April 29, 2024

Chinese Hackers Infiltrate New York Times Computers

After surreptitiously tracking the intruders to study their movements and help erect better defenses to block them, The Times and computer security experts have expelled the attackers and kept them from breaking back in.

The timing of the attacks coincided with the reporting for a Times investigation, published online on Oct. 25, that found that the relatives of Wen Jiabao, China’s prime minister, had accumulated a fortune worth several billion dollars through business dealings.

Security experts hired by The Times to detect and block the computer attacks gathered digital evidence that Chinese hackers, using methods that some consultants have associated with the Chinese military in the past, breached The Times’s network. They broke into the e-mail accounts of its Shanghai bureau chief, David Barboza, who wrote the reports on Mr. Wen’s relatives, and Jim Yardley, The Times’s South Asia bureau chief in India, who previously worked as bureau chief in Beijing.

“Computer security experts found no evidence that sensitive e-mails or files from the reporting of our articles about the Wen family were accessed, downloaded or copied,” said Jill Abramson, executive editor of The Times.

The hackers tried to cloak the source of the attacks on The Times by first penetrating computers at United States universities and routing the attacks through them, said computer security experts at Mandiant, the company hired by The Times. This matches the subterfuge used in many other attacks that Mandiant has tracked to China.

The attackers first installed malware — malicious software — that enabled them to gain entry to any computer on The Times’s network. The malware was identified by computer security experts as a specific strain associated with computer attacks originating in China. More evidence of the source, experts said, is that the attacks started from the same university computers used by the Chinese military to attack United States military contractors in the past.

Security experts found evidence that the hackers stole the corporate passwords for every Times employee and used those to gain access to the personal computers of 53 employees, most of them outside The Times’s newsroom. Experts found no evidence that the intruders used the passwords to seek information that was not related to the reporting on the Wen family.

No customer data was stolen from The Times, security experts said.

Asked about evidence that indicated the hacking originated in China, and possibly with the military, China’s Ministry of National Defense said, “Chinese laws prohibit any action including hacking that damages Internet security.” It added that “to accuse the Chinese military of launching cyberattacks without solid proof is unprofessional and baseless.”

The attacks appear to be part of a broader computer espionage campaign against American news media companies that have reported on Chinese leaders and corporations.

Last year, Bloomberg News was targeted by Chinese hackers, and some employees’ computers were infected, according to a person with knowledge of the company’s internal investigation, after Bloomberg published an article on June 29 about the wealth accumulated by relatives of Xi Jinping, China’s vice president at the time. Mr. Xi became general secretary of the Communist Party in November and is expected to become president in March. Ty Trippet, a spokesman for Bloomberg, confirmed that hackers had made attempts but said that “no computer systems or computers were compromised.”

Signs of a Campaign

The mounting number of attacks that have been traced back to China suggest that hackers there are behind a far-reaching spying campaign aimed at an expanding set of targets including corporations, government agencies, activist groups and media organizations inside the United States. The intelligence-gathering campaign, foreign policy experts and computer security researchers say, is as much about trying to control China’s public image, domestically and abroad, as it is about stealing trade secrets.

This article has been revised to reflect the following correction:

Correction: January 31, 2013

An earlier version of this article misstated the year that the United States and Israel were said to have started a cyber attack that caused damage at Iran’s main nuclear enrichment plant, and the article misstated the specific type of attack. The attack was a computer worm, not a virus, and it started around 2008, not 2012.

Article source: http://www.nytimes.com/2013/01/31/technology/chinese-hackers-infiltrate-new-york-times-computers.html?partner=rss&emc=rss

Sunday Routine | Jeffrey Sachs: On Sundays, Jeffrey Sachs Revels in the Rites of the City

ON GLOBAL TIME I get up very early even on Sundays. Five o’clock would be normal — sometimes earlier. A lot of my colleagues and work are in Europe and in Asia, so inevitably when I get up there’s lots of e-mail traffic, some Skype, some phone calls.

THINGS TO BE DONE The work tends to be seven days a week just by its nature. The days are pretty much indistinguishable from that point of view, though the pace at home is, of course, gentler on Sundays. I make a cup of coffee, sit down to my bowl of cereal and do my e-mail and Skype. Then the newspaper tends to come around 6:30 or 7, and that’s the next hour.

