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Elizabeth Warren testifies before the US House Committee on Oversight this week.

Just how many cities will burn to the ground before we decide it's OK to enforce some building codes?

In case anyone hasn't noticed, the U.S. is stuck in the worst economic downturn in 80 years.  Why this happened is important: It wasn't caused by a debilitating depletion of raw materials, a devastating natural disaster or even a slow, steady decline in competitiveness. No, the recession’s cause is entirely artificial -- runaway bank greed, irresponsible decisions by plenty of people who should have known better and, most important, by the deflation of a financial bubble and its massive fallout.

It seems incredible to argue that, after all this, nothing should change.  And yet, that's the feeling you get from opponents of Elizabeth Warren, who have made it their cause celebre to dismantle the most tangible effort since 2008 to stop the financial madness.  A handful of bills have been proposed that would defang the new Consumer Financial Protection Bureau, or turn it into a commission so temporary director Warren can't be in charge. We'll get to these in a moment, but suffice to say the legislative efforts are very thinly veiled attempts to close the agency before it opens.

This week's very public childish exchange between Republican Rep. Patrick McHenry, R-N.C., and Warren over a scheduling disagreement was a rare, unscripted moment in congressional hearings.  If you haven't watched it, you should. McHenry wanted the hearing to continue; Warren said she has other commitments that were scheduled around the agreed-upon time, and instead offered to submit other answers later in writing.  McHenry said there was no agreed upon time, telling Warren she is "making this up." The meeting devolved from there.

The spat provides a window into how Washington, D.C., really works and Congress’ lack of urgency in working to rescue our nation's economy and prevent another meltdown. McHenry was engaging in one of the oldest tricks in the book -- the equivalent of arguing about the size of the negotiating table during peace talks. He might as well be yelling about the best way to rearrange the deck chairs on the Titanic.

The spat didn’t end there. McHenry’s staff issued a press release after the hearing saying Warren showed a "blatant sense of entitlement," and the incident proved she has "disregard for congressional oversight."

If you've never been to a hearing in the halls of Congress, it's important to note that most verbal testimony is delivered in nearly empty rooms, to nearly empty member seats –  that can be hard to see on TV, given the magic of television. Submitted written comments, placed into the record, occur at every hearing. In other words, the hearings themselves are a charade.

The charade within the charade that McHenry orchestrated was simply an attempt to make Warren look bad, to appeal to those who robotically hate every new government initiative, no matter what. A quick glance at McHenry's Facebook page might suggest his effort to make Warren look bad backfired on him.

The incident does provide yet another occasion to re-examine the idea that a new regulator is needed to keep banks from misbehaving and to protect consumers. It's very hard to argue against the notion that whatever we had in place before 2008 didn't work very well. Was the problem the rules, or the rules enforcers?  There's plenty of debate about that, but I can tell you that those who designed the Consumer Financial Protection Board believed chiefly that bank regulators we had were too cozy with banks, and a fresh start with a new agency was needed.  The Dodd-Frank financial reform law passed by Congress contains few new rules for credit card issuers and mortgage originators; mainly it just tells them there's a new sheriff in town.

Beneath all the rhetoric, the real argument is about the sheriff.  Warren has been one of the very few voices in Washington, of either party, who speaks openly about bank abuses.  A career lawyer and Harvard academic who has never held elected office, she has no history of political donors to please, no favors to pay back, no sweetheart mortgage deals we know about and, apparently, no skeletons in her closet other than an apparent fastidiousness about sticking to schedules.  She's just the kind of person banks fear.

I've known Elizabeth Warren professionally for a long time. We first met after she published her breakthrough book, “The Two-Income Trap,” long before the financial meltdown that thrust her into the role as the nation's top consumer protector. Anyone with curiosity about what's really happening now should at least read some excerpts of the book.  In it, Warren lays out a compelling argument that most families now need two incomes – usually husband and wife -- to afford a house in a safe neighborhood with good schools. A generation ago, one income was sufficient. The stress this change has placed on American families is immense, and no political party should call itself family-friendly without taking on this immense, fundamental social upheaval. 

Not long after, I attended a more typical, boring congressional hearing about bankruptcy. Warren testified, and I watched. During a break, a gang of former Harvard law school students surprised her with a visit.  She hugged them like a grandmother would. 

In 2008, she was kind enough to take the time do a peer review of my book, “Gotcha Capitalism,” even as she exploded on the national scene as the public face of financial reform aimed at helping consumers.

Of course, being nice and writing a book say nothing about your ability to run a large government bureaucracy. We don't yet know if a Warren-led Consumer Financial Protection Bureau would be effective.  But we know exactly how things worked in the past. Anyone who wants to try that again is insane. If there is a better person to head the agency, no one has said his or her name out loud yet.

Republicans have introduced several pieces of legislation designed to “reform” the Consumer Financial Protection Bureau before it officially opens for business on July 21; one might hope they would be as active in attempts to reform Wall Street and the banking industry, but let's examine the specifics of these efforts.

