May 31, 2011

Tupac's alive, hackers post on PBS site

A hacker group displeased about a recent PBS documentary on WikiLeaks attacked the broadcaster's website Sunday night, posting hundreds of stolen passwords as well as fake news stories.

Among the phony news items placed on was a story about deceased rappers Tupac Shakur and Biggie Smalls being alive and well in New Zealand. The attacks continued through Monday afternoon as the network struggled to regain control of its site.

PBS said Monday that it was working to close the remaining security holes. A spokesperson said the compromised passwords were from its internal communications sites and that no personal information about the site's readers had been taken.

A group calling itself LulzSec - a combination of "security" and the Internet argot for laughs had at another's expense - claimed responsibility in an online message.

"Greetings, Internets. We just finished watching WikiSecrets and were less than impressed," the attackers wrote. "We decided to sail our Lulz Boat over to the PBS servers for further ... perusing."

First aired May 24, the one-hour "Frontline" documentary focused on Bradley Manning, a former low-level U.S. Army intelligence analyst who has been charged with unlawfully transmitting tens of thousands of diplomatic cables to WikiLeaks.

The group and its founder, Julian Assange, publicly criticized the documentary even before it aired, saying "the program is hostile and misrepresents WikiLeaks' views" and that it tries to "build an espionage case" against Assange and Manning.

WikiLeaks advocates leaking sensitive information as a means of exposing secretive government and corporate processes. But the group has come under fire by the Justice Department, which announced last year that it was conducting a criminal investigation into whether WikiLeaks violated laws about the disclosure of confidential national security information.

Manning is being held in solitary confinement. According to his attorney, he is denied sheets, forbidden to exercise in his cell and not allowed to sleep between 5 a.m. and 8 p.m.

The show presents a friend of Manning calling him "very depressed."

The PBS attackers posted a prominent message on the site that read, "Free Bradley Manning!"

by David Sarno Los Angeles Times May. 31, 2011 12:00 AM

Tupac's alive, hackers post on PBS site

May 30, 2011

Hackers appear to set sights on bigger targets

NEW YORK - This cyberattack didn't go after people playing war games on their PlayStations. It targeted a company that helps the U.S. military do the real thing.

Lockheed Martin said it was the recent target of a "significant and tenacious" hack, although the defense contractor and the Department of Homeland Security insist the attack was thwarted before any critical data was stolen.

The effort highlighted the fact that some hackers, including many working for foreign governments, set their sights on information far more devastating than credit-card numbers.

Information-security experts said a rash of cyberattacks this year - including a massive security breach at Sony Corp. last month that affected millions of PlayStation users - has emboldened hackers and made them more willing to pursue sensitive information.

"2011 has really lit up the boards in terms of data breaches," said Josh Shaul, chief technology officer at Application Security, a New York-based company that is one of the largest database-security-software makers. "The list of targets just grows and grows."

Lockheed Martin Corp. said in a statement Saturday that it detected the May 21 attack "almost immediately" and took countermeasures.

"Our systems remain secure; no customer, program or employee personal data has been compromised," the Bethesda, Md.-based company said. Neither Lockheed Martin nor federal agencies would reveal specifics of the attack or its origins. Company spokeswoman Jennifer Whitlow declined to comment further on the case Sunday.

This isn't the first time Lockheed Martin has been targeted. Nearly four years ago, officials revealed that hackers had breached Lockheed's Joint Strike Fighter program.

Officials said no classified information about the military program was compromised, but heightened protections were added.

Analysts said the latest attack would likely spur rival defense contractors like Northrop Grumman Corp., Raytheon Co., General Dynamics Corp. and Boeing Co. to take additional steps to safeguard their systems.

"I guarantee you every major defense contractor is on double alert this weekend, watching what's going on and making sure they're not the next to fall victim," Shaul said.

