Target Stores – An Identity Thief’s Best Friend ?

Is Target Stores, Inc. targeting your sensitive personal data ?  (image from angrywhiteboy.com)

Is Target Corporation targeting your personal data ? Will a data breach make you a victim of identity theft ? (image linked from angrywhiteboy.org)

You might have found this article after asking…

Why did Target scan my drivers license, or

Why did Target swipe my drivers license, or

Is Target collecting personal information from my drivers license, or

What is the Target stores ID policy, and what if I refuse to give them my drivers license,  or

Did a jury award  South Carolina Target shopper Rita Cantrell $3.1 million in a libel case, after she was wrongly accused of trying to pass a counterfeit $100 bill at Target ?

Maybe Eric Arthur Blair was right (you’ll probably know who he was, even if you don’t recognize his name).

We very rarely shop at Target, but happened to find ourselves in a Target store recently.  While our order was being scanned at the register, even before we decided how we would pay, the cashier asked for our drivers license.  When asked why they needed to see our drivers license, they told us that it was because we were buying a package of over-the-counter cold medicine.  Since we are closer to retirement age than we are to the age of majority, we can’t remember the last time a clerk or cashier “proofed” us.  But since we want to do our part to make sure that no minors can get relief from their cold or flu symptoms, we graciously handed the cashier our license.  We quickly regretted complying with their request, when, to our horror, the cashier scanned the barcode on our license with their barcode reader, before we realized what they were doing, and before we had a chance to stop them.  It is worth noting that the last time I checked, this was still America, and there was absolutely no legal requirement for a retailer to scan or swipe your drivers license, or any other form of ID when purchasing medications, alcoholic beverages, etc.  Target appears to have adopted this misguided policy to protect themselves, and to possibly make their job easier (but at your expense).  What’s next ?  Scanning a barcode tattooed on your forehead by the State, or scanning you for the mandatory RFID chip implanted under your skin at birth ?

It seems to us that Target might be capturing at least some the information embedded in the barcode of your drivers license.  If not, then simply having the cashier confirm the date of birth printed on the license would suffice, and scanning the license would serve no purpose.   This makes us wonder what they might be doing with the data.  How long are they retaining the data ?  Do they sell the data, or use it for marketing purposes ?  Will they provide the data to the government, either voluntarily or in response to a subpoena or a National Security Letter ?

As (now very wealthy) South Carolina Target shopper Rita Cantrell can attest, Target can’t distinguish real currency from counterfeit.  Likewise,  we have little confidence that their employees, POS scanners or computer systems would be able to tell a fake drivers license barcode from the real thing.

Are you wondering what information Target (and other retailers) can capture from your drivers license barcode, in this post-9/11, “Homeland Security” driven world ?  The American Association of Motor Vehicle Administrators (aamva.org) publishes the standards that the individual states follow when designing their drivers licenses.  This AAMVA document (in .PDF format) lists 22 mandatory and 23 optional data elements that are encoded into the PDF417 barcode that is used on U.S. drivers licenses.  Did you know that items such as a driver’s race/ethnic group and social security number can be embedded in the barcode ?   The individual states are free to add additional data elements that are not included in the AAMVA standard.

Sample License

We suspect that Target would be happy to sell cold medicine to this fellow, as long as he allows them to scan his drivers license.

Even if Target Stores does not have any ulterior motives, the fact that they are able to capture any or all of the data embedded in your drivers license barcode exposes their customers to the threat of identity theft.  The fact that their name is Target doesn’t help the situation either, if you catch our drift.  I mean, just look at their stores… they put a big red bulls eye right on the front of every store !  If that isn’t taunting all the hackers out there, I don’t know what is.   Maybe we would be less concerned if their name was “Fortress” or something along those lines, and their logo was a bank vault, rather than a bulls eye.  Even their cute mascot, Bullseye, looks like he would rather lick you to death than defend the company’s customer data.  Retailers, credit card companies, banks and other businesses are constantly making headlines because their networks are hacked into, their data stolen, and their customers or employees personal and financial information  compromised.  Sometimes it’s a hacker breaking into a computer network.  Sometimes, it’s a rogue employee inside a company or at a vendor that has access to a company’s systems.  Sometimes, it’s a laptop computer containing sensitive information that is lost or stolen.  Sometimes, backup tapes are lost in transit to an off-site storage location.  There are many ways that customer data can be put at risk of theft.

Now we’re wondering if we will pick up the newspaper one day, and see the headline “Target Stores Targeted By Hackers,  Personal Info From 50 Million Customers Stolen”.  Think it can’t happen ?  Think Again.  It has happened to other large retailers, banks and credit card companies.