Rep. Spencer Bachus, R-Ala., has introduced a bill that calls for the biggest change: The bureau would be run not by a director, but by a five-person commission. Anyone who's worked in corporate America knows full well that the best way to kill an idea is to appoint a committee to study it; that's the strategy here.  Anyone who thinks D.C. commissions work well should look at the long line of successes that have emerged from the FCC or other federal commissions.

Bachus is fond of saying that the new bureau might be "the most powerful agency ever created," which shows a gift of hyperbole that even the National Enquirer could love.  The financial reform bill holds that any decision the bureau makes can be overturned by the new 10-member Financial Oversight Stability Council, which is made up of top banking regulators such as the Federal Reserve and the Office of the Comptroller of the Currency.

Rep. Sean Duffy, R-Wis., introduced a bill that would make it easier for the Financial Oversight Stability Council to reverse decisions made by the new consumer agency.  At the moment, stopping a new bureau rule requires two-thirds of the 10-member council to vote that a new rule threatens the safety and soundness of the banking system. Duffy's law changes that to a simple majority. Here's the problem: Such a law tips the balance of power bank into the hands of the same regulators who had it before 2008. They didn't do a bang-up job of determining safety and soundness then.

Finally, Rep. Shelley Moore Capito, R-W.V., introduced a bill that would open the door to delaying the formal opening of the agency indefinitely.  As we all know, nothing happens -- particularly in D.C. -- without a deadline.  When Congress passed financial reform, it set July 21, 2011, as the date when a director should be in place and the transfer of regulatory power would take effect.  Capito's bill would stop the power transfer if a permanent director has not been confirmed in the Senate.  Republicans have already said they'd block Warren's confirmation if she were appointed.  That kabuki dance would lead to an indefinite delay in the opening of the new consumer agency.

All three bills were passed by the House Financial Services Committee earlier this month. The full House may pass them, but the bills stand little or no chance in the Democrat-controlled Senate, would face a certain presidential veto and would never win a veto-proof majority. In short, they are legislative non-starters.  They are great conversation starters, however, for legislators hoping to woo donations from financial companies. The Center for Responsive Politics reports that banks and their political action committees gave $19 million in political donations to federal candidates, committees, and parties in 2010.

I can't predict the future; I can't say the new consumer agency will prevent the next financial meltdown, or if it will even prevent a single consumer from being deceived by a bank.  I can say it’s time to stop blocking progress. No doubt, the agency will require some adjustments after it begins its work, and Congress would do well to actively oversee it. It can pass laws to fine-tune it -- or dismantle it -- at any time.  It seems foolish to "reform" the agency before it’s even open for business.  Legislators should let Elizabeth Warren begin her job, and fire her if they don’t like results. The agency’s chief role should be to clarify mortgage application forms, step in when outrageous new bank fees appear and to act on consumer complaints when they arise. It’s amazing how threatening that work sounds to some people.

After a string of bad fires, you force builders to use safer materials and install sprinklers, and you hire inspectors to make sure the work gets done. That's just how the world evolves.  Getting in the way of that process will just send us spinning in circles, and I don't think anyone wants 2008 again.

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It's perhaps the very definition of Red Tape. Four years ago, Congress decided that the IRS should get into the banking business, authorizing it to give out no-interest loans to first-time homebuyers. That put the agency in the position of both collecting loan payments and issuing tax refunds to the roughly 1 million taxpayers who took advantage of the program.

This year, the odd arrangement overwhelmed IRS systems, and an unspecified number of taxpayers have been forced to wait four months or more for their tax refunds. In fact, many are still waiting.

"This is frustrating for taxpayers, and it's frustrating for us," said IRS spokesman Terry Lemons. "We deeply apologize."

Making matters worse, taxpayers caught up in the vortex say they've been promised delivery dates for their refunds repeatedly, only to be disappointed or to discover their returns have been placed back into "error" status.

One of those taxpayers who's been tantalized by repeated promises of a refund check is Tia Littlejohn, who lives in Maryland just outside Washington, D.C. She and her husband are planning to use their expected $6,800 refund to pay for in vitro fertilization. She's had to postpone the procedure twice because promised tax refund dates have come and gone without payment.

"At this point, I may have to just cancel it," she said. "It's really affecting our household. It's very stressful."

Her litany of hope and disappointment is typical.

"Our return was processed February 19 with a refund date of March 4. Well, March 4 came and went. Since then we have been waiting, every other week we have a different error code and the date of a possible direct deposit," she said. "On April 27 they told me they told me my return was done and 'out of error.' Last week they told me I should receive it May 20. Then (Wednesday) I looked and it's gone back into error again."

Lemons said the IRS has devoted a lot of extra labor toward solving the problem and began manually processing the returns after the problem was discovered in February. The number of victims has been whittled to "a few thousand taxpayers," he said.