Boeing declined to comment on the company's network security measures. Northrop Grumman spokesman Randy Belote said in an e-mailed statement, "We do not comment on whether or not Northrop Grumman is or has been a target for cyber intrusions," adding that the company "continuously monitors and proactively strengthens the security of our networks."

Over the past several years, the U.S. government has become more aggressive in its efforts to tackle cybercrime, developing strategies to beef up government computer systems, expand cooperation with other countries and improve coordination with the private sector.

President Barack Obama declared cybersecurity a top priority shortly after taking office in 2009, setting off several government-wide reviews to develop strategies to better secure government, business and public online activity.

The Pentagon last May set up a new Cyber Command, based alongside the National Security Agency at Fort Meade, Md., in recognition of the expanding threat against the Defense Department and the need to better coordinate the nation's offensive and defensive cyber operations.

The Department of Homeland Security is also slowly employing an automated system - known as Einstein 2 and Einstein 3 - to protect government agencies' computer systems.

Still, the attacks have continued. William J. Lynn III, the deputy Defense secretary, said in January that more than 100 foreign intelligence agencies have tried to breach U.S. defense computer networks, largely to steal military plans and weapons-systems designs.

China is often pointed to as a source of cyberattacks because a large amount of malware, or malicious software, originates from there. The government denies it is involved but experts say the high skill level of some attacks suggests the Chinese military, a leader in cyberwarfare research, or other agencies might be stealing technology and trade secrets to help state companies.

Meanwhile, attacks against corporations have been growing this year. In March, RSA, the security division of data storage company EMC, acknowledged that its computer network was hacked.

The implications are serious because RSA's technology underpins the security of some of the world's most closely guarded data.

RSA makes small security devices that supply constantly changing numbers that are used as secondary passwords for accessing corporate networks and e-mail.

by Chip Cutter and Lolita C. Baldor Associated Press May. 30, 2011 12:00 AM

Hackers appear to set sights on bigger targets

May 29, 2011

Google stole our trade secrets: PayPal

Google has unveiled a service to let consumers pay merchants and download coupons with a tap of their mobile phones.
Google last week unveiled a service to let consumers pay merchants and download coupons with a tap of their mobile phones. Photo: Bloomberg

Google's ambitious plan to supplant credit cards with smartphones has thrust the internet search leader into a legal tussle with online payment pioneer PayPal, which contends Google stole its ideas by hiring away two key executives.

PayPal painted a picture of betrayal and corporate espionage in a lawsuit filed late last week in a California state court, just hours after the unveiling of the "Google Wallet" payment service in New York.

The 28-page complaint alleges the service evolved from research that eBay's PayPal had been working on for the past decade.

PayPal fingers two central culprits in the intellectual heist — one of its former executives, Osama Bedier, and former eBay executive Stephanie Tilenius.

In its response, Google contends it merely identified talented candidates to run its mobile payments service and then made them offers that proved too tempting to refuse.

"Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities, a principle recognised by both California law and public policy," Google spokesman Aaron Zamost said. "We respect trade secrets, and will defend ourselves against these claims."

The civil complaint alleges Google spent more than two years discussing a partnership that would have relied on PayPal to process payments for an application market set up for Google's mobile phone software, Android.

Google cut off the Android talks earlier this year after it had poached enough PayPal employees to set up its own mobile payments service, according to the suit. The suit doesn't directly connect the application markets system with the technology behind Google Wallet.

Google recruited Bedier, a PayPal executive for nine years, while the two companies were in talks about their alliance. After initially waffling, Bedier left PayPal to become Google's vice president of payments four months ago.

Before leaving, Bedier transferred some of PayPal's secrets to his computer and also uploaded other sensitive information to an internet storage locker called DropBox, the suit alleged. Bedier also began lobbying for Google to hire other PayPal employees working on mobile payments before he took the new job, the suit said.

Google wanted to hire Bedier so badly that Eric Schmidt, then Google's CEO, and company co-founder Larry Page got involved in the recruitment last fall, according to the suit. Page replaced Schmidt as Google's CEO last month.

