1,053 posts categorized "Corporate Responsibility" Feed

Wells Fargo Forced Customers To Buy Unwanted And Unnecessary Auto Insurance

Wells Fargo logo Just when it seems that executives at Wells Fargo Bank have seen the light and turned the ethics corner, along comes a news report about another fraudulent program at the bank. The New York Times reported:

"More than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.

The expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, according to the 60-page report, which was obtained by The New York Times. Among the Wells Fargo customers hurt by the practice were military service members on active duty."

The internal report, by the consulting firm Oliver Wyman, investigated auto insurance policies sold from January 2012 through July 2016. While this was happening, the bank has been recovering from a scandal where employees opened millions of phony accounts in order to game an incentive system.

Wells Fargo released a statement about how it will help affected with unwanted and unnecessary insurance, and fix its Collateral Protection Insurance (CPI) policies:

"Wells Fargo reviewed policies placed between 2012 and 2017 and identified approximately 570,000 customers who may have been impacted and will receive refunds and other payments as compensation. In total, approximately $64 million of cash remediation will be sent to customers in the coming months, along with $16 million of account adjustments, for a total of approximately $80 million in remediation... in July 2016 Wells Fargo initiated a review of the CPI program and related third-party vendor practices. Based on the initial findings, the company discontinued its CPI program in September 2016... Wells Fargo’s review determined that certain external vendor processes and internal controls were inadequate. As a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession... Wells Fargo already has been providing CPI-related refunds to some customers and, beginning in August, will send letters and refund checks to customers who are due additional payments. The process is expected to be complete by the end of the year and is as follows:

i) Approximately 490,000 customers had CPI placed for some or all of the time they had adequate vehicle insurance coverage of their own... These customers will receive additional refunds of certain fees and some additional interest. Refunds for this group total approximately $25 million;

ii) In five states that have specific notification and disclosure requirements, approximately 60,000 customers did not receive complete disclosures from our vendor as required prior to CPI placement. In these cases, even if CPI was required, customers will receive a refund including premiums, fees and interest. Refunds for this group total approximately $39 million:

iii) For approximately 20,000 customers, the additional costs of the CPI could have contributed to a default that resulted in the repossession of their vehicle. Those customers will receive additional payments as compensation for the loss of their vehicle. The payment amount will depend on each customer’s situation..."

Do the math. 490,000 customers were overcharged about $25 million, or about $51 per person. 60,000 customers were overcharged $39 million or about $1,950 per person. 34 percent of borrowers (274,000 divided by 800,000) were reportedly pushed into delinquency. Substantial amounts.

Besides reimbursements, the bank said it will work with credit reporting agencies to correct affected borrowers’ credit records. That seems to be the minimum solution. Not only did the bank overcharge some customers, but it also had inadequate controls for both internal processes and external vendors. Which managers were reprimanded, or fired, for those lapses? The bank's statement didn't say. Where were the bank's auditors throughout this mess?

National General Insurance (NGI) underwrote the auto insurance policies for Wells Fargo. A lawsuit by customers named both Wells Fargo and NGI as defendants. And, at least one other law firm is investigating a possible class-action suit.

How does unwanted and unnecessary insurance help customers? Not in any way I can see. Well, it probably helped the bank's profitability for a while.

Reportedly, military service members and their families were among the affected borrowers. And, this latest program isn't the first abuse by the bank of military members and their families. Last fall, the U.S. Justice Department (DOJ) sanctioned the bank for improperly repossessing cars owned by members of the military. The DOJ alleged 413 violations of the Servicemembers Civil Relief Act, and the bank agreed to pay more than $4 million to compensate borrowers affected by seven years of unlawful repossessions.

In June, one U.S. Senator called for the firing of all 12 board members for failing to protect account holders. It seems that unethical executive behavior at the bank will stop only when guilty executives serve jail time; not fines the bank can easily afford.

The whole sordid affair makes one wonder what other programs at the bank remain hidden. What are your opinions? If you received a refund letter and check, please share what you safely can about it below.


Survey: 90 Percent Of Consumers Want Smart Devices With Security Built In

A recent survey of consumers in six countries found that 90 percent believe it is important for smart devices to have security built into the products. Also, 78 percent said they are aware that any smart device connected to their home WiFi network is vulnerable to attacks by hackers wanting to steal personal data stored on the device.

Security importance by country. Irdeto Global Consumer IoT Security Survey. Select to view larger version The Irdeto Global Consumer IoT Security Survey, conducted online from June 22, 2017 to July 10, 2017 by YouGov Plc for Irdeto, included 7,882 adults (aged 18 or older) in six countries: Brazil, China, Germany, India, United Kingdom, and United States. Irdeto provides security solutions to protect platforms and applications for media, entertainment, automotive and Internet-of-things (IoT) connected industries.

Additional key findings:

"... 72% of millennials (ages 18-24 years) indicated that they are aware that any smart device connected to the Wi-Fi in their home has the potential to be targeted by a hacker, compared to 82% of consumers 55+. This indicates that older generations may be more savvy about IoT security or more cautious... More than half of consumers around the globe (56%) think that it is the responsibility of both the end-user and the manufacturer of the product to prevent hacking of smart devices. Alternatively, only 15% of consumers globally think they are responsible, while 20% feel the manufacturer of the device is responsible for cybersecurity. In China, more consumers than any other country surveyed (31%) stated that it is the responsibility of manufacturers. Brazilians led all countries surveyed (23%) in the belief that it is the responsibility of the end-user to prevent hacking of connected devices... Germans expressed the least concern with nearly half (42%) stating that they are not concerned about smart devices being hacked. On the opposite end of the spectrum, Brazilian smart device owners expressed the most concern with 88% of those surveyed saying they were concerned...

And, smart device usage varies by country:

"Regarding the number of smart devices consumers own, 89% of those surveyed have at least one connected device in their home. In addition, 81% of consumers across the globe admitted to having more than one connected device in the home. India led all countries with a staggering 97% of consumers stating that they have at least one smart device in the home, compared to only 80% of US consumers..."

Read the announcement by Irdeto. View the full infographic.

Device security responsibility. Irdeto Global Consumer IoT Security Survey. Select to view larger version


The Myth Of Drug Expiration Dates

[Editor's Note: some politicians and pundits repeatedly claim that the private sector is more efficient than the public sector. Today's blog post explores waste in the healthcare industry. Today's post is reprinted with permission.]

By Marshall Allen, ProPublica

The box of prescription drugs had been forgotten in a back closet of a retail pharmacy for so long that some of the pills predated the 1969 moon landing. Most were 30 to 40 years past their expiration dates -- possibly toxic, probably worthless.

But to Lee Cantrell, who helps run the California Poison Control System, the cache was an opportunity to answer an enduring question about the actual shelf life of drugs: Could these drugs from the bell-bottom era still be potent?

Cantrell called Roy Gerona, a University of California, San Francisco, researcher who specializes in analyzing chemicals. Gerona had grown up in the Philippines and had seen people recover from sickness by taking expired drugs with no apparent ill effects.

"This was very cool," Gerona says. "Who gets the chance of analyzing drugs that have been in storage for more than 30 years?"

The age of the drugs might have been bizarre, but the question the researchers wanted to answer wasn't. Pharmacies across the country -- in major medical centers and in neighborhood strip malls -- routinely toss out tons of scarce and potentially valuable prescription drugs when they hit their expiration dates.

Gerona and Cantrell, a pharmacist and toxicologist, knew that the term "expiration date" was a misnomer. The dates on drug labels are simply the point up to which the Food and Drug Administration and pharmaceutical companies guarantee their effectiveness, typically at two or three years. But the dates don't necessarily mean they're ineffective immediately after they "expire" -- just that there's no incentive for drugmakers to study whether they could still be usable.

ProPublica has been researching why the U.S. health care system is the most expensive in the world. One answer, broadly, is waste -- some of it buried in practices that the medical establishment and the rest of us take for granted. We've documented how hospitals often discard pricey new supplies, how nursing homes trash valuable medications after patients pass away or move out, and how drug companies create expensive combinations of cheap drugs. Experts estimate such squandering eats up about $765 billion a year -- as much as a quarter of all the country's health care spending.

What if the system is destroying drugs that are technically "expired" but could still be safely used?

In his lab, Gerona ran tests on the decades-old drugs, including some now defunct brands such as the diet pills Obocell (once pitched to doctors with a portly figurine called "Mr. Obocell") and Bamadex. Overall, the bottles contained 14 different compounds, including antihistamines, pain relievers and stimulants. All the drugs tested were in their original sealed containers.

The findings surprised both researchers: A dozen of the 14 compounds were still as potent as they were when they were manufactured, some at almost 100 percent of their labeled concentrations.

"Lo and behold," Cantrell says, "The active ingredients are pretty darn stable."

Cantrell and Gerona knew their findings had big implications. Perhaps no area of health care has provoked as much anger in recent years as prescription drugs. The news media is rife with stories of medications priced out of reach or of shortages of crucial drugs, sometimes because producing them is no longer profitable.

Tossing such drugs when they expire is doubly hard. One pharmacist at Newton-Wellesley Hospital outside Boston says the 240-bed facility is able to return some expired drugs for credit, but had to destroy about $200,000 worth last year. A commentary in the journal Mayo Clinic Proceedings cited similar losses at the nearby Tufts Medical Center. Play that out at hospitals across the country and the tab is significant: about $800 million per year. And that doesn't include the costs of expired drugs at long-term care pharmacies, retail pharmacies and in consumer medicine cabinets.

After Cantrell and Gerona published their findings in Archives of Internal Medicine in 2012, some readers accused them of being irresponsible and advising patients that it was OK to take expired drugs. Cantrell says they weren't recommending the use of expired medication, just reviewing the arbitrary way the dates are set.  

"Refining our prescription drug dating process could save billions," he says.

But after a brief burst of attention, the response to their study faded. That raises an even bigger question: If some drugs remain effective well beyond the date on their labels, why hasn't there been a push to extend their expiration dates?

It turns out that the FDA, the agency that helps set the dates, has long known the shelf life of some drugs can be extended, sometimes by years.

In fact, the federal government has saved a fortune by doing this.

For decades, the federal government has stockpiled massive stashes of medication, antidotes and vaccines in secure locations throughout the country. The drugs are worth tens of billions of dollars and would provide a first line of defense in case of a large-scale emergency.

Maintaining these stockpiles is expensive. The drugs have to be kept secure and at the proper humidity and temperature so they don't degrade. Luckily, the country has rarely needed to tap into many of the drugs, but this means they often reach their expiration dates. Though the government requires pharmacies to throw away expired drugs, it doesn't always follow these instructions itself. Instead, for more than 30 years, it has pulled some medicines and tested their quality.

The idea that drugs expire on specified dates goes back at least a half-century, when the FDA began requiring manufacturers to add this information to the label. The time limits allow the agency to ensure medications work safely and effectively for patients. To determine a new drug's shelf life, its maker zaps it with intense heat and soaks it with moisture to see how it degrades under stress. It also checks how it breaks down over time. The drug company then proposes an expiration date to the FDA, which reviews the data to ensure it supports the date and approves it. Despite the difference in drugs' makeup, most "expire" after two or three years.

Once a drug is launched, the makers run tests to ensure it continues to be effective up to its labeled expiration date. Since they are not required to check beyond it, most don't, largely because regulations make it expensive and time-consuming for manufacturers to extend expiration dates, says Yan Wu, an analytical chemist who is part of a focus group at the American Association of Pharmaceutical Scientists that looks at the long-term stability of drugs. Most companies, she says, would rather sell new drugs and develop additional products.

Pharmacists and researchers say there is no economic "win" for drug companies to investigate further. They ring up more sales when medications are tossed as "expired" by hospitals, retail pharmacies and consumers despite retaining their safety and effectiveness.

Industry officials say patient safety is their highest priority. Olivia Shopshear, director of science and regulatory advocacy for the drug industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, says expiration dates are chosen "based on the period of time when any given lot will maintain its identity, potency and purity, which translates into safety for the patient."

That being said, it's an open secret among medical professionals that many drugs maintain their ability to combat ailments well after their labels say they don't. One pharmacist says he sometimes takes home expired over-the-counter medicine from his pharmacy so he and his family can use it.

The federal agencies that stockpile drugs -- including the military, the Centers for Disease Control and Prevention and the Department of Veterans Affairs -- have long realized the savings in revisiting expiration dates.

In 1986, the Air Force, hoping to save on replacement costs, asked the FDA if certain drugs' expiration dates could be extended. In response, the FDA and Defense Department created the Shelf Life Extension Program.

Each year, drugs from the stockpiles are selected based on their value and pending expiration and analyzed in batches to determine whether their end dates could be safely extended. For several decades, the program has found that the actual shelf life of many drugs is well beyond the original expiration dates.

A 2006 study of 122 drugs tested by the program showed that two-thirds of the expired medications were stable every time a lot was tested. Each of them had their expiration dates extended, on average, by more than four years, according to research published in the Journal of Pharmaceutical Sciences.

Some that failed to hold their potency include the common asthma inhalant albuterol, the topical rash spray diphenhydramine, and a local anesthetic made from lidocaine and epinephrine, the study said. But neither Cantrell nor Dr. Cathleen Clancy, associate medical director of National Capital Poison Center, a nonprofit organization affiliated with the George Washington University Medical Center, had heard of anyone being harmed by any expired drugs. Cantrell says there has been no recorded instance of such harm in medical literature.

Marc Young, a pharmacist who helped run the extension program from 2006 to 2009, says it has had a "ridiculous" return on investment. Each year the federal government saved $600 million to $800 million because it did not have to replace expired medication, he says.

An official with the Department of Defense, which maintains about $13.6 billion worth of drugs in its stockpile, says that in 2016 it cost $3.1 million to run the extension program, but it saved the department from replacing $2.1 billion in expired drugs. To put the magnitude of that return on investment into everyday terms: It's like spending a dollar to save $677.

"We didn't have any idea that some of the products would be so damn stable -- so robustly stable beyond the shelf life," says Ajaz Hussain, one of the scientists who formerly helped oversee the extension program.

Hussain is now president of the National Institute for Pharmaceutical Technology and Education, an organization of 17 universities that's working to reduce the cost of pharmaceutical development. He says the high price of drugs and shortages make it time to reexamine drug expiration dates in the commercial market.

"It's a shame to throw away good drugs," Hussain says.

Some medical providers have pushed for a changed approach to drug expiration dates -- with no success. In 2000, the American Medical Association, foretelling the current prescription drug crisis, adopted a resolution urging action. The shelf life of many drugs, it wrote, seems to be "considerably longer" than their expiration dates, leading to "unnecessary waste, higher pharmaceutical costs, and possibly reduced access to necessary drugs for some patients."

Citing the federal government's extension program, the AMA sent letters to the FDA, the U.S. Pharmacopeial Convention, which sets standards for drugs, and PhRMA asking for a re-examination of expiration dates.

No one remembers the details -- just that the effort fell flat.

"Nothing happened, but we tried," says rheumatologist Roy Altman, now 80, who helped write the AMA report. "I'm glad the subject is being brought up again. I think there's considerable waste."

At Newton-Wellesley Hospital, outside Boston, pharmacist David Berkowitz yearns for something to change.

On a recent weekday, Berkowitz sorted through bins and boxes of medication in a back hallway of the hospital's pharmacy, peering at expiration dates. As the pharmacy's assistant director, he carefully manages how the facility orders and dispenses drugs to patients. Running a pharmacy is like working in a restaurant because everything is perishable, he says, "but without the free food."

Federal and state laws prohibit pharmacists from dispensing expired drugs and The Joint Commission, which accredits thousands of health care organizations, requires facilities to remove expired medication from their supply. So at Newton-Wellesley, outdated drugs are shunted to shelves in the back of the pharmacy and marked with a sign that says: "Do Not Dispense." The piles grow for weeks until they are hauled away by a third-party company that has them destroyed. And then the bins fill again.