MOVING OUT At this point it’s time to get ready to go out for a walk. If I can lure Hannah with me, I do that. She often is up early with a lot of schoolwork. Usually around 8:30 or 9, we can get moving to go outside.

Chester Higgins Jr./The New York Times

THE ROUTE Pretty much every Sunday that I’m here it’s a walk down Columbus more or less to Columbus Circle, then a walk up Broadway to key points along the way — Fairway, Zabar’s, Barnes Noble, a Starbucks, the farmers’ market outside the natural history museum. One of the wonderful things, and for me the biggest surprise as a new New Yorker 10 years ago, is that it is like taking a walk through your village, because you know a lot of people along the way by now.

NAVIGATING ZABAR’S You have to start with the olives, go to the nut section, the fish counter. They have the best, freshest fish, produced by the most skilled artisans. I watch them. The sculpture work is phenomenal to me — the joy of watching a nova being cut by these artisans.

Chester Higgins Jr./The New York Times

QUIET TIMES THREE Sunday afternoon is generally quiet writing, reading and thinking about a nice family dinner out in the evening. I’m working on a book right now, in the final stretches, about John Kennedy’s speeches in 1963, so the 50th anniversary of his great speech on peace. The household’s usually pretty quiet with the three of us sitting around just a few feet apart, my daughter doing her homework, my wife doing her work and e-mails and writing.

FAMILY GATHERING Starting around 5, we start to fantasize about food. My mother lives on Broadway and 68th, my sister on 72nd, our older daughter on Broadway and 70th, so we’re all in the neighborhood. And typically we have some version of a family dinner, almost always at a restaurant. Ocean Grill may be our deluxe pleasure, and we have a favorite trattoria on Columbus and 90th, Trattoria Pesce and Pasta.

LAST WALK After dinner we walk to the fruit stand at Columbus and 68th and to the Starbucks there for a cup of coffee and to buy fruit for the next day. Then, depending on the next day’s schedule, possibly a late movie. The TV stays off for months at a time. I barely know how to turn it on. That’s literally true, because it’s got too many boxes.

LAST TALK The family has the laptops open as we fade into the night. Very often I give a speech at 10:30 or 11 at night on Sunday for a talk in Asia. I close the door, see the family the next day.

UNPLUGGED Usually the day ends sometime around midnight, and starts again sometime around 4 or 5.

Article source: http://www.nytimes.com/2013/01/20/nyregion/on-sundays-jeffrey-sachs-revels-in-the-rites-of-the-city.html?partner=rss&emc=rss

Bits Blog: U.S. Banks Again Hit by Wave of Cyberattacks

For the last week, hackers have — once again — attacked the online banking sites of several American banks.

The attacks appear to be the second stage of a campaign that began in September, when a hacker group calling itself Izz ad-Din al-Qassam Cyber Fighters took credit for a series of attacks on the Web sites of Bank of America, Citigroup, U.S. Bank, Wells Fargo and PNC  that caused intermittent delays.

The group said it had attacked the banks in retaliation for an anti-Islam video that mocked the Prophet Muhammad and pledged to continue its campaign until the video was removed from the Internet. They called the campaign Operation Ababil, a Koran reference to the swallows Allah sent to attack an army of elephants dispatched by the King of Yemen to attack Mecca in 571 A.D.

In an online post on Tuesday, the group said that it had resumed Operation Ababil and that, over the last several weeks, it had focused on nine banks: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, PNC, BBT, Suntrust and Regions Financial.

“Our aim of this operation is removal of that insulting and absurd film,” the hackers wrote in an online post.

Of the nine banks, representatives of PNC, BBT and Citigroup confirmed that their online banking sites had experienced intermittent disruptions because of a high volume of Web traffic, but they said that bank accounts and customer information had not been affected. Though they were not mentioned in the group’s online hit list, Capital One and Fifth Third Bank also experienced brief disruptions.

Customers at Bank of America, Wells Fargo, U.S. Bancorp and JPMorgan did not appear to have had any trouble reaching their accounts.