More on the First Time Homebuyer tax credit

That's cold comfort to people who have been waiting months for thousands of dollars. A Facebook group devoted to taxpayers caught up in the mess now has more than 3,000 members; they write daily about their mind-numbing frustrations. Many are now being told their returns won't arrive until mid-June.

"I had a date, and a second date ... and now I'm back at 1201 (error). My advocate said that it's just sitting there. WTF IRS?" Jannae Leonard Powell wrote Thursday.

The Facebook page has become a support group for some, a place where taxpayers share tips on the best time to call , the best number to call and how to reach the most helpful phone agents. Littlejohn said many in the group have received frequent rude treatment, so they just hang up repeatedly until a "nice" agent answers.

"Some are very nice, but some are very nasty and basically say, 'I don't know what else to tell you. You are just going have to wait,'" she said.

All the taxpayers involved in the glitch took advantage of a one-time, misnamed First Time Homebuyer  tax “credit” offered during the 2008 tax year, a program that turned out to be a meager effort by Congress to prop up the then-imploding housing market. Homebuyers who took advantage didn't actually receive a credit — they were granted what was essentially an interest-free loan of up to $7,500, to be paid back in $500 increments starting in 2010. Subsequent versions of the program granted homebuyers an outright tax credit, so the 2008 users already have something to moan about.

Lemons said IRS systems weren't set up to handle the many variables that ultimately came from the program, such as how to calculate repayment of the loans if buyers got divorced, or ended up in foreclosure. One particularly vexing and unexpected problem: Many taxpayers are paying more than the minimum $500 annual payment in an effort to pay off the loan early.

"That has complicated matters," he said. "These are well-intentioned homeowners, but our initial programming was that payments would be spread out equally over 15 years."  Programmers of complex systems will understand this as a typical problem of "unexpected input."

Stephanie Vega used the tax break loan to buy a house in  2008 and accommodate her growing family shortly after she had twins. The family bought a foreclosure property that needed major cosmetic repair at the time — and still does. They planned to use this year's refund to repair their master bathroom, which has been essentially unusable since the purchase.

"When I called at the end of March, they said they were going to get everyone who was affected by this their money by April 5th," Vega said. "That came and went, and obviously no money. … They all contradict what the one before them say. You just don't know who to believe."

Vega, like many of the other taxpayers, has been assigned an agent in the IRS Taxpayer Advocate's Office, but she said that hasn't helped much.

"Normally, I am not a pushy person, and so usually I just sit back and wait. I don't like to be a pain or a bother, but we are needing our money now," Vega said. "I just feel like the complete lack of communication, along with the IRS seemingly just sweeping this problem under the rug, is so unfair and unjust."

Amy Royer, 37, had to wait more than three months, but she just received her $4,700 refund last Friday. Even so, she still feels angry about her interactions with the IRS.

"The whole thing was a pretty bad experience," she said. "Most of the frustration came because of the inconsistency, the different stories we got about the status of our refunds. It was a fiasco, really."

Royer had also planned to use her refund to take care of a medical procedure. Because she was promised a refund on March 8, she went ahead with sinus surgery on March 1 and paid with credit, assuming the refund money would arrive and cover the bill. The refund's tardiness caused her to pay high interest and set her blood boiling.

"The whole time, I was saying, 'I would have a different feeling about things if we were getting real answers,'" she said. "It's our money, not their money."

With the problem having shrunk to a few thousand taxpayers, it might be hard to understand why the IRS hasn't been able to manually overcome its computer issues and issue refunds. Lemons said that the agency is trying but that the problem arose at the worst possible time.

"This time of year, we have tens of millions of tax returns coming in. It's all hitting at the busiest time of year," he said. "Our people have been hustling for weeks to get this thing squared away, but the bottom line is there are people who have not gotten refunds yet, and we deeply apologize."

RED TAPE WRESTLING TIPS

Many consumers enjoy the rush of a large tax refund check and use their regular payroll deductions as a kind of forced savings plan. That's a bad idea.

This Red Tape tale is a good reminder to all that now is a good time to double-check your regular payroll deduction. There is no good reason to overpay federal taxes during the year in order to build up a large tax refund. That amounts to no-interest loan to the government, and you are better off keeping that money throughout the year and putting it in the bank yourself. Obviously, it's better for you to receive the interest, rather than Uncle Sam. But perhaps more important, in an economy where even Standard & Poor's is beginning to doubt Washington's ability to pay its bills and where the federal government faces threatened work shutdowns annually, it's bad to trust your money to the whim of Uncle Sam. In the past, state governments have delayed issuing refunds to help close budget gaps — it's not unthinkable that Congress could try that someday.

If you received a large refund this year, that's nothing to celebrate. You should adjust your payroll withholding accordingly, ASAP.

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Verizon Wireless customers who tried to pay their bills online last week may have been hit by an ingenious, almost undetectable hacker attack aimed at stealing their identities.