How can consumers protect themselves ?  Well, it’s nearly impossible in the age of  The Internet and when “plastic” has largely supplanted the use of cash.  But nothing says that you have to shop at a retailer that unnecessarily places your personal information at risk, even if its only a potential risk.   We doubt that we will be shopping at Target stores again, but if we do, and we are asked for our drivers license in the future, we will refuse and walk out.  If collecting our personal data is more important to Target than keeping us as a customer, we will gladly take our business elsewhere, and patronize a business that does not unnecessarily expose us to the threat of identity theft.  Speaking of Target, we think that letting retailers scan and capture the data stored in your drivers license barcode is a lot like placing a bullseye on your back.

We are normally happy to accomodate a  merchant’s request to provide suitable ID, especially when the transaction involves payment by check or credit card, or we are returning an item, but Target’s policy is unacceptable, and we believe, simply wrong.  And we’re not the only one who feels this way.  This article at informationweek.com echoes our concerns about Target’s policy.  From a purely practical standpoint, we suspect that draconian policies such as the one put in place by Target will backfire, with (even more) people simply deciding to steal the medication.  OTC pharmacy items are already the most frequently shoplifted items (see this list of the 50 most frequently shoplifted items).   And isn’t it just a bit ludicrous (not to mention, rude) to ask a senior citizen buying cold medicine to prove they’re 18 years old ?

As far as we know,  Target customers concerned about identity theft can still do their shopping at Walmart without having to show them your drivers license when buying cold medications.  If you are very obviously over the age of 18, and asked for your drivers license at a Target store, we suggest that you decline.   If they persist, simply tell them that under the circumstances, you have changed your mind and don’t wish to purchase anything.  It won’t take Target very long to realize that their policy is costing them business, and that they need to change it.  They might not enjoy having to put all your stuff back on the shelves after you walk out without buying it, but at least your personal data will be safe.

- Routing By Rumor

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The David Letterman Sextortion Scandal And Confession Has Damaged The CBS Network !

From Murrow To Mediocrity…

The Fall From Grace At CBS

The Ed Sullivan Theater (photo from Wikimedia Commons)

The Ed Sullivan Theater in New York City, home of the Late Show, where David Letterman delivered his mea culpa, mea culpa, mea maxima culpa, admitting to sexual indiscressions with staff members (photo from Wikimedia Commons)

Legendary CBS broadcasting giants, including Edward R. MurrowWalter Cronkite and Ed Sullivan must be turning over in their graves as a result of their “Tiffany Network”, the Columbia Broadcasting System, having its image tarnished by scandal in recent years.  The latest (sex) scandal to hit CBS involves David Letterman, his staff, and a CBS Producer named Robert Halderman.

Executives at CBS must regret the day they lured David Letterman away from NBC.  And the venerable Ed Sullivan Theater in New York City, where CBS tapes the Letterman show, has been forever sullied by the scandal that hit the news Thursday.  CBS began broadcasting from CBS-TV “Studio 50″ in 1936, and renamed it the Ed Sullivan Theater in 1967.  The Ed Sullivan show was broadcast from there during it’s 23-year run, from 1948 thru 1971.

In the 1970’s, about the time that David Letterman was a weatherman on an Indianapolis, Indiana television station, we were working for a company in New York City that sold equipment to broadcasters.  They did business with CBS, and on one occasion our work took us to the Ed Sullivan Theater.  We entered that building in awe.  We felt extremely privileged to be in that space, where some of the most historic broadcasts in the history of television originated from.  Today however, we would be embarrassed to be seen entering  the studio where the Beatles made their U.S. debut, and where virtually every notable performer or group from that era appeared,  many of them multiple times.

Ed Sullivan would cringe if he heard what David Letterman admitted to this past Thursday, while standing on the same stage that Sullivan’s shows were broadcast from.  Ed Sullivan was so squeaky clean that it was commonplace for him to ask performers to change objectionable lyrics in the songs they performed on the Ed Sullivan show.  Performers that refused to clean up their lyrics would not be broadcast, and those that reneged on their promise to sanitize their lyrics (remember that this was live television), were never invited back to the Ed Sullivan show again.