"I question the expiration dates on most of these drugs," Berkowitz says.

One of the plastic boxes is piled with EpiPens -- devices that automatically inject epinephrine to treat severe allergic reactions. They run almost $300 each. These are from emergency kits that are rarely used, which means they often expire. Berkowitz counts them, tossing each one with a clatter into a separate container, " 'that's 45, 46, 47' " He finishes at 50. That's almost $15,000 in wasted EpiPens alone.

In May, Cantrell and Gerona published a study that examined 40 EpiPens and EpiPen Jrs., a smaller version, that had been expired for between one and 50 months. The devices had been donated by consumers, which meant they could have been stored in conditions that would cause them to break down, like a car's glove box or a steamy bathroom. The EpiPens also contain liquid medicine, which tends to be less stable than solid medications.

Testing showed 24 of the 40 expired devices contained at least 90 percent of their stated amount of epinephrine, enough to be considered as potent as when they were made. All of them contained at least 80 percent of their labeled concentration of medication. The takeaway? Even EpiPens stored in less than ideal conditions may last longer than their labels say they do, and if there's no other option, an expired EpiPen may be better than nothing, Cantrell says.

At Newton-Wellesley, Berkowitz keeps a spreadsheet of every outdated drug he throws away. The pharmacy sends what it can back for credit, but it doesn't come close to replacing what the hospital paid.

Then there's the added angst of tossing drugs that are in short supply. Berkowitz picks up a box of sodium bicarbonate, which is crucial for heart surgery and to treat certain overdoses. It's being rationed because there's so little available. He holds up a purple box of atropine, which gives patients a boost when they have low heart rates. It's also in short supply. In the federal government's stockpile, the expiration dates of both drugs have been extended, but they have to be thrown away by Berkowitz and other hospital pharmacists.

The 2006 FDA study of the extension program also said it pushed back the expiration date on lots of mannitol, a diuretic, for an average of five years. Berkowitz has to toss his out. Expired naloxone? The drug reverses narcotic overdoses in an emergency and is currently in wide use in the opioid epidemic. The FDA extended its use-by date for the stockpiled drugs, but Berkowitz has to trash it.

On rare occasions, a pharmaceutical company will extend the expiration dates of its own products because of shortages. That's what happened in June, when the FDA posted extended expiration dates from Pfizer for batches of its injectable atropine, dextrose, epinephrine and sodium bicarbonate. The agency notice included the lot numbers of the batches being extended and added six months to a year to their expiration dates.

The news sent Berkowitz running to his expired drugs to see if any could be put back into his supply. His team rescued four boxes of the syringes from destruction, including 75 atropine, 15 dextrose, 164 epinephrine and 22 sodium bicarbonate. Total value: $7,500. In a blink, "expired" drugs that were in the trash heap were put back into the pharmacy supply.

Berkowitz says he appreciated Pfizer's action, but feels it should be standard to make sure drugs that are still effective aren't thrown away.

"The question is: Should the FDA be doing more stability testing?" Berkowitz says. "Could they come up with a safe and systematic way to cut down on the drugs being wasted in hospitals?"

Four scientists who worked on the FDA extension program told ProPublica something like that could work for drugs stored in hospital pharmacies, where conditions are carefully controlled.

Greg Burel, director of the CDC's stockpile, says he worries that if drugmakers were forced to extend their expiration dates it could backfire, making it unprofitable to produce certain drugs and thereby reducing access or increasing prices.

The 2015 commentary in Mayo Clinic Proceedings, called "Extending Shelf Life Just Makes Sense," also suggested that drugmakers could be required to set a preliminary expiration date and then update it after long-term testing. An independent organization could also do testing similar to that done by the FDA extension program, or data from the extension program could be applied to properly stored medications.

ProPublica asked the FDA whether it could expand its extension program, or something like it, to hospital pharmacies, where drugs are stored in stable conditions similar to the national stockpile.

"The Agency does not have a position on the concept you have proposed," an official wrote back in an email.

Whatever the solution, the drug industry will need to be spurred in order to change, says Hussain, the former FDA scientist. "The FDA will have to take the lead for a solution to emerge," he says. "We are throwing away products that are certainly stable, and we need to do something about it."

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.


Wisconsin Employer To Offer Its Employees ID Microchip Implants

Microchip implant to be used by Three Square Market. Click to view larger version A Wisconsin company said it will offer to its employees starting August 1 the option of having microchip identification implants. The company, Three Square Market (32M), will allow employees with the microchip implants to make purchases in the employee break room, open locked doors, login to computers, use the copy machine, and related office tasks.

Each microchip, about the size of a grain of rice (see photo on the right), would be implanted under the skin in an employee's hand. The microchips use radio-frequency identification (RFID), a technology that's existed for a while and has been used in variety of devices: employee badges, payment cards, passports, package tracking, and more. Each microchip electronically stores identification information about the user, and uses near-field communications (NFC). Instead of swiping a payment card, employee badge, or their smartphone, instead the employee can unlock a device by waving their hand near a chip reader attached to that device. Purchases in the employee break room can be made by waving their hand near a self-serve kiosk.

Reportedly, 32M would be the first employer in the USA to microchip its employees. CBS News reported in April about Epicenter, a startup based in Sweden:

"The [implant] injections have become so popular that workers at Epicenter hold parties for those willing to get implanted... Epicenter, which is home to more than 100 companies and some 2,000 workers, began implanting workers in January 2015. Now, about 150 workers have [chip implants]... as with most new technologies, it raises security and privacy issues. While biologically safe, the data generated by the chips can show how often an employee comes to work or what they buy. Unlike company swipe cards or smartphones, which can generate the same data, a person cannot easily separate themselves from the chip."

In an interview with Saint Paul-based KSTP, Todd Westby, the Chief Executive Officer at 32M described the optional microchip program as:

"... the next thing that's inevitably going to happen, and we want to be a part of it..."

To implement its microchip implant program, 32M has partnered with Sweden-based BioHax International. Westby explained in a company announcement:

"Eventually, this technology will become standardized allowing you to use this as your passport, public transit, all purchasing opportunities... We see chip technology as the next evolution in payment systems, much like micro markets have steadily replaced vending machines... it is important that 32M continues leading the way with advancements such as chip implants..."

"Mico markets" are small stores located within employers' offices; typically the break rooms where employees relax and/or purchase food. 32M estimates 20,000 micro markets nationwide in the USA. According to its website, the company serves markets in North America, Europe, Asia, and Australia. 32M believes that micro markets, aided by chip implants and self-serve kiosk, offer employers greater employee productivity with lower costs.

Yes, the chip implants are similar to the chip implants many pet owners have inserted to identify their dogs or cats. 32M expects 50 employees to enroll in its chip implant program.

Reportedly, companies in Belgium and Sweden already use chip implants to identify employees. 32M's announcement did not list the data elements each employee's microchip would contain, nor whether the data in the microchips would be encrypted. Historically, unencrypted data stored by RFID technology has been vulnerable to skimming attacks by criminals using portable or hand-held RFID readers. Stolen information would be used to cloned devices to commit identity theft and fraud.

Some states, such as Washington and California, passed anti-skimming laws. Prior government-industry workshops about RFID usage focused upon consumer products, and not employment concerns. Earlier this year, lawmakers in Nevada introduced legislation making it illegal to require employees to accept microchip implants.

A BBC News reporter discussed in 2015 what it is like to be "chipped." And as CBS News reported:

"... hackers could conceivably gain huge swathes of information from embedded microchips. The ethical dilemmas will become bigger the more sophisticated the microchips become. The data that you could possibly get from a chip that is embedded in your body is a lot different from the data that you can get from a smartphone..."

Example: employers installing RFID readers for employees to unlock bathrooms means employers can track when, where, how often, and the duration employees use bathrooms. How does that sound?

Hopefully, future announcements by 32M will discuss the security features and protections. What are your opinions? Are you willing to be an office cyborg? Should employees have a choice, or should employers be able to force their employees to accept microchip implants? How do you feel about your employer tracking what you eat and drink via purchases with your chip implant?

Many employers publish social media policies covering what employees should (shouldn't, or can't) publish online. Should employers have microchip implant policies, too? If so, what should these policies state?


Microsoft Fights Foreign Cyber Criminals And Spies

The Daily Beast explained how Microsoft fights cyber criminals and spies, some of whom with alleged ties to the Kremlin:

"Last year attorneys for the software maker quietly sued the hacker group known as Fancy Bear in a federal court outside Washington DC, accusing it of computer intrusion, cybersquatting, and infringing on Microsoft’s trademarks. The action, though, is not about dragging the hackers into court. The lawsuit is a tool for Microsoft to target what it calls “the most vulnerable point” in Fancy Bear’s espionage operations: the command-and-control servers the hackers use to covertly direct malware on victim computers. These servers can be thought of as the spymasters in Russia's cyber espionage, waiting patiently for contact from their malware agents in the field, then issuing encrypted instructions and accepting stolen documents.

Since August, Microsoft has used the lawsuit to wrest control of 70 different command-and-control points from Fancy Bear. The company’s approach is indirect, but effective. Rather than getting physical custody of the servers, which Fancy Bear rents from data centers around the world, Microsoft has been taking over the Internet domain names that route to them. These are addresses like “livemicrosoft[.]net” or “rsshotmail[.]com” that Fancy Bear registers under aliases for about $10 each. Once under Microsoft’s control, the domains get redirected from Russia’s servers to the company’s, cutting off the hackers from their victims, and giving Microsoft a omniscient view of that servers’ network of automated spies."

Kudos to Microsoft and its attorneys.


U.S. Treasury Department Fined ExxonMobil $2 Million For Sanction Violations

ExxonMobil logo On Thursday, the U.S. Department of the Treasury fined ExxonMobil Corporation $2 million for violations of sanctions while current Secretary of State Rex Tillerson was the company's Chief Executive Officer. The Office of Foreign Assets Control (OFAC) within the Treasury Department issued the fine. According to the announcement:

"Between on or about May 14, 2014 and on or about May 23, 2014, ExxonMobil violated § 589.201 of the Ukraine-Related Sanctions Regulations when the presidents of its U.S. subsidiaries dealt in services of an individual whose property and interests in property were blocked, namely, by signing eight legal documents related to oil and gas projects in Russia with Igor Sechin, the President of Rosneft OAO, and an individual identified on OFAC’s List of Specially Designated Nationals and Blocked Persons.

OFAC determined that ExxonMobil did not voluntarily self-disclose the violations to OFAC, and that the violations constitute an egregious case."

During March of 2014, Russia officially annexed Crimea, a peninsula in the Black Sea, from Ukraine. Moscow retaliated by banning nine U.S. officials and lawmakers from entering Russia. Then, President Obama ordered more sanctions against two-dozen members of Putin's inner circle and against Bank Rossiya, the Russian bank supporting them.

During August of 2014, Russian troops invaded eastern areas of Ukraine along the country's southeast coast. Reportedly, Russian troops fought with pro-Russia rebels against Ukrainian military.

 The Treasury Department released an "Enforcement Information for July 20, 2017" document which stated in part:

"... ExxonMobil did not voluntarily self-disclose the violations to OFAC and that the violations constitute an egregious case. Both the base civil monetary penalty and the statutory maximum civil monetary penalty amounts for the violations were $2,000,000. OFAC thoroughly considered the arguments ExxonMobil set forth in its submissions to OFAC, and the penalty amount reflects OFAC's consideration of the following facts and circumstances... OFAC considered the following to be aggravating factors: (1) ExxonMobil demonstrated reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN; (2) ExxonMobil's senior-most executives knew of Sechin's status as an SDN when they dealt in the blocked services of Sechin; (3) ExxonMobil caused significant harm to the Ukraine-related sanctions program objectives by engaging the services of an SDN designated on the basis that he is an official of the Government of the Russian Federation contributing to the crisis in Ukraine; and (4) ExxonMobil is a sophisticated and experienced oil and gas company that has global operations and routinely deals in goods, services, and technology subject to U.S economic sanctions and U.S. export controls. OFAC considered the following to be a mitigating factor: ExxonMobil has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the first transaction giving rise to the violation..."

It seems that OFAC would have fined ExxonMobil more if it could have. During 2016, ExxonMobil generated sales revenues of $197.52 billion and net income of $7.84 billion. So, the company can easily afford this fine.

ExxonMobil issued a press release on July 20 which denied the violations and claimed that it had received clear guidance from the Treasury Department that the transactions were legal, "so long as the activity related to Rosneft’s business and not Sechin’s personal business." The press release also cited several news sources. You'd think that the company's executive would simply have gone straight to the source, the OFAC, and bypassed intermediaries.

The OFAC Enforcement Information document debunked the energy company's claim:

"ExxonMobil claims that it interpreted press statements as establishing a distinction between Sechin's "professional" and "personal" capacity, in part citing to a news article published in April 2014 that quoted a Department of the Treasury representative as saying that a U.S. person would not be prohibited from participating in a meeting of Rosneft' s board of directors. However, that brief statement did not address the conduct in this case.

Furthermore, the plain language of the Ukraine-Related Sanctions Regulations (which were issued after the Executive branch statements) and E.O. 13661 do not contain a "personal" versus "professional" distinction, and OFAC has neither interpreted its Regulations in that manner nor endorsed such a distinction. The press release statements provided context for the policy rationale surrounding the targeted approach during the early days of the Ukraine crisis, which was to isolate designated individuals who were targeted as a result of the crisis in Ukraine, rather than imposing blocking sanctions on the large companies that they managed. No materials issued by the White House or the Department of the Treasury asserted an exception or carve-out for the professional conduct of designated or blocked persons, nor did any materials suggest that U.S. persons could continue to conduct or engage in business with such individuals.

Separately, there was a Frequently Asked Question (FAQ) publicly available on the OFAC website at the time of the violations that specifically spoke to the conduct at issue in this case..."

The Enforcement Information document is available at the Treasury Department's website and here (Adobe PDF).

While at the Treasury Department's website, I noticed that the Treasury Notes blog stopped publishing on January 19, 2017 -- about the same time as the Presidential Inauguration. What's up with that? Does the Treasury Department, under the Trump Administration, believe that it is okay not to inform citizens, taxpayers, and voters?


CFPB Issues New Rule Governing Arbitration Clauses

The products and services many consumers purchases include contractual agreements with arbitration clauses, which prohibit consumers from getting relief by joining class-action lawsuits. Those clauses also specify the out-of-court process to resolve disagreements and the upfront fees consumers must pay.

Many you have heard of the phrase, "binding arbitration." Regular readers of this blog are familiar with the issues with binding arbitration. Many popular mobile apps, websites, streaming video services, and some augmented-reality (AR) mobile games contain these clauses. The Public Citizen website lists the banks, retail stores, entertainment, online shopping, telecommunications, consumer electronics, software, nursing homes, and health care companies that include binding arbitration clauses in their contracts with customers.

To achieve a better balance between the needs of consumers versus the needs of corporations, the Consumer Financial Protection Bureau (CFPB) has issued new rules governing arbitration clauses. The CFPB explained:

"No matter how many people are harmed by the same conduct, most arbitration clauses require people to bring claims individually against the company, outside the court system, before a private individual (an arbitrator). Companies know that people almost never spend the time or money to pursue relief when the amounts at stake are small, so few people do this. Our new rule will restore the ability of groups of people to file or join group lawsuits. In some cases, not only will companies have to provide relief, they will also have to change their behavior moving forward.

People who would otherwise have to go it alone or give up, will be able to join with others to pursue justice and some remedy for their harm."

Richard Cordray, the Director of the CFPB, in a statement briefly discussed the history:

"Originally, arbitration was primarily used for disagreements between two businesses. But over the last quarter century or so, companies started adding arbitration clauses to their consumer contracts... In 2007, Congress passed the Military Lending Act, which disallows mandatory arbitration clauses in connection with certain loans made to servicemembers. Three years later, in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress went further and banned mandatory arbitration clauses in most residential mortgage contracts."

