one knows if it's good or bad activity."

Loans vs. fees: Where your bank stands

The chart below shows that, in many cases, salaries and non-interest income at the nation's top 85 banks rose between the first quarter of 2007 and the second quarter of 2009, even as lending-related interest income declined.

SOURCE: EDGAR Online, SEC filings.

Bank	Compensation change (2007-2009)	Non-interest income change (2007-2009)	Interest income change (2007-2009)
Astoria Financial Corp	12.94% 77323,78324,80305,83023,83603,85162,85836,85277,86650,87324	-6.69% 47387,46691,46621,46207,45953,46587,46031,45094,44837,44219	2% 717391,718553,722910,739841,739926,735701,733231,744338,740883,731770
Associated Banc-Corp	8.15% 56494,56844,57882,59379,59692,60042,60390,60210,60493,61097	15.2% 50550,52100,53664,53938,53656,53749,54968,54981,54473,58231	-17.82% 251578,250868,250875,249650,246207,238755,228338,219204,212514,206739
American Express Co	11.66% 77997,78884,81988,80325,82821,85199,86662,92273,88985,87091	-2.79% 89985,88761,94602,92496,95303,97179,100133,97985,92939,87470	3% 91927,96865,104465,109660,113663,113456,108922,109106,102591,94682
Bank Of America Corp /De/	17.16% 90564,91827,90328,89300,87876,86367,91267,75601,92235,106103	27.87% 148246,149647,153983,153048,158262,162495,169205,151379,172428,189556	-11.61% 398279,407792,414482,415733,421919,416181,416957,352609,353831,352041
Bancfirst Corp /Ok/	6.62% 51077,52214,53479,53232,54202,55192,55556,54829,54780,54457	1.53% 28749,31869,33964,29041,30109,27648,38956,31534,32199,29187	-21% 157197,161454,163975,159909,157904,151586,145044,135844,128561,124187
BB&T Corp	9.66% 71229,72389,72048,71224,72007,72857,74150,74358,76149,78108	33.1% 82799,84778,86143,87993,90646,92823,96327,98581,104257,110203	-6.31% 246689,256689,264437,268503,268639,262823,254762,243480,236182,231115
Bank Of Hawaii Corp	3.2% 67722,67636,68332,69563,73435,73973,74673,73830,70582,69888	2.6% 76377,77917,79580,80736,81328,81779,80899,79662,79515,78366	-12.17% 225249,228709,231246,231490,230067,225785,217727,211577,203208,197838
Bok Financial Corp Et Al	10.47% 76644,78585,81417,79977,82356,84678,84043,82081,83132,84666	23.2% 64225,64591,66231,67413,72279,63278,65522,63938,65698,79122	-12.21% 262107,274296,285640,282418,282774,275816,266808,246894,236937,230100
Popular Inc	-2.36% 53485,53310,49346,50456,48635,47906,51435,57473,54650,52224	39.39% 41530,42381,43249,45654,47117,48900,49088,58857,58453,57888	-25.46% 247508,249336,214238,207448,194301,171570,204179,214803,196691,184496
Brookline Bancorp Inc	-2.63% 97106,97861,98822,95014,95519,95352,95324,95909,94164,94548	-3.85% 17837,19327,19803,19667,19551,18861,18759,17982,18324,17151	-2.01% 668716,682889,691000,673806,675120,671792,667843,655986,651269,655292
Bancorpsouth Inc	4.01% 58691,60027,61201,58032,59520,60491,61763,60346,60610,61048	7.69% 42150,43871,44851,42242,43652,45583,47555,44314,44910,45389	-16.6% 172958,181537,189519,182100,182855,176765,168733,156758,149016,144250
Citigroup Inc	105.94% 93924,98492,100520,90620,90794,89783,93428,234224,215011,193422	56.5% 60116,64073,63856,55364,44599,41762,42484,81061,100231,94079	105.11% 314367,334229,354422,324676,327393,320016,308877,770072,702628,644801
Commerce Bancshares Inc /Mo/	11.32% 65531,66622,67770,68312,69663,71239,72667,71498,72301,72950	0.07% 67538,68873,70259,71036,72467,72589,72670,67650,67405,67586	-10.63% 194718,202212,207126,207102,205838,200394,194021,182137,175990,174016
Community Bank System Inc	8.5% 50745,52195,53939,52109,53554,54508,55906,51370,52965,55059	12.2% 28732,29523,30711,29979,31020,32062,32319,29385,30827,32237	-11.77% 176628,181638,186405,176350,177447,175942,173332,155331,155298,155846
Capitol Federal Financial	10.42% 54488,54743,55629,54445,54859,54727,55128,58781,59766,60165	4.69% 29070,28386,28270,27237,27204,28156,28806,30227,30261,30434	0.53% 561293,564836,563615,542942,537483,533846,535507,555143,560880,564284
Cullen Frost Bankers Inc	7.66% 66778,67956,69078,67992,68815,69673,70931,70186,70896,71892	8.43% 54798,55134,57111,56726,57451,58990,60171,59245,59869,59415	-15.86% 197070,203720,208776,203345,198881,191696,184238,173600,168038,165821
Chemical Financial Corp	11.58% 37998,39189,39514,43135,42944,42240,42688,41827,42489,42400	4.93% 27037,27127,27266,29798,29511,29332,29452,27827,27997,28371	-5.57% 149574,152074,153158,165127,163308,159231,155233,147130,143518,141240
Comerica Inc /New/	-4.94% 100306,102675,103268,101408,100919,99452,97692,100185,98027,95356	5.76% 61309,62296,63185,64052,64737,66106,66399,68434,67304,64838	-24.79% 350578,359265,365090,364757,361040,341874,320653,313502,282676,263666
Capital One Financial Corp	20.69% 74959,79093,81384,96020,93653,90345,88283,90532,88329,90470	8.55% 190436,200890,210931,280214,292262,280955,236973,243565,221505,206720	49.35% 282971,306289,328361,410302,416495,418465,418643,430698,421733,422616