Consumers whose computers were infected with the SpyEye Trojan horse program would have been redirected to a Web site controlled by criminals after they logged into Verizon Wireless' website, according to Israel-based security firm Trusteer. Then they were presented with a form that appeared to be from Verizon, but tricked users into entering a detailed series of personal information, including their Social Security number and credit card information.

"The attack is transparent to Verizon customers since the malware waits for the user to log on and access their billing page, and only then injects an authentic-looking replica Web page that requests this information," said Amit Klein, Trusteer's CEO. "Since the user has logged on and has navigated to the familiar billing page they have no reason to suspect this request for payment information is fraudulent."

SpyEye is a copycat of the powerful Zeus Trojan horse that has been successfully used in massive electronic banking heists, including a series of thefts the FBI warned about recently that hit U.S. companies and sent millions of dollars to six Chinese cities. 

The attacks occurred between May 7 and May 13, Trusteer said.

Verizon confirmed the attack late Wednesday night, but said it didn't impact its systems — only consumers who failed to secure their own computers were hit.

"No Verizon systems or networks were breached," said Verizon spokesman Bill Kula in an email to msnbc.com. "Customer data was protected unless their PC was not protected by anti-virus software with current definitions. We encourage all customers to use anti-virus software and keep their ant-virus definitions current."

Verizon said at least one other "major communications company" was targeted by the SpyEye attack, but declined to identify the firm.

It also noted that consumers who were infected with the Trojan horse, but didn't log in to Verizon or that other firm, were not impacted.

"(Computer criminals) typically just go after anyone they can infect," Kula said. "We have no indication it is more than this. The bogus page will only launch when they try to go to our billing site. There could be many other people infected who are not our customers, and thus will not see the bogus page launch."

Trusteer said it had reason to believe at least some consumers had fallen for the scam, but couldn't say how many.

Hackers have taken to increasingly sophisticated malicious software that lies in wait until consumers — or businesses — are particularly vulnerable, such as immediately after logging on to a financial website. It's a troubling trend, Klein said.

"While this attack is not technically new, it continues a financial malware trend we have been tracking in recent weeks: a shift away from stealing usernames and passwords to stealing payment and credit card data," he wrote in a blog post. "There's no easy answer, since most endpoints used to enter payment and credit card data are outside the control of the merchants who process the transactions."

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Advertisers and other third parties had the potential to gain unauthorized access to many Facebook user accounts and profile information because of a software flaw, Symantec Corp. said Tuesday night.

Hundreds of thousands of third party applications leaked user account access tokens to advertisers and others during the past several years, Symantec said.  In April alone, when the flaw was found, about 100,000 applications were enabling the leakage, according to the company.

Facebook was advised of the flaw and fixed it, according to Symantec, but some of the leaked access codes -- called tokens -- might still be stored on log files or in applications, and could be exploited.

"Concerned Facebook users can change their Facebook passwords to invalidate leaked access tokens," Symantec wrote in a blog post describing the situation. "We estimate that over the years, hundreds of thousands of applications may have inadvertently leaked millions of access tokens to third parties."

The tokens act like "spare keys," allowing third-party applications to perform certain functions on behalf of users without requiring them to log in each time. When third-party apps are installed, users selectively grant them permission to access profile data. In certain situations, a token can be passed by Facebook to these third-party applications "potentially on purpose and unfortunately very commonly by accident" in the referrer field of Web-based data requests. That data, in turn, can be shared with other third parties.

In other words, the spare key gets around.

That would enable third parties to gain unauthorized access to profiles, photographs, and chats, and also enable a malicious attacker to post messages and mine personal information, Symantec said.

Facebook acknowledged the flaw, but told the Wall Street Journal that it had not been exploited by anyone. 

"We've conducted a thorough investigation which revealed no evidence of this issue resulting in a user's private information being shared with unauthorized third parties," the firm said, according to the Journal.  No explanation of the investigation was shared.

The incident is not the first time Facebook has been accused of leaking critical data to third parties.  Last fall, the Wall Street Journal found that many popular apps were transmitting Facebook user ID information to third parties, regardless of user privacy settings.

The token leakage incident is just the latest reminder that Facebook holds a treasure trove of information about half a billion people, leaving the firm atop a mountain of private data.  The safety and security of so much information stored in one place is inherently suspect.  

"The repercussions of this access token leakage are seen far and wide," wrote Nishant Doshi, who discovered the flaw with Candid Wueest, in his blog post about the incident.

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Christopher Akinyemi

Christopher Akinyemi hates feeling like a company has taken advantage of him. Like the rest of us, he gets angry at what seems like a constant stream of broken products, ignored warranties, screwed up reservations, endless phone calls and unwanted email.  But unlike most of us, the 22-year-old college student in Indiana puts his anger to good use.

He takes the culprits to small claims court.