Supporters of binding arbitration clauses have long fought pro-consumer action by the CFPB. Director Cordray also discussed the new CFPB rule:

"A cherished tenet of our justice system is that no one, no matter how big or how powerful, should escape accountability if they break the law. But right now, many contracts for consumer financial products like bank accounts and credit cards come with a mandatory arbitration clause that makes it virtually impossible for people to sue the company as a group if things go wrong. On paper, these clauses simply say that either party can opt to have disputes resolved by private individuals known as arbitrators rather than by the court system. In practice, companies use these clauses to bar groups of consumers from joining together to seek justice by vindicating their legal rights..."

"The breadth and application of these clauses can be unexpected and severe. For example, when Wells Fargo opened millions of deposit and credit card accounts without the knowledge or consent of consumers, arbitration clauses in existing account contracts blocked their customers from bringing group lawsuits for the unauthorized account openings. Companies have argued that group lawsuits are unnecessary because the government can pursue enforcement actions to address the same problems. But consumers should be able to stand up for themselves and pursue their own legal rights without having to wait on the government. And the government has limited resources..."

The CFPB also produced this video:

What are your opinions of binding arbitration clauses? Were you aware of them? What are your opinions of the new CFPB rule?


Data Breach Exposes Information Of Millions Of Verizon Customers

Verizon logo A data breach at Verizon has exposed the sensitive information of millions of customers. ZD Net reported:

"As many as 14 million records of subscribers who called the phone giant's customer services in the past six months were found on an unprotected Amazon S3 storage server controlled by an employee of NICE Systems, a Ra'anana, Israel-based company. The data was downloadable by anyone with the easy-to-guess web address."

Many businesses use cloud services vendors  -- Amazon Web Services and other vendors -- to outsource the storage of customers' information in online databases. While the practice isn't new, a problem is that customers aren't always informed of the business practice using their sensitive information.

Founded in 1986, NICE Systems has 3,500 employees, serves about 25,000 customers in 150 countries, and provides services to 85 percent of Fortune 100 companies. The exact number of affected Verizon customers is disputed.

The security firm Upguard found the unprotected cloud-based storage server:

"Upguard's Cyber Risk Team can now report that a mis-configured cloud-based file repository exposed the names, addresses, account details, and account personal identification numbers (PINs) of as many as 14 million US customers of telecommunications carrier Verizon, per analysis of the average number of accounts exposed per day in the sample that was downloaded. The cloud server was owned and operated by telephonic software and data firm NICE Systems, a third-party vendor for Verizon. (UPDATE: July 12, 3 PM PST - Both NICE Systems and Verizon have since confirmed the veracity of the exposure, while a Verizon spokesperson has claimed that only 6 million customers had data exposed)."

Whether the total number of breach victims is 6 or 14 million customers, neither is good. The phrase "account details" is troubling. That could mean anything from e-mail addresses to payment information to residential addresses, or more.

Upguard's announcement added:

"Beyond the risks of exposed names, addresses, and account information being made accessible via the S3 bucket’s URL, the exposure of Verizon account PIN codes used to verify customers, listed alongside their associated phone numbers, is particularly concerning. Possession of these account PIN codes could allow scammers to successfully pose as customers in calls to Verizon, enabling them to gain access to accounts—an especially threatening prospect, given the increasing reliance upon mobile communications for purposes of two-factor authentication.

Finally, this exposure is a potent example of the risks of third-party vendors handling sensitive data... Third-party vendor risk is business risk; sharing access to sensitive business data does not offload this risk, but merely extends it to the contracted partner, enabling cloud leaks to stretch across several continents and involve multiple enterprises."

Agreed. This outsourcing business practice may be profitable for all companies involved, but the outsourcing practice does not decrease the risks. Not good. Mis-configured cloud servers should not happen. Not good. The event raises the question: when has this happened before, but went undetected?

Verizon released a statement about the incident:

"... an employee of one of our vendors put information into a cloud storage area and incorrectly set the storage to allow external access. We have been able to confirm that the only access to the cloud storage area by a person other than Verizon or its vendor was a researcher who brought this issue to our attention. In other words, there has been no loss or theft of Verizon or Verizon customer information.

By way of background, the vendor was supporting an approved initiative to help us improve a residential and small business wireline self-service call center portal and required certain data for the project. The overwhelming majority of information in the data set had no external value, although there was a limited amount of personal information included, and in particular, there were no Social Security numbers or Verizon voice recordings in the cloud storage area.

To further clarify, the data supports a wireline portal and only includes a limited number of cell phone numbers for customer contact purposes. In addition, to the extent PINs were included in the data set, the PINs are used to authenticate a customer calling our wireline call center, but do not provide online access to customer accounts..."

Typically, after a breach companies hire independent security experts to investigate breaches and the contributing causes. Verizon's announcement did not state who, if anyone, it hired to perform a post-breach investigation nor when. So, according to Verizon: no big deal. No problem. Hmmmmm.

Reportedly, Upguard notified Verizon about the breach on June 13, and the breach was fixed on June 22. Upguard added:

"The long duration of time between the initial June 13th notification to Verizon by UpGuard of this data exposure, and the ultimate closure of the breach on June 22nd, is troubling."

Troubling, indeed. What took Verizon (and/or Nice Systems) so long? Verizon's statement didn't say. And what is Verizon (and/or NICE Systems) doing so this type of breach doesn't happen again? I look forward to upcoming explanations by both companies.

Readers: what are your opinions of this data breach? Of how long it took Verizon to fix things? Of the outsourcing practice? Verizon customers:

  • Is Verizon doing enough to protect your sensitive data?
  • Should affected customers be notified directly?
  • Have you received a breach notice from Verizon? If so, share some of its details.

ProPublica Seeks Input From Former IBM Employees

IBM logo This news item immediately caught my attention, since a data breach in 2007 at IBM Inc. was the original inspiration for this blog. And the tech company had another breach in 2009. The company has struggled against other tech companies.

Earlier this month, IBM completed a blockchain trial with Westpack and ANZ. According to Yahoo News and Zacks Equity Research, blockchain:

"... is a kind of distributed database and works as an online ledger that cannot be altered or breached easily. The use of such technologies in the banking and finance sector is aimed at reducing the possibility of losing valuable data as well as minimizing the rate of cybercrime in the finance industry.

Notably, IBM is one of major players in the Blockchain market. This is the second significant deal for the company in this technology space..."

The reporters at ProPublica seek input from former IBM employees who left the company during the last few years. Why? The computing and technology company has:

"... been upending its workforce, often with painful results for longtime employees. According to one estimate, IBM’s U.S. employment, which peaked at 230,000, had dropped to about 70,000 by mid-2015, largely the product of layoffs and retirements. And six weeks ago, IBM told thousands of its telecommuting employees to start reporting to particular offices, which in many cases would involve long-distance moves. That, or resign. As a result, hundreds, perhaps thousands, more IBMers are leaving the company.

IBM has long been a corporate leader in employment practices. That means the way it treats its employees speaks volumes about what lies ahead for working people everywhere. But IBM executives won’t tell their workers or the public how many people are leaving this year. They refuse to provide the numbers for 2016, 2015, or 2014 either, to explain the logic behind who gets tapped to go, or exactly how the departures fit into a larger strategy.

We’re asking you to help us get the numbers and, with them, answers."

Former IBM employees interested in providing input should complete this brief questionnaire at the ProPublica site.


Facebook's Secret Censorship Rules Protect White Men from Hate Speech But Not Black Children

[Editor's Note: today's guest post, by the reporters at ProPublica, explores how social networking practice censorship to combat violence and hate speech, plus related practices such as "geo-blocking." It is reprinted with permission.]

Facebook logo by Julia Angwin, ProPublica, and Hannes Grassegger, special to ProPublica

In the wake of a terrorist attack in London earlier this month, a U.S. congressman wrote a Facebook post in which he called for the slaughter of "radicalized" Muslims. "Hunt them, identify them, and kill them," declared U.S. Rep. Clay Higgins, a Louisiana Republican. "Kill them all. For the sake of all that is good and righteous. Kill them all."

Higgins' plea for violent revenge went untouched by Facebook workers who scour the social network deleting offensive speech.

But a May posting on Facebook by Boston poet and Black Lives Matter activist Didi Delgado drew a different response.

"All white people are racist. Start from this reference point, or you've already failed," Delgado wrote. The post was removed and her Facebook account was disabled for seven days.

A trove of internal documents reviewed by ProPublica sheds new light on the secret guidelines that Facebook's censors use to distinguish between hate speech and legitimate political expression. The documents reveal the rationale behind seemingly inconsistent decisions. For instance, Higgins' incitement to violence passed muster because it targeted a specific sub-group of Muslims -- those that are "radicalized" -- while Delgado's post was deleted for attacking whites in general.

Over the past decade, the company has developed hundreds of rules, drawing elaborate distinctions between what should and shouldn't be allowed, in an effort to make the site a safe place for its nearly 2 billion users. The issue of how Facebook monitors this content has become increasingly prominent in recent months, with the rise of "fake news" -- fabricated stories that circulated on Facebook like "Pope Francis Shocks the World, Endorses Donald Trump For President, Releases Statement" -- and growing concern that terrorists are using social media for recruitment.

While Facebook was credited during the 2010-2011 "Arab Spring" with facilitating uprisings against authoritarian regimes, the documents suggest that, at least in some instances, the company's hate-speech rules tend to favor elites and governments over grassroots activists and racial minorities. In so doing, they serve the business interests of the global company, which relies on national governments not to block its service to their citizens.

One Facebook rule, which is cited in the documents but that the company said is no longer in effect, banned posts that praise the use of "violence to resist occupation of an internationally recognized state." The company's workforce of human censors, known as content reviewers, has deleted posts by activists and journalists in disputed territories such as Palestine, Kashmir, Crimea and Western Sahara.

One document trains content reviewers on how to apply the company's global hate speech algorithm. The slide identifies three groups: female drivers, black children and white men. It asks: Which group is protected from hate speech? The correct answer: white men.

The reason is that Facebook deletes curses, slurs, calls for violence and several other types of attacks only when they are directed at "protected categories" -- based on race, sex, gender identity, religious affiliation, national origin, ethnicity, sexual orientation and serious disability/disease. It gives users broader latitude when they write about "subsets" of protected categories. White men are considered a group because both traits are protected, while female drivers and black children, like radicalized Muslims, are subsets, because one of their characteristics is not protected. (The exact rules are in the slide show below.)

The Facebook Rules

Facebook has used these rules to train its "content reviewers" to decide whether to delete or allow posts. Facebook says the exact wording of its rules may have changed slightly in more recent versions. ProPublica recreated the slides.

Behind this seemingly arcane distinction lies a broader philosophy. Unlike American law, which permits preferences such as affirmative action for racial minorities and women for the sake of diversity or redressing discrimination, Facebook's algorithm is designed to defend all races and genders equally.

"Sadly," the rules are "incorporating this color-blindness idea which is not in the spirit of why we have equal protection," said Danielle Citron, a law professor and expert on information privacy at the University of Maryland. This approach, she added, will "protect the people who least need it and take it away from those who really need it."

But Facebook says its goal is different -- to apply consistent standards worldwide. "The policies do not always lead to perfect outcomes," said Monika Bickert, head of global policy management at Facebook. "That is the reality of having policies that apply to a global community where people around the world are going to have very different ideas about what is OK to share."

Facebook's rules constitute a legal world of their own. They stand in sharp contrast to the United States' First Amendment protections of free speech, which courts have interpreted to allow exactly the sort of speech and writing censored by the company's hate speech algorithm. But they also differ -- for example, in permitting postings that deny the Holocaust -- from more restrictive European standards.

The company has long had programs to remove obviously offensive material like child pornography from its stream of images and commentary. Recent articles in the Guardian and Süddeutsche Zeitung have detailed the difficult choices that Facebook faces regarding whether to delete posts containing graphic violence, child abuse, revenge porn and self-mutilation.

The challenge of policing political expression is even more complex. The documents reviewed by ProPublica indicate, for example, that Donald Trump's posts about his campaign proposal to ban Muslim immigration to the United States violated the company's written policies against "calls for exclusion" of a protected group. As The Wall Street Journal reported last year, Facebook exempted Trump's statements from its policies at the order of Mark Zuckerberg, the company's founder and chief executive.

The company recently pledged to nearly double its army of censors to 7,500, up from 4,500, in response to criticism of a video posting of a murder. Their work amounts to what may well be the most far-reaching global censorship operation in history. It is also the least accountable: Facebook does not publish the rules it uses to determine what content to allow and what to delete.

Users whose posts are removed are not usually told what rule they have broken, and they cannot generally appeal Facebook's decision. Appeals are currently only available to people whose profile, group or page is removed.

The company has begun exploring adding an appeals process for people who have individual pieces of content deleted, according to Bickert. "I'll be the first to say that we're not perfect every time," she said.

Facebook is not required by U.S. law to censor content. A 1996 federal law gave most tech companies, including Facebook, legal immunity for the content users post on their services. The law, section 230 of the Telecommunications Act, was passed after Prodigy was sued and held liable for defamation for a post written by a user on a computer message board.

The law freed up online publishers to host online forums without having to legally vet each piece of content before posting it, the way that a news outlet would evaluate an article before publishing it. But early tech companies soon realized that they still needed to supervise their chat rooms to prevent bullying and abuse that could drive away users.

America Online convinced thousands of volunteers to police its chat rooms in exchange for free access to its service. But as more of the world connected to the internet, the job of policing became more difficult and companies started hiring workers to focus on it exclusively. Thus the job of content moderator -- now often called content reviewer -- was born.

In 2004, attorney Nicole Wong joined Google and persuaded the company to hire its first-ever team of reviewers, who responded to complaints and reported to the legal department. Google needed "a rational set of policies and people who were trained to handle requests," for its online forum called Groups, she said.

Google's purchase of YouTube in 2006 made deciding what content was appropriate even more urgent. "Because it was visual, it was universal," Wong said.

While Google wanted to be as permissive as possible, she said, it soon had to contend with controversies such as a video mocking the King of Thailand, which violated Thailand's laws against insulting the king. Wong visited Thailand and was impressed by the nation's reverence for its monarch, so she reluctantly agreed to block the video -- but only for computers located in Thailand.

Since then, selectively banning content by geography -- called "geo-blocking" -- has become a more common request from governments. "I don't love traveling this road of geo-blocking," Wong said, but "it's ended up being a decision that allows companies like Google to operate in a lot of different places."

For social networks like Facebook, however, geo-blocking is difficult because of the way posts are shared with friends across national boundaries. If Facebook geo-blocks a user's post, it would only appear in the news feeds of friends who live in countries where the geo-blocking prohibition doesn't apply. That can make international conversations frustrating, with bits of the exchange hidden from some participants.

As a result, Facebook has long tried to avoid using geography-specific rules when possible, according to people familiar with the company's thinking. However, it does geo-block in some instances, such as when it complied with a request from France to restrict access within its borders to a photo taken after the Nov. 13, 2015, terrorist attack at the Bataclan concert hall in Paris.

Bickert said Facebook takes into consideration the laws in countries where it operates, but doesn't always remove content at a government's request. "If there is something that violates a country's law but does not violate our standards," Bickert said, "we look at who is making that request: Is it the appropriate authority? Then we check to see if it actually violates the law. Sometimes we will make that content unavailable in that country only."

Facebook's goal is to create global rules. "We want to make sure that people are able to communicate in a borderless way," Bickert said.

Founded in 2004, Facebook began as a social network for college students. As it spread beyond campus, Facebook began to use content moderation as a way to compete with the other leading social network of that era, MySpace.

MySpace had positioned itself as the nightclub of the social networking world, offering profile pages that users could decorate with online glitter, colorful layouts and streaming music. It didn't require members to provide their real names and was home to plenty of nude and scantily clad photographs. And it was being investigated by law-enforcement agents across the country who worried it was being used by sexual predators to prey on children. (In a settlement with 49 state attorneys general, MySpace later agreed to strengthen protections for younger users.)

