Volume 40, Number 4, Winter 2008-2009

Who's Watching You Watch YouTube?

(And seeing you shop, scoping out your Google searches, and peeking at your email?)

The answer may soon be: your Internet Service Provider. Along with various network advertisers. They all want to engage in a practice known as behavioral advertising. That's where a company tracks your digital life, keeping track of where you go on the Internet over time, creating a profile of your web habits and packaging that information so it can be sold to companies who want to personalize the advertising they serve up to you.

That's the message from a forum on January 15, 2009, organized by the Coalition for a Connected West, and co-sponsored by the Arizona Consumers Council and The Center for the Study of Law, Science, & Technology at the Sandra Day O'Connor College of Law at Arizona State University. There, Professor Andrew Askland of the ASU College of Law, Leslie Kyman Cooper of the Arizona Consumers Council, Sheel Pandya of the Center for Democracy and Technology, and Sherry Ramsey of AT&T discussed behavioral advertising with a very engaged audience.

Although many consumers are unaware of the practice, behavioral advertising may be the wave of the future. While it offers benefits, in that it helps subsidize the cost of the Internet and can provide us with more personalized advertising that consumers may find more useful, it also imposes costs. Behavioral advertising represents the potential for a significant invasion of privacy, since behavioral advertisers may look over your shoulder at the web sites you visit, the videos you watch, the games you play, the news you read, the email you send, and the social networking sites you frequent. They have the potential to see information you might think of as private: your financial information; your health concerns and communications with family and friends.

Behavioral advertisers can track this information over time to create a profile of you and your digital life. That digital trail will become more and more detailed, as we live more of our lives online, and the advertising created based on those profiles may become more and more intrusive. In addition, the compilation and retention of reams of information about us represents a potential threat that we can't easily define, but that is nonetheless unsettling to many of us.

While many of us find the ability of companies to track our digital lives unsettling, it's not entirely clear that we can stop it. As Professor Askland explained at the forum, the United States has not enacted laws that provide broad protection for privacy. Without such laws, it will more difficult to affect behavioral advertising. But even without statutory guidelines, it's possible the practice may be limited. Some network advertisers have signed onto the Network Advertising Initiative, and have agreed to voluntary limitations on the behavioral advertising. In addition, the Federal Trade Commission has announced principles for self-regulation that it believes companies should follow. And, some companies have announced voluntary limitations on the practice, and have committed to permit consumers to choose whether to be tracked, and to keep consumers information private.

These measures are important, but they may not be enough. Because behavioral advertising does impose costs on consumers as they use the Internet, the Arizona Consumers Council believes that behavioral advertising should not occur unless consumers are given an opportunity to agree, in advance, to the tracking and use of their information. When giving consumers this opportunity, companies must make clear, complete, conspicuous disclosure about what information they will collect, how they will use it, how long they will keep it, and how they will protect it. In addition, consumers who do not want to be tracked should not be penalized. In other words, consumers should be allowed to control information about themselves, and to understand the costs of permitting information about themselves to be tracked.

It may be difficult to achieve these goals using self-regulation; after all, self-regulation only applies to those who volunteer to accept it, and it would only take one significant player opting out of self-regulation to make a mockery of the effort. It may be necessary for Congress to step in and enact legislation, and the Arizona Consumers Council will keep you up-to-date on any such efforts, as well as on any significant changes related to the practice. In the meantime, we want to know what you think about behavioral advertising. Click on the ’ÄúTell Us What You Think’Äù link at Arizona Consumers Council.

Arizona Voters See Through Payday Lenders’ Fake Reform

Arizona voters proved themselves to be savvy ballot initiative readers when they voted down Proposition 200, the payday lenders’ fake reform act. Prop 200, an initiative created entirely by payday lenders, for payday lenders, was a desperate attempt to keep preying on Arizona consumers in perpetuity. Had Prop 200 passed, it would have allowed payday lenders to make loans with nearly 400% interest forever. The legislature would not have been able to repeal the law.