He's filed a dozen cases in the past few years, and wins nearly all the time.  In 10 of the 12 cases, he said, companies have settled and sent cold, hard cash rather than a team of lawyers to fight him in court.

"I've stood up for the average Joe since I was 18. I put my foot down," said Akinyemi. "I have a heart for justice in business. ... I'm on a mission to show you don't have to pay a lawyer $225 an hour to get your voice heard."

For a trivial court fee -- usually $76 in Indiana -- Akinyemi often gets himself settlement checks of $500 or more. He also gets something most of us rarely taste: satisfaction.

In recent months, he's obtained settlements from companies like Lending Tree, Priceline, Dell, and Hewlett Packard. He's also served as the lead plaintiff in a class-action lawsuit against JP Morgan Chase -- that case was dismissed -- and has taken Bank of America, Hilton Hotels, and Sprint to court since he began his legal flourish in 2009.

"A lot of people, when they have a problem, wait on the phone and then ask to talk to a supervisor, and they just don't get anywhere. They ask to go higher, but they still are left hanging," he said. “I just try to change things one case at a time. People don’t forget me.”

Akinyemi took Hewlett Packard to court last year alleging repeated problems with a notebook computer he'd purchased. After several attempts to get the machine fixed or replaced, Akinyemi sued H-P for $1,300, plus $76 in court costs.

In June of last year, H-P agreed to pay Akinyemi $688 to settle the case, according to court documents he provided to msnbc.com. A Hewlett Packard spokesman declined to comment.

The H-P settlement also includes a "no future business" agreement, something Akinyemi is getting used to.  Most of his small claims settlements include such a provision, a rather blunt tool by corporations to rid themselves of troublesome consumers.

"I have one with Bank of America. That means for the rest of my life I can't ever do business with them, even if I live to be 100 years old," said Akinyemi. At this rate, Akinyemi may soon run out of businesses he can work with.

He sued Priceline earlier this year for $1,076, claiming the company booked a reservation for him with a rental car company that was not honored.

"I went through hell and high water trying to get that fixed," he said. There were dozens of phone calls between him, Priceline, and the rental company, but he couldn't get satisfaction until he filed suit.  His case was bolstered by extensive telephone call records.

"I'm very vigilant in these situations," he said.

In April, Priceline agreed to pay him $219 to settle the case, according to a document he provided. 

Priceline spokesman Brian Ek declined to comment about the situation.

The case Akinyemi filed against Lending Tree earlier this year is much more straightforward. He claimed that Lending Tree repeatedly sent him spam. He sued Lending tree for $3,000 -- $500 each for six unwanted messages he documented, the amount allowed under Indiana's spam law.  On April 19, Lending Tree agreed to pay him $500.

Lending Tree said it couldn't comment on the litigation, or on an individual consumer.

He also sued Dell Inc. earlier this year for trouble he was having with a Dell Studio XPS laptop he purchased two years.  In April, Dell agreed to pay him $376.

Akinyemi has lost two cases, but figures an 80 percent success rate is pretty good.  What's the secret to his success? The small claims court justice system gives him something all of us want when we're trying to get satisfaction from a big company -- a person on the other end of the phone who is empowered to solve the problem.

"When I talk to their attorneys, I try to have a conversation with them.  I'll say, 'You know you've done wrong.  Instead of paying your attorneys $225 to drive to the courthouse, why don't you talk to me right now and settle this?' They usually want to work with me," he said. 

The settlement amounts aren't enormous -- they won't pay for law school, which Akinyemi hopes to attend when he finishes his degree at Indiana Purdue University in Ft. Wayne in the fall.  But they do make a point -- and they often at least pay for his time and frustration.

"My mission isn't just to get a settlement check," he said.  "It's to make these companies do right by people. It's a principle."

Akinyemi got a taste for the ups and downs of the justice system in 2009, when he was accused of assault in Noble County, Ind.  All charges related to the incident were later dropped, his case dismissed, and his $5,000 bail money returned, but his reputation was damaged.

"A $10,000 retainer (legal fee) ... is what it cost me to prove my innocence, yet I never even got an apology from anyone," he said. 

At that point, Akinyemi had already signed on as the lead plaintiff in a case against JP Morgan Chase regarding a $100 coupon the firm had mailed to prospective new customers.  Akinyemi alleged that JP Morgan didn't honor the coupons unless consumers followed a list of unclear requirements -- including setting up direct deposit as part of the new account. Days after filing the case, JP Morgan deposited $100 in Akinyemi's account.  The lawsuit was dismissed -- a dismissal affirmed by an appeals court in May of 2009 -- because the court found Akinyemi had suffered no damages.

He did, however, get a feeling of satisfaction from using the legal system to get the attention of corporate America.  He was soon studying the ins and outs of small claims court, and began filing cases there whenever he felt mistreated by a company.