By comparison, Facebook was the buttoned-down Ivy League social network -- all cool grays and blues. Real names and university affiliations were required. Chris Kelly, who joined Facebook in 2005 and was its first general counsel, said he wanted to make sure Facebook didn't end up in law enforcement's crosshairs, like MySpace.

"We were really aggressive about saying we are a no-nudity platform," he said.

The company also began to tackle hate speech. "We drew some difficult lines while I was there -- Holocaust denial being the most prominent," Kelly said. After an internal debate, the company decided to allow Holocaust denials but reaffirmed its ban on group-based bias, which included anti-Semitism. Since Holocaust denial and anti-Semitism frequently went together, he said, the perpetrators were often suspended regardless.

"I've always been a pragmatist on this stuff," said Kelly, who left Facebook in 2010. "Even if you take the most extreme First Amendment positions, there are still limits on speech."

By 2008, the company had begun expanding internationally but its censorship rulebook was still just a single page with a list of material to be excised, such as images of nudity and Hitler. "At the bottom of the page it said, 'Take down anything else that makes you feel uncomfortable,'" said Dave Willner, who joined Facebook's content team that year.

Willner, who reviewed about 15,000 photos a day, soon found the rules were not rigorous enough. He and some colleagues worked to develop a coherent philosophy underpinning the rules, while refining the rules themselves. Soon he was promoted to head the content policy team.

By the time he left Facebook in 2013, Willner had shepherded a 15,000-word rulebook that remains the basis for many of Facebook's content standards today.

"There is no path that makes people happy," Willner said. "All the rules are mildly upsetting." Because of the volume of decisions -- many millions per day -- the approach is "more utilitarian than we are used to in our justice system," he said. "It's fundamentally not rights-oriented."

Willner's then-boss, Jud Hoffman, who has since left Facebook, said that the rules were based on Facebook's mission of "making the world more open and connected." Openness implies a bias toward allowing people to write or post what they want, he said.

But Hoffman said the team also relied on the principle of harm articulated by John Stuart Mill, a 19th-century English political philosopher. It states "that the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." That led to the development of Facebook's "credible threat" standard, which bans posts that describe specific actions that could threaten others, but allows threats that are not likely to be carried out.

Eventually, however, Hoffman said "we found that limiting it to physical harm wasn't sufficient, so we started exploring how free expression societies deal with this."

The rules developed considerable nuance. There is a ban against pictures of Pepe the Frog, a cartoon character often used by "alt-right" white supremacists to perpetrate racist memes, but swastikas are allowed under a rule that permits the "display [of] hate symbols for political messaging." In the documents examined by ProPublica, which are used to train content reviewers, this rule is illustrated with a picture of Facebook founder Mark Zuckerberg that has been manipulated to apply a swastika to his sleeve.

The documents state that Facebook relies, in part, on the U.S. State Department's list of designated terrorist organizations, which includes groups such as al-Qaida, the Taliban and Boko Haram. But not all groups deemed terrorist by one country or another are included: A recent investigation by the Pakistan newspaper Dawn found that 41 of the 64 terrorist groups banned in Pakistan were operational on Facebook.

There is also a secret list, referred to but not included in the documents, of groups designated as hate organizations that are banned from Facebook. That list apparently doesn't include many Holocaust denial and white supremacist sites that are up on Facebook to this day, such as a group called "Alt-Reich Nation." A member of that group was recently charged with murdering a black college student in Maryland.

As the rules have multiplied, so have exceptions to them. Facebook's decision not to protect subsets of protected groups arose because some subgroups such as "female drivers" didn't seem especially sensitive. The default position was to allow free speech, according to a person familiar with the decision-making.

After the wave of Syrian immigrants began arriving in Europe, Facebook added a special "quasi-protected" category for migrants, according to the documents. They are only protected against calls for violence and dehumanizing generalizations, but not against calls for exclusion and degrading generalizations that are not dehumanizing. So, according to one document, migrants can be referred to as "filthy" but not called "filth." They cannot be likened to filth or disease "when the comparison is in the noun form," the document explains.

Facebook also added an exception to its ban against advocating for anyone to be sent to a concentration camp. "Nazis should be sent to a concentration camp," is allowed, the documents state, because Nazis themselves are a hate group.

The rule against posts that support violent resistance against a foreign occupier was developed because "we didn't want to be in a position of deciding who is a freedom fighter," Willner said. Facebook has since dropped the provision and revised its definition of terrorism to include nongovernmental organizations that carry out premeditated violence "to achieve a political, religious or ideological aim," according to a person familiar with the rules.

The Facebook policy appears to have had repercussions in many of the at least two dozen disputed territories around the world. When Russia occupied Crimea in March 2014, many Ukrainians experienced a surge in Facebook banning posts and suspending profiles. Facebook's director of policy for the region, Thomas Myrup Kristensen, acknowledged at the time that it "found a small number of accounts where we had incorrectly removed content. In each case, this was due to language that appeared to be hate speech but was being used in an ironic way. In these cases, we have restored the content."

Katerina Zolotareva, 34, a Kiev-based Ukrainian working in communications, has been blocked so often that she runs four accounts under her name. Although she supported the "Euromaidan" protests in February 2014 that antagonized Russia, spurring its military intervention in Crimea, she doesn't believe that Facebook took sides in the conflict. "There is war in almost every field of Ukrainian life," she says, "and when war starts, it also starts on Facebook."

In Western Sahara, a disputed territory occupied by Morocco, a group of journalists called Equipe Media say their account was disabled by Facebook, their primary way to reach the outside world. They had to open a new account, which remains active.

"We feel we have never posted anything against any law," said Mohammed Mayarah, the group's general coordinator. "We are a group of media activists. We have the aim to break the Moroccan media blockade imposed since it invaded and occupied Western Sahara."

In Israel, which captured territory from its neighbors in a 1967 war and has occupied it since, Palestinian groups are blocked so often that they have their own hashtag, #FbCensorsPalestine, for it. Last year, for instance, Facebook blocked the accounts of several editors for two leading Palestinian media outlets from the West Bank -- Quds News Network and Sheebab News Agency. After a couple of days, Facebook apologized and un-blocked the journalists' accounts. Earlier this year, Facebook blocked the account of Fatah, the Palestinian Authority's ruling party -- then un-blocked it and apologized.

Last year India cracked down on protesters in Kashmir, shooting pellet guns at them and shutting off cellphone service. Local insurgents are seeking autonomy for Kashmir, which is also caught in a territorial tussle between India and Pakistan. Posts of Kashmir activists were being deleted, and members of a group called the Kashmir Solidarity Network found that all of their Facebook accounts had been blocked on the same day.

Ather Zia, a member of the network and a professor of anthropology at the University of Northern Colorado, said that Facebook restored her account without explanation after two weeks. "We do not trust Facebook any more," she said. "I use Facebook, but it's almost this idea that we will be able to create awareness but then we might not be on it for long."

The rules are one thing. How they're applied is another. Bickert said Facebook conducts weekly audits of every single content reviewer's work to ensure that its rules are being followed consistently. But critics say that reviewers, who have to decide on each post within seconds, may vary in both interpretation and vigilance.

Facebook users who don't mince words in criticizing racism and police killings of racial minorities say that their posts are often taken down. Two years ago, Stacey Patton, a journalism professor at historically black Morgan State University in Baltimore, posed a provocative question on her Facebook page. She asked why "it's not a crime when White freelance vigilantes and agents of 'the state' are serial killers of unarmed Black people, but when Black people kill each other then we are 'animals' or 'criminals.'"

Although it doesn't appear to violate Facebook's policies against hate speech, her post was immediately removed, and her account was disabled for three days. Facebook didn't tell her why. "My posts get deleted about once a month," said Patton, who often writes about racial issues. She said she also is frequently put in Facebook "jail" -- locked out of her account for a period of time after a posting that breaks the rules.

"It's such emotional violence," Patton said. "Particularly as a black person, we're always have these discussions about mass incarceration, and then here's this fiber-optic space where you can express yourself. Then you say something that some anonymous person doesn't like and then you're in 'jail.'"

Didi Delgado, whose post stating that "white people are racist" was deleted, has been banned from Facebook so often that she has set up an account on another service called Patreon, where she posts the content that Facebook suppressed. In May, she deplored the increasingly common Facebook censorship of black activists in an article for Medium titled "Mark Zuckerberg Hates Black People."

Facebook also locked out Leslie Mac, a Michigan resident who runs a service called SafetyPinBox where subscribers contribute financially to "the fight for black liberation," according to her site. Her offense was writing a post stating "White folks. When racism happens in public -- YOUR SILENCE IS VIOLENCE."

The post does not appear to violate Facebook's policies. Facebook apologized and restored her account after TechCrunch wrote an article about Mac's punishment. Since then, Mac has written many other outspoken posts. But, "I have not had a single peep from Facebook," she said, while "not a single one of my black female friends who write about race or social justice have not been banned."

"My takeaway from the whole thing is: If you get publicity, they clean it right up," Mac said. Even so, like most of her friends, she maintains a separate Facebook account in case her main account gets blocked again.

Negative publicity has spurred other Facebook turnabouts as well. Consider the example of the iconic news photograph of a young naked girl running from a napalm bomb during the Vietnam War. Kate Klonick, a Ph.D. candidate at Yale Law School who has spent two years studying censorship operations at tech companies, said the photo had likely been deleted by Facebook thousands of times for violating its ban on nudity.

But last year, Facebook reversed itself after Norway's leading newspaper published a front-page open letter to Zuckerberg accusing him of "abusing his power" by deleting the photo from the newspaper's Facebook account.

Klonick said that while she admires Facebook's dedication to policing content on its website, she fears it is evolving into a place where celebrities, world leaders and other important people "are disproportionately the people who have the power to update the rules."

In December 2015, a month after terrorist attacks in Paris killed 130 people, the European Union began pressuring tech companies to work harder to prevent the spread of violent extremism online.

After a year of negotiations, Facebook, Microsoft, Twitter and YouTube agreed to the European Union's hate speech code of conduct, which commits them to review and remove the majority of valid complaints about illegal content within 24 hours and to be audited by European regulators. The first audit, in December, found that the companies were only reviewing 40 percent of hate speech within 24 hours, and only removing 28 percent of it. Since then, the tech companies have shortened their response times to reports of hate speech and increased the amount of content they are deleting, prompting criticism from free-speech advocates that too much is being censored.

Now the German government is considering legislation that would allow social networks such as Facebook to be fined up to 50 million euros if they don't remove hate speech and fake news quickly enough. Facebook recently posted an article assuring German lawmakers that it is deleting about 15,000 hate speech posts a month. Worldwide, over the last two months, Facebook deleted about 66,000 hate speech posts per week, vice president Richard Allan said in a statement Tuesday on the company's site.

Among posts that Facebook didn't delete were Donald Trump's comments on Muslims. Days after the Paris attacks, Trump, then running for president, posted on Facebook "calling for a total and complete shutdown of Muslims entering the United States until our country's representatives can figure out what is going on."

Candidate Trump's posting -- which has come back to haunt him in court decisions voiding his proposed travel ban -- appeared to violate Facebook's rules against "calls for exclusion" of a protected religious group. Zuckerberg decided to allow it because it was part of the political discourse, according to people familiar with the situation.

However, one person close to Facebook's decision-making said Trump may also have benefited from the exception for sub-groups. A Muslim ban could be interpreted as being directed against a sub-group, Muslim immigrants, and thus might not qualify as hate speech against a protected category.

Hannes Grassegger is a reporter for Das Magazin and Reportagen Magazine based in Zurich.

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Bank Of New York Mellon Corporation Fined For 'Unsafe And Unsound' Practices

The Federal Reserve Board (FRB) announced on Tuesday that it had levied a $3 million fine against the Bank of New York Mellon Corporation (BNY Mellon) for "unsafe and unsound practices." The FRB announcement explained:

"In 2010, following a change in the relevant accounting rules, BNY Mellon consolidated a portfolio of collateralized loan obligations onto its balance sheet. BNY Mellon incorrectly assigned the assets a zero-risk weighting, which was improper under the rules in place at the time. As a result of its improper treatment of the portfolio BNY Mellon understated its reported risk-weighted assets and overstated its risk-based capital ratios for nearly 14 quarters."

When the errors were identified, BNY Mellon has since taken corrective action and is now in compliance. The Consent Order (Adobe PDF) dated June 26, 2017 stated:

"The Board of Governors hereby assesses BNY Mellon a civil money penalty in the amount of $3,000,000.00 which shall be paid upon the execution of this Order by Fedwire transfer of immediately available funds to the Federal Reserve Bank of Richmond... This penalty is a penalty paid to a government agency for a violation of law for purposes of 26 U.S.C. § 162(f) and 26 C.F.R. § 1.162-21. The Federal Reserve Bank of Richmond, on behalf of the Board of Governors, shall distribute this sum to the U.S. Department of the Treasury... Each provision of this Consent Penalty Assessment shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Board of Governors.

The Board of Governors hereby agrees not to initiate any further enforcement actions, including for civil money penalties, against BNY Mellon and its affiliates, successors, and assigns, with respect to the conduct that has been or might have been asserted by the Board of Governors described..."

Earlier this month, the FRB barred two former employees of Regions Bank from working within the banking industry, after both men -- Richard Henderson and Philip Cooper -- pled guilty to conspiracy to commit money laundering, and conspiracy to commit bank bribery and wire fraud. In late May, the FRB levied a $41 million penalty, plus a cease-and-desist order, against the U.S. operations of Deutsche Bank AG for anti-money laundering deficiencies.

BNY Mellon can easily afford this fine. In April, the bank reported first quarter earnings of $880 million on revenues of $3.84 billion. The bank has about $29 trillion in assets under custody and administration, and $1.6 trillion in assets under management.


How Two Common Medications Became One $455 Million Specialty Pill

[Editor's Note: today's guest post, by the reporters at ProPublica, explores reasons for the high cost of prescription drugs for patients in the United States. Today's post is reprinted with permission.]

by Marshall Allen, ProPublica

Everything happened so fast as I walked out of the doctor's exam room. I was tucking in my shirt and wondering if I'd asked all my questions about my injured shoulder when one of the doctor's assistants handed me two small boxes of pills.

"These will hold you over until your prescription arrives in the mail," she said, pointing to the drug samples.

Strange, I thought to myself, the doctor didn't mention giving me any drugs.

I must have looked puzzled because she tried to reassure me.

"Don't worry," she said. "It won't cost you any more than $10."

I was glad whatever was coming wouldn't break my budget, but I didn't understand why I needed the drugs in the first place. And why wasn't I picking them up at my local CVS?

At first I shrugged it off. This had been my first visit with an orthopedic specialist and he, Dr. Mohnish Ramani, hadn't been the chatty type. He'd barely said a word as he examined me, tugging my arm this way and bending it that way before rotating it behind my back. The pain made me squirm and yelp, but he knew what he was doing. He promptly diagnosed me with frozen shoulder, a debilitating inflammation of the shoulder capsule.

But back to the drugs. As an investigative reporter who has covered health care for more than a decade, the interaction was just the sort of thing to pique my interest. One thing I've learned is that almost nothing in medicine 2014 especially brand-name drugs 2014 is ever really a deal. When I got home, I looked up the drug: Vimovo.

The drug has been controversial, to say the least. Vimovo was created using two readily and cheaply available generic, or over-the-counter, medicines: naproxen, also known by the brand Aleve, and esomeprazole magnesium, also known as Nexium. The Aleve handles your pain and the Nexium helps with the upset stomach that's sometimes caused by the pain reliever. The key selling point of this new "convenience drug"? It's easier to take one pill than two.

But only a minority of patients get an upset stomach, and there was no indication I'd be one of them. Did I even need the Nexium component?