In an e-mail to customers, PNC said it had experienced “an unusually high volume of traffic” to its site. “This volume of traffic is consistent with threatened cyberattacks on the U.S. banking system and is designed to cause access delays for legitimate Internet customers,” the statement said.

Debra DeCourcy, a spokeswoman for Fifth Third Bank, said that from 11 a.m. to 3 p.m. on Thursday, Fifth Third also had a high volume of traffic to its site. “We believe it was a denial of service attack designed to disrupt access to our site,” Ms. DeCourcy said. “This was an access issue, not a security issue: No customer information or data was compromised.”

In a denial of service attack, hackers bombard a site with traffic until it collapses under the load. Though banks take great pains to absorb large volumes of traffic, many experienced  unprecedented levels. Typically such attacks are deployed through a Web application, in which hackers recruit volunteers to click on a link that sends signals from their computers to a victim’s site, or through botnets, networks of infected computers and devices that do hackers’ work for them.

But security researchers who studied the attacks on banking sites last fall said hackers had used a new weapon: data centers.

Researchers at Radware who investigated the attacks for several banks found that the traffic was coming from data centers around the world that had been infected with a sophisticated form of malware that was designed to evade detection by antivirus solutions. The attackers used those infected servers to simultaneously fire traffic at each banking site until it slowed or collapsed. By infecting data centers instead of computers, attackers obtained the horsepower to mount an enormous denial of service attack.

Jenny Shearer, a spokeswoman for the Federal Bureau of Investigation, declined to comment on the source of the attacks on Friday.

In an online post, hackers said the attacks had not been sponsored by a country.

Government and intelligence officials have blamed Iran for the fall attacks and for a destructive cyberattack on computers at Saudi Aramco in August, though they have not presented any evidence to back up their claims. Tracing cyberattacks back to one particular country is difficult, security experts say, because traffic can be routed through different Internet addresses to mask their true origin.

Security researchers still do not know how the data centers used in the first wave of attacks were infected in the first place, how widespread the infection rate was and — perhaps most troubling  — whether the servers could be used to damage other sensitive targets in the future.

On Tuesday, the hackers said they had no intention of halting their campaign. “Officials of American banks must expect our massive attacks,” they wrote. “From now on, none of the U.S. banks will be safe.”

Article source: http://bits.blogs.nytimes.com/2013/01/04/u-s-banks-again-hit-by-wave-of-cyberattacks/?partner=rss&emc=rss

Instagram Reversal Doesn’t Appease Everyone

Ryan Cox, a 29-year-old management consultant at ExactTarget, an Indianapolis-based interactive marketing software company, said he had already moved his photos to Flickr, Yahoo’s photo-sharing app, where he could have better control.

Mr. Cox said the uproar this week over whether Instagram owned its users’ photos was “a wake-up call.”

“It’s my fault,” he continued. “I’m smart enough to know what Instagram had and what they could do — especially the minute Facebook acquired them — but I was a victim of naïve optimism.”

“Naïve optimism” is as good a term as any for the emotion that people feel as they put their private lives onto social networks.

Companies like Google, Twitter, Yelp and Facebook offer themselves as free services for users to store and share their most intimate pictures, secrets, messages and memories. But to flourish over the long term, they need to seek new ways to market the personal data they accumulate. They must constantly push the envelope, hoping users either do not notice or do not care.

So they sell ads against the content of an e-mail, as Google does, or transform a user’s likes into commercial endorsements, as Facebook does, or sell photographs of your adorable 3-year-old, which is what Instagram was accused of planning this week.

“The reality is that companies have always had to make money,” said Miriam H. Wugmeister, chair of Morrison Foerster’s privacy and data security group.

Even as Instagram was pulling back on its changed terms of service on Thursday night, it made clear it was only regrouping. After all, Facebook, as a publicly held corporation, must answer to Wall Street’s quarterly expectations.

“We are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work,” Kevin Systrom, Instagram’s youthful co-founder, wrote on the company’s blog.

Instagram’s actions angered many users who were already incensed over the company’s decision earlier this month to cut off its integration with Twitter, a Facebook rival, making it harder for its users to share their Instagram photos on Twitter.

Users were apprehensive that the new terms of service meant that data on their favorite things would be shared with Facebook and its advertisers. Users also worried that their photos would become advertising.