This past Thursday, in what can only be described as one of the most bizarre broadcasts of the Letterman show (or any television show, for that matter), Letterman delivered his mea culpa, admitting to his sexual indiscretions, to an audience of people who were laughing like hyenas.  Apparently, the audience didn’t know what to make of the confession, and assumed it was part of his comedy routine.  Here’s an article published by the New York Daily News on Friday, which identifies a woman who worked for David Letterman, who they believe is involved in the scandal.  In any case, Letterman’s broadcast confession certainly gives a whole new meaning to the term “Worldwide Pants”.  You can probably find the confession on YouTube and elsewhere, but we aren’t going to link to it, since it seems that CBS has been asking YouTube to pull any excerpts people have been posting from the show, due to copyright infringement, and, no doubt, severe embarrassment.  Ya know, maybe CBS should have never broadcast it in the first place.

In the 1970’s Watergate scandal, Richard Nixon had his infamous 18- minute gap on the White House tapes.  Similarly, in the Letterman scandal, CBS has redacted the ten-minute mea culpa segment of David Letterman’s monologue from the official copy that CBS posted on YouTube (read this NY Times article about the missing Letterman segment).

As an aside, we think it’s worth noting that technology like cellphones, digital cameras, the VCR, DVDs, computers, the Internet and websites like YouTube have a way of  changing the status quo, and making existing law moot in many cases.  As many individuals and corporations have learned over the last few years, it is largely an exercise in futility to try and have something that has been posted on the Web taken down.  The harder you try to quash something, whether a photo, a video, an MP3 file or a point of view, the faster it propagates.  Remove it from one website, and it springs up in 100 other places.  The battle to protect intellectual property (IP) has been made infinitely more difficult as technology has made it a trivial matter to make high quality copies of materials such as music, movies, photos, etc.  Two events in particular stick out in our mind;  The introduction of VCRs in the late 1970’s, which had the entertainment industry scared to death about illegal recording of television shows, and the advent of music sharing websites such as Napster.  Blogs, personal websites, and the fact that virtually everyone can now have a “printing press” in their home has changed the publishing and newspaper businesses forever.  Organizations have learned that a different mindset is necessary to survive.  If you can’t beat them, join them.  As an example of this consider the fact that every major U.S. daily newspaper that has managed to survive also has a website.  Newspapers have even begun scrapping their paper editions, becoming Internet-only news outlets, a la The Huffington Post (see this NYTimes article about The Seattle Post-Intelligencer going Internet-only).  But we digress.

If we were running CBS, the Letterman show would be pulled faster than you can say “Top Ten List”, but for financial reasons, we doubt CBS will pull the show.  Moral and ethical standards are simply not what they were when William S. Paley was running CBS.  Certainly not at CBS, and not anywhere else in broadcasting, or society in general.  If Letterman can continue to do well in the ratings, his job is probably secure.  But we expect to see CBS getting hit with lawsuits from Letterman staffers, who will say that his conduct created a hostile work environment.

And of course, the “Top Ten” lists have begun to appear on the Web, in response to the Letterman scandal.  A fellow WordPress blogger posted “The Top Ten Reasons Why David Letterman Should Be Fired”, while this conservative Christian website posted their own Top Ten list.

- Routing By Rumor

P.S. – According to this article at the Museum of Broadcast Communications, “From Murrow To Mediocrity” was the title of a scathing 1987 New York Times op-ed piece written by CBS newsman Dan Rather.

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Milking The Herd At T-Mobile

Cows - 600 x 456

T-Mobile is milking us dry, and that's no bull !

T-Mobile USA’s (aka Deutsche Telekom AG) catch phrase used to be “Get More”, before they dropped it (like so many dropped calls) for their “Stick Together” campaign.  Well, now it seems that their next advertising slogan might just be “Pay More”.

We know times are rough.  T-Mobile is probably hurting just as much as the rest of us.  Evidence the bad news they’ve included in customer’s bills over the last few months.  First, they made the decision to charge customers who wanted to continue to receive their call detail on each month’s bill.  I believe they are charging $3.00 a month for the privilege of seeing what they are charging you for.  Then they decided to charge an additional $1.50 a month for the privilege of getting a paper bill in the mail each month (isn’t it nice to know that T-Mobile is saving the lives of innocent trees).  After what must have been a torrent of subscriber defections to other carriers and complaints from customers who didn’t bolt, they dropped their plan to charge for paper bills (but they’re still charging customers who want to see the call detail on their bills).  Apparently, T-Mobile decided that trying to milk their customers with yet another new monthly charge was going to cost them more than they would have realized in additional income (see “T-Mobile Customers Demand Traditional Paper Bills” at dailyfinance.com).