Of course I also did the math. You can walk into your local drugstore and buy a month's supply of Aleve and Nexium for about $40. For Vimovo, the pharmacy billed my insurance company $3,252. This doesn't mean the drug company ultimately gets paid that much. The pharmaceutical world is rife with rebates and side deals 2014 all designed to elbow ahead of the competition. But apparently the price of convenience comes at a steep mark-up.

Think about it another way. Let's say you want to eat a peanut butter and jelly sandwich every day for a month. You could buy a big jar of peanut butter and a jar of grape jelly for less than 10 bucks. Or you could buy some of that stuff where they combine the peanut butter and grape jelly into the same jar. Smucker's makes it. It's called Goober. Except in this scenario, instead of its usual $3.50 price tag, Smucker's is charging $565 for the jar of Goober.

So if Vimovo is the Goober of drugs, then why have Americans been spending so much on it? My insurance company, smartly, rejected the pharmacy's claim. But I knew Vimovo's makers weren't wooing doctors like mine for nothing. So I looked up the annual reports for the Ireland-based company, Horizon Pharma, which makes Vimovo. Since 2014, Vimovo's net sales have been more than $455 million. That means a lot of insurers are paying way more than they should for their Goober.

And Vimovo wasn't Horizon's only such drug. It has brought in an additional $465 million in net sales from Duexis, a similar convenience drug that combines ibuprofen and famotidine, AKA Advil and Pepsid.

This year I have been documenting the kind of waste in the health care system that's not typically tracked. Americans pay more for health care than anyone else in the world, and experts estimate that the U.S. system wastes hundreds of billions of dollars a year. In recent months I've looked at what hospitals throw away and how nursing homes flush or toss out hundreds of millions of dollars' worth of usable medicine every year. We all pay for this waste, through lower wages and higher premiums, deductibles and out-of-pocket costs. There doesn't seem to be an end in sight 2014 I just got a notice that my premiums may be increasing by another 12 percent next year.

With Vimovo, it seemed I stumbled on another waste stream: overpriced drugs whose actual costs are hidden from doctors and patients. In the case of Horizon, the brazenness of its approach was even more astounding because it had previously been called out in media reports and in a 2016 congressional hearing on out-of-control drug prices.

Health care economists also were wise to it.

"It's a scam," said Devon Herrick, a health care economist with the National Center for Policy Analysis. "It is just a way to gouge insurance companies or employer health care plans."

Unsurprisingly, Horizon says the high price is justified. In fact, the drug maker wrote in an email, "The price of Vimovo is based on the value it brings to patients."

Thousands of patients die and suffer injuries every year, the company said, because of gastric complications from naproxen and other non-steroid anti-inflammatory drugs (NSAIDs). Providing pain relief and stomach protection in a single pill makes it more likely patients will be protected from complications, it said.

And Horizon stressed Vimovo is a "special formulation" of Aleve and Nexium, so it's not the same as taking the two separately. But several experts said that's a scientific distinction that doesn't make a therapeutic difference. "I would take the two medications from the drugstore in a heartbeat 2014 therapeutically it makes sense," said Michael Fossler, a pharmacist and clinical pharmacologist who is chair of the public-policy committee for the American College of Clinical Pharmacology. "What you're paying for with [Vimovo] is the convenience. But it does seem awful pricey for that."

Public outrage is boiling over when it comes to high drug prices, leading the media and lawmakers to scold pharmaceutical companies. You'd think a regulator would monitor this, but the Food and Drug Administration told me they are only authorized to review new drugs for safety and effectiveness, not prices. "Prices are set by manufacturers and distributors," the FDA said in a statement.

Horizon acquired Vimovo in November 2013 from the global pharmaceutical giant AstraZeneca. Horizon knew it faced challenges trying to get top dollar for inexpensive ingredients. "Use of these therapies separately in generic form may be cheaper," it said in its 2013 report to investors. But the company executed a shrewd strategy to give everyone -- insurers, patients, doctors and pharmacies -- the incentive to use Vimovo. It's instructive to review its playbook.

To get Vimovo covered, Horizon made deals with insurance payers and pharmacy benefit managers -- the intermediaries who help determine which drugs get reimbursed. The contracts generally included special rebates and even administrative fees for these intermediaries, the Horizon reports said, so the drug maker got paid much less than the sticker price, though it wouldn't say how much. But the company's net sales show the deals worked.

Horizon put boots on the ground to get the prescriptions rolling, expanding its sales force by the hundreds and focusing its marketing and sales efforts on doctors who already liked to prescribe brand-name drugs. The company's message to doctors emphasized the convenience of prescribing the two ingredients in a single pill and that the single pill protected patients by making it more likely they would take their medication as directed.

Horizon also primed the medical community by giving donations totaling $101,000 to the American Gastroenterology Association, a specialty nonprofit for physicians. Some doctors refuse drug-industry money, if only to at least avoid the appearance of a conflict of interest. ProPublica has done loads of stories showing why doctors taking money is indeed problematic, including one about drug makers' influence on physician specialty groups. When I went on the American Gastroenterology Association's website, the first thing I saw was a pop-up ad from a drug company. Several of the association's board members have received drug-company money, too. Horizon has made clear in its annual reports that donations to the group "help physicians and patients better understand and manage" the risks of pain relievers causing gastric problems.

Horizon also zeroed in on patients' worries about drug costs. To encourage them to fill their prescriptions, Horizon covered all or most of their out-of-pocket costs. That's why my doctor's office could promise me I wouldn't spend too much for my Vimovo. The program, Horizon told investors in reports, addressed the impact of pharmacies switching to less expensive alternatives and could "mitigate" the effect of payers searching for cheaper alternatives.

The strategy worked on me. I didn't even know why I was getting the prescription, but when they told me it wouldn't cost more than I would spend on lunch with a friend, I gave it the OK. A pharmacy I'd never heard of sent me a bottle of Vimovo for $10, even though my insurance company rejected the claim.

Turns out paying the patient's costs motivated my doctor, too. I waited until the end of my next visit to bring up Vimovo, and then we had a follow-up conversation on the phone. Ramani didn't know the price of the drug and found it "disturbing" when I told him. That was a surprise to me, but not to him. He said he leaves billing to his staff and doesn't even know how much he gets paid for a lot of the procedures he performs, let alone how much insurers are being charged for drugs. The marketing arms of companies like Horizon must count on this sort of blindness.

Ramani doesn't receive money or gifts from Horizon. (I confirmed this on ProPublica's Dollars for Docs website, which lists drug-company payments.) He said he likes Vimovo because Horizon covers the patient's out-of-pocket costs, entirely in many cases. Prescribing the generics or over-the-counter medications separately would actually cost more, he said. Which of course is exactly the company's plan. But Ramani agreed that the high cost of the drug to insurers ultimately raises overall health care costs for all Americans.

Knowing Vimovo's price, I asked him if he would continue to prescribe it. "It changes my thought process," he said. "But at the end of the day, I have to think about the patient and whether the patient will be able to pay out of pocket or not."

Ramani said the Horizon drug rep told him Vimovo prescriptions had to go through a particular pharmacy for the patient to receive financial assistance. In its 2016 annual report, Horizon wrote that prescriptions for its drugs might not be filled by certain pharmacies because of insurance-company exclusions, co-payment requirements, or incentives to use lower-priced alternatives. So that's why they didn't give me the option of picking up my pills at my neighborhood drugstore.

Instead, my Vimovo was mailed to me from White Oak Pharmacy in Nutley, New Jersey, which is about 45 minutes from my house. I drove there to find out why. The neighborhood pharmacy is on the bottom floor of a two-story brick building on a street corner, next to a hair salon.

Vishal Chhabria, the pharmacist who owns White Oak, told me the drug company sets the price of Vimovo. He insisted his pharmacy has no special relationship or contract with Horizon. Maybe the drug company steers prescriptions his way, he said, because his pharmacy will process the coupons that reduce or eliminate the patient costs, which some pharmacies don't.

Chhabria said there is no approved generic alternative to Vimovo, so he can't suggest one to patients. And while other drugs, like over-the-counter medications, would be cheaper for the health system overall, they are more expensive for the individual patient, he said.

In poring through Horizon's financial filings, it appears the drug's run may be ending. Horizon said in its report for the first quarter of 2017 that fewer insurance companies have been willing to cover Vimovo and many that do have demanded larger rebates. As a result, Horizon has been eating more of the costs of providing the drug to patients, as they must have in my case. The prescriptions have still been coming in, but net sales were just under $5 million in the first quarter of this year, down 81 percent from the first quarter of 2016.

Critics of Vimovo say that's still more than patients should be spending on the drug. "That number should be zero," said Linda Cahn, an attorney who advises corporations, unions and other payers to help reduce their costs. "If you want to talk about waste, that's waste."

Herrick, the health care economist, said Horizon cashed in by eliminating many of the barriers in the system that are meant to control costs. The company got patients on board by covering their out-of-pocket costs. It appealed to doctors by promoting the benefits to patients. And it did an end-run around chain pharmacies, which typically might suggest a lower-priced alternative, by steering prescriptions to pharmacists who would participate in their patient-assistance program.

"Somebody brainstormed: 'How can we nullify any consumer check and balance in this supply chain? What can we do to keep the customer from asking questions?'" Herrick said.

The scheme that played out with Vimovo is bound to happen again, Herrick said. Maybe it already is. Drug companies are always on the lookout to deploy similar strategies.

I dutifully took my Vimovo for several days, until I noticed it kept me awake until 3 in the morning 2014 a rare side effect. (Perhaps they need to add a third drug to the combo.) I probably have more than 50 pills left in the bottle on my bedside table. Maybe I could sell it back to Horizon for $1,500.

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Massive Data Breach By RNC Contractor Exposed Information Of 198 Million Voters

GOP logo A massive data breach by a contractor hired by the Republican National Committee (RNC) has exposed the personal information of 198 million likely voters. The breach happened after a contractor, Deep Root Analytics, accidentally left the database files unprotected on an internet-connected computer server. The Hill reported:

"The databases were part of 25 terabytes of files contained in an Amazon cloud account that could be browsed without logging in. The account was discovered by researcher Chris Vickery of the security firm UpGuard. The files have since been secured."

Deep Root Analytics logo Deep Root Analytics helps a variety of clients, including political organizations, advertisers, and advocacy groups, identify custom audiences for television advertising -- in this instance, likely voters. Reportedly, the data elements exposed include full names, birth dates, residential addresses, and persons' positions on a variety of topics:

"... 46 different issues ranging from "how likely it is the individual voted for Obama in 2012, whether they agree with the Trump foreign policy of 'America First' and how likely they are to be concerned with auto manufacturing as an issue..."

The files exposed during the breach also identified another contractor hired by the RNC, Target Point, which experts conclude:

"... compiled and shared the data with Deep Root. Another folder appears to reference Data Trust, another contracted firm."

At press time, Target Point had not made any statements on its website. Deep Root issued this statement:

"Deep Root Analytics has become aware that a number of files within our online storage system were accessed without our knowledge. Deep Root Analytics builds voter models to help enhance advertiser understanding of TV viewership. The data accessed was not built for or used by any specific client. It is our proprietary analysis to help inform local television ad buying.

The data that was accessed was, to the best of our knowledge proprietary information as well as voter data that is publicly available and readily provided by state government offices. Since this event has come to our attention, we have updated the access settings and put protocols in place to prevent further access. We take full responsibility for this situation.

Deep Root Analytics maintains industry standard security protocols. We built our systems in keeping with these protocols and had last evaluated and updated our security settings on June 1, 2017.

We are conducting an internal review and have retained cyber security firm Stroz Friedberg to conduct a thorough investigation. Through this process, which is currently underway, we have learned that access was gained through a recent change in access settings since June 1. We accept full responsibility, will continue with our investigation, and based on the information we have gathered thus far, we do not believe that our systems have been hacked."

So, Deep Root wasn't aware of this breach until an outside security expert found it. Nor does the company seem certain about exactly what data elements were exposed/accessed by unauthorized persons. Not good. It makes one wonder what other undiscovered breaches may have happened.

Perhaps more troubling, the company's statement differs from news reports about the data elements exposed/accessed. The company's statement mentioned "publicly available" data, while news reports mentioned sensitive, non-public data. Hopefully, the results of Deep Root's internal breach investigation will clarify things. And, if sensitive information was truly exposed/stolen, hopefully Deep Root will do the right thing: notify breach victims and offer free credit monitoring services for at least two years.

This was not the first data breach of voter-related database data. A CouchDB breach in June 2016 exposed the sensitive information of 154 million voters. Both breaches seem to raise the question about whether political organizations, and the contractors they hire, adequately protect consumers' sensitive personal information.

Many consider this Deep Root data breach the largest voter breach ever. Yes, the data breach was undeniably massive. Why? Two measurement approaches highlight the fact.

First, the Quick Facts page at the U.S. Census Bureau site lists the population of the United States on July 1, 2015 at 321, 418,820 persons. Of those, 22.9 percent were under the age of 18. With a little "rough" math, one can calculate the population aged 18 or older at 247,813,910 persons. So, the Deep Root breach represented about 61.6 percent of the total population or 79.9 percent of the voting age population. That's almost 4 of every 5 adults aged 18 or older.

Second, the breach ranks near the largest when compared to notable data breaches during the past few years:

Regarding the AJLA portal breach earlier this year, the Privacy Rights Clearinghouse reported 1.7 million breach victims in Idaho and 430,000 in Oklahoma. Given this, the true number of breach victims is likely far higher.

What are your opinions about the Deep Root breach? Do political organizations, and the contractors they hire, adequately protect citizens' sensitive information? And, if not, what should be done?

When citizens vote, they expect privacy -- not just within voting booths. So, too, regarding the personal information and opinions data describing their voting. Arguably, voting data is different than other types of consumer information. And there is legal precedent for treating selected consumer information differently. Example: a set of privacy laws govern health care data. Perhaps, you have heard of the term: Protected Health Information (PHI). If data mining companies can't protect voters' data, then we just might need new laws to protect voting-related data: PVI = Protected Voting Information.

When data about voters is compromised (e.g., exposed and/or accessed), that is a strike at the heart of our democracy. Example: the bad guys could pressure voters using stolen information. Does the big-data/data-mining industry require oversight? Does Congress need to intervene to protect our democratic elections? What are your opinions about PVI?

[Correction: an earlier version of this blog post mentioned a database. Files were exposed, not a database nor an RNC database.]


Senator Warren Calls For the Firing Of All Wells Fargo Board Members

Wells Fargo logo In a letter sent Monday to the Federal Reserve Chair Janet Yellen, U.S. Senator Elizabeth Warren (D-Massachusetts) has called for the firing of all 12 board members at Wells Fargo bank for failing to adequately protect accountholders. CNBC reported first the Senator's letter, which read in part:

"The fake accounts scandal cost Wells Fargo customers millions of dollars in unauthorized fees and damaged many of their credit scores," the senator wrote. "The scandal also revealed severe problems with the bank's risk management practices — problems that justify the Federal Reserve's removal of all responsible Board members."

After implementing sales targets and an incentive program, many of the bank's employees secretly opened new accounts and transferred money from other accounts to fund the new accounts -- all without the customers' knowledge nor consent. In some cases, employees applied for credit cards, created PIN numbers, and operated fake e-mail accounts in customers' names.

The Consumer Financial Protection Bureau (CFPB) announced in September, 2016 the consent order with the bank. As a result of the fake-account scandal, the bank paid about $185 million in fines and fired 5,300 lower-level employees for setting up 2 million bogus accounts. Few or no senior executives have been punished.

Many Republicans and President Trump seek to defund and shut down the CFPB.

During October, 2016 Timothy J. Sloan was elected chief executive officer at Wells Fargo bank after the former CEO, John Stumpf, retired. Sloan also joined the board of directors as a member.

CNN Money reported:

"... Wells Fargo suffered from inadequate risk management systems that should have flagged the illegal activity earlier. Shareholder advisory firm Institutional Shareholder Services (ISS) agrees. ISS argued the Wells Fargo board made the scandal worse by failing to provide oversight that could have limited the damage..."