Instagram is barely two years old but has 100 million users. Last spring, Facebook announced plans to buy it in a deal that was initially valued at $1 billion. The deal was closed in September for a somewhat smaller amount.

For some users, Mr. Systrom’s apology and declaration that “Instagram has no intention of selling your photos, and we never did” was sufficient.

National Geographic, which suspended its account in the middle of the uproar, held a conference call with members of Facebook’s legal and policy teams. Afterward, the magazine, which has 658,000 Instagram followers, said it would resurrect its account.

Also mollified was Noah Kalina, who took wedding photographs earlier this year for Mark Zuckerberg, the founder of Facebook. In a widely circulated post on Twitter, Mr. Kalina said the new terms of service were “a contract no professional or nonprofessional should ever sign.” His advice: “Walk away.”

On Friday, the photographer said he had walked back. “It’s nice to know they listened.”

Kim Kardashian, the most followed person on Instagram, said on Tuesday that she “really loved” the service — note the past tense — and that the new rules were not “fair.” She had yet to update her 17 million Twitter followers on Friday, but since she is pushing her True Reflection fragrance it is a safe bet that she has forgiven and forgotten.

Article source: http://www.nytimes.com/2012/12/22/technology/instagram-reversal-doesnt-appease-everyone.html?partner=rss&emc=rss

DealBook: Yahoo Shakes Up Its Board

Marissa Mayer, chief of Yahoo.Stephen Lam/ReutersMarissa Mayer, chief of Yahoo.Daniel S. Loeb, the hedge fund manager of Third Point.Steve Marcus/ReutersDaniel S. Loeb, manager of the hedge fund Third Point.

Yahoo announced a number of changes to its board on Thursday, including the addition of Max Levchin, a co-founder of PayPal.

The company also said two directors were stepping down: Brad Smith, the chief executive of Intuit, and David W. Kenny, chief executive of the Weather Channel.

Yahoo’s latest board changes signal its continued push to become a top technology company once more, a strategy it began in July, when it hired Marissa Mayer away from Google to become its new chief executive.

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Since taking over, Ms. Mayer has emphasized ways to modernize Yahoo staples like its e-mail and the Flickr photo service, to help the company square off against ever-newer competitors.

Bringing in Mr. Levchin is intended to help with that push and show a commitment to developing enticing new offerings. He served as PayPal’s chief technology officer before forming Slide, a company that eventually helped produce Web applications for Facebook. Google bought Slide for about $180 million two years ago, and Mr. Levchin left the Internet giant when it closed Slide last year.

“Max is someone I’ve admired throughout my career for his phenomenal sense for great products and keen focus on user experiences,” Ms. Mayer said in a statement. “I’m confident that his strong product and technology expertise will be a tremendous asset to Yahoo as we work to transform the world’s daily habits.”

He will serve as the fourth director nominated by Daniel S. Loeb, the activist hedge fund manager who joined Yahoo’s board in May after mounting a prominent challenge to the company’s directors. Mr. Loeb’s other directors, besides himself, are Michael J. Wolf, a media consultant, and Harry J. Wilson, a turnaround expert who served on the Obama administration’s automotive task force.

Since joining Yahoo’s board, Mr. Loeb has helped orchestrate a number of changes, including hiring Ms. Mayer.

Mr. Loeb was introduced to Mr. Levchin by Mr. Wolf, who had served on Slide’s board of advisers. They met in Silicon Valley ahead of the proxy fight, when Mr. Loeb was recruiting candidates for Yahoo board seats.

One of the departing directors, Mr. Smith, was a main supervisor of Yahoo’s turnaround efforts, including its talks with private equity firms about a capital infusion into the Web company and its eventual deal to sell some of its stake in Alibaba back to its Chinese Internet partner.

The other, Mr. Kenny, became the Weather Channel’s chief executive in January and was formerly the president of Akamai Technologies. Mr. Kenny had briefly considered campaigning for Yahoo’s top spot last year.

Both men were stepping down to focus on their respective companies, according to Yahoo.

“Both David and Brad played critical roles in bringing me to Yahoo, so I’m especially grateful for the opportunity and trust they’ve placed in me,” Ms. Mayer said. “We will miss their leadership and partnership, and I know I speak for everyone at Yahoo in wishing them the best.”