T-Mobile’s latest bills have included a strangely vague warning to their customers that they may be paying more for minutes used beyond their calling plan’s allowance.  But they don’t tell you how much more they are charging per minute. If you are a T-Mobile subscriber, and you decide to dial 611 to ask them about the rate increase, better do it during the day.  T-Mobile used to provide customer service 24 hours a day, but now,  if you try calling T-Mobile at night, you’ll get an announcement telling you to call back during the day.  That brings to mind another possible advertising slogan T-Mobile might consider… “Pay More, Get Less”.

Why the lack of specifics regarding their rate increase ?  (they tell you to check out their website for details)  Well, it seems to us that T-Mobile, just in time for Halloween,  is trying to scare subscribers into moving to more expensive monthly plans.  Is it really necessary to raise what are already exhorbitant per-minute charges if you go over on your plan’s minute allotment.  We believe those per-minute charges were already in the range of 40 cents to 60 cents per minute, even before their recent increases.

Those folks at T-Mobile must also think their customers are a bunch of idiots.  Here’s how they broke the good news to customers, via an insert in their bills titled “An important message about your additional minutes”…

“T-Mobile is committed to providing you the coverage you need at the price you want.  Therefore, it’s important to tell you about a change to ensure you are on the plan that best meets your needs.  Starting on September 1st, the price for the minutes you use over the minutes included in your plan will increase for some rate plans.  Those rates apply to all additional minutes, including calls to voicemail and call forwarding.”


Don’t you love it how companies always begin their notices of price increases on an upbeat theme ?   How about leveling with the customer and starting off with something like “We have some bad news for our most loyal customers” ?

When we first spotted their billing insert, we thought that perhaps T-Mobile was increasing the number of minutes in their calling plans, or perhaps that they were lowering their charge for additional minutes.  Unfortunately, it was nothing or the sort, but it is certainly reassuring to know that T-Mobile is so concerned about us.  Why then all the secrecy ?  Why not just say how much they’re charging for additional minutes, right there on the billing insert ?  And the fact of the matter is that they can’t legally raise their rates without notifying their customers.  We guess that T-Mobile figures that this indirect method of notifying their customers of a rate increase fulfills their obligation to notify their customers.  How lame can you get ?

We wonder what little bit of good news T-Mobile might be planning to stuff into the envelope with your bill, next month.  How about charging a fee for speaking with a customer service rep, or charging you $1.00 every time you check how many minutes you have used up.  There’s probably dozens of ways they can come up with to squeeze more out of their customers every month.

Long time T-Mobile subscribers might remember the pre-T-Mobile days, and perhaps even the pre-Voicestream days.  The T-Mobile U.S. cellular network started it’s life as “Omnipoint”, circa 1996.  (Does anybody remember Fred, the Omnipoint parrot ?  See Fred in this Omnipoint TV Commercial on Youtube.)  One of Omnipoint’s selling points was “No Contract Required”.  As any T-Mobile customer can tell you, that is not the case with T-Mobile.  But for T-Mobile customers who have fulfilled their contract (and maybe even for those who haven’t), all of  T-Mobile’s recent attempts to nickel and dime their customers to death might signal that it is time to move your mobile number to a different network, one that is more customer-friendly, and one that gives it’s subscribers a little more credit for being able to see through a thinly veiled attempt to increase profits.  According to this article at cellphonesignal.com, T-Mobile’s decision to increase their per-minute overage charges means that subscribers who are under contract can opt to terminate their contract without incurring an early termination fee (ETF), which just may be the silver lining in this network’s cloud.

Oh, and while we’re on the subject, when is T-Mobile going to bring back Jamie Lee Curtis as it’s spokesmodel ?

- Routing By Rumor

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Maine High School Student Proves That Almost Anyone Can Become A School Administrator !

Bonny Eagle High School is located in Standish, Maine

Bonny Eagle High School is located in Standish, Maine

What was Justin Denney thinking ?

Mr. Denney’s actions risked the lives of his fellow students, as well as everyone attending the Bonny Eagle High School (Standish, Maine) graduation last Friday at the Cumberland County Civic Center in Portland, Maine.

What dastardly deed is this graduating senior guilty of ?   Did he bring a loaded gun to the graduation?  No.  Did he call in a bomb scare, or set off a smoke bomb in the Civic Center?  No.  Did he pull the fire alarm just as the graduation ceremonies were about to begin?  No.   Did he release a box full of mice during the pledge of allegiance?  No.  Mr. Denney is guilty of a much more sinister offense.