In her letter, Senator Warren urged the Federal Reserve to act:

"I urge you to use the tools Congress has given you to remove the responsible board members and protect the continued safety and soundness of one of the country's largest banks..."

Reportedly, the Senator's letter mentioned the following Wells Fargo board members: John D. Baker II, John S. Chen, Lloyd H. Dean, Elizabeth A. Duke, Enrique Hernandez, Donald M. James, Cynthia H. Milligan, Federico F. Pena, James H. Quigley, Stephen W. Sanger, Susan G. Swenson, and Suzanne M. Vautrinot.

Some banking experts see the demand as unprecedented and unlikely. All of the bank's board members were re-elected during the annual shareholder meeting in April , 2017. Also during April, the bank announced an expansion of its class-action settlement agreements for its retail sales practices. The expansion covered account holders affected as early as May, 2002 by the bogus new account scandal, and added $32 million to the settlement amount total.


Trump Administration Quietly Rolls Back Civil Rights Efforts Across Federal Government

[Editor's Note: today's guest blog post is by the reporters at ProPublica. Consent decrees are an important oversight tool to ensure corporate responsibility after wrongdoing. Today's post is reprinted with permission.]

By Jessica Huseman and Annie Waldman, ProPublica

Department of Justice logo For decades, the Department of Justice has used court-enforced agreements to protect civil rights, successfully desegregating school systems, reforming police departments, ensuring access for the disabled and defending the religious.

Now, under Attorney General Jeff Sessions, the DOJ appears to be turning away from this storied tool, called consent decrees. Top officials in the DOJ civil rights division have issued verbal instructions through the ranks to seek settlements without consent decrees -- which would result in no continuing court oversight.

The move is just one part of a move by the Trump administration to limit federal civil rights enforcement. Other departments have scaled back the power of their internal divisions that monitor such abuses. In a previously unreported development, the Education Department last week reversed an Obama-era reform that broadened the agency's approach to protecting rights of students. The Labor Department and the Environmental Protection Agency have also announced sweeping cuts to their enforcement.

"At best, this administration believes that civil rights enforcement is superfluous and can be easily cut. At worst, it really is part of a systematic agenda to roll back civil rights," said Vanita Gupta, the former acting head of the DOJ's civil rights division under President Barack Obama.

Consent decrees have not been abandoned entirely by the DOJ, a person with knowledge of the instructions said. Instead, there is a presumption against their use -- attorneys should default to using settlements without court oversight unless there is an unavoidable reason for a consent decree. The instructions came from the civil rights division's office of acting Assistant Attorney General Tom Wheeler and Deputy Assistant Attorney General John Gore. There is no written policy guidance.

Devin O'Malley, a spokesperson for the DOJ, declined to comment for this story.

Consent decrees can be a powerful tool, and spell out specific steps that must be taken to remedy the harm. These are agreed to by both parties and signed off on by a judge, whom the parties can appear before again if the terms are not being met. Though critics say the DOJ sometimes does not enforce consent decrees well enough, they are more powerful than settlements that aren't overseen by a judge and have no built-in enforcement mechanism.

Such settlements have "far fewer teeth to ensure adequate enforcement," Gupta said.

Consent decrees often require agencies or municipalities to take expensive steps toward reform. Local leaders and agency heads then can point to the binding court authority when requesting budget increases to ensure reforms. Without consent decrees, many localities or government departments would simply never make such comprehensive changes, said William Yeomans, who spent 26 years at the DOJ, mostly in the civil rights division.

"They are key to civil rights enforcement," he said. "That's why Sessions and his ilk don't like them."

Some, however, believe the Obama administration relied on consent decrees too often and sometimes took advantage of vulnerable cities unable to effectively defend themselves against a well-resourced DOJ.

"I think a recalibration would be welcome," said Richard Epstein, a professor at New York University School of Law and a fellow at the Hoover Institution at Stanford, adding that consent decrees should be used in cases where clear, systemic issues of discrimination exist.

Though it's too early to see how widespread the effect of the changes will be, the Justice Department appears to be adhering to the directive already.

On May 30, the DOJ announced Bernards Township in New Jersey had agreed to pay $3.25 million to settle an accusation it denied zoning approval for a local Islamic group to build a mosque. Staff attorneys at the U.S. attorney's office in New Jersey initially sought to resolve the case with a consent decree, according to a spokesperson for Bernards Township. But because of the DOJ's new stance, the terms were changed after the township protested, according to a person familiar with the matter. A spokesperson for the New Jersey U.S. attorney's office declined comment.

Sessions has long been a public critic of consent decrees. As a senator, he wrote they "constitute an end run around the democratic process." He lambasted local agencies that seek them out as a way to inflate their budgets, a "particularly offensive" use of consent decrees that took decision-making power from legislatures.

On March 31, Sessions ordered a sweeping review of all consent decrees with troubled police departments nationwide to ensure they were in line with the Trump administration's law-and-order goals. Days before, the DOJ had asked a judge to postpone a hearing on a consent decree with the Baltimore Police Department that had been arranged during the last days of the Obama administration. The judge denied that request, and the consent decree has moved forward.

The DOJ has already come under fire from critics for altering its approach to voting rights cases. After nearly six years of litigation over Texas' voter ID law -- which Obama DOJ attorneys said was written to intentionally discriminate against minority voters and had such a discriminatory effect -- the Trump DOJ abruptly withdrew its intent claims in late February.

Attorneys who worked on the case for years were barely consulted about the change -- many weren't consulted at all, according to two former DOJ officials with knowledge of the matter. Gore wrote the filing changing the DOJ's position largely by himself and asked the attorneys who'd been involved in the case for years to sign it to show continuity. Not all of the attorneys fell in line. Avner Shapiro -- who has been a prosecutor in the civil rights division for more than 20 years -- left his name off the filings written by Gore. Shapiro was particularly involved in developing the DOJ's argument that Texas had intentionally discriminated against minorities in crafting its voter ID legislation.

"That's the ultimate act of rebellion," Yeomans, the former civil rights division prosecutor, said. A rare act, removing one's name from a legal filing is one of the few ways career attorneys can express public disagreement with an administration.

Gore has no history of bringing civil rights cases. A former partner at the law firm Jones Day, he has instead defended states against claims of racial gerrymandering and represented North Carolina when the state was sued over its controversial "bathroom bill," which requires transgender people to use the facility that matched their birth gender.

All of the internal changes at the DOJ have left attorneys and staff with "a great deal of fear and uncertainty," said Yeomans. While he says the lawyers there would like to stay at the department, they fear Sessions' priorities will have devastating impact on their work.

The DOJ's civil rights office is not alone in fearing rollbacks in enforcement. Across federal departments, the Trump administration has made moves to diminish the power of civil rights divisions.

U.S. Department of Education logo The Department of Education has laid out plans to loosen requirements on investigations into civil rights complaints, according to an internal memo sent to staff on June 8 and obtained by ProPublica.

Under the Obama administration, the department's office for civil rights applied an expansive approach to investigations. Individual complaints related to complex issues such as school discipline, sexual violence and harassment, equal access to educational resources, or racism at a single school might have prompted broader probes to determine whether the allegations were part of a pattern of discrimination or harassment.

The new memo, sent by Candice Jackson, the acting assistant secretary for civil rights, to regional directors at the department's civil rights office, trims this approach. Jackson was appointed deputy assistant secretary for the office in April and will remain as the acting head of the office until the Senate confirms a full-time assistant secretary. Trump has not publicly nominated anyone for the role yet.

The office will apply the broader approach "only" if the original allegations raise systemic concerns or the investigative team argues for it, Jackson wrote in the memo.

As part of the new approach, the Education Department will no longer require civil rights investigators to obtain three years of complaint data from a specific school or district to assess compliance with civil rights law.

Critics contend the Obama administration's probes were onerous. The office "did such a thorough review of everything that the investigations were demanding and very expensive" for schools, said Boston College American politics professor R. Shep Melnick, adding that the new approach could take some regulatory pressure off schools and districts.

But some civil rights leaders believe the change could undermine the office's mission. This narrowing of the department's investigations "is stunning to me and dangerous," said Catherine Lhamon, who led the Education Department's civil rights office from August 2013 until January 2017 and currently chairs the United States Commission on Civil Rights. "It's important to take an expansive view of the potential for harm because if you look only at the most recent year, you won't necessarily see the pattern," said Lhamon.

The department's new directive also gives more autonomy to regional offices, no longer requiring oversight or review of some cases by department headquarters, according to the memo.

The Education Department did not respond to ProPublica's request for comment.

Education Secretary Betsy DeVos has also proposed cutting over 40 positions from the civil rights office. With reduced staff, the office will have to "make difficult choices, including cutting back on initiating proactive investigations," according to the department's proposed budget.

Elsewhere, Trump administration appointees have launched similar initiatives. In its 2018 fiscal plan, the Labor Department has proposed dissolving the office that handles discrimination complaints. Similarly, new leadership at the Environmental Protection Agency has proposed entirely eliminating the environmental justice program, which addresses concerns that almost exclusively impact minority communities. The Washington Post reports the plan transfers all environmental justice work to the Office of Policy, which provides policy and regulatory guidance across the agency.

Mustafa Ali, a former EPA senior adviser and assistant associate administrator for environmental justice who served more than 20 years, quit the agency in protest days before the plan was announced. In his resignation letter, widely circulated in the media, Ali suggested the new leadership was abandoning "those who need our help most."

Ryan Gabrielson contributed to this report.

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Dozens Of Uber Employees Fired Or Investigated For Harassment. Uber And Lyft Drivers Unaware of Safety Recalls

Uber logo Ride-sharing companies are in the news again and probably not for the reasons their management executives would prefer. First, TechCrunch reported on Thursday:

"... at a staff meeting in San Francisco, Uber executives revealed to the company’s 12,000 employees that 20 of their colleagues had been fired and that 57 are still being probed over harassment, discrimination and inappropriate behavior, following a string of accusations that Uber had created a toxic workplace and allowed complaints to go unaddressed for years. Those complaints had pushed Uber into crisis mode earlier this year. But the calamity may be just beginning... Uber fired senior executive Eric Alexander after it was leaked to Recode that Alexander had obtained the medical records of an Uber passenger in India who was raped in 2014 by her driver."

"Recode also reported that Alexander had shared the woman’s file with Kalanick and his senior vice president, Emil Michael, and that the three men suspected the woman of working with Uber’s regional competitor in India, Ola, to hamper its chances of success there. Uber eventually settled a lawsuit brought by the woman against the company..."

News broke in March, 2017 about both the Recode article and the Grayball activity at Uber to thwart local government code inspections. In February, a former Uber employee shared a disturbing story with allegations of sexual harassment.

Lyft logo Second, the investigative team at WBZ-TV, the local CBS afiliate in Boston, reported that many Uber and Lyft drivers are unaware of safety recalls affecting their vehicles. This could make rides in these cars unsafe for passengers:

"Using an app from Carfax, we quickly checked the license plates of 167 Uber and Lyft cars picking up passengers at Logan Airport over a two day period. Twenty-seven of those had open safety recalls or about 16%. Recalls are issued when a manufacturer identifies a mechanical problem that needs to be fixed for safety reasons. A recent example is the millions of cars that were recalled when it was determined the airbags made by Takata could release shrapnel when deployed in a crash."

Both ride-sharing companies treat drivers as independent contractors. WBZ-TV reported:

"Uber told the [WBZ-TV investigative] Team that drivers are contractors and not employees of the company. A spokesperson said they provide resources to drivers and encourage them to check for recalls and to perform routine maintenance. Drivers are also reminded quarterly to check with NHTSA for recall information."

According to the president of the Massachusetts Bar Association Jeffrey Catalano, the responsibility to make sure the car is safe for passengers lies mainly with the driver. But because Uber and Lyft both advertise their commitment to safety on their websites, they too could be held responsible."


Trump Is Not the Only One Blocking Constituents on Twitter

[Editor's note: today's guest blog post, by the reporters at ProPublica, explores the emerging debate about whether the appropriate, perhaps ethical, use of social media by publicly elected officials and persons campaigning for office. Should they be able to block constituents posting views they dislike or disagree with? Is it really public speech on a privately-run social networking sites? Would you vote for person who blocks constituents? Do companies operating social networking site have a responsibility in this? Today's post is reprinted with permission.]

by Charles Ornstein, ProPublica

As President Donald Trump faces criticism for blocking users on his Twitter account, people across the country say they, too, have been cut off by elected officials at all levels of government after voicing dissent on social media.

In Arizona, a disabled Army veteran grew so angry when her congressman blocked her and others from posting dissenting views on his Facebook page that she began delivering actual blocks to his office.

A central Texas congressman has barred so many constituents on Twitter that a local activist group has begun selling T-shirts complaining about it.

And in Kentucky, the Democratic Party is using a hashtag, #BevinBlocked, to track those who've been blocked on social media by Republican Gov. Matt Bevin. (Most of the officials blocking constituents appear to be Republican.)

The growing combat over social media is igniting a new-age legal debate over whether losing this form of access to public officials violates constituents' First Amendment rights to free speech and to petition the government for a redress of grievances. Those who've been blocked say it's akin to being thrown out of a town hall meeting for holding up a protest sign.

On Tuesday, the Knight First Amendment Institute at Columbia University called upon Trump to unblock people who've disagreed with him or directed criticism at him or his family via the @realdonaldtrump account, which he used prior to becoming president and continues to use as his principal Twitter outlet.

Trump blocked me after this tweet.Let's all hope the courts continue to protect us. Never stop resisting. pic.twitter.com/TlR4zgHCoU

-- Nick Jack Pappas (@Pappiness) June 5, 2017

"Though the architects of the Constitution surely didn't contemplate presidential Twitter accounts, they understood that the president must not be allowed to banish views from public discourse simply because he finds them objectionable," Jameel Jaffer, the Knight Institute's executive director, said in a statement.

The White House did not respond to a request for comment, but press secretary Sean Spicer said earlier Tuesday that statements the president makes on Twitter should be regarded as official statements.

Similar flare-ups have been playing out in state after state.

Earlier this year, the American Civil Liberties Union of Maryland called on Governor Larry Hogan, a Republican, to stop deleting critical comments and barring people from commenting on his Facebook page. (The Washington Post reported that the governor had blocked 450 people as of February.)

Deborah Jeon, the ACLU's legal director, said Hogan and other elected officials are increasingly foregoing town hall meetings and instead relying on social media as their primary means of communication with constituents. "That's why it's so problematic," she said. "If people are silenced in that medium," they can't effectively interact with their elected representative.

The governor's office did not respond to a request for comment this week. After the letter, however, it reinstated six of the seven people specifically identified by the ACLU (it said it couldn't find the seventh). "While the ACLU should be focusing on much more important activities than monitoring the governor's Facebook page, we appreciated them identifying a handful of individuals -- out of the over 1 million weekly viewers of the page -- that may have been inadvertently denied access," a spokeswoman for the governor told the Post.

Practically speaking, being blocked cuts off constituents from many forms of interacting with public officials. On Facebook, it means no posts, no likes and no questions or comments during live events on the page of the blocker. Even older posts that may not be offensive are taken down. On Twitter, being blocked prevents a user from seeing the other person's tweets on his or her timeline.

Moreover, while Twitter and Facebook themselves usually suspend account holders only temporarily for breaking rules, many elected officials don't have established policies for constituents who want to be reinstated. Sometimes a call is enough to reverse it, other times it's not.

Eugene Volokh, a constitutional law professor at the UCLA School of Law, said that for municipalities and public agencies, such as police departments, social media accounts would generally be considered "limited public forums" and therefore, should be open to all.

"Once they open it up to public comments, they can't then impose viewpoint-based restrictions on it," he said, for instance allowing only supportive comments while deleting critical ones.