Capitalsource Inc	-22.9% 260230,268414,276414,280703,266068,264632,248911,200281,204817,200627	-51.02% 326588,342013,297091,288959,259802,253060,254192,185958,182823,159972	-33.48% 2026622,2127255,2244002,2273849,2307249,2205893,2081283,1548270,1427267,1348011
CVB Financial Corp	-20.33% 99351,100906,105224,71543,73446,75928,78708,78957,79313,79153	-51.45% 44226,44019,54331,20583,21114,22153,39402,22625,22202,21473	-34.18% 628623,641703,651649,441497,440251,439268,433611,428503,423017,413745
City National Corp	-0.52% 112131,114803,118053,113621,117806,120076,121900,119443,115453,111543	-7.29% 84448,89311,93750,91521,93555,93650,100360,95823,87883,78294	-22.19% 313263,320560,328576,306829,304603,293581,281649,262525,249725,243759
East West Bancorp Inc	-9.74% 59822,63654,66432,63134,64961,68739,65388,66480,61500,53998	27.83% 23443,24628,26429,25902,26572,26749,27006,28705,29523,29968	-13.85% 563982,586230,603299,568411,569151,554963,526377,537476,503312,485873
Flagstar Bancorp Inc	20.36% 57233,58910,59914,42565,46227,49493,52378,54253,63895,68883	-30.98% 26407,28613,29177,19104,15310,23894,29499,12704,13453,18225	-42.97% 330732,342610,355198,228664,226210,220680,208404,198469,191868,188624
First Citizens Bancshares Inc /De/	12.34% 71081,71487,73919,73892,76184,77183,77780,78672,79141,79853	26.6% 56244,57083,59984,71273,72893,74308,62468,73231,72294,71208	-14.65% 217644,222964,226464,225226,225043,219694,211803,201463,192128,185764
First Financial Bancorp /Oh/	-7.35% 64905,60247,58158,62220,60591,59522,59169,59327,59842,60133	1.27% 33924,33447,34145,38320,38651,38523,38181,37908,36250,34357	-2.95% 160920,161282,161173,178121,174651,169180,163634,162649,158374,156176
First Financial Bankshares Inc	6.75% 45365,45786,46565,48148,49285,50410,51158,49285,48729,48425	5.83% 37950,37286,40067,40192,40427,41810,41669,40942,39878,40162	-6.96% 163246,167471,170719,173712,174403,171010,167587,159154,154370,151887
First Horizon National Corp	66.44% 83248,84270,82319,95570,99630,101494,99403,157657,151265,138561	137.38% 65968,77597,77315,81101,89060,81783,109053,238367,227852,156596	3.78% 196103,197449,194987,227637,217099,199388,179695,263614,229758,203509
Fifth Third Bancorp	9.46% 69001,69282,69984,69963,72407,73099,73744,75200,74176,75526	26.27% 96948,97369,98118,105474,111331,116358,114514,118691,120460,122416	-12.2% 281668,282183,281902,277960,277360,264355,265277,261129,248603,247299
First Midwest Bancorp Inc	-3.54% 57145,58186,58361,60552,59814,58382,58188,55691,54086,55124	4.74% 48961,50302,51167,55291,55846,54947,52853,54585,52837,51279	-20.12% 262406,261149,257794,258796,251680,241177,231082,228098,218624,209609
Firstmerit Corp /Oh/	8.61% 63945,62790,62094,61872,62077,62377,63724,69694,69546,69453	-0.7% 58864,58728,58183,58433,57901,57482,57213,59588,59029,58450	-12% 224212,228273,231036,231214,227072,218474,209225,215078,204916,197299
FNB Corp	7.58% 56891,57116,57814,57646,59623,66790,71865,58148,61556,61206	3.77% 45451,45865,46069,46083,46332,51293,55851,45040,47794,47166	-14.36% 238929,244414,246682,243814,242517,251557,261373,203973,208740,204627
First Niagara Financial Group Inc	7.24% 66121,67144,66480,68913,69202,70006,72065,70296,70201,70908	7.26% 48490,49866,51490,55060,55101,54815,53888,52246,52480,52012	5% 217689,218486,219467,231783,235505,238717,240384,231083,228900,228581
Federal National Mortgage Association Fannie Mae	-14.87% 198485,204242,212576,240351,228070,220175,185965,177931,179138,168966	80.48% 808182,891212,933182,1162105,1258070,1324912,1342456,1492069,1467586,1458621	8.65% 6686212,6727273,6770758,7853684,7842456,7701754,7577368,7435000,7347759,7264310
Fulton Financial Corp	18.41% 50063,50555,49977,59110,58812,58466,59228,58831,58861,59279	44.88% 24747,25386,25884,31879,32832,33783,35062,35984,35938,35853	9.67% 205116,208958,211149,255320,254930,250930,244155,238979,229708,224944
Glacier Bancorp Inc	-11.74% 56322,60250,63724,50044,51051,51287,51858,49354,49864,49709	-12.38% 31505,33454,35436,28789,29343,29637,30237,28584,28113,27604	-16.5% 217875,230303,242065,192886,195478,195023,193288,182301,182010,181918
Huntington Bancshares Inc/Md	-1.13% 67357,67021,75476,57596,63240,68674,67221,71550,69175,66595	20.79% 53741,54371,62259,47703,51703,57417,58118,61281,64523,64914	-14.47% 264903,267447,306077,230018,248338,261270,247397,255531,238779,226573
Hancock Holding Co	3467.98% 56339,55494,56290,56652,56158,57320,57390,1892638,1981328,2010155	3530.93% 50364,52387,54562,55952,57777,58513,58483,1885810,1853810,1828690	2921.39% 188554,187761,186834,183102,182606,180908,179128,5783397,5725379,5696948
Hudson City Bancorp Inc	13.56% 88047,88408,88340,87834,92609,97129,101657,95279,96168,99983	18.07% 5628,5946,6271,5986,6539,6757,6866,6356,6284,6644	43.45% 1485276,1594312,1702324,1752475,1862558,1973898,2083547,1987434,2069857,2130605
Iberiabank Corp	9.36% 69290,87257,100227,60403,62997,63391,66551,69836,72434,75776	-38.78% 32051,47178,58386,23036,24203,19427,38167,27765,28071,19622	-25.77% 267202,304665,341808,198822,206563,206035,203741,207086,201600,198345