Article source: http://dealbook.nytimes.com/2012/12/13/yahoo-said-to-plan-board-shake-up-adding-levchin/?partner=rss&emc=rss

Bucks Blog: Airlines Waive Change Fees Because of Hurricane Sandy

American Airlines jets at JFK Airport.Associated PressAmerican Airlines jets at JFK Airport.

We all grumble about airlines and their increasingly creative fees. But some airlines are doing something nice for families and teachers affected by Hurricane Sandy.

Because of the hurricane, some New York area school systems have changed the dates for the annual February school break. So airlines including Delta, American and United are waiving their usual change fees for passengers that need to reschedule trips out of area airports as a result of the rejiggered calendar.

The waiver applies only to change fees; travelers must still pay any increase in fares.

Details of the waivers vary so travelers should check with their airline before changing plans.

Delta Air Lines says tickets with an original issue date on or before Nov. 19, for travel from Feb. 15 to Feb. 24, are eligible. Flights out of five airports (John F. Kennedy, La Guardia, Newark, Westchester County (HPN) and Newburgh (SWF)) are eligible.

Leslie Scott, a Delta spokeswoman, says the airline makes such decisions on a case by case basis. She couldn’t say for sure that the Sandy-related fee waiver was the only time such a broad waiver had been made because of a schedule change occurring well after a storm’s initial impact. (All of the airlines often waive change fees because of the immediate impact of a major storm.)

But the fee waiver made sense in this case because New York is a major market for Delta, she said. “Because the mid-winter break had been on the school calendar for so long and many people had already planned trips, issuing the waiver when the schools changed the vacation dates was the right thing to do,” she said in an e-mail. Delta’s change fee is normally $150 for domestic travel and $250 for international travel.

American Airlines said its waiver applied to customers whose tickets were issued on or before Nov. 29, for travel from Feb. 15 through Feb. 24 out of La Guardia, J.F.K., Newark and White Plains (HPN). American’s change fees are typically $150 for domestic travel and from $150 to $250 for international, depending on the type of ticket.

United Air Lines said it often offered waivers “when there’s an ongoing disruption to air service at a particular airport or in a particular region,” like blizzards or storms. Its Sandy-related waiver is for travel that had been scheduled from Feb. 14 through Feb. 25 from La Guardia, J.F.K., Newark and White Plains (HPN). United’s change fees are typically $150 for domestic flights and up to $250 for international flights.

Are you taking advantage of the change-fee waiver?

Article source: http://bucks.blogs.nytimes.com/2012/12/11/airlines-waive-change-fees-due-to-hurricane-sandy/?partner=rss&emc=rss

Court Upholds F.C.C. Rule on Use of Data Networks

WASHINGTON — Cellphone companies must allow customers of competing wireless carriers to use their networks for the Internet and e-mail when outside their home territory, a federal appeals court said here on Tuesday.

The United States Court of Appeals for the District of Columbia said that just as the Federal Communications Commission required wireless carriers to allow voice-service roaming by customers of other carriers, it also can require the same, at commercially reasonable rates, for data customers — in essence, those who use smartphones, tablets and other wireless devices.

The judges’ 3-to-0 decision is a significant victory for the F.C.C. The agency has lost authority over Internet communications in recent years. And it is a big win for smaller cellphone companies, who now have the leeway to offer customers national calling and data plans, albeit ones that could generate extra charges.

On the losing side is Verizon Wireless, which had challenged the agency’s data roaming order in 2011. The company argued that the agency did not have authority to oversee data communications on wireless broadband networks and that it was imposing “common carrier” regulations on companies — essentially, regulating them like public utilities, as it does with home phone service.

Verizon said that it already had data roaming agreements so there was no need to codify the practice. “As we made clear throughout the case,” Ed McFadden, a company spokesman, said on Tuesday, “Verizon Wireless regularly enters into such data roaming agreements on commercially reasonable terms to meet the needs of consumers, and will continue to do so.”