But legislators are different because they are people. Elected officials can have personal accounts, campaign accounts and officeholder accounts that may appear quite similar. On their personal and campaign accounts, there's little disagreement that officials can engage with -- or block -- whoever they want. Last month, for instance, ProPublica reported how Rep. Peter King (Republican, New York) blocked users on his campaign account after they criticized his positions on health reform and other issues.

But what about their officeholder social media accounts?

The ACLU's Jeon says that they should be public if they use government resources, including staff time and office equipment to maintain the page. "Where that's the situation and taxpayer resources are going to it, then the full power of the First Amendment applies," she said. "It doesn't matter if they're members of Congress or the governor or a local councilperson."

Volokh of UCLA disagreed. He said that members of Congress are entitled to their own private speech, even on official pages. That's because each is one voice among many, as opposed to a governor or mayor. "It's clear that whatever my senator is, she's not the government. She is one person who is part of a legislative body," he said. "She was elected because she has her own views and it makes sense that if she has a Twitter feed or a Facebook page, that may well be seen as not government speech but the voice of somebody who may be a government official."

Volokh said he's inclined to see Trump's @realdonaldtrump account as a personal one, though other legal experts disagree.

"You could imagine actually some other president running this kind of account in a way that's very public minded -- 'I'm just going to express the views of the executive branch,'" he said. "The @realdonaldtrump account is very much, 'I'm Donald Trump. I'm going to be expressing my views, and if you don't like it, too bad for you.' That sounds like private speech, even done by a government official on government property."

It's possible the fight over the president's Twitter account will end up in court, as such disputes have across the country. Generally, in these situations, the people contesting the government's social media policies have reached settlements ending the questionable practices.

After being sued by the ACLU, three cities in Indiana agreed last year to change their policies by no longer blocking users or deleting comments.

In 2014, a federal judge ordered the City and County of Honolulu to pay $31,000 in attorney's fees to people who sued, contending that the Honolulu Police Department violated their constitutional rights by deleting their critical Facebook posts.

And San Diego County agreed to pay the attorney's fees of a gun parts dealer who sued after its Sheriff's Department deleted two Facebook posts that were critical of the sheriff and banned the dealer from commenting. The department took down its Facebook page after being sued and paid the dealer $20 as part of the settlement.

Angela Greben, a California paralegal, has spent the past two years gathering information about agencies and politicians that have blocked people on social media -- Democrats and Republican alike -- filing ethics complaints and even a lawsuit against the city of San Mateo, California, its mayor and police department. (They settled with her, giving her some of what she wanted.)

Greben has filed numerous public-records requests to agencies as varied as the Transportation Security Administration, the Seattle Police Department and the Connecticut Lottery seeking lists of people they block. She's posted the results online.

"It shouldn't be up to the elected official to decide who can tweet them and who can't," she said. "Everybody deserves to be treated equally and fairly under the law."

Even though she lives in California, Greben recently filed an ethics complaint against Atlanta Mayor Kasim Reed, a Democrat, who has been criticized for blocking not only constituents but also journalists who cover him. Reed has blocked Greben since 2015 when she tweeted about him... well, blocking people on Twitter. "He's notorious for blocking and muting people," she said, meaning he can't see their tweets but they can still see his.

@LizLemeryJoy @KasimReed Mr. Mayor you are violating the #civilrights of all you have #blocked! @Georgia_AG @FOX5Atlanta @11AliveNews

-- Angela Greben (@AngelaGreben) March 7, 2015

In a statement, a city spokeswoman defended the mayor, saying he's now among the top five most-followed mayors in the country. "Mayor Reed uses social media as a personal platform to engage directly with constituents and some journalists. 2026 Like all Twitter users, Mayor Reed has the right to stop engaging in conversations when he determines they are unproductive, intentionally inflammatory, dishonest and/or misleading."

Asked how many people he has blocked, she replied that the office doesn't keep such a list.

J'aime Morgaine, the Arizona veteran who delivered blocks to the office of Rep. Paul Gosar, a Republican, said being blocked on Facebook matters because her representative no longer hosts in-person town hall meetings and has started to answer questions on Facebook Live. Now she can't ask questions or leave comments.

"I have lost and other people who have been blocked have lost our right to participate in the democratic process," said Morgaine, leader of Indivisible Kingman, a group that opposes the president's agenda. "I am outraged that my congressman is blocking my voice and trampling upon my constitutional rights."

@RepGosar ..You weren't home when I delivered this message to your office, but no worries...there WILL be more!Stop BLOCKING Constituents! pic.twitter.com/JTWGQwhxKt

-- Indivisible Kingman (@IndivisibleCD4) May 13, 2017

Morgaine said the rules are not being applied equally. "They're not blocking everybody who's angry," she said. "They're blocking the voices of dissent, and there's no process for getting unblocked. There's no appeals process. There's no accountability."

A spokeswoman for Gosar defended his decision to block constituents but did not answer a question about how many have been blocked.

"Congressman Gosar's policy has been consistent since taking office in January 2010," spokeswoman Kelly Roberson said in an email. "In short: 2018Users whose comments or posts consist of profanity, hate speech, personal attacks, homophobia or Islamophobia may be banned.'"

On his Facebook page, Gosar posts the policy that guides his actions. It says in part, "Users are banned to promote healthy, civil dialogue on this page but are welcome to contact Congressman Gosar using other methods," including phone calls, emails and letters.

Sometimes, users are blocked repeatedly.

Community volunteer Gayle Lacy was named 2015 Wacoan of the Year for her effort to have the site of mammoth fossils in Waco, Texas, designated a national monument. Lacy's latest fight has been with her congressman, Bill Flores, who was with her in the Oval Office when Obama designated the site a national monument in 2015. She has been blocked three times by Flores' congressional Twitter account and once by his campaign account. One of those blocks happened after she tweeted at him: "My father died in service for this country, but you are not representative of that country and neither is your dear leader."

Lacy said she was able to get unblocked each time from Flores' congressional account by calling his office but remains blocked on the campaign one. "I don't know where to call," she said. "I asked in his D.C. office who I needed to call and I was told that they don't have that information."

Lacy and others said Flores blocks those who question him. Austin lawyer Matt Miller said he was blocked for asking when Flores would hold a town hall meeting. "It's totally inappropriate to block somebody, especially for asking a legitimate question of my elected representative," Miller said.

In a statement, Flores spokesman Andre Castro said Flores makes his policies clear on Twitter and on Facebook. "We reserve the right to block users whose comments include profanity, name-calling, threats, personal attacks, constant harping, inappropriate or false accusations, or other inappropriate comments or material. As the Congressman likes to say 2014 2018If you would not say it to your grandmother, we will not allow it here.'"

Ricardo Guerrero, an Austin marketer who is one of the leaders of a local group opposed to Trump's agenda, said he has gotten unblocked by Flores twice but then was blocked again and "just kind of gave up."

"He's creating an echo chamber of only the people that agree with him," Guerrero said of Flores. "He's purposefully removing any semblance of debate or alternative ideas or ideas that challenge his own -- and that seems completely undemocratic. That's the bigger issue in my mind."

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Verizon To Exit Its Copper Wire Telephone Business In Several States In 2018

Verizon logo If your home uses a copper wire telephone service, often called a "landline" or POTS (e.g., Plain Old Telephone Service), you may soon have to make a change. In Boston, Verizon will abandon its landline business in June 2018.

On Saturday, my wife received a letter via postal mail from Verizon. We live in Boston. The "Notice of Copper Retirement" stated:

"Currently, Verizon brings voice and/or data services to your home over copper cables. However, the company is updating to fiber-optic technology in your area, and will be retiring its copper facilities that currently serve you and your neighbors.

To continue to provide you service, Verizon will have to move your service to these fiber-optic facilities. If fiber is available to your home now, we will be contacting you individually soon to schedule an appointment to transition your services to fiber. Otherwise, we will be contacting you once fiber is available. In either case, we will need to move your service well before we retire the copper in your area which is scheduled for on or after June 1, 2018

We will transfer your voice services from copper to fiber at no cost to you. This transfer will not result in any change to the voice service that you currently receive from Verizon. You may continue to subscribe to the same voice service at the same price, terms, and conditions. In addition, any devices that rely upon your voice service, such as fax machines, medical devices, or security alarms connected to a central station, will continue to work in the same way as they currently do over copper. We will also provide you with a battery backup device at no charge. For almost all residential customers, that device uses standard D-cell batteries that can support up to 24 hours of standby voice service during a commercial power outage. In case of a prolonged power outage, you can simply replace the batteries and extend the backup power.

If you subscribe to our High Speed Internet service, the migration to fiber will require a change since that service is not available on our fiber facilities. The Internet access service that we offer on fiber is FiOS Internet. FiOS Internet is available at significantly faster speeds than High Speed Internet. We will offer the service at a special rate for customers who migrate from copper to fiber facilities as a result of the retirement of our copper facilities. In some cases, this price may be lower or higher than what you currently pay for internet access.

Please review the Frequently Asked Questions for additional information about the fiber update or visit us at verizon.com/fiberupgrade. If you still have questions, please call us Monday through Friday, 8 a.m. - 8 p.m., or Saturday 9 a.m. - 5 p.n. at 1-877-439-7442.

You may also contact the Federal Communications Commission or your State Commission if you have any questions. Thank you for continuing to be a loyal customer. We greatly appreciate your business.

Sincerely

Janet Gazlay Martin
Director, Network Transformation

I visited the website mentioned in the notice. That site pitches the FiOS Internet service, and doesn't explain the company's copper landline retirement activities. You have to do a little digging online to find the locations where Verizon announced its retirement of copper-wire telephone services. The locations include several states in the Northeast and Middle Atlantic regions. Earlier this month, Verizon announced the retirement of copper landlines next year in the following states, cities, and towns:

  • Delaware: Newark, Ocean View
  • Maryland: Bethesda, Columbia, Glen Burnie, Rockville, Towson
  • Massachusetts: Danvers, Dorchester, Framingham, Hanover, Lawrence, Leominster, Marblehead, Newton, North Chelmsford, Roxbury, Stoughton, West Roxbury
  • New Jersey: Bergen, Berlin, Cape May, Cranford, East Dover, East Orange, Ewing, Freehold, Hackensack, Haddonfield, Journal Square, Marlton, Medford, Merchantville, Morristown, New Brunswick, Red Bank, Somerville, Toms River, Union City, Wall Township, Woodbury
  • New York: Cayuga Williamsville, Cornwall, Mineola, Mount Vernon, Plainview Central, Skaneateles, White Plains, and multiple areas within all of the five boroughs of New York City
  • Pennsylvania: Allentown, Dormont, Glenolden, Jefferson, Jenkintown, Mayfair, Mechanicsburg, portions of Philadelphia, Pilgrim, Turtle Creek, Wilkinsburg
  • Rhode Island: portions of Providence
  • Virginia: Arlington, Falls Church, Reston, Springfield, Virginia Beach, and portions of Richmond

The telecommunications company made similar announcements during February, 2017 about other areas within the same states. Verizon is not alone. Telephone companies have planned for years to abandon their their copper landline services. In August 2015, the Institute of Electrical and Electronics Engineers (IEEE) reported that the U.S. Federal Communications Commission (FCC):

"... set new ground rules for carriers seeking to replace their old copper telephone networks. Approved by a 3-2 vote at an open meeting yesterday, the rules require carriers to notify customers in advance and to seek FCC approval before reducing services... FCC chairman Tom Wheeler and others have been pushing to shift telephone traffic to fiber optics and the Internet. Critics have charged that phone companies are allowing their old copper networks to decay to force customers to shift to fiber service. But some 37 million households —- many of them headed by elderly people —- remain on legacy copper, commissioner Mignon Clyburn noted at the hearing. Other holdouts live in rural areas that lack cellular and broadband service. Some prefer copper connections because they are independent of local power lines, and offer better 911 emergency service.

The FCC ruling requires that carriers notify retail customers at least three months before shutting down a copper network, and provide six-months notice to interconnecting carriers using the old lines. (Clyburn complained that that's much less time than the FCC gave before shutting down analog broadcast television, but voted for the measure anyway.) Carriers also must seek FCC approval if the telephone changeover would "discontinue, reduce or impair" service... In a separate vote, all five FCC commissioners agreed to require carriers to offer customers backup power supplies that maintain their phone service during prolonged power outages..."

You can read announcements by AT&T about copper landline retirements. CenturyLink notified the FCC last year about copper landline retirements in eight states: in Alabama, Florida, Michigan, Minnesota, Pennsylvania, Virginia, Washington, and Wisconsin.

Since the FCC set copper-retirement rules in 2015, technology adoption has climbed slightly. In January of this year, Pew Research reported that 77 percent of adults in the USA own a smartphone and 73 percent have broadband internet at home. However, while:

"... broadband adoption has increased to its highest level since the Center began tracking this topic in early 2000, not all Americans have shared in these gains. For instance, those who have not graduated from high school are nearly three times less likely than college graduates to have home broadband service (34 percent vs. 91 percent)... 12 percent of Americans say they are “smartphone dependent” when it comes to their online access – meaning they own a smartphone but lack traditional broadband service at home. The share of Americans who are smartphone dependent has increased 4 percentage points since 2013, and smartphone reliance is especially pronounced among young adults, nonwhites and those with relatively low household incomes."

While more people have smartphones and internet access at home, a sizeable number still have copper landlines. Phys.org reported in November 2016 the results of a recent survey:

"... 20 percent of the nation's households still view having a landline or fixed telephone as the most important of their telecommunications choices, according to a survey that queried consumers about their telephone and internet preferences... The study also found that for the average consumer, having mobile telephone service is about 3.5 times more important than a landline or fixed telephone service... Study findings suggest about 90 percent of American households have at least one mobile phone, 75 percent have fixed internet service, 58 percent have mobile internet service and 49 percent have fixed telephone service. Mobile telephone service was the most important service for the typical respondent, followed by fixed internet service, mobile internet service and fixed telephone service, although a portion rank fixed telephone first."

According to the 2012 United States Census, there are about 117 million households in the United States, and 2.59 persons on average per household. So, a substantial portion of the population will probably view negatively the termination of copper wire telephone services in their homes.

Verizon's copper termination notice was unnecessarily complicated, which could confuse many consumers. The portion of its notice which said "If fiber is available to your home..." was laughable. FiOS is already available in our neighborhood. Verizon notified me months ago, and I already migrated my antiquated DSL (Digital Subscriber Line) internet service on my phone line to FiOS. Verizon's landline business unit should know what its FiOS division is doing.The left hand should know what the right hand is doing.

So, Verizon's notice wasn't as customized nor as relevant as it could have been. It makes one wonder if, in its zeal to terminate its copper wire phone business, Verizon rushed the customer letters.

Readers of this blog remember the Boston City Council's hearings in 2015 about residents' requests for FiOS. In 2015, Verizon hadn't deployed FiOS even though it had been available in several suburban towns for many years. Example: a friend in Lexington has had FiOS since at least 2009. So, Verizon could have deployed FiOS far sooner, providing consumers more time to migrate their phone service without rushing.

What should consumers do? It depends upon your lifestyle. If you already have a smartphone, you may want to simply terminate your landline phone service and use your smartphone instead. If you don't have a smartphone, you can migrate your copper landline phone service to Verizon's FiOS fiber connection, to a smartphone, or to another telephone service provider. For example, many cable-TV providers, such as Comcast, provide phone service in residences.

Some consumers value security and privacy. If you perform phone-based banking or online banking with your desktop/laptop computer, then security is a concern. Since smartphones or wireless phones using home WiFi networks transmit using radio waves, you'll probably want to encrypt you wireless online banking transmissions to protect against theft by criminals or hackers. Several brands of Virtual Private Network (VPN) software and apps are available to encrypt your wireless transmissions. If you are unfamiliar with VPN software, this prior blog post contains links to online primers and tutorials.

If you received a copper termination letter from your phone company, what were your opinions of it? Did you switch to fiber landlines or to wireless?