International Bancshares Corp	-6.78% 46065,46726,47905,43975,43923,43740,43136,42281,42647,42943	-3.76% 50153,50500,51379,48148,48815,49994,50290,48019,48229,48269	-21.2% 230037,234799,235751,217057,212269,203677,196606,184934,182168,181266
Investors Bancorp Inc	-3.7% 95141,97978,103036,98692,105491,105844,107840,83286,85901,91620	-19.15% 5725,5703,5801,5322,5505,5802,6067,4671,4875,4629	-8.14% 575667,593632,610143,549563,563222,580751,597827,483473,503009,528824
Keycorp	-32.87% 125962,85174,83425,85613,84610,84029,84134,88699,86101,84554	-6.98% 67730,66530,59182,65227,64170,67022,63906,69190,68804,63001	-11.08% 274768,278167,280416,298088,297349,270149,259480,255817,238022,244322
Kearny Financial Corp.	-3.28% 98190,101869,102328,103583,101763,98966,95075,93833,94179,94970	51.96% 3608,3560,3422,3729,4132,4323,4872,5080,5433,5483	11.78% 338194,346000,352351,359252,359737,361707,363195,370217,376859,378023
MB Financial Inc	21.09% 67702,73806,76508,86925,88476,90449,92069,81645,81818,81978	34.73% 48770,45922,57628,64273,61044,67438,68414,66027,62936,65707	0.74% 291625,317578,330654,356682,353510,344144,333137,308337,299405,293797
M&T Bank Corp	6.94% 74431,75064,75213,73121,74338,75258,76541,78662,78459,79595	12.42% 59975,60649,60822,59050,62162,63114,64256,66317,66994,67421	-16.27% 285439,290922,294297,285366,287226,282348,274969,269384,250509,238990
Newalliance Bancshares Inc	-19.16% 88912,90611,91190,86326,88197,89525,92221,74969,72959,71873	-18.86% 44066,45272,47093,44471,45430,45691,43988,34662,33081,35756	-18.36% 387235,407441,424593,411931,417455,418546,415675,326388,320289,316121
NBT Bancorp Inc	16.39% 48016,45495,45683,47499,48142,51242,52019,50432,53732,55887	41.88% 31121,32129,33971,38334,39632,40082,44853,42018,40897,44155	-11.04% 226785,230334,232231,244307,243663,240757,237916,208656,204921,201744
Nelnet Inc	36.68% 54674,57972,58825,84511,81704,75914,70269,83360,76262,74730	115.63% 61852,72723,74888,111295,107540,101983,111894,137560,133925,133370	1.4% 405728,417963,431013,624027,596594,550141,491324,551991,476239,411415
National Penn Bancshares Inc	9.12% 65421,65699,66277,65458,72231,80563,89109,69288,70853,71388	18.38% 44144,47421,42087,41072,46514,54418,62755,50633,51894,52258	0.18% 251180,257200,263310,260258,283540,311974,339119,261930,259429,251643
Northern Trust Corp	-6.46% 115515,118918,123895,116606,120471,125838,122733,111189,109598,108049	-13.66% 201902,209984,217499,202464,206393,217366,214490,187270,177918,174320	-34.34% 244797,258914,274820,255010,257382,249212,240145,203156,179934,160738
Northwest Bancorp Inc	9.72% 49795,50285,50763,51227,51877,53013,54223,53637,54345,54637	28.99% 20490,21295,22119,23273,24531,25498,26333,24833,25434,26430	-3.7% 231478,236117,241178,240895,241642,240449,237896,228758,226460,222915
New York Community Bancorp Inc	5.25% 60209,63256,65774,56181,58250,59454,60220,62975,62737,63368	-12.44% 16491,16893,16970,14880,15173,14984,14905,15262,14783,14439	0.06% 596654,616754,631533,552839,564456,561736,562150,594712,593891,597001
Ocwen Financial Corp	13.93% 25368,26069,29088,23596,25739,27567,27747,30282,30075,28902	-17.62% 130615,134239,138796,101223,104161,107304,106499,116081,113027,107598	-77.65% 11947,12837,10604,6426,5309,4008,3513,3545,2906,2670
Old National Bancorp /In/	10.56% 61389,62886,63995,65646,66039,66693,67025,66918,67066,67875	9.28% 50083,51203,52137,52967,53812,53856,54020,53257,52927,54729	-17.73% 178515,180153,180911,184991,180108,171867,163740,156570,150128,146864
Oritani Financial Corp.	3.58% 110508,104068,103042,87602,87453,93797,96570,97364,106524,114462	-7.71% 9017,8958,9042,8742,8727,8828,2781,7874,8077,8322	24.56% 445441,469771,508932,494914,521609,539281,543602,500636,525909,554860
Pacwest Bancorp	-97.35% 3145318,3299955,3385136,83070,82981,83740,85774,83451,84012,83405	-96.87% 743364,799909,839591,21619,22320,22542,22855,23458,23563,23260	-97.96% 15088545,15796045,16250818,408117,390503,372908,353160,332749,316630,307288
People'S United Financial Inc	-1.63% 85757,87707,88470,89238,104884,118046,131498,84481,84383,84359	-17.48% 65833,63968,63290,60224,66267,74752,92384,59181,56558,54327	-19.91% 251674,269987,286944,292632,336300,352856,366515,224859,210125,201569
Provident Financial Services Inc	-2.98% 79381,81517,86645,83449,84076,83720,78806,76924,77791,77019	-5.21% 28835,30109,31049,28368,29163,27029,28007,26551,25546,27333	-4.8% 355436,363249,372004,349800,357471,355651,354276,345426,341788,338361
PNC Financial Services Group Inc	-41.8% 95867,92083,87626,83987,86107,86224,86852,36144,45272,55793	-55.57% 150486,140352,138460,132339,136068,136499,135911,55189,60508,66868	-23.01% 204390,222386,240214,241994,253925,254827,252747,105932,133468,157362
Park National Corp /Oh/	8.51% 45240,47996,50487,47295,48075,47954,48867,48278,48676,49089	2.73% 23693,24256,25437,24085,24848,25021,24342,22972,23524,24339	1.16% 182240,192561,202327,194494,199156,196918,194101,190804,187341,184362