Mr. Denney’s crime involved taking a bow and blowing a kiss to his mother, as he went up to receive his diploma, which is apparently a capital offense in the State of Maine.  For the depraved indifference to human life that Mr. Denney demonstrated by blowing a kiss to his mother, Schools Superintendent Suzanne Lukas ordered Mr. Denney back to his seat, and he was denied his diploma (see “Blow a kiss, lose your diploma” at examiner.com, where Dr. Todd Berntson describes the conduct of the Maine school superintendent involved as bizarre, absurd,  disturbing, insensitive and hostile).  We shudder to think what sort of draconian punishment might be imposed on a student who is foolish enough to actually do something bad in this school district from hell.

We can picture Justin Denney sitting in a prison cell full of  murderers, felons and hardened criminals.  One of the inmates asks the others what landed them in prison.  One fellow says he killed three people.  The next guy says he robbed a bank.  Another says that he shot a cop.  Then Justin says “I blew a kiss to my mommy”.  The other inmates move away from Justin, fearing for their lives.  Justin Denney becomes known as “that Bonny Eagle dude” that you don’t want to mess with.

Good call, Ms. Lukas.  God only knows what might have happened if other students copied Mr. Denney’s reckless and depraved behavior.  You could have had every kid there blowing kisses to their parents.  Pandemonium would have ensued.  Lives might have been lost.  Fortunately, your quick action prevented a disaster.

We feel that Mr. Denney was way too well behaved, considering the circumstances.  If Ms. Lukas had told US to return to our seat without receiving our diploma, we would have flatly refused to move an inch until the diploma was awarded.  Let them have their goons drag us off  the stage if they wish (we would be screaming “I earned that diploma” and “Don’t tase me, bro” as they dragged us away).  The bigger the spectacle, the better, since there was a civic center full of witnesses who would have been horrified.  Video would have shown up on youtube faster than you can say “Suzanne Lukas”.  Actually, this story has shown up on youtube !

Those who meekly submit to tyrants empower them.  To Mr. Denney’s credit, when asked by Ms. Lukas why he should receive his diploma, he did not hesitate to tell her why he deserved it.

How would Ms. Lukas have felt if, let’s say, she was denied her diploma at her 1968 graduation from Marian Central Catholic High School in Worcester, Massachusetts, because she had acknowledged her parents in the audience ?

To recognize the courage and leadership that Suzanne Lukas demonstrated in the face of adversity, we have awarded her the Routing By Rumor Humanitarian Of The Year award.   If readers would like to express their appreciation and support for Ms. Lukas’ actions, you can visit the Maine Department of Education’s website, and e-mail Maine’s Education Commissioner,  Susan A. Gendron.

Ms. Lukas, you really need to give Justin Denney his hard-earned diploma (preferably with the news media present) before the Board of Education (it is called the “Board of Directors” in the case of this school district) hands you your walking papers, for making the District the laughing stock of the Internet and the State of Maine.  While you’re at it, why don’t you help yourself to a large serving of humble pie, and issue a public apology to Mr. Denney, his family, and the students and parents of Bonny Eagle High School.  Who knows… expressing a bit of remorse for your despicable behavior might even save your job !

Perhaps it’s also time for the Maine School Administrative District 6 to revisit some of their rules and regulations, which seem more appropriate for a correctional facility or prisoner-of-war camp, than for a school district.  On that note, perhaps Ms. Lukas should apply for a warden’s job with the Maine Department of Corrections.

And to Justin Denney, congratulations on your graduation, and on your 15 minutes of fame.  Andy Warhol was right !

6/18/2009 UPDATE…

It’s now almost a week since Justin Denney should have received his diploma.  Schools Superintendent Suzanne Lukas (her name has become a household word, but for all the wrong reasons) seems to have gone into hiding.  The School District Board of Directors has held a closed-door emergency meeting to discuss the situation, and the Dennys have spoken to an attorney.  Justin Denney still does not have the diploma that he has earned.

Doesn’t anybody in the school system have any intestinal fortitude or common sense ?  Deliver the diploma to Justin’s home in person.  Send it by FedEx.  Have Suzanne Lukas crawl up to the Denney’s front door on her hands and knees, holding the diploma in her mouth.  Whatever.  The important thing at this point is to award the diploma and issue a public apology.  Any administrative action against Ms. Lukas, any lawsuits against the school district, and any changes to school policy will all come in due time.  The longer the school district waits to “make things right”, the more damage that will be done.  Rather than going into closed-door executive sessions, sitting around a conference table and wringing their hands, one of the school administrators or Board members should stand up, take the lead, and put a quick end to this nonsense.  And the families of SAD #6 (aptly named, don’t you think?), should use the next school board elections as an opportunity to ensure that this sort of situation doesn’t happen again.