"My message to people is that no matter what your age, you don't have to be intimidated," he said.  "In my state, it costs just $76 to file in small claims court, and I know in some places, like California, it's even cheaper.  It's worth every penny, and you get justice. Every consumer should know how to use small claims court."

RED TAPE WRESTLING TIPS
It's easier than you think to file small claims court cases -- in some states, you can file them online. That means if your case settles, you never even have to go to court. Here's a good state-by-state list of resources, including how and where to file.

And here's a very simple set of advice on filing successful cases. In short: Be prepared, be polite and be reasonable.  That'll get you far.

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Buying a gadget is beginning to resemble buying a car. You walk into a retailer and as you pull out your wallet, you are pelted with all manner of service plans, extended warranties, and other tack-ons that can double the price.

The similarity should come as no surprise. Car dealers and electronics retailers both sell products on razor thin margins. Their survival depends on finding a few suckers every day who are willing to overpay for an extended warranty.

The latest brainchild of cash-hungry electronics retailers is the guaranteed trade-in, with clever names like Best Buy’s “Future Proof Your Technology.” For a relatively small up-front fee, retailers promise to buy back the gadget at a specified price, providing consumers some measure of comfort that they won’t waste their money on ever-upgrading gadgets. The programs tap into perhaps the greatest frustration of tech consumers -- everything they buy is outdated almost immediately, meaning there is never a good time to buy. I call this the Cost of Keeping Up, or COKU, because it drives you cuckoo.  These programs are cleverly crafted to overcome this psychological obstacle to buying a gadget right now.

It must be going well. Best Buy, which launched its version of the program in January, recently announced it will expand its buy back offerings to a variety of new product categories in May.

On the surface, buy back guarantees could offer some value to consumers who perpetually like having the newest thing, much like car leases. You buy an $1,000 laptop, pay $70 extra for the buy-back plan, and in 11 1/2 months you bring it back and get $400 toward a new machine.  Sounds like you are spending $70 today to get $400 a year from now.  What could be wrong with that?

As in many financial arrangements, things are not quite what they seem. Think of this as one big mathematics equation, all gently tilted in the retailer’s favor. For example, you may end up paying sales tax three separate times on the same money if you use a buy-back program.

If you read a lawsuit that’s been filed against Best Buy by the first company to offer buy- back plans – California-based Tech Forward – you’ll get a whiff of just how systematic the effort is to separate you from your money. 

Tech Forward offers private label versions of buy-back programs for retailers like WalMart and Radio Shack. It says Best Buy copied its program after initially inviting the company to run a pilot last year. In its lawsuit, Tech Forward asserts that its main intellectual property is years of research into what the firm calls the "exercise rate,” defined as “the percentage of plan holders who actually send in their devices and qualify for a store credit.”  

In English, that means the number of consumers who pay for the program and get nothing in return.  In order for buy-back programs to be profitable, they require a certain percentage of consumers to pay for nothing.

The lawsuit also claims that Tech Forward has years of experience(PDF) and a database full of “information on how to profitably influence exercise rate behavior for specific devices.”

I’m always opposed to consumers entering into complex financial arrangements with companies, which  almost always have the upper hand. They make the rules, they often bend the rules, and you often have better things to do than send in a flurry of letters in triplicate to assert your rights. Of course, there are a few superconsumers who can play the game and win. In this case, an anal-retentive record keeper who plans on buying the latest iPad literally the moment it’s released every year for the next five years might do well in these programs. If you’re not one of those technofreaks, I highly recommend you look elsewhere.

Why? Here are a few different ways to think about buy-back programs:

As an insurance product.  Buy-back programs essentially guarantee you a resale value, meaning they act as insurance against loss of value.  As with all insurance programs, they are impossible to really evaluate until there's a substantial number of claims, and we can see how consumer-friendly the claims process is. I can tell you that Best Buy's program includes a mountain of fine print that could turn your good deal into a bad deal very quickly.  The company's provider and underwriter, Chartis Warranty Guard, reserves the right to inspect returned gadgets, something it calls “acceptance testing.”  They are then graded into one of three tiers – “good,” “poor” or “substantially impaired.”  Bring back that laptop 11 1/2 months after purchase in poor condition, and you get only $200.  Bring it back substantially impaired, and you get nothing.  On the surface, that's reasonable, of course.  But guess who makes the determination? Guess what the appeals process is?  Guess who has no leverage in the negotiation?

Tech Forward has the exact same return inspection strategy. Again, the firm might be magnanimous. Or it might not be.  If you disagree with their decision, you must take your case to binding arbitration before the Better Business Bureau – you will have no option to sue the firm, as that right is waived by signing the terms and conditions.