Tilenius, now Google's vice president of commerce, began the wooing of Bedier with a Facebook message on July 15, 2010. As part of an agreement when she left eBay in October 2009, Tilenius had agreed not to recruit eBay employees until March of this year, the suit said.

Google, Tilenius and Bedier are all named as defendants in the suit filed in Santa Clara County. It seeks to a court order protecting PayPal's trade secrets, punitive damages and royalties from any revenue generated by Google Wallet.

It's not unusual for a company to go to court when a rival hires away a key executive. Google also was sued six years ago when it hired a top Microsoft executive to oversee its China operations. Before the case was settled, both companies filed documents that revealed colourful details about their rivalry.

Google, which is based in Mountain View, California, also was among six Silicon Valley employers who got into trouble with the US Justice Department for agreeing not recruit each other's top engineers and other workers with specialised skills. The companies settled the allegations last fall by agreeing not to enter into "no-solicitation" agreements for five years. Neither eBay nor PayPal were among the employers involved in that settlement.

by May 30, 2011

Google stole our trade secrets: PayPal

Google Wallet replaces cash and credit cards for Android users; PayPal sues |

news_052711_google_wallet.jpgGoogle Vice President of Payments (and former PayPal executive) Osama Bedier demonstrates how Google Wallet will work during a news conference, Thursday, May 26, 2011, in New York. Google wants the smartphone to be the wallet of the future, a container for digital credit cards, coupons, receipts and loyalty cards that can be "tapped" to terminals in stores.

Goodbye, cash. Goodbye, credit cards. Hello, Google Wallet.

Google launched its new mobile payment service, called Google Wallet, in New York on Thursday. Demonstrating on an Android smartphone, users can tap credit card icons on their phone and hover it in front of an NFC (near-field communication) device in stores and restaurants. Basically, instead of swiping a credit card, they could just wave their phones at check-out and the amounts would be deducted from their accounts.

Google announced San Francisco and New York would be the first cities to test their product, working in cooperation with MasterCard and Citibank. Consumers across the country will get to try it out as early as this summer.

According to the Associated Press, Google plans to make money by selling coupons and advertising that go along with the service. The company predicts it'll be the strongest form of advertising yet, appearing at the exact moment when shoppers are about to make purchases and might be swayed by discounts and competitor prices.

Mashable reports that iPhone and Windows Phone 7 devices are not yet compatible with Google Wallet, but they do plan to "work with all platforms especially if they build NFC into their hardware." However, the company couldn't provide any details or numbers, but did name retailers who have signed up, including Macy's, American Eagle and Subway.

Shortly after Google announced its new service, PayPal filed a lawsuit against the search engine giant, including two former PayPal executives who are now in charge of mobile payments at Google. The 28-page complaint alleges "misappropriation of trade secrets" and "breach of fiduciary duty."

TechCrunch reports Google was in negotiations for two years to have the eBay-owned payment company manage the new mobile service, but instead hired PayPal's Osama Bedier -- the same executive negotiating with Google. The lawsuit claims Bedier may have used knowledge of PayPal's own plans to launch mobile payments independently for Google's gain. Bedier had been with PayPal for nine years.

Meanwhile, Visa is working on its own pay-by-phone system with several large banks, including Bank of America and Wells Fargo. CNBC reports Visa's own virtual wallet will be commercially available later this year.

What do you think of Google Wallet? Could you see yourself replacing credit cards with smartphone payments?

by Geoff Herbert May 27, 2011

Google Wallet replaces cash and credit cards for Android users; PayPal sues |

Google Wallet app lets you tap to pay with smartphone -

NEW YORK — Ready to pay for everything via your smartphone? Google is the latest tech company banking on it. On Thursday the search giant launched Google Wallet, a mobile app to pay for goods via your smartphone. Google also announced Google Offers, for mobile discounts you can redeem by tapping your phone at participating merchants, or by showing the bar code as you check out.