- Routing By Rumor

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Introducing The Sichuan Tengzhong Hummer H1

This week’s bankruptcy filing by General Motors, and indeed the current critical condition of the entire U.S. economy can be traced directly to the wholesale loss of decent paying American manufacturing jobs, primarily to China.  Retailers like Walmart, whose stores are stocked predominantly with cheap Chinese-made goods are thriving, because financially desperate American families can’t afford to shop anywhere else (Walmart employs almost 1.5 million workers in the United States, and will be adding 22,000 more U.S. workers to its payroll in 2009; while this may sound like good news, it is anything but.)  It is a vicious cycle of cheap imports, resulting in job losses and low wages for those still lucky enough to find work, that creates an even greater demand for cheap imports that are destroying the American economy even more.  Probably the only thing that is limiting imports from China right now is the lack of available space on cargo ships.  The U.S. government does not seem to be the least bit inclined to limit imports, despite the damage they are doing to our country.

Now, it appears that General Motor’s Hummer division is being sold to China’s Sichuan Tengzhong Heavy Industrial Machinery Company.  We feel that dismantling what was one of the largest and oldest American corporations, and selling a portion of it to China is nothing short of treason.  It’s also ludicrous.  Friends, what you are witnessing is an acceleration of the destruction of the U.S. economy.

On a purely practical level, it won’t work.  The type of American buyers who are attracted to a vehicle like a Hummer won’t want a Chinese vehicle.  And as the U.S. economy continues to disintegrate because of exactly this sort of exportation of American brands and jobs, few if any Americans will be able to afford to buy a Hummer, or any vehicle, for that matter.

From a national security standpoint, selling yet another major American manufacturing company to China places America in grave danger. And remember… Hummer is basically a military vehicle, even if it has morphed into a family vehicle for soccer moms on American highways. We’ve said it before on this blog, and we’ll say it again…  Anytime it desires, China will be able to bring America to its knees without firing a single shot.  If China cuts off the supply lines that America has become dependent on, the United States will starve to death.   And we won’t be able to defend ourselves either, because unlike during World War II, America’s manufacturing capacity has all but disappeared.  If you think that melamine-laced pet food, lead-tainted toys, or toxic sheetrock from China are a problem, you ain’t seen nothing yet.

How bad are things getting for U.S. manufacturers?  We went to the Home Depot recently to buy a few sheets of sandpaper, and everything they had was made in China.  It appears that America can’t even manufacture sandpaper any more.

So stop worrying about North Korea or Iran or al-Qaeda or the Taliban.  What you should really be worrying about are those shiny new Sichuan Tengzhong Hummers that will soon be rolling down America’s highways.

We wonder if they sell portraits of Chairman Mao at Walmart.  There’s a bare wall in our living room where we could hang it.

- Routing By Rumor

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The Death Spiral At The New York Times

Extra, Extra… Read All About It !

The New York Times hikes its cover price yet again.

Another New York Times price increase.

Get ready to shell out more for your copy of The New York Times.

Extra, Extra !

Executives at The New York Times must be taking business strategy lessons from the same experts that have guided the once mighty General Motors to the brink of bankruptcy and needing to take federal bailout money to stay alive.  Shares of GM, once considered a “blue chip” stock that was among the most highly regarded of all investments, and which were trading at close to  $90 a share ten years ago, are now virtually worthless.

The New York Times has announced yet another round of price increases, the third in less than two years , that will hike the newsstand price of their Sunday edition to $5.00 or $6.00, depending on the geographic edition.  The weekday New York Times increases to $2.00 !  And you still don’t get any comics.  The price increases are effective June 1st.

$6.00 for a newspaper?  Are they joking ?  Perhaps New York Times publisher Arthur Ochs Sulzberger, Jr. hasn’t yet taken notice of the new kid on the block.   Mr. Sulzberger, we would like to introduce you to Mr. Internet.  He’s big, he’s getting bigger all the time, and he’s eating your lunch.

The Internet is eating everybody’s lunch.  This Time Magazine article names the ten most endangered newspapers in America.  And according to this CNN article, at least 120 U.S. newspapers have folded since January, 2008.

Faced with a sharp drop in advertising revenue and falling circulation, the price increases at The Times are likely to just exacerbate the problems facing the newspaper.  Price increases will inevitably produce a further errosion in circulation, which is sure to further weaken advertising income.  A decision to increase prices at a time like this, for many businesses, is tantamount to committing suicide.  We believe that the New York Times has made the worst possible decision at the worst possible time.

Our readers will note that we have not raised the cover price here at Routing By Rumor;  reading our blog is still free!