Privatebancorp Inc	63.61% 100049,105163,109875,119295,142779,174740,201226,150942,160479,163691	-36.2% 45881,59376,70401,13538,9049,759,63546,28498,30342,29273	0.06% 583915,613221,637654,515786,528898,554250,606950,524428,559022,584268
Regions Financial Corp	28.07% 56792,61744,66829,74541,75571,75450,74577,76531,73122,72733	57.28% 53226,58908,65514,73713,76053,77229,76590,82726,82770,83712	4.48% 182816,204436,223512,243499,233950,221947,208559,213208,200104,191008
Sterling Bancshares Inc	12.47% 71750,72630,74298,77773,78800,79853,80869,76392,77752,80697	67.59% 12798,14338,16426,19183,21815,23538,21744,22182,24366,21448	-5.65% 246437,255931,264672,276631,279239,275467,269858,246079,238814,232514
SVB Financial Group	-21.72% 173182,176061,185670,189621,189994,188311,182228,142536,138114,135570	-15.07% 61456,64657,69854,72293,76809,79645,74625,62900,54715,52193	-0.67% 354561,369124,380411,393073,395393,390191,390389,353289,351645,352203
SLM Corp	3.74% 64929,67011,67541,66798,66196,64028,65006,76253,70902,67355	25.09% 69034,65125,80183,109165,108588,98460,23751,82411,63647,86355	18.2% 640234,688871,745237,788547,783630,753864,712788,908705,827429,756767
Suntrust Banks Inc	16.84% 80940,81581,81683,85703,86201,86242,86813,94135,94850,94569	22.06% 86679,87922,88916,94242,98269,99338,101598,95482,100806,105799	-15.3% 298859,302454,302150,310489,302144,287371,271965,283891,265857,253138
State Street Corp	-12.98% 127005,132719,145484,120103,132018,141313,145223,134925,123301,110518	-3.33% 244055,251521,277005,244670,266470,283770,286831,272063,253134,235926	-33.37% 208986,216774,229677,192254,196533,194098,180966,171343,152028,139245
TCF Financial Corp	9.99% 40223,40413,40450,42340,42416,42118,42092,43733,43409,44240	9.43% 48264,48492,48644,51676,51685,50997,51805,53303,52034,52813	14.39% 106949,109194,111368,118297,119701,119960,119247,123609,122427,122339
Texas Capital Bancshares Inc/Tx	12.06% 105950,110479,115873,110996,112535,113725,115265,112318,113921,118731	58.06% 18899,20026,20581,20886,21586,22457,23822,23095,25854,29870	-14.05% 503926,533119,559545,567239,566833,545049,518263,455082,434967,433148
Trustmark Corp	7.47% 60391,61605,62354,65361,65521,65489,65720,65645,65584,64901	10.02% 53615,54349,55121,58239,61529,62739,63453,62703,61551,58985	-4.43% 185743,192515,197095,207941,206150,200779,193291,185377,180694,177523
United Bankshares Inc/Wv	9.84% 45418,44572,45903,42446,45161,47859,48601,49005,49533,49888	9.08% 36904,37507,39486,37439,39119,41363,42388,41739,41248,40253	-12.59% 296799,297707,308587,285445,293854,296923,290059,280804,268498,259427
UMB Financial Corp	24.66% 57673,58288,59030,61627,62774,64322,66034,69621,70523,71896	16.3% 66473,67982,69768,73541,75547,77669,79425,80602,79000,77305	0.23% 112845,116954,119567,123447,122983,119976,116930,118501,114521,113104
Umpqua Holdings Corp	4.1% 68829,72463,73521,64716,64701,63996,64642,67412,69076,71648	3.02% 29906,31178,31672,28644,27161,27816,27784,27152,29781,30810	-12.74% 286851,305552,314129,280041,281047,274263,263862,260321,253812,250317
US Bancorp	4.54% 59920,60560,60960,59950,62131,64196,66358,61377,62396,62638	1.71% 123980,116560,130020,129254,127379,133711,136198,121719,118662,126105	-18.15% 251180,255540,259240,251277,251621,247394,242095,214458,208621,205599
Valley National Bancorp	3.12% 56717,57867,58180,56850,57876,58034,59872,56729,57663,58489	-6.52% 19174,19514,19918,19668,20115,19826,19796,18226,18039,17924	-7.65% 288511,291255,292056,282985,281835,279783,282844,262197,264673,266442
Webster Financial Corp	14.19% 70564,72477,72343,77572,78141,75802,73212,87175,84799,80576	19.99% 49699,48292,49189,54846,55021,54220,48034,60841,60095,59635	-14.39% 319264,319505,316784,296838,291862,281032,270000,296175,282462,273322
Wells Fargo & Co/Mn	58.12% 77671,80411,82411,83655,83285,83542,82703,81435,102070,122813	80.97% 85639,88728,93487,95682,96414,99875,100926,93782,123644,154984	39.61% 207886,211025,216241,220131,224574,224412,221602,219622,254009,290220
Wilmington Trust Corp	-0.34% 98439,100390,103084,101272,102807,106175,109356,100509,99219,98099	5.06% 137471,141764,146058,143975,146482,150374,155165,142872,144807,144433	-34.64% 274005,280172,283411,270284,263698,252096,240382,207536,192159,179090
Wintrust Financial Corp	-5.09% 73509,74410,74238,72208,72592,73568,74366,62376,65879,69765	10.12% 33574,34260,30159,29848,30026,30143,34648,27463,30938,36972	-30.66% 310994,320362,323395,311383,303170,289561,275266,221291,215230,215647
Whitney Holding Corp	-3.14% 73700,75633,76461,76138,76233,75385,74994,68826,69781,71383	14.59% 24363,24870,25461,25589,26230,26847,26923,26104,26972,27918	-19.28% 254924,259273,263296,260073,257282,246505,234307,216085,209005,205780
Zions Bancorporation /Ut/	0.81% 72651,73878,75190,73162,73507,73747,74159,73608,73137,73239	1.29% 36445,37108,37841,35731,36671,37326,38582,37454,37175,36917	-10.49% 277822,287523,295640,293179,294978,288878,281370,270084,256424,248683