The decision has broad implications for the agency, analysts said. “This does bode well for the F.C.C.’s ability to assert its authority in regulating wireless services,” said Andrew Jay Schwartzman, senior vice president and policy director for the Media Access Project, a nonprofit law firm that promotes consumer choice. “This is the first time these issues have come up in the context of data, which obviously is our future,” he said.

The F.C.C.’s chairman, Julius Genachowski, went further, saying the court’s opinion “confirms the F.C.C.’s authority to promote broadband competition and protect broadband consumers.”

In 2010, in Comcast v. the F.C.C., the same appeals court rejected the legal theory that the agency was using to validate its regulation of broadband Internet service. While Tuesday’s decision does not reverse that ruling, it does signal that the agency may have found a justification for its broadband rules.

Both Tuesday’s and the 2010 decisions were written by one of the appeals court’s more liberal members, Judge David S. Tatel.

John Bergmayer, senior staff lawyer at Public Knowledge, which filed a brief supporting the agency, noted that many of the legal arguments Verizon made in the case are also part of another challenge in the same court.

There, Verizon is trying to overturn the agency’s Open Internet order, a 2011 regulation that contains elements of net neutrality rules. Those rules require Internet service providers to treat all traffic equally, rather than favoring some transmissions over another.

The Open Internet case is in its early stages and has not yet been argued before the appeals court. But agency officials say they think the appeals court, in Tuesday’s case, rejected at least one of the arguments Verizon makes in the Open Internet case.

Many small wireless companies had supported the agency’s data roaming requirement, saying that it would provide more competition, particularly by allowing them to offer national service to compete with Verizon and ATT.

The large wireless providers argued that the data roaming order gave them less incentive to invest in their networks, because it would benefit rivals that would not shoulder any of the costs of building infrastructure.

Article source: http://www.nytimes.com/2012/12/05/technology/court-upholds-fcc-rule-on-use-of-data-networks.html?partner=rss&emc=rss

Sales at Nation’s Retailers Fall Short

The reporting period included Thanksgiving and Black Friday, the official kickoff of the critical holiday shopping season. Early reports regarding those days had been mixed, and the individual retailers’ dim results suggest a big challenge in the coming weeks for retailers.

Craig Johnson, a retail consultant and president of Customer Growth Partners, said that early November was weak across the board and not just in the Northeast, which was hit by Hurricane Sandy in late October.

“The traditional post-Black Friday lull, normally starting the following week, started on …Black Friday,” Mr. Johnson wrote in an e-mail. Activity in shopping malls slowed down starting about noon that Friday, he said, “right about the time the early bird specials expired, and long after the Thanksgiving evening doorbuster items were all sold out — leaving financially stressed consumers with little reason to shop” so many weeks away from Christmas.

Over all, the 16 retailers tracked by Thomson Reuters that reported results Thursday recorded a 1.6 percent increase in sales at stores that were open at least a year. Analysts had expected a 3.3 percent jump.

It was the major chains’ results that were most troubling. Target, Kohl’s and Macy’s typically promote holiday shopping heavily, while Nordstrom sales tend to give an indication of how higher-income consumers are feeling.

Kohl’s sales at stores open at least a year dropped 5.6 percent, recording negative sales in all regions. Analysts expected a 1.9 percent gain. The company seemed to be the victim of its own “showrooming,” when consumers visit stores to see the merchandise but end up buying online. The company noted “a significant shift in Black Friday-related sales into our e-commerce channel.”

Target’s sales at stores open at least a year fell 1 percent, and its overall sales for the month decreased 0.1 percent from last November. Analysts had been looking for a 2.1 percent increase. Gregg Steinhafel, chief executive, said in a statement that profitability “remained on plan.”

Nordstrom, where same-store sales fell 1.1 percent, said the problem was a weaker-than-expected clearance sale. “Customers continue to demonstrate a strong preference for fashion and newness, which has made clearance events less compelling,” the company said. Hurricane Sandy also hurt sales in the first part of the month, it said. Analysts had projected a 4.3 percent increase.

Macy’s same-store sales fell 0.7 percent, missing analyst expectations of a 1.5 percent increase. The company said it had the largest-volume Thanksgiving weekend in its history — meaning the highest number of transactions, though not necessarily sales — but blamed Hurricane Sandy for the month’s decline.