Understandably, the bean counters at The Times are desperate.  They’re being squeezed from all directions.  But you have to wonder who made the strategic decision that may very well seal their fate.  Perhaps a price decrease, coupled with an agressive advertising campaign would have been the right course to follow.  We believe that with the increasing competition for readers that the Internet has created, along with belt tightening by consumers in the depths of this economic recession, and the drastically shrinking size (the number of pages) of newspapers over the last few years, including the Times, newspapers are increasingly becoming  irrelevant to more and more readers.  It’s not unlike a phone company that keeps increasing it’s rates, in an attempt to offset the loss of revenue from customers who are dropping their traditional phone service, and using cellphones exclusively.  Price increases will only serve to accelerate the trend.

Will the New York Times disappear completely? We fully expect to see a copy of the New York Times on the newsstand in the near future, with a headline of “THE END”.  The fact that you are reading this blog, when you could be reading The New York Times instead, isn’t helping the Gray Lady one bit.  We believe that their print editions are in mortal danger,with The Times becoming an online-only newspaper.

Better buy your Amazon Kindle now !

- Routing By Rumor

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Good News For Costco, Bad News For Consumers !

We must be getting old, here at Routing By Rumor world headquarters, because we’re not spotting deceptive consumer practices as quickly as we used to.  If you’re a regular visitor to these parts, you’ve heard us complaining about manufacturers who downsize their products, and about manufacturer’s practices we’ve termed “deception engineering“.

Case in point…  When last month’s “Costco Connection” advertising and propaganda publication  arrived (they call it a “lifestyle magazine” –  believe that, and we have an “infomercial” we want you to watch), we found great news on page 52  (View the April edition of Costco Connection here).  Costco announced, in a two-page article, that while other brands of tuna fish were shrinking their cans from six ounces to five ounces, Costco was increasing the size of their  “Kirkland Signature” house brand of tuna fish, from six ounces to seven ounces.  You don’t read good news like that every day.  Sounds like they’re making an already good value even better.  Break out the mayonnaise and strike up the band.  Happy days are here again!

Or are they?

It turns out that it’s good news for Costco, but bad news for Costco members (and, we suspect, for those cute little tuna fishies).  While it’s true that they have increased the size of their Kirkland Signature tuna fish by 16.6%, to seven ounces, consumers are not getting more tuna for their money.  The article in their Costco Connection magazine somehow forgot to mention the fact that the price per can actually increased even more than the size of the can!  Bottom line: You get more tuna per can, but the price per ounce has increased.

Silly us.  We thought we might be getting more tuna fish for the same price.  In actuality, while the size of the cans was increased a whopping 16.6%, the price per can has increased an even more whopping 20%.  Packs of eight 6-ounce cans  had sold for $9.99 in area Costco Wholesale warehouses.  Now that they have introduced packs of eight 7-ounce cans, Costco has raised the selling price to $11.99, a 20% increase.  By the way, didja ever notice how most grocery items at Costco seem to be sized so that the average price per package is around $10 or $12 ?  Throw 9 or ten items in your cart, and you just spent at least $100.  But we guess that’s the whole idea of shopping in a “warehouse” club.   And why does the price of everything have to end in “.99″, ie: $9.99, $11.99, $14.99 ?  We realize that Costco didn’t invent that pricing strategy, but if you’re shopping in a place like Costco, which says it caps  it’s margin** (see below) at 14%, it seems like a suspicious practice to cynical little us.  Like maybe if their normal markup dictates a selling price of $12.35, it gets rounded UP to $12.99, just because someone at Costco likes the number 99, and rounding it up to an even $13.00 might seem, well, excessive.  Yes, we know that 13 is not an even number, but you get the point.  Besides, 1300 IS an even number, which is sort of odd, when you stop and think about it.  Then again, maybe we’re paranoid, and when they have an item that should sell for $12.35, they decide to give their members a break, and round the price down to $11.99.  Yeah, right.  All we know is that if you look at your receipt the next time you shop at Costco, just about everything except random-weight packages of meat, poulty, fish, etc., will end in “.99″.  But even those random-weight items will have a unit price ending in “.99″, such as $5.99 per pound.