 

The grand plan for a new federal agency that would fight for consumer rights in financial transactions has been given a hatchet job by industry groups, a consumer group charged on Monday.

The latest version of legislation (PDF) that would create the Consumer Financial Protection Agency carves out wide-ranging exceptions for the nation's credit reporting agencies, car dealerships, realtors, and tax preparation firms, among others, according to Consumer Watchdog, an advocacy group.  Those industries would be largely exempt from the new regulator, according to the most recent draft of the legislation, sponsored by Rep. Barney Frank, D-Mass., chairman of the House Financial Services committee.  The committee will consider changes to the proposal at a formal markup session scheduled for Wednesday.

Carmen Balber, head of Consumer Watchdog's Washington, D.C., office, said the new agency won't be able to do its job unless it has oversight over firms like Experian, Equifax and Trans Union, which help determine consumer interest rates through credit scores, or car dealerships, which engage in complex loan transactions.

---

"A new consumer protection agency should be looking at any company that provides a loan or has impact on loans," she said. If consumers who feel they've been treated unfairly by these industries can't turn to the new agency, they won't know where to turn, she said, adding, "That's the kind of confusion over what's covered by what (agency) that this is legislation is supposed to fix."

Many members of Congress, and Frank in particular, have received political contributions from the credit bureaus.  The three firms have given about $1.6 million to Congress since 2002, including $40,000 to Frank.

Balber sees a connection between the political donations and the new provision that benefits the credit reporting agencies.

"Companies that collect, analyze and sell our private financial information are off the hook in the current bill," Balber said. "Campaign contributions to Congress should not buy the Big Three data collectors an exemption from oversight."

But Steven Adamske, a spokesman from Frank, accused Consumer Watchdog of grandstanding.

"It only demonstrates the shallowness of their argument, that they are saying there's some kind of cause and effect (between contributions and changes in the legislation)," he said. "If they spent more time talking to members of Congress and being a part of the process and less time writing press releases they would be more effective at helping consumers. … I don't think anyone can call into question (Frank's) dedication to protecting consumers."

Adamske said the exemptions would be considered at Wednesday's meeting.

"I'm sure members of the committee will try to change the bill in one direction or another," he said. "It's possible exemptions could be removed. … It's possible the list could be expanded."

Agency powers shrink
As the bill stands now, many industries would not face regulation by the new agency, including:

• Merchants, retailers, and sellers of non-financial services.
• Retirement plan providers and educational savings 529 plan providers.
• Accountants, tax preparers like H&R Block and attorneys.
• Real estate agents acting to buy, sell, or rent residential properties. Mortgage lenders would be covered.
• Auto dealers who lease or sell cars and market financing arrangements.
• Credit reporting agencies when they are "assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties."

The current version of the law also includes an explicit statement that the agency would have "no authority ... to establish a usury limit applicable to an extension of credit."

None of those exceptions was in the initial version of the Consumer Financial Protection Agency proposed by the Obama administration.

Balber said corporate influence led to the changes.

"Every one of those exemptions is the result of intense lobbying efforts by those industries," Balber said. For example, she said, "The auto dealers say, 'We are struggling, you put these new rules on us.' But the problem is by carving out all these exemptions you are making the job harder to for the agency to look at the whole consumer credit transaction."

'Tripped up'
But Adamske said the new limits are designed to focus the new agency on the kinds of consumer credit transactions that led to the recent economic crisis, such as predatory loans.  Credit card issuers and other direct lenders would still be covered by the new agency. Meanwhile, many of the exempted industries are regulated by other agencies, he said.

"Real estate agents are not regulated at the federal level," he said.

While designing the agency and consulting with industry groups, many complexities arose, Adamske said.  For example, a dentist who allows patients to pay large bills over time might have been included had earlier language not been amended, he said.

"We got tripped up on a lot of issues like that," he said.  "We didn't want to lose focus from the predatory lending that got us into this mess."

But Balber said consumers won't appreciate the distinction and need one agency to look out for their interests.

"Whether you're denied a loan because of a bank, or because of a credit score determined by your credit report, at the end of the day you've been denied a loan. It's the same thing to you," she said. "So if those companies are excluded, then consumers aren't going to be protected."

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Would you sign up for a discount with your power company in exchange for surrendering control of your thermostat?  What if it means that, one day, your auto insurance company will know that you regularly arrive home on weekends at 2:15 a.m., just after the bars close?

Welcome to the complex world of the Smart Grid, which may very well pit environmental concerns against thorny privacy issues.  If you think such debates are purely philosophical, you're behind the times.

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Maryland residents this month received fliers offering annual discounts of up to $100 in exchange for allowing their power company, Pepco, to occasionally shut off their air conditioning units during hot days, when demand is high. Pepco says consumers will hardly notice the change, and the two-way communication between utility and appliances will go a long way toward preventing brownouts.

 

Pepco's discount plan is among the first signs that the futuristic "Smart Grid" has already arrived. Up to three-fourths of the homes in the United States are expected to be placed on the "Smart Grid" in the next decade, collecting and storing data on the habits of their residents by the petabyte.   And while there's no reason to believe Pepco or other utilities will share the data with outside firms, some experts are already asking the question: Will saving the planet mean inviting Big Brother into the home? Or at least, as Commerce Secretary Gary Locke recently warned, will privacy concerns be the "Achilles' heel" of the Smart Grid?