As a costly loyalty program.  Remember, you don't get money for your item. If you sign up for a buy-back program at a store, you get a gift card to the store. That means you won't be able to shop around for a new laptop at other places, you'll be forced to buy from Best Buy, Radio Shack, Walmart, or wherever you originally spent the money.  You'll be forced to pay that store’s prices, which might not be the lowest.  With items stuck in Minimum Advertised Price land, and never fluctuate in price, such as Apple's iPad, this is less of a concern. Still, it's never a good idea to give up your free agency as a consumer. What if you have a dispute and want to take your business elsewhere? Why are you paying them to be loyal? 

NOTE: It is possible to buy a buy-back program directly from Tech Forward, which will issue you a check when you make a claim – that’s an advantage.

As punishment for the detail disinclined: To get your bounty, you need to have the original receipt and all the other original stuff that came with the gadget -- power cords, manuals, etc.  If anything is missing, your gift card is reduced by the replacement cost of the missing items. If the item gets damaged in shipping, you’re on the hook. If you never quite make it to the UPS store, you’re out of luck.  For those of you that have every receipt from the past two years stored in a safe deposit box, God bless.  The rest of us mere mortals must add into the calculation of the program’s worth the odds that something will go missing before your return date. Those odds lower the value of the program.  So does timing.  Miss the 12-month cut off by one day?  You get $300 instead of $400.  Miss the 24-month anniversary by one day?  You might get nothing. Tech Forward gives users a 30-day grace period, but assesses a late fee of 20 percent of the claim amount. In other words, that $200 payout becomes a $160 payout – (and remember, you probably paid around $40 in the first place for the protection, Tech Forward’s going rate for a $1,000 laptop right now).

Just as 10 percent of so of gift cards go unredeemed, Best Buy and Tech Forward know some people will screw up and miss out on their payouts entirely. As the lawsuit shows, the firms believe they can even influence those outcomes.  That tilts the math in their favor.

Triple the sales tax, and maybe income tax -- Other surprises in the fine print might deeply reduce the value of your return.  The gadget return transaction is actually defined as a sale and a transfer of ownership in the contract.  That means sales tax might apply.  Best Buy’s contract, for example, contains this ominous provision: “All sales tax liabilities for your sale of the device (to us) are solely your responsibility.”

Sales tax rules vary by state. According to Tech Forward, California residents who sell fewer than two personal items per year can be exempt from the tax. Others have to pay.

Best Buy, in response to an inquiry from msnbc.com, said “most customers will not pay sales tax on the proceeds,” but didn’t elaborate or explain why it includes the sale tax provision in its contracts. The company did say some consumers might have to pay income tax on the buy-back benefits.

(Tech Forward did not immediately respond to a request for comment)

While the tax may vary, the only thing that can be said for certain is: You have the tax liability, and they don’t. This means it’s possible you'll be paying sales tax twice on the same transaction – once when you buy the gadget and again when you return it. And, when you use that gift card, you'll have to pay tax on any purchase you make with it, so it's hardly a stretch to say you could be triple-taxed on buy-back purchases.

To illustrate:

6/1/2011 – You buy a $1,000 laptop and pay $80 in sales tax.

5/31/2012 – You return the laptop and get a $400 gift card. You pay $32 in sales tax for that sale.

5/31/2012 – You buy another $1,000 laptop, paying $80 in sales tax -- $32 of that for using the $400 gift card. 

TOTAL -- $144 in sales tax

As a way to really confuse your mobile phone purchase – Best Buy executive George Sherman recently said that buy-back programs were most popular among cell phone buyers. It’s really hard to make the numbers make sense with most phone purchases, because they come with two-year service obligations. Fulfill that two-year contract, and you can’t get a dime back from the insurance.  Return the phone early, and any buy-back payment you receive will be reduced by the early termination fee you’d have to pay.  Again, this is calculus that most consumers shouldn’t even attempt.

As a great way to give your data to someone else – Best Buy’s contract states expressly that consumers are responsible for cleaning their data off the returned gadget. Most of us are terrible at that.  Forensic experts will tell you the only real way to accomplish a complete wipe – given that deleted data can be restored -- is to take a hammer to your hard drive. But that would void other parts of the buy-back contract.

Tech Forward says it will do its best to delete your data from gadgets you turn in: “We intend to erase all information on the device using U.S. Department of Defense-grade software overwrite, magnetic degaussing, and/or physically drilling holes in a hard drive before reselling or recycling the device,” the firm says on its website.  But of course, it shoves liability for any lost or stolen information back on the consumer.

To get lost in other fine print – Tech Forward says it will process payments as quickly as possible, but reserves the right to take 60 days to make a payment.  If you are returning a laptop computer with the intention of upgrading to a new machine – that’s the idea, after all --  you could be without a computer for two months.  That is potentially an inconvenient benefit.

As part as source of confusion at the point of sale– At the risk of repeating myself, I hate complicated, multi-layered deals. I love simple, neat transactions.  Buy a laptop computer today at Best Buy, and the salesman will hound you into buying an extended warranty, a service plan, buy-back protection and perhaps a pack of gum.  Buy the service plan, and you’ll get half-off the buy-back plan, etc., etc.  Judging by prices offered on Tech Forward’s website, Best Buy’s buy-back prices are excessive anyway.  Just don’t engage in the conversation.  Know what you’re getting for what you’re spending.  If you can’t help but consider this option, you owe it to yourself to visit TechForward’s website to get a quote for comparison purposes before you go shopping.

