A tale of two Super Bowl ads: GE's smart grid and Cash4Gold

The broadcast for last February's Super Bowl XLIII, in which the Pittsburgh Steelers edged the Arizona Cardinals, featured the usual roster of ads vying for your attention and Twitter posts if not your money.

Among the more notable spots were this one for Cash4Gold, in which Ed McMahon and MC Hammer urged people to trade in their precious jewelry for cold, hard cash and this one for GE's efforts related to the smart grid, in which an animated scarecrow sings an updated rendition of The Wizard of Oz tune "If I Only Had a Brain" (shown).

The intervening months have not been kind to Cash4Gold, as you can read in the coverage by our colleagues at the Consumerist.

The smart grid has fared significantly better. About $4.5 billion in federal stimulus money from the American Recovery and Reinvestment Act of 2009 is being doled out by the U.S. Department of Energy to help utilities turn the existing power grid into a smart network. This modernization is designed to enable two-way communication between utilities and consumers.provide safer, more-efficient management of the electric grid, and save you money.

Based on what I heard during an Edison Electric Institute event last week in New York City, it seems as if the stimulus influx for the smart grid has the country's biggest power companies in good spirits.

"We've been talking about the smart grid for years," said Thomas R. Kuhn, EEI president and event moderator. "It's finally coming to fruition." He added that 58 million smart meters will be installed in U.S. homes within the next 10 years. Pacific Gas & Electric, for instance, says it has deployed smart meters for nearly 4 million of its 15 million customers in California and installs 13,000 every day.

During the event, Andrew Tang, senior director of PG&E's Smart Energy Web, talked about the "changing relationship between consumers and their electric bill" that smart meters catalyze. For example, instead of paying a flat rate for electricity, customers pay a time-of-use rate, with peak hours occurring from midday to early evening. Customers can also buy an energy orb (shown), a plug-in device that changes colors to indicate real-time changes in the price of electricity. A simple visual signal like this results in energy reductions ranging from 22 to 37 percent, according to Tang. And more-sophisticated technologies are on the way, including comprehensive in-home displays and programmable communicating thermostats, which are supposed to automatically adjust temperatures based on pricing signals they receive from the utility.

Questionable claims for $8,000 first-time home-buyer tax credit spawn IRS investigations

The $8,000 federal tax credit for first-time home buyers might have been created as a way to jump-start the housing market, but it's also apparently stirred up some fraudulent activity, according to an article in today's Wall Street Journal. The Internal Revenue Service is reportedly investigating more than 100,000 suspicious claims out of the approximately 1 million tax-credit claims people have filed.

Loose oversight of the filing process is apparently to blame. The credit "has some fraud issues because it's not being done at the time of the sale," Bonnie Speedy, national director of AARP Tax-Aide, told a White House tax-advisory panel. "People are filing for the home credit who don't have a right to file for it."

The IRS's findings could dampen efforts to extend the tax credit past its current November 30 end date, to increase it to $15,000, and even to offer it to all home buyers.—Daniel DiClerico | e-mail | Twitter | Forums | Facebook

Essential information: Learn how to buy a foreclosed home and be sure to get a thorough inspection of any property you're considering. Once you've moved in, refer to our Kitchen-Planning Guide and Home Improvement Guide interactive.

Don't fall for mortgage scams

With foreclosures in this country reaching a record high, as we recently reported, it's not surprising that more strapped homeowners are looking for some help to avoid losing their homes.

It's also no surprise that scammers are preying on vulnerable homeowners, as evidenced by this week's arrest in Westchester County, New York, of eight people who allegedly defrauded homeowners and mortgage lenders of $1.4 million.

If you're at risk of losing your home, read this story from the September 2009 of the Consumer Reports Money Adviser to avoid foreclosure and learn how to avoid getting ripped off if you're trying to refinance or modify your mortgage.

Essential information: If you or a family member are considering a reverse mortgage, read "Reversals of Fortune" to learn the ins and outs of these loans.

By the Numbers: U.S. foreclosure rate hits new high, says RealtyTrac

32 percent

Year-over-year jump in foreclosure activity in the United States, according to RealtyTrac, which tracks the foreclosure market and sells information on foreclosed properties.

In July, more than 360,000 U.S. households drew a foreclosure filing (i.e., notice of default, auction, and/or bank repossession), which represents a new monthly record since RealtyTrac began issuing its updates in January 2005. So far in 2009, 2.3 million homes have drawn a foreclosure filing. (The National Association of Realtors says that pending home sales have risen for the fifth month in a row, the first since 2003. Read more about the NAR's Pending Home Sales Index.)

Florida, California, Arizona, and Nevada—accounted for almost 57 percent of foreclosure activity in July. One in every 56 properties in Nevada got a filing—more than six times the national average—in spite of a new state law that took effect on July 1 requiring lenders to offer mediation to homeowners facing foreclosure. In Michigan, foreclosure activity fell 39 percent in July from June as a similar state law freezing foreclosures for homeowners who commit to work on a loan modification took effect on July 6.