To advocates, the Smart Grid means appliances will work in electric harmony: Icemakers will operate only when the washing machine isn't, TVs will shut off when viewers leave the room, and so on.  All of these gadgets will be wirelessly connected to the Internet. Households with solar panels will actually be able to sell their excess energy back to the power company.  The result: lower power consumption, lower power bills, people and planet happier. That's the grand vision of the Smart Grid, a plan to upgrade power meters and electronic devices so they all constantly communicate.

Dark side of a bright idea
But others see a darker side. Utility companies, by gathering hundreds of billions of data points about us, could reconstruct much of our daily lives -- when we wake up, when we go home, when we go on vacation, perhaps even when we draw a hot bath.  They might sell this information to marketing companies -- perhaps a travel agency will send brochures right when the family vacation is about to arrive.  Law enforcement officials might use this information against us ("Where were you last night? Home watching TV? That's not what the power company says … ").  Divorce lawyers could subpoena the data ("You say you're a good parent, but your children are forced to sleep in 61-degree rooms. For shame ..."). A credit bureau or insurance company could penalize you because your energy use patterns are similar to those of other troublesome consumers.   Or criminals could spy the data, then plan home burglaries with fine-tuned accuracy.

Space-aged visions of talking appliances may seem farfetched. They're not.  At last month's GridWeek in Washington D.C., hundreds of companies vying for a market some say is as big as the Internet bragged about their new gadgets. Many are competing for the $4.5 billion set aside in the White House's stimulus package for investment in Smart Grid technologies.  Already, some 8 million "Smart Meters," with the ability to conduct two-way communication with utility companies, have been installed in U.S. homes.  There will be nearly 50 million by 2012.  And while we race headlong into the brave new world of hair dryers that have IP addresses, privacy experts like Jules Polonetsky are wondering out loud if we've really thought through all the implications.

"The potential benefits of the Smart Grid are fabulous," he said. "I just think that it's critical that sober and adequate thinking be done at this stage.  We must do this right or we could hamper the rollout of the Smart Grid and you could have folks unwilling to participate. ... We are trying to help before it's too late."

Polonetsky, director of The Future of Privacy Forum, heads a small crowd of researchers who are asking important questions about the future of our futuristic power delivery plans.

"Knowing what's going on in people's homes … this strikes at some of our most core values," he said.

Eli Quinn, a research analyst at the Center for Energy and Environmental Security in Boulder, Colo., convinced that state's public utility commission to hold hearings on the grid and privacy after he published two papers on the subject.

'Unintended consequences'
"The biggest privacy danger is it's hard to wrap your head around the unintended consequences," he said.  "It's not that different from the privacy risks of Facebook or other technologies … but it's a lot more surprising to people what you can conclude from detailed electricity usage information."

Larry Ponemon, a privacy auditor who runs The Ponemon Institute, said it's often hard to get consumers and regulators to focus on potential privacy issues ahead of time.

"Most people don't think about the issues until they become a victim of a privacy abuse," he said. "I see the privacy issues here as potentially serious. I'm not sure if I trust the utilities. It's hard to know how that information would be appended to other information and be used against consumers."

As an example, he cited recent moves by banks to target customers who shop at stores that are frequented by consumers with low credit scores. Some are having the credit limits lowered merely because of where they shop -- a guilt-by-association model that infuriates some consumers. (It was first observed by msnbc.com a year ago.)

Privacy expert Alessandro Acquisti, who studies the intersection of economics and privacy at Carnegie Mellon University, said privacy issues routinely arise even when companies that collect data do so with all good intention.  Many times, data that collected is harmless in isolation, but becomes troublesome when combined with other data, or examined by a third party for patterns.

As an example, in 2006, America Online posted what it thought were anonymized searches from its service. But observers quickly learned how to connect searches to individuals, creating a black eye for AOL and embarrassing hundreds of users.

More recently, students at MIT created a formula they say can predict which Facebook users might be gay, based on their public friend listings.

"This is the great challenge we face in the privacy realm," he said. "Often when data is combined, you can draw inferences that are unexpected."

'Tsunami of information'
Given the sheer avalanche of data that is going to be generated by Smart Meters that talk back to the grid, it's easy to imagine unintended consequences.   Utility companies sometimes collect only two meter readings per year on a customer.  Smart meters can easily send two readings per hour.

"It could mean more data than you've ever collected," he said.  "It's a tsunami of information. … I don't know that companies appreciate how much data is coming."

According to a recent discussion by experts at Smart Grid Security, here's a quick explanation of the sudden explosion in data.  In the United Kingdom, for example, 44 million homes had been creating 88 million data entries per year. Under a new two-way, smart system, new meters would create 32 billion data entries. Pacific Gas & Electric of California says it plans to collect 170 megabytes of data per smart meter, per year. And if about 100 million meters are installed as expected in the United States by 2019, 100 petabytes (a million gigabytes) of data could be generated during the next 10 years.

Utility companies could adopt a European approach called "data minimalization," Ponemon said. Firms in Europe are legally bound to collect as little information as is necessary to complete a transaction, and they must delete the data as soon as it is no longer needed.  That's unlikely, however.

"Once a company monetizes data it collects, even if the amount is small, it is very reluctant to give it up," he said.  Many companies he audits have robust privacy policies but end up using information in ways that frustrate or cost consumers, he said. "They talk a good game, but I'm sure (utility companies) will find ways to use the data, and not necessarily to benefit people but to harm people."

Data creep will inevitably happen. Already, some consumers are getting statements that compare their use to neighbors' usage -- and "overusage" premium pricing isn't far behind.  But what if the comparisons aren't fair?  Most families would want to be compared to similar families -- how much power do three teen-ager daughter households use?