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People who advocate for privacy in the digital age spend a lot of conjuring up hypothetical situations to illustrate how technology could be misused to violate basic human rights.

They won't have to tax their imagination so much anymore. A new lawsuit suggests consumers who rent computers may be suffering the most dramatic kind of privacy violation.

Crystal and Brian Byrd, of Casper, Wyo, told TODAY's Janet Shamlian on Thursday that a company that sold them a rent-to-own computer spied on them, using the laptop's Webcam to take pictures of them in their home. The spying came to light when someone who worked at the firm came to their house and tried to repossess the machine.

The couple is now suing Aaron's, a nationwide chain that rents furniture and other equipment, and the franchisee that rented the machine to them, Aspen Way Enterprises.  A note on the Aaron’s Web site says, "We’re taking this allegation very seriously. We are conducting a thorough investigation and diligently reaching out to our customers to address any of their concerns."

The couple's lawsuit alleges that pop-up boxes regularly appeared on the rented machine, claiming they needed to "register" software.  Each time that happened, the suit claims, a Webcam image of them was taken without their knowledge, and transmitted to a firm that managed tracking software for the rental company.

The lawsuit further alleges that law enforcement investigators have been told that other Aaron's customers have been similarly tracked and seeks class action status. 

Hardware tracking software has been defended in the past as a tool for helping rental companies recover stolen items. The software is chiefly used to ensure lease terms are honored, and allows the rental firm to remotely disable rented machines or put time limits on their use. 

Designerware LLC, which is also named in the suit for selling the tracking tools to Aspen Way Enterprises, says it encourages rental firms to get signatures from consumers declaring they know they might be tracked.  

But contract or not, there isn't a person in America who thinks that their rented equipment could do this:

"I was completely taken aback by all this, to know that they were taking pictures of all  us with webcam in our home, I totally felt invaded," Crystal Byrd told NBC News. "I have used (the computer) in my bra and underwear. I spent a few times checking my grades for school and I'm ready to get into the shower and I'm in my bra and underwear not thinking that anyone is watching me."

The lawsuit crystalizes the central issue in the ongoing debate about privacy: Powerful software is easy to use, and also very easy to abuse.

It's common for computer rental firms to place so-called "bricking software" on hardware they lease, said Mark Rasch, former head of the Department of Justice Computer Crime Unit.  If a renter doesn't pay the bill, the computer can be remotely disabled.

Software powerful enough to remotely control a computer, however, necessarily comes with all sorts of other capabilities -- such as remotely turning on a Web cam.

"When you have this kind of powerful software, there is an enormous temptation to use it,” said Rasch, now an executive at CyberSecurity and Privacy Consulting in Virginia. “There is often little employee training, and little appreciation of the legality involved." 

Without gaining express consent of those who are tracked, this kind of remote monitoring would clearly violate federal wiretap laws, the Electronic Communications Privacy Act and probably fraud laws, Rasch said. He stressed that consumers would have to provide "informed consent," which couldn’t be obtained by fine print hidden in a rental agreement.

"It's hard to invade someone's privacy more than taking pictures inside their home," he said.  

WHAT YOU SHOULD KNOW

Even if the Byrd family's situation turns out to be the result of a rogue employee misbehaving, he or she will undoubtedly not be the last one.

Consumers should know that when computers are rented, it's possible that remote control software is installed and that software could be used to invade your privacy.

What to look for in the fine print: Designerware told NBC News that it recommends an addendum be added to all lease agreements. It reads, in part: "While you are renting, the computer you are renting has security, locking and tracking software installed on it. If at any time you fail to make your rental/renewal payment, your computer may be locked down and/or electronically tracked and monitored." Language like that is a sure sign that the firm you've rented from has installed powerful software on your machine.

What to do: No one spites a rental company's right to get paid or recover its equipment. But even a broken rental agreement doesn't force a consumer to forgo his or her right to privacy at home.  If you have any reason to believe tracking software has been placed on a computer in your home, it makes sense to disable the Web cam when not in use. A gently placed piece of electrical tape or a band-aid will do the trick.

It's much harder to disable other monitoring components -- keylogger software or programs that "phone home" with IP addresses and locations, for example. Doing so would likely be a violation of the lease terms. Still, it's a good idea to install your own anti-virus software to make sure no unauthorized spy programs are on your machine.

Finally, awareness is key: Understand that a computer leasing company armed with tracking software can learn your whereabouts whenever you are connected to the Internet, and has the ability to know what you are typing and what websites you visit. Behave accordingly. That might mean avoiding laptop leasing agreements altogether.