If you're considering a reverse mortgage as a way to dig yourself out of financial woes, be sure to read "Reversals of Fortune," from the September 2009 issue of Consumer Reports. As our investigation notes, reverse mortgages "can be terrible for customers who don't understand the complicated rules governing them and how quickly high fees and interest charges can balloon. They can end up stranded in their homes without any remaining equity to cover unexpected costs later in life." e-mail | Twitter | Forums | Facebook

Essential information: If you're a foreclosure vulture and are considering investing in distressed properties, learn about inspecting and buying foreclosed homes and avoiding foreclosure-related scams.

Weekend Project: Strike out burglars with a beefed-up strike plate

Security experts stress that you should never leave doors unlocked or windows open even when you're just outside doing chores—burglars can quickly enter your home and snatch your valuables. Other thieves, however, are less subtle and will kick in a door while you're out of the house. With summer-vacation, -staycation, and -paycation season in full swing, you'll want to take steps to prevent a burglary when you're gone.

Our past tests of wood, fiberglass, and steel entry doors and door locks found that some models resisted kicks, drills and picking better than others. Adding a stronger metal strike plate with 3-inch screws that went into the framing improved the kick-in resistance of all the weakest locks; three models actually went from the lowest to the highest score in that test after the sturdier strike plate was installed.

Buy a high-security strike plate that comes with 3-inch screws (about $10) and, using your cordless drill/driver, mount the strike plate into the doorjamb with the screws. Those longer screws will lodge deeper into the framing and help the strike plate withstand kicking and hammering. See the video at right for more details.—Gian Trotta | e-mail | Twitter | Forums | Facebook

Essential information: "Keep Your Home Safe" offers many more low-cost, commonsense ways to boost home security. Also check out related stories on bump keys, burglar-alarm scams, and Rex Plus, the "Electronic Watchdog."

Avoid summertime burglar-alarm scams

One consumer rip-off that shows no sign of abating is the annual invasion of door-to-door salespeople who use dubious and intrusive tactics to sell burglar-alarm systems to unwary homeowners, a topic we covered in "Scam Alert: Don't Get Ripped Off by an Alarm Company."

Jane Driggs, president of the Better Business Bureau of Utah, stops short of advising you not to buy an alarm system from door-to-door salespeople, but says, "You just have to make sure that you verify everything the company says and do your comparison shopping as if somebody hadn't come to the door." Read the BBB's "Don’t Fall for the Deceptive Pitch of a Door-to-Door Alarm Salesman."

Law-enforcement and consumer-protection officials warn you to be wary of an alarm salesperson who:

• Attempts to alarm you by citing rashes of burglaries in their neighborhoods.

• Claims to represent or wear clothing with logos from major alarm manufacturers like GE and Honeywell. These firms don't sell directly to consumers and don't allow their logos to be used by door-to-door salespeople.

• Tries to gain entrance into your home. "I actually had a salesperson reach inside the door to show me where his system would go and ask if he could come in," says Driggs. "I have a big dog, so I wasn't worried about it, but I could see a lot of people might have let him gain admittance that way."

• Offers a free system. Experts say "free" systems usually come with higher monthly service fees. Also be sure that the contract clearly indicates what the monthly service fee will be. "If they say your charges are going to be $44 a month for a one-year term, verify that that's what the contract says—don't sign it if it isn't clearly stated," says Driggs.

"Alarm companies generally don't make money on the equipment, but on he monthly services. You should focus on the quality of the service and the length of the contract—many jurisdictions limit the length and number of automatic renewals," says Ron Walters, the Security Industry Alarm Coalition's director of field operations. Make sure the contract stipulates the length of the agreement and any associated early-termination fees.

• Says the company is ready to install your system right away. Experts say legitimate alarm companies don't mind taking the time to talk to consumers to get a comprehensive view of their security needs.

• Claims your current alarm company is defunct. A scam recently spotted by our colleagues at The Consumerist involves Orem, Utah-based Pinnacle Security. The company's reps have been implying to customers of CastleRock Security in Wichita, Kansas, that CastleRock has gone out of business, a claim CastleRock disputes. Another variation on this theme is a salesperson's claim that your current equipment needs updating. Read more about this story on the KWCH Web site.

Industry experts stress that you should deal only with well-established companies. Find out which local or state agency has jurisdiction over alarm companies and check the records of any company you're considering using. Also see whether your homeowner's-insurance company offers a discount for using certain alarm companies.—Gian Trotta | e-mail | Twitter | Forums | Facebook

Essential information: These low-cost products and commonsense procedures can boost your home security. And read about Rex, a virtual watchdog.

Modern Crimes: Florida homeowner watches her home being burglarized via the Web; perps arrested

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Buzzword: Foreclosure “Rescue”

What it means. While the White House has pledged $75 billion to stem foreclosures, plenty of scam artists are getting in on foreclosure “rescue” measures. “Just as this administration has intensified our efforts to help homeowners, those who would seek to prey on the most vulnerable also seek to intensify their efforts as well,” said Treasury Secretary Timothy Geithner at a joint press conference yesterday with the Justice Department and the Federal Trade Commission. To date, the FBI is investigating approximately 2,100 mortgage-fraud cases.