Cost savings, efficient allocation
Acquisti, who wears dual hats as both an economist and privacy expert, says consumers should not expect the worst from Smart Meters and the Smart Grid. In general, he says, more information is helpful to any economic system.

"I do not want people to be paranoid," he said. "Information from the Smart Grid could lead to cost savings and more efficient allocation of resources."

The key, he said, often lies in setting consumer expectations ahead of time.  In numerous studies of consumer attitudes towards data collection, Acquisti has found what seems like contradictory attitudes, with users angry at some companies while pleased with others.  But he thinks it boils down to transparency.

"If a consumer knows what is gathered and why, they can be comfortable with it. But when news comes out because of an investigative report in the news, they get angry.  Even if it is the very same information used in the same way," he said.

Polonetsky hopes utility companies have learned something from the missteps of Internet firms through the years. Early on, many consumers reflexively deleted Internet cookies in part because didn't understand what they were, and how they helped the consumer experience.  They also didn't trust Web sites after a few embarrassing news stories.

But not all Web firms suffered that fate.

"Amazon is doing well, but they are tracking the books you buy. But they are also making suggestions," he said.  "I think people feel, 'Hey, you are doing something for me.' And that's ok."

The key, he said, will be the actions of utility companies early on in the Smart Grid upgrade process.  They need to "recognize that they will be having complicated conversations with customers" and work to build trust now, before the digital makeover begins in earnest.  After all, many consumers might prefer that their security alarm system be automatically armed if the lights on the house have been dark for two days, as long as someone explains the benefits to them.

"This is all coming very quickly and we don't have the history of how to understand whether people will or won't want these things," he said.

Already, complaints of high bills
Discounts, like the one offered to Maryland consumers, could certainly serve as the carrot that entices U.S. power users to sign up for smart meters, and agree to allow collection of data. But some consumers already feel new meters are being used as sticks instead of carrots.

When California's Pacific Gas & Electric flipped the switch on smart meters earlier this year, a cascade of complaints followed.  A host said their energy bills doubled the first month after the smart meters were installed. Complaints have been so vocal that the California state Legislature recently held a hearing about it. One consumer, Jane Hahn, said her August power bill soared 422 percent, to $735, over the same month a year ago.

That's hardly the way to win over a potentially skeptical population. Still, someone will have to pay for installation of two-way electronic sensors in the system. The data mining and marketing opportunities may prove too tempting, since they could fund much of the upgrade. But doing so could create a backlash that could place the entire upgrade in peril.

"Will the folks involved learn from the mistakes of the past?" Polonetsky said. "Will the grid end up with a marketing model, with unease and distrust, and complaints that 'I didn't even know you had this data.'  Or will it be 'How can I respect your data' and will this model evolve as the best of Web 2.0 … giving people control of their information and great new tools? "  

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To see a sample working smart meter, including dollars spent per hour and hour of highest consumption, click here.

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On the Web, it's not always easy to know who your friends are.  Mistakes in judgment can be very costly.

Internet imposters are perfecting the technique of impersonating friends on social networking sites like Facebook, with lucrative results. Victims are losing thousands of dollars. Emotional e-mail pleas sent by imposters, such as "I'm stuck in London and I've been robbed, help me," have become so effective that the FBI last week issued a warning to consumers about social networking sites.

"Fraudsters continue to hijack accounts on social networking sites and spread malicious software by using various techniques," the warning said.   The agency says it has logged 3,200 complaints about such incidents since it began keeping track.

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And Facebook responded to increased scam activity by posting a blog entry last week saying it is "redoubling our efforts to combat the scam" and detailing steps the firm is making to beef up security.

"Our security team is working with law enforcement and collaborating with email providers and other industry experts to identify and catch the criminals responsible," the post said. "Western Union also is working closely with law enforcement on scams such as this one."

Msnbc.com first brought you the story of Facebook ID theft in January. Brian Rutberg of Seattle had his status changed by a hacker to "BRYAN IS IN URGENT NEED OF HELP!!" The criminal then sent notes to all his friends, claiming that Rutberg's family had been mugged while traveling in London, and was in desperate need of cash.  One concerned friend followed the criminal's instructions and wired $1,200 to London before realizing the error.  The money could not be recovered.

Then in August, we updated the story, describing Colorado resident Susie McLain and her ordeal with Facebook ID theft.  Her phone was ringing off the hook, and her cell phone full of concerned text messages, after an imposter began asking her friends for $850, claiming McLain had been stabbed during a mugging in London.

The criminals keep honing their story, and they've expanded their playing field, as reported on NBC's Today Show on Tuesday.  They've moved beyond Facebook: Some targets are receiving imposter e-mails directly from victims' personal e-mail accounts.  When Debbie Peterson recently received what looked like a private e-mail from a family friend who needed help, she jumped at the chance.  But the e-mail was a fake, and Peterson sent $3,000 to the criminal.

"It's all we had in our savings. They take the emotional part of human nature and manipulate it to their advantage," she told the Today Show.

Convincing scam
The scam works because personal e-mail and Facebook messages from friends carry with them an air of legitimacy that other Internet communication does not.  Many users have wised up to so-called phishing scam e-mails that appear to come from banks or Internet companies like eBay, and no longer fall for traditional efforts to steal their passwords. But an e-mail that comes from a friend in need is hard to ignore.

In Rutberg's case, the e-mail dialog included his Facebook photo next to each comment, making it even more believable. In the image below, an imposter tried to trick a friend into sending money. The last message is from the real Rutberg, sent after he regained control of the account.

RED TAPE WRESTLING TIPS

Consumers who've been hit up for cash by an e-mail or Facebook imposter should fill out a complaint with the FBI at IC3.gov.