Many of the nation’s big retailers no longer report same-store sales, including Walmart, the largest, J. C. Penney and Saks. Early on Black Friday morning, Walmart sent out a statement reporting larger crowds than last year at its stores.

Specialty and warehouse stores fared better than the large chains. Costco posted a 6 percent rise in same-store sales, 0.5 percentage point above analysts’ expectations. Limited, the parent company of Victoria’s Secret, said same-store sales rose 5 percent. Gap missed its 3.9 percent estimated increase, but still posted a 3 percent rise. Stage Stores and Stein Mart, two small chains, said same-store sales rose 13.2 percent and 7.1 percent.

Some shoppers said the deals this year were not good enough to get them to buy. “We looked through the ads and didn’t see anything we really wanted,” said Lisa Apple, 46, who was shopping in Columbus, Ohio, on Black Friday. “The good deals were on TVs, but how many TVs do you need?”

Another shopper, Laura Schimpf, 32, who lives in Delaware, Ohio, and works for the Ohio state government, agreed. “The deals don’t seem too good. We really had to hunt for good ones. I’ve been looking online for three weeks,” she said.

Christopher Maag contributed reporting from Columbus, Ohio.

Article source: http://www.nytimes.com/2012/11/30/business/sales-at-nations-retailers-fall-short.html?partner=rss&emc=rss

Today’s Economist: Nancy Folbre: The Power of Plastic

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

Credit card payment networks and card-issuing banks are taking advantage of their market power to extract more and more revenue from small businesses. In last week’s post, I provided an overview of recent legal and legislative battles over rising swipe fees. But as an attentive reader points out in an e-mail, I should have called attention to how hard it is for merchants even to figure out what fees they will be charged.

Today’s Economist

Perspectives from expert contributors.

Michael Latigona of David Michael’s Salon in Berlin, N.J., provides a vivid description of the perils of a phenomenon known as “strategic price complexity”:

Please, take a credit card out of your wallet and look at it closely. Any card will do. Now let me ask you. Can you tell me whether or not your card is a MC rewards class I, II or III (all of which have different rates)? How about your Visa? What type of Visa is it you are holding? Would it be a Visa CPS Retail card; how about a Visa Rewards 1 card? Or it could be a Visa enhanced business card?

You see, each card carries a different fee for the merchant. But how can a merchant ever know what the card is to ask the customer to use a different or cheaper card that carries less fees for the merchant? You can’t. There is nothing on the cards to delineate the literally thousands of types of cards and fees associated with them.

I asked my merchant provider to give me a list to show me the different types of cards and fees associated with them. Well, that was about 20 pages long, and still, even with that knowledge, could never determine what card you are holding, how much I will be charged for such card, let alone ask the consumer to use a cheaper one.

So regardless of the ruling or future settlement, unless it is clearly marked on the card what type of card I am about to swipe, us millions of small businesses have no clue what that charge will be until we receive our monthly statement. It’s like you going to the restaurant and eating, but not seeing the bill until it comes in a month. Would you receive a service without knowing how much it will cost you? Well us small businesses have no clue what our charges will be when we swipe that card.

Did you figure out whether you are a class I, II or III Visa yet? Now even if I gave you my 20-page list of types of cards, could you still determine it? No. So us small business will continue to be forced to accept a card, and have absolutely no clue how much we will be charged for that card, and that is something nobody is talking about.

I hope you can research this and do a story on this. After all, don’t you think us small businesses should know ahead of time what we have to pay before we swipe that card? Or you could come to my salon and I could do your hair, not give you a price and send you a bill later. But I think you might not be happy without knowing how much that fabulous hair I just gave you would cost before the service and get sticker shock when you come to the register. Not quite fair to the consumer is it? And it’s definitely not fair that your credit card doesn’t tell me which one out of the thousands out there I am taking, the fees associated with that type of card and then have sticker shock each month when opening a statement because I have no clue what the actual charge will be when I accept the card.

Here’s some economic background that Mr. Latigona and other small-business owners might find useful:

The credit card payment network is an oligopoly. Visa and MasterCard dominate the market, along with the smaller networks Discover and American Express. This market structure is hard to discern, because cards themselves are issued by different banks, with different terms — and they come in many different colors. Among issuers, the top 10 credit-card-issuing banks accounted for more than 90 percent of outstanding credit card debt in 2009.