3 Strategies To Defend GOP Health Bill: Euphemisms, False Statements and Deleted Comments

[Editor's Note: today's guest post is by the reporters as ProPublica. Affordable health care and coverage are important to many, if not most, Americans. It is reprinted with permission.]

by Charles Ornstein, ProPublica

Earlier this month, a day after the House of Representatives passed a bill to repeal and replace major parts of the Affordable Care Act, Ashleigh Morley visited her congressman's Facebook page to voice her dismay.

"Your vote yesterday was unthinkably irresponsible and does not begin to account for the thousands of constituents in your district who rely upon many of the services and provisions provided for them by the ACA," Morley wrote on the page affiliated with the campaign of Representative Peter King (Republican, New York). "You never had my vote and this confirms why."

The next day, Morley said, her comment was deleted and she was blocked from commenting on or reacting to King's posts. The same thing has happened to others critical of King's positions on health care and other matters. King has deleted negative feedback and blocked critics from his Facebook page, several of his constituents say, sharing screenshots of comments that are no longer there.

"Having my voice and opinions shut down by the person who represents me -- especially when my voice and opinion wasn't vulgar and obscene -- is frustrating, it's disheartening, and I think it points to perhaps a larger problem with our representatives and maybe their priorities," Morley said in an interview.

King's office did not respond to requests for comment.

As Republican members of Congress seek to roll back the Affordable Care Act, commonly called Obamacare, and replace it with the American Health Care Act, they have adopted various strategies to influence and cope with public opinion, which polls show mostly opposes their plan. ProPublica, with our partners at Kaiser Health News, Stat and Vox, has been fact-checking members of Congress in this debate and we've found misstatements on both sides, though more by Republicans than Democrats. The Washington Post's Fact Checker has similarly found misstatements by both sides.

Today, we're back with more examples of how legislators are interacting with constituents about repealing Obamacare, whether online or in traditional correspondence. Their more controversial tactics seem to fall into three main categories: providing incorrect information, using euphemisms for the impact of their actions, and deleting comments critical of them. (Share your correspondence with members of Congress with us.)

Incorrect Information

Representative Vicky Hartzler (Republican, Missouri) sent a note to constituents this month explaining her vote in favor of the Republican bill. First, she outlined why she believes the ACA is not sustainable -- namely, higher premiums and few choices. Then she said it was important to have a smooth transition from one system to another.

"This is why I supported the AHCA to follow through on our promise to have an immediate replacement ready to go should the ACA be repealed," she wrote. "The AHCA keeps the ACA for the next three years then phases in a new approach to give people, states, and insurance markets plenty of time to make adjustments."

Except that's not true.

"There are quite a number of changes in the AHCA that take effect within the next three years," wrote ACA expert Timothy Jost, an emeritus professor at Washington and Lee University School of Law, in an email to ProPublica.

The current law's penalties on individuals who do not purchase insurance and on employers who do not offer it would be repealed retroactively to 2016, which could remove the incentive for some employers to offer coverage to their workers. Moreover, beginning in 2018, older people could be charged premiums up to five times more than younger people -- up from three times under current law. The way in which premium tax credits would be calculated would change as well, benefiting younger people at the expense of older ones, Jost said.

"It is certainly not correct to say that everything stays the same for the next three years," he wrote.

In an email, Hartzler spokesman Casey Harper replied, "I can see how this sentence in the letter could be misconstrued. It's very important to the Congresswoman that we give clear, accurate information to her constituents. Thanks for pointing that out."

Other lawmakers have similarly shared incorrect information after voting to repeal the ACA. Representative Diane Black (Republican, Tennessee) wrote in a May 19 email to a constituent that "in 16 of our counties, there are no plans available at all. This system is crumbling before our eyes and we cannot wait another year to act."

Black was referring to the possibility that, in 16 Tennessee counties around Knoxville, there might not have been any insurance options in the ACA marketplace next year. However, 10 days earlier, before she sent her email, BlueCross BlueShield of Tennessee announced that it was willing to provide coverage in those counties and would work with the state Department of Commerce and Insurance "to set the right conditions that would allow our return."

"We stand by our statement of the facts, and Congressman Black is working hard to repeal and replace Obamacare with a system that actually works for Tennessee families and individuals," her deputy chief of staff Dean Thompson said in an email.

On the Democratic side, the Washington Post Fact Checker has called out representatives for saying the AHCA would consider rape or sexual assault as pre-existing conditions. The bill would not do that, although critics counter that any resulting mental health issues or sexually transmitted diseases could be considered existing illnesses.

Euphemisms

A number of lawmakers have posted information taken from talking points put out by the House Republican Conference that try to frame the changes in the Republican bill as kinder and gentler than most experts expect them to be.

An answer to one frequently asked question pushes back against criticism that the Republican bill would gut Medicaid, the federal-state health insurance program for the poor, and appears on the websites of Representative Garret Graves (Republican, Louisiana) and others.

"Our plan responsibly unwinds Obamacare's Medicaid expansion," the answer says. "We freeze enrollment and allow natural turnover in the Medicaid program as beneficiaries see their life circumstances change. This strategy is both fiscally responsible and fair, ensuring we don't pull the rug out on anyone while also ending the Obamacare expansion that unfairly prioritizes able-bodied working adults over the most vulnerable."

That is highly misleading, experts say.

The Affordable Care Act allowed states to expand Medicaid eligibility to anyone who earned less than 138 percent of the federal poverty level, with the federal government picking up almost the entire tab. Thirty-one states and the District of Columbia opted to do so. As a result, the program now covers more than 74 million beneficiaries, nearly 17 million more than it did at the end of 2013.

The GOP health care bill would pare that back. Beginning in 2020, it would reduce the share the federal government pays for new enrollees in the Medicaid expansion to the rate it pays for other enrollees in the state, which is considerably less. Also in 2020, the legislation would cap the spending growth rate per Medicaid beneficiary. As a result, a Congressional Budget Office review released Wednesday estimates that millions of Americans would become uninsured.

Sara Rosenbaum, a professor of health law and policy at the Milken Institute School of Public Health at George Washington University, said the GOP's characterization of its Medicaid plan is wrong on many levels. People naturally cycle on and off Medicaid, she said, often because of temporary events, not changing life circumstances -- seasonal workers, for instance, may see their wages rise in summer months before falling back.

"A terrible blow to millions of poor people is recast as an easing off of benefits that really aren't all that important, in a humane way," she said.

Moreover, the GOP bill actually would speed up the "natural turnover" in the Medicaid program, said Diane Rowland, executive vice president of the Kaiser Family Foundation, a health care think tank. Under the ACA, states were only permitted to recheck enrollees' eligibility for Medicaid once a year because cumbersome paperwork requirements have been shown to cause people to lose their coverage. The American Health Care Act would require these checks every six months -- and even give states more money to conduct them.

Rowland also took issue with the GOP talking point that the expansion "unfairly prioritizes able-bodied working adults over the most vulnerable." At a House Energy and Commerce Committee hearing earlier this year, GOP representatives maintained that the Medicaid expansion may be creating longer waits for home- and community-based programs for sick and disabled Medicaid patients needing long-term care, "putting care for some of the most vulnerable Americans at risk."

Research from the Kaiser Family Foundation, however, showed that there was no relationship between waiting lists and states that expanded Medicaid. Such waiting lists pre-dated the expansion and they were worse in states that did not expand Medicaid than in states that did.

"This is a complete misrepresentation of the facts," Rosenbaum said.

Graves' office said the information on his site came from the House Republican Conference. Emails to the conference's press office were not returned.

The GOP talking points also play up a new Patient and State Stability Fund included in the AHCA, which is intended to defray the costs of covering people with expensive health conditions. "All told, $130 billion dollars would be made available to states to finance innovative programs to address their unique patient populations," the information says. "This new stability fund ensures these programs have the necessary funding to protect patients while also giving states the ability to design insurance markets that will lower costs and increase choice."

The fund was modeled after a program in Maine, called an invisible high-risk pool, which advocates say has kept premiums in check in the state. But Senator Susan Collins (Republican, Maine) says the House bill's stability fund wasn't allocated enough money to keep premiums stable.

"In order to do the Maine model 2014 which I've heard many House people say that is what they're aiming for -- it would take $15 billion in the first year and that is not in the House bill," Collins told Politico. "There is actually $3 billion specifically designated for high-risk pools in the first year."

Deleting Comments

Morley, 28, a branded content editor who lives in Seaford, New York, said she moved into Representative King's Long Island district shortly before the 2016 election. She said she did not vote for him and, like many others across the country, said the election results galvanized her into becoming more politically active.

Earlier this year, Morley found an online conversation among King's constituents who said their critical comments were being deleted from his Facebook page. Because she doesn't agree with King's stances, she said she wanted to reserve her comment for an issue she felt strongly about.

A day after the House voted to repeal the ACA, Morley posted her thoughts. "I kind of felt that that was when I wanted to use my one comment, my one strike as it would be," she said.

By noon the next day, it had been deleted and she had been blocked.

"I even wrote in my comment that you can block me but I'm still going to call your office," Morley said in an interview.

Some negative comments about King remain on his Facebook page. But King's critics say his deletions fit a broader pattern. He has declined to hold an in-person town hall meeting this year, saying, "to me all they do is just turn into a screaming session," according to CNN. He held a telephonic town hall meeting but only answered a small fraction of the questions submitted. And he met with Liuba Grechen Shirley, the founder of a local Democratic group in his district, but only after her group held a protest in front of his office that drew around 400 people.

"He's not losing his health care," Grechen Shirley said. "It doesn't affect him. It's a death sentence for many and he doesn't even care enough to meet with his constituents."

King's deleted comments even caught the eye of Andy Slavitt, who until January was the acting administrator of the Centers for Medicare and Medicaid Services. Slavitt has been traveling the country pushing back against attempts to gut the ACA.

.@RepPeteKing, are you silencing your constituents who send you questions? Assume ppl in district will respond if this is happening.

-- Andy Slavitt (@ASlavitt) May 12, 2017

Since the election, other activists across the country who oppose the president's agenda have posted online that they have been blocked from following their elected officials on Twitter or commenting on their Facebook pages because of critical statements they've made about the AHCA and other issues.

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Coming Soon: A New HD Video Standard For TV. Will Over-The-Air Broadcasts Remain Free?

Federal communications Commission logo Soon, consumers will hear about improvements in over-the-air broadcast television. Free, broadcast television has been around since forever, and High Definition (HD) broadcast signals have been around since 2009. Many consumers have chosen free, over-the-air broadcast television to avoid expensive monthly cable-TV bills.

Consumer Reports explained:

"Technically called ATSC 3.0, the new broadcast standard is—thankfully—being more generally billed as "Next-Gen Broadcast TV." There are a few big differences between our current ATSC 1.0 broadcasts and the new ones we'll receive as part of ATSC 3.0. A key one is that the new standard is IP (internet protocol)-based, which means it can carry internet content alongside traditional TV broadcasts. The broadcasts can also include 4K video and high dynamic range (HDR) content—the two biggest selling points in TVs right now."

And, consumers will be able to receive the new HD broadcast signals on their smart phones. Reportedly, the coming ATSC 3.0 standard will use a more efficient video format, called HEVC or H.265, which streaming services already use.

Last year, WRAL-TV in Raleigh, North Carolina began to broadcast using the new standard with a documentary, "Take Me Out To the Bulls' Game." The U.S. Federal Communications Commission (FCC) announced in February a Notice of Proposed Rulemaking (NPRM) which sought comments from the public about the new HD broadcast standard. That FCC announcement stated, in part:

"ATSC 3.0 has the potential to greatly improve broadcast signal reception on mobile devices and television receivers without outdoor antennas.  It is also intended to enable broadcasters to offer enhanced and innovative new features to consumers, including Ultra High Definition picture and immersive audio, more localized programming content, an advanced emergency alert system capable of waking up sleeping devices to warn consumers of imminent emergencies, improved accessibility options, and interactive services.

A coalition of broadcast and consumer electronics industry representatives petitioned the Commission to allow the use of the new standard. The upgraded technology is intended to merge the capabilities of over-the-air broadcasting with the broadband viewing and information delivery methods of the Internet using the same 6 MHz channels presently allocated for digital television (DTV)."

Like most things in life, details matter. Consumer Reports warned:

"... Jonathan Schwantes, senior policy counsel at Consumers Union, the policy and mobilization arm of Consumer Reports, says that some consumers could lose the ability to get some ATSC 1.0 signals if the host station is located farther away than their current broadcaster.

"Our position is that next-gen TV can and will be beneficial to consumers if implemented by the FCC in a measured and conscientious manner," he says. That could include making sure the current coverage areas are preserved as much as possible, not allowing broadcasters to downgrade the quality of ATSC 1.0 broadcasts from high to standard definition, and providing consumers with education on issues such as the timing of the transition and what new equipment they may need."

So, some broadcasters might choose to cut corners while migrating to the new standard: reduce their existing HD over-the-air signal strength, degrade their existing HD signal quality, or both. Not good.

And, there's more bad news for consumers. The new HD broadcast standard may cost more. You're probably wondering how, since over-the-air broadcasts have been free since television was introduced. Consumer Reports explained:

"... broadcasters could encrypt at least part of their programming, and require users to create an account and pay for access to certain features. No details are available on how this would work from the consumer's point of view. Consumers Union and other groups say they will insist that consumers continue to have access to free over-the air high-definition TV reception."

The new HD broadcast standard should not include hidden costs or new fees for consumers. For many consumers, new televisions are expensive and out of reach. Many consumers have chosen to "cut the cord" to save money. For these consumers, free over-the-air broadcast television is vital.

Nor should broadcasters be able to cut corners and force consumers to the new HD standard by degrading their existing HD signal strength and/or quality. The new HD broadcast standard should be voluntary for consumers. Nor should consumers be forced to submit to broadcasters their personal, contact, and payment information. One of the benefits of over-the-air broadcasts is privacy.

The next-gen TV standard offers benefits to both consumers and broadcasters. The FCC must balance the needs of both, and not serve only one group. The industry uses the term "Multi-channel Video Programming Distributors" (MVPD) to describe companies that provide video content. These MVPD companies include video producers and distributors: legacy cable-TV providers, TV networks, and others that provide programming via cable, the Internet, and over-the-air broadcasts.

Some MVPDs do both: produce and distribute video content. These MVPDs have a financial bias to force consumers from free over-the-air broadcasts to their proprietary, higher cost distribution networks (e.g., cable, internet). Consumers must have the freedom to choose how they consumer video content, and not have a distribution network forced upon them via bundling, "retransmission consent system," or other MVPD tactics.

What are retransmission consent systems? This 16-142 filing by Consumer's Union, Public Knowledge, and New America's Open Technology Institute explained (Adobe PDF):

"It is increasingly axiomatic that, when MVPDs and broadcast groups engage in retransmission consent negotiations, consumers end up suffering, or footing the bill, or both. Increased broadcast retransmission consent fees are passed on to consumers by MVPDs who have little choice but to accept most broadcaster demands or face crippling blackouts.... Large MVPDs, and those which also own broadcast interests, also use the retransmission consent process to extract favorable terms, potentially limiting the growth or viability of competitive video services. Comcast, for example, is rumored to have fleshed out its fledgling over-the-top (OTT) service by exercising most-favored-nation clauses in many of its carriage contracts. Comcast can only demand such favorable contract terms due to its dominant position in the video delivery marketplace, and once again, consumers are left holding the bag..."

So, the FCC must not make things worse for consumers by allowing the new HD broadcast standard to reduce competition and raise prices. Higher prices may be good for MVPDs (and their stockholders) but not for consumers.

If you want to submit a comment or read comments already submitted about the new HD broadcast standard, search for the 16-142 Filing within the FCC's Electronic Filing & Comment System (ECFS). At press time, only 167 persons, companies, and entities had submitted filings and comments (compared to 2,869,632 comments via ECFS about Net Neutrality). Not good.

What are your opinions about the new HD video broadcast standard?