In the meantime, here's how to avoid being a victim:

• Never send money to an individual, even a friend, using Western Union unless you are ready to never see it again.  There are no security measures in place to protect those who wire money that way, and there's no way to recover funds send through Western Union that end up in the wrong hands.
• Don't believe your e-mail, even if it comes from a friend.  Any unexpected greeting cards, solicitations, or  offers you receive should be treated with complete skepticism.  Before you click, call and ask "Did you send this?"
• It's a good idea to have two e-mail contact addresses on file with Facebook, so you have a better chance of reclaiming a hijacked account if you become a victim. Criminals who hack accounts usually change the password to lock out the rightful owner.  Facebook will use the secondary e-mail in an attempt to determine the real owner of the account.

Facebook has also set up a special page to deal with account hacking. You can find that here.

For other Facebook hacking issues, look here.

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Mary Cox's consumer nightmare began with poor satellite television reception, but ended up costing her a $430 early termination fee, hundreds of dollars in overdraft charges, and endless hours of frustration. Adding insult to injury, she says, was a phone call with a customer service agent who said his name was "Ding-A-Ling."

Cox's story should serve as a harsh reminder that it's never a good idea to give any company your checking account number.  Credit card transactions are always the smarter way to establish a financial relationship with a company. Sharing your checking account or debit card might seem OK at first, when you're excited about getting that new cell phone or TV service.  But if things turn sour, consumers who have authorized direct withdrawals, or even merely shared bank account information with a company, often find they've lost all leverage in the dispute. Then they're surprised when money gets sucked right out of their checking accounts.

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That's what Mary Cox said happened to her.  The California resident and six-year customer of DirecTV moved to the city of Fontana in November and took advantage of DirecTV's offer to set her service up at her new home for free.  After the hardware was installed, the signal was so poor that the service was unusable, Cox says.  She spent several weeks trying to get DirecTV to fix the service, then decided to cancel on Jan. 2. A few days later, she returned the receiver and other equipment to DirecTV.

On Jan. 12, DirecTV sucked $432.58 out of her checking account as an early termination fee because the "free moving" service had obligated her to a two-year contract with DirecTV, she said.

"That's something they don't tell you in those commercials," she said.  "I didn't sign anything agreeing to that."

A cascade of problems soon followed, as the surprise withdrawal led her to overdraw her checking account.  She bounced a series of checks, including her rent check, and had to pay nearly $200 in overdraft fees.

"It was just a nightmare," she said. "I was on the phone with the bank crying, asking them to fix this."

Perhaps the worst part, she said, was her continued frustrations when calling DirecTV to ask for help.  When she complained about the withdrawal, a front-line customer service agent told her there was nothing he could do. She asked for a supervisor, who told her the same thing. Then, Cox says, she demanded to speak to a manager.  After a long wait, a man answered the phone and identified himself as "Ding-A-Ling."

"I thought I heard wrong, so I asked him to repeat himself.  And he said it again," Cox said.  "You might as well be talking to a wall ... I think they just do everything they can to make it hard on you."

Cox is now a plaintiff in a class-action lawsuit against DirecTV, filed in California state court. Lawyers in the case have asked the court for an injunction that would prevent DirecTV from automatically withdrawing funds from consumers' accounts when there is a dispute.  DirecTV was facing several similar lawsuits in California; the cases have now been consolidated into a single class action.

"The activity of going directly into someone's account is absolutely shocking. ... Mary had her bank account plundered," said Edie Mermelstein, Cox's lawyer. "We're not saying they can't bill people ... we're just trying to prevent them from reaching into other peoples' accounts like they did with Mary."

'Customers...consent to these charges'
DirecTV, in a statement, denied that it takes money from consumers without their knowledge.

"Contrary to the claims that are being made, DirecTV does not withdraw money from its customers' bank accounts or credit cards without their consent," said spokesman Robert Mercer in an e-mail. "DirecTV only charges an early cancellation fee to a customer's credit or debit card after the customer authorizes the charge so there is nothing for the court to enjoin.  Customers are informed of and consent to these charges on multiple occasions, and DirecTV intends to vigorously defend against these claims in this litigation."

On its Web site, DirecTV indicates it may charge consumers a "pro-rated fee of up to $480" if they don't fulfill their "programming agreement," which requires 24 months of service.

Cox didn't use direct withdrawals to make her monthly payments for TV service -- but she did give DirecTV her bank account information when she signed up with the service "under the guise of leaving a deposit for the equipment," Mermelstein said. Cox never imagined the firm would make surprise direct withdrawals from her account.

To date, she's gotten some of her money back, but the problems continue.  After the withdrawal, she initiated a dispute with her bank, the now-defunct Washington Mutual.  The bank initially sided with DirecTV, but gave her a temporary credit for $430.  Cox took the money and switched banks. She was still out about $200 in bank fees.

Then, collection agents working on behalf of DirecTV started caller her home, looking for the $430. The calls stopped when Mermelstein sent them a cease-and-desist letter, but now Cox is worried about a potential impact on her credit report.

"There's nothing there yet, perhaps because of the lawsuit. But we are in a standstill right now," Cox said.  "This ended up so ugly, I had to borrow money to cover the checks I wrote. I'm not the kind of person to bounce checks."

Red Tape Wrestling Tips
It's common for consumers who give their checking accounts to firms for automatic payments to later regret the choice.  Health club auto-deductions and magazine subscriptions, for example, are notoriously hard to cancel. The U.S. Treasury Department says banks must stop making such automated payments within three days of receipt of a letter from a consumer saying authorization for payment is withdrawn.  But relying on banks' quick action is an unnecessary gamble.              

Consumers who pay with credit cards have additional rights and superior leverage when a dispute arises.  For starters, they still have control of their money, which gives them better bargaining power.  Also, credit card issuers make it easy to dispute charges -- much easier than obtaining refunds.

Of course, disputing a credit card charge is not a cure-all.  In Cox's case, DirecTV could still have initiated collections proceedings. But she wouldn't have faced the cascading overdraft charges.

 Credit cards also are superior to debit cards because debit transactions result in immediate checking account withdrawals, so disputes can lead to unhappy surprises such as overdraft fees.

But for consumers who don't have credit cards, a debit transaction is superior to a direct checking account withdrawal, as debit card dispute procedures tend to be more streamlined.

 

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