Why the buzz? The Federal Trade Commission yesterday announced a crackdown on foreclosure scams. The agency has taken legal action against the Federal Loan Modification Loan Law Center (shown), Bailout.hud-gov.us, Home Assure d/b/a Expert Foreclosure, Hope Now Modifications LLC, and New Hope Property LLC d/b/a New Hope Modifications LLC. The agency has sent letters to another 131 companies suspected of engaging in deceptive practices related to foreclosure rescue.

Fraudulent firms often create a false government affiliation, for example by including ".gov" in their URL. Their marketing literature then lures distressed homeowners with reassuring terms like “guarantee” and “97 percent success rate.” Homeowners who bite are charged exorbitant up-front fees ($1,500 to $2,500 in the case of Home Assure) for services they never receive.

The FTC also announced an outreach program to help consumers spot foreclosure-rescue scam artists from genuine housing counselors such as Hope Now, the Homeownership Preservation Foundation, and NeighborWorks America.

A foreclosure-rescue company probably isn’t legit if it does any of the following, says the FTC:

 
• Instructs you not to contact your lender, lawyer, or credit or housing counselor.

• Accepts payment only by cashier’s check or wire transfer.

• Suggests you lease your home so you can buy it back over time.

• Asks you to make mortgage payments directly to it rather than to your lender.

• Tells you to transfer your property deed or title to it.

• Offers to buy your property for cash at a fixed price that is not set by the housing market at the time of sale.

• Offers to fill out paperwork for you.

• Pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

If you feel you're getting ripped off, contact a counseling agency certified by the U.S. Department of Housing and Urban Development. You can also get advice from the Homeowner’s Hope hotline (888-995-4673) and the Institute for Foreclosure Legal Assistance.—Daniel DiClerico | e-mail | Twitter

Essential information: Read "Financial Traps Are Flourishing," from the March 2009 issue of Consumer Reports, for more advice on avoiding mortgage scams.

Tip of the Day: Smart moves when getting goods on Craigslist

Since its launch in San Francisco in early 1995 as an e-mail list of local events, Craigslist has blossomed into a sizable battalion of no-frills community Web sites offering local classified ads and forums for more than 570 cities in 50-plus countries on six continents. If you've ever visited a Craigslist.org site in your area, you know there's a tantalizing array of goods and services to buy, pick up for free, or swap. And as it has nationwide during the recession, bartering has boomed on the U.S. city sites, up about 100 percent in a year.

The key to the sites' success is "following through with basic shared values, like 'treat people like you want to be treated,'" says Craig Newmark, the founder of Craigslist who's also on the board of Consumers Union. He adds that that's "Easy to say, hard to follow through with." To be a solid citizen and to avoid disappointment over an item or, worse, getting scammed by a shady lister who might not embrace the Craigslist credo, follow Newmark's tips:

• When selling furniture, appliances, rugs, and the like, include a photo of the item with your listing and disclose all issues related to the product, including damage, wear, and performance problems.

• When you're buying, show up at the agreed-upon time and be sure your vehicle is big enough to hold the item you're buying. Also follow these personal-safety tips.

• When dealing with a party for the first time, insist on a public meeting place and consider having someone accompany you; if you don't, tell a friend or family member where you're going and bring your cell phone. Newmark advises against going to a stranger's home to pick up your latest great find.

• Finally, trust your instincts—if something seems wrong, walk away from the deal. If you encounter a scam, report the incident. Read the details on avoiding fraud.

Essential information: When you buy something through the classifieds or even at a garage or yard  sale, if applicable, ask for the warranty information and owner’s manual/user's guide. Don't sweat it if you can't get the manual or guide, since you might be able to download it off the manufacturer's site. Also, if a piece of electronic equipment you're buying comes in what appears to be a factory-sealed box, open it to be sure you're getting what you paid for and not a cheaper model or even just a a couple of bricks. (Don't laugh. It happens.) And learn how to buy on eBay so you save money and don't get ripped off.

By the Numbers: More U.S. homeowners drowning with underwater loans

8.3 million

Number of U.S. homeowners with mortgages whose homes are worth less than their loans, according to an analysis by First American CoreLogic that was reported on by CNN. The number means that about 20 percent of mortgages are underwater.

Eight percent of all mortgages are delinquent, and 6,600 homes go into foreclosure each day, says the Center for Responsible Lending; foreclosures could total 8.1 million by 2012. Some banks suspended foreclosures, but the moratoriums are set to expire this month.

Essential information: A variety of scammers and foreclosure vultures are targeting distressed homeowners, while foreclosure auctions are front-page news. You'll find advice for dealing with mortgage problems at Defend Your Dollars.org. If you don't need a life vest and instead want to invest, see our tips for buying foreclosed property and choosing a home inspector.