Opponents of payday lending spent less than $200,000. That was less than 2% of the over $14 million that payday lenders poured into the pricey ad campaign that blanketed the airwaves and filled voters’ mailboxes with deceptive ads. Fortunately, Arizona voters like you saw through the deceit, and rejected payday lenders.

While opponents of payday lending may not have spent a lot of money, they have been working hard to limit payday lending since the early 1990s. In 1992, Phyllis Rowe, Arizona Consumers Council President Emeritus, used a grant from Consumer Federation of America and convened the first meeting in the country against payday loans, eventually bringing together organizations like AARP (www.aarp.org), 200 is No Reform ( www.200isnoreform.org) and Association of Community Organizations for Reform Now (www.acorn.org). Despite these efforts, in the late 1990s the legislature gave into payday lenders, passing a law allowing them to operate with few restrictions until 2010. With this deadline rapidly approaching, and facing the prospect of the same 36% interest rate as other consumer lenders, payday lenders launched their expensive campaign to pass Prop 200.

A broad-based coalition of over 100 organizations worked together to get the word out about the deceptive nature of Prop 200. They made sure their members and supporters knew that Prop 200’s promise of reform was no reform at all. They countered every deceptive pro-200 ad with truth. Those united against Prop 200 gave their supporters the information they needed to talk to friends, colleagues and neighbors, to get the word out about the truth behind Prop 200.

And it worked! Sixty percent of Arizona voters rejected Proposition 200. Despite the resounding defeat, payday lenders probably won’t go quietly into that good night. Arizona Consumers Council expects payday lenders to renew their efforts to change Arizona law. The Council is ready to remind legislators that it’s their job to do what voters want; in this case, that means limiting payday lenders’ ability to trap low-income borrowers. We’ll keep you posted, and let you know when it’s time to write your legislators to show payday lenders the boot at the legislature too.

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Requesting Your Support

Dear Friend of the Arizona Consumers Council:

As 2008 draws to a close, we’d like to take the opportunity in this last issue of the year to ask you for your support and to sign up for membership in the Arizona Consumers Council. With more members like you and your friends, neighbors and colleagues, we can be a stronger voice for Arizona consumers.

For over forty years, the Council has been a strong and effective voice for consumers in Arizona. Highlights of our successful efforts on behalf of Arizona consumers include:

In this challenging economic environment, it’s especially important that the Council continue to serve as a reliable source of information about policies affecting consumers, and as a supportive voice helping lawmakers focus on consumers’ needs.

The tumultuous economy raises the possibility of renewed public interest in consumer legislation. We need to let Congress know what Arizona consumers expect them to do. With many changes in our state too, we need ensure that our new governor and state legislators address what’s right for consumers. With more members like you, our voice will be stronger.

Please, go to www.azconsumer.org, and sign up as a member using the online form linked at ‘Support Arizona Consumers Council’. With more members, our voice on your behalf will be stronger. Your membership dollars will help us build on the Council’s past successes, and increase the visibility of the Council among the current crop of state and federal legislators. With your financial contribution, we will continue to improve our website and electronic communications. If you prefer to send us a check, please fill out the mail-in form below in this issue.

We look forward to continuing to mail our newsletter to you, and to make it available online and via email.

We will continue to support Arizona consumers by holding forums on timely topics, including identity security, energy efficiency standards for cars, and by helping to defeat negative legislation like Prop 200 on Payday loans.

So please, use the mail-in form below, or sign up as a member online. Consider supporting the Arizona Consumers Council with an additional financial contribution. Mail your check, or click ‘Support Arizona Consumers Council’ to pay securely online at www.azconsumer.org.

Tell your friends, neighbors and colleagues about Arizona Consumers Council. We promise not to sell or share your personal information.

When you visit us online at www.azconsumer.org, click on
‘Tell Us What You Think’ and tell us about your consumer priorities, or send us a note with your check.