Both the payment networks and the card issuers operate in a “two-sided” market — selling their services both to consumers and to merchants. Consumers can engage in at least some comparison shopping — considering both terms of service and interest rates charged by different providers.

Small businesses, however, have long been limited in their ability to steer customers toward credit cards that charge lower fees, partly as a result of payment-network rules and partly because they fear inconveniencing their customers and reducing sales.

Payment networks and card issuers know how to exploit that fear, and they have a common interest in extracting as much revenue as possible from the merchants who rely on their services. Their market power puts them in a strong position to do so.

In a report on interchange fees (also known as swipe fees) published in 2009, the Government Accountability Office concluded that these fees had increased significantly since 1991, especially for so-called premium cards offered only to high-spending customers. It delicately pointed out that producers with market power “have the ability to charge high, noncompetitive prices” and went on to note that representatives of card issuers openly acknowledged that their fees were not determined by costs but “were one of several revenue sources.”

The G.A.O. report also noted that the number of fee categories had proliferated over time, to 60 from four for Visa and to 243 from four for MasterCard between 1991 and 2009.

Here is where the concept of “strategic price complexity” comes in. In his study of retail financial markets, Bruce Carlin of the Anderson School of Management at the University of California, Los Angeles, contends that complexity itself can increase market power, because it reduces the power that buyers would otherwise have to compare prices.

This strategy seems to be working well for credit card issuers. A recent report from the Federal Reserve notes that credit card earnings have almost always been higher than returns on all commercial bank activities. The financial sector in general commands a far higher profit rate than the retail sector.

The proposed legal settlement that grew out of the antitrust suit I described last week gives small businesses more latitude to encourage customers to use cards with lower fees. But this settlement will not solve the problem because, as Mr. Latigona points out, it is difficult for businesses to determine which cards fit this category.

Paying with plastic is technically more efficient for everyone than paying with checks or cash. But the fees we are now charged for using plastic far exceed the actual costs. They reflect the market power of a financial oligopoly.

Article source: http://economix.blogs.nytimes.com/2012/11/12/the-power-of-plastic/?partner=rss&emc=rss

Question Mark: How AARP Learns People’s Birthdays

Some recipients may feel irritated by an unwelcome reminder of an even more unwelcome milestone. Others may be excited at the prospect of Comfort Inn discounts. And some – you know who you are – are AARP haters who post scathing comments on blogs if the group is mentioned even peripherally in an article.

Then there are those people who just want to know how the organization ferrets out information that many might go to considerable lengths to conceal.

“Some people are shocked that our membership letter hits their mailbox on their exact birthday,” Lynn Mento, an AARP senior vice president, said by e-mail. “For some people who aren’t comfortable yet with turning 50, it can be seen as a bit of a ‘downer,’ but for millions of people, they’re excited about being able to take advantage of our benefits.”

The organization says it amasses birthdates from “companies that specialize in providing information to direct marketers.” Those companies, it says, gather information from a variety of sources to which people provide personal information on things like product warranties and sweepstakes forms.

When AARP learns that someone is turning 50, it sends a letter as close to the birthday as possible. It may then send five to eight follow-up letters that year, it says. The nonprofit group, which advocates on issues affecting older Americans and markets services to members, claims to have signed up more than 37 million people at a cost of $16 a year.

The Privacy Rights Clearinghouse, a consumer advocacy group based in San Diego, noted that AARP is doing nothing illegal or even uncommon — though the group may be far more adept at it than other businesses. But that doesn’t mean people on the receiving end of those letters have to like it.

“Different people have different sensitivities,” said Paul Stephens, director of policy and advocacy for the clearinghouse. “I think for a lot of people, age is something that they are very sensitive about. It’s something that they’d prefer not to be publicly available.”

Ms. Mento noted that all the information was there for the taking. “The data we – and all direct marketers in the U.S. – purchase from these companies doesn’t carry any privacy issues at all with it,” she said.

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Article source: http://www.nytimes.com/2012/11/09/booming/how-aarp-learns-peoples-birthdays.html?partner=rss&emc=rss