But then, there are a lot of odd things at Costco, like the fact that they will accept any credit card in your wallet, as long as it is from American Express.  And the fact that they don’t offer grocery bags, so you end up throwing 500 loose items into your car in the parking lot.  And the fact that they won’t accept any manufacturer’s cents-off  coupons, unless they are distributed by Costco themselves.  And the fact that they have pretty limited hours of operation, especially for the lowest-cost membership holders. And the fact (according to this New York Times article), that Costco refuses to accept food stamps (now issued as debit cards) for purchases.  And the fact that you’ll find horrifically environment-unfriendly packaging of many small items (especially electronic items) at Costco, which doesn’t seem to be getting Costco members too upset.  We’re talking huge plastic blister packs (which can’t be recycled, at least where we live), or combination plastic and cardboard blister packs, so that these small items are less likely to be stolen.  In our opinion,  some of the terribly excessive packaging at Costco and other warehouse-type retailers qualifies as a crime against the planet, even if it doesn’t happen to be illegal.

Now, we’ll admit that we aren’t going to stop buying Costco tuna fish.  It’s actually excellent quality tuna.  It is quite possibly the best quality tuna we have ever found, at any price.  But those good folks in Seattle must think their customers are idiots.  To be sure, the price per ounce has increased only slightly, and it’s still a good value.  But shamelessly hyping the increased size of their cans of tuna fish, and not mentioning that it’s now more expensive and was actually a better value before they increased the size of the cans isn’t what we would consider good news or being straightforward with their customers .  In our opinion, it borders on deceptive advertising.  Of course, you can’t  expect that manufacturers will go out of their way to let you know when they raise prices, downsize a product, or substitute cheaper ingredients, either.  What we don’t like is the fact that, in our mind at least, Costco’s announcement paints a picture that it’s now a better value, when the opposite is actually true.

Since when is raising the price (per ounce, per pound, per gallon, etc.) of a product, while at the same time, forcing you to buy more of it at once, a good thing for consumers ?  What ever happened to the warehouse club concept that as package size increases, so does value ?

For us, the appeal of shopping at Costco isn’t so much about price, as it is about quality.  After all, shopping at Costco means an extra shopping trip,  an annual membership fee, not getting your groceries bagged, often waiting in long lines at the checkout, limited shopping hours and very limited product selection.  Indeed,we can buy many identical items for less at the local supermarket, especially when they’re on sale or if we use manufacturer’s coupons.  What we like most about Costco is that the quality of their private-labeled items, such as their tuna fish, is generally superior to not only the national brands, but any brand at any price.  Even Jimmy Kimmel shops at Costco.  Watch Jimmy shopping at Costco on youtube.  We never knew a trip to Costco could be so much fun.

An article entitled “Costco’s Artful Discounts” (Business Week, October 9, 2008), says this of Costco CEO James D. Sinegal… “he’s constantly pushing his buyers to find creative ways to lower prices and add value while getting his managers to crank up their efficiency efforts”.  It seems to us that Costco’s new 7-ounce cans of tuna have failed to deliver the lower prices or added value which Mr. Sinegal is so fond of.  What they do seem to have provided is a lot of hype for Costco’s marketing efforts, and very likely a higher profit margin because a product’s shipping and packaging costs (especially for canned items) decrease (on a percentage basis), as container size increases.  There is very little difference in the cost of manufacturing a 7-ounce tin can, compared to a 6-ounce tin can.  In fact, in the case of Costco tuna fish, the old and new cans use exactly the same size lid; but the walls of the can are slightly taller.  Costco is also very good at finding ways to minimize shipping costs, for instance, by having their vendors redesign packages so that more of them can fit onto a standard shipping pallet.  We wouldn’t be surprised if Costco’s next “improvement” to their Kirkland signature tuna will be to offer it in new and improved square cans.  Think of all the space that will save in the pantry, and the fact that you won’t have to worry about your can of tuna fish rolling away, should you drop it.  That’s always been a big problem for households that live in hilly areas.  Now, if the United States mint would only start issuing square pennies !

1919 Australian Kooka Square Penny

1919 Australian Kooka Square Penny

So, what have we learned today, class?  We’ve learned that you get less for your money when manufacturers shrink the size of their products,  and sometimes, you get less for your money when manufacturers increase the size of their products.  Heads, you lose.  Tails, you lose.

Dear Costco… May we please have our old 6-ounce cans of Kirkland Signature tuna fish back again?  They were a better value.

Then again, maybe we should just pay our money, eat our tuna fish (mercury content and torpedoes be damned), and keep our mouth shut.  Mother always said you shouldn’t speak with your mouth full, and now it’s 16.6% more full.

- Routing By Rumor

**  “Margin” is not the same as “markup”.  For instance, if you buy an item for $1.00, and sell it for $2.00,  your markup is 100%, but your margin (the percentage of the selling price that represents your profit) is only 50%.   We’ve always felt that putting things in terms of profit margin instead of markup, especially as markups become greater, has the effect of making a seller’s prices seem more reasonable.

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