With best wishes for a joyous holiday season,
and a peaceful New Year,

Arizona Consumers Council Board of Directors

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Your Support Mail-In Form

Please click on Sample to Link to Online and Mail-In Form:
 

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Charity Rating Guide and Tips
For December 2008

The American Institute of Philanthropy, a non-profit charity watchdog and information service provides consumers with valuable information to help maximize the effectiveness of every dollar contributed to charity. Charities are rated by the cost of raising $100 and the actual amount spent on charitable purposes.

Don’t Be Fooled
Sometimes scammers and charities with less-than-stellar reputations use look-alike names that can trick you into giving to the wrong organization. Be sure that the money you give goes to the correct organization and that they will use most of your contribution for the purpose intended.

Ask Questions and Get Answers
Do you know how to tell whether your gift to charity is really tax-deductible? Do you know whether it’s better to give to many charities or just a few?

Charity Navigator, at www.charitynavigator.org, one of the nation’s largest charity evaluation websites, has released a new quiz to help you test your knowledge.

The site also offers donation tips, charity ratings, and a calculator that tells you the net cost of a donation and your tax savings.

American Institute of Philanthropy is found online at www.charitywatch.org. Other great resources on charities include the BBBWise Giving Alliance at www.bbb.org, and Guidestar at www.guidestar.org.

As a service to consumers, Arizona Consumers Council provides a convenient table format guide of charity names, the percentage amount of donations that actually go to the charity’s cause, and a letter rating for each charity.

Consult the following Charity Rating Guide for December 2008, with popular charities and their ratings.

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Charity Rating Guide 2008

Please click on Charity Rating Guide image to open larger printable version:
 

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What About Gift Cards?

Consumer Groups have petitioned the Federal Trade Commission (FTC) to require merchandise retailers to set aside and hold in trust sufficient funds to back up gift cards should the retailer file for bankruptcy.

They have also requested that the FTC maintain a registry of bankrupt retailers to inform the public of the bankruptcy steps the retailer and the court have taken.

Consumers Union has drafted model gift card legislation that will ban expiration dates and eliminate dormancy fees. It’s been long in coming, but a few retailers have bowed under pressure to eliminate gift card expiration dates.

Gift card pitfalls:

A surprising 27 percent of gift card recipients had not used all their cards from a 2007 survey. Gift cards may include ‘gotcha’ conditions making using cards difficult, such as not accepting them online. Instead of gift cards, consider giving cash.

Bank issued cards are not the answer either, because they are often loaded with fees. If the bank fails, the value of the cards might not be insured.

Be sure that your gift card recipient understands the fees and expiration date of any gift card you buy.

See www.ftc.gov and www.consumerreports.org.

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Getting the Biggest Bang From Your Holiday Spending Buck

Get the most from your holiday dollars. This year, make a budget and a list. Decide how much you can afford to spend and stay within that budget. Staying within budget will be much easier if you make a price list of all gifts and other holiday items you plan to purchase. Then comparison Shop. You can easily save more than 10% or more on most items. Call sellers and question them. Compare items online. Be sure that you are purchasing from a secure website; look for ‘https’ in the website address and a locked padlock icon on the toolbar. Review related email statements for accuracy and terms. Pay off quickly: You are less apt to overdo it if you pay in cash. If you must use credit, use a lower-interest card and pay off this debt as soon as possible. Pay attention to the return policy when you make a purchase, keep receipts and note time limits. Restocking fees and other factors may affect your recipient.

Consider your general approach to the holidays. Find low-or no-cost ways to celebrate. Limit the number of people for whom you purchase gifts; give homemade items; make your own gift wrap. Plan for next year by opening a Christmas Club Account. They provide a practical way to save small amounts of money over time, helping to avoid overloading holiday resources.

With a little planning, consumers can substantially reduce holiday spending without sacrificing holiday quality.

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