Google is partnering with Citi, MasterCard, First Data and Sprint and merchants including Subway, Macy's, Walgreens and American Eagle Outfitters. Google says it is building an open solution to other financial companies and retailers.

"Your phone will be your wallet — just tap, pay and save," says Stephanie Tilenius, vice president of commerce at Google. Adds Osama Bedier, vice president of payments at Google, "This is just the beginning." Consumers will be able to store credit cards, loyalty cards, gift cards and mobile offers on their phones.

Google isn't the only one at it, of course. The Google announcement follows word that Square, a company headed by Twitter co-founder Jack Dorsey, will also pursue mobile contact-less payments. Visa has invested in the start-up. Financial-software publisher Intuit is also going after mobile payments.

For mobile payments to take off, consumer behavior will have to change. But Google points out that while a decade ago 70% of consumers were reluctant to pay for stuff online, today 70% access their credit card information over the Internet. Beth McCormick of American Eagle says, "For our customers, smartphones are a way of life. This is the next frontier of how customers are going to shop."

At the start, a Google Wallet will give access to a Citi MasterCard. But it will also include a prepaid Google card that can be funded by any of your credit cards. Google also says it is adding multiple layers of security. "It was a fundamental consideration from Day 1," Bedier says.

Citi's Paul Galant, CEO of Global Enterprise Payments, says this is of "strategic importance" to Citi in its vision to become "the world's digital bank."

Google will begin initial field testing of Google Wallet in New York and San Francisco this summer. To start, Google Wallet will be compatible with Nexus S 4G, available on Sprint. The Wallet app will connect only to MasterCard PayPass terminals at first, of which there are more than 135,000 in stores and restaurants.

by Edward C. Baig USA Today May 26, 2011

Google Wallet app lets you tap to pay with smartphone -

Banks launch clearXchange transfer system to rival PayPal - May. 25, 2011

Major banks launch transfer system to rival PayPal

NEW YORK (CNNMoney) -- You will soon be able to pay your friend back for dinner or give your kid $100 by simply logging in to your bank account and entering their name and phone number. No cash, check, PayPal or silly app required.

Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM,Fortune 500) and Wells Fargo (WFC, Fortune 500) announced Wednesday that they will launch a system, called clearXchange, allowing customers to transfer money electronically through their existing accounts.

The new cash transfer system is a direct attempt to rival PayPal, owned by online auctioneer eBay (EBAY, Fortune 500) and currently the dominant player in the person-to-person payment space. This kind of streamlined venture is rare among banks, who are constantly battling each other for customers.

"We call this a model of 'coopetition,' where we're actually cooperating with our competitors," said John Feldman, general manager of clearXchange and a former employee of Bank of America.

11 new tools for your money

As more customers shift away from traditional check and cash payments, having an online transfer system will be crucial to keeping customers loyal, Feldman said.

Whereas PayPal and other systems require you to create an account separate from your bank account to transfer money, this new service will let customers simply log in to their existing bank account and enter the recipient's name and e-mail address or phone number.

The person they're paying will then instantaneously receive an alert that money is being sent their way.

"We are the air traffic controllers, taking the messages from the separate banks and transferring them to consumers," said Feldman.

For now, the person on the receiving end must belong to one of the three member banks, but they anticipate that other large financial institutions will soon join the venture, and that it will one day be possible to transfer money to anyone.

ClearXchange will charge each financial institution to use the service; each bank can then decide whether its customers need to pay a fee for using it. Currently, customers aren't charged.

Bank of America and Wells Fargo are testing the new service for customers in Arizona, and Chase will join the tests soon. Soon after completing the pilot in Arizona, the banks will expand the testing to a second region.

Your bank is profiling you!

In about a year, the banks expect to be ready to roll out the service nationally.

ClearXchange says its system will be more convenient and secure, since it doesn't require consumers to provide checking account details like routing numbers. It will also allow customers to see just how much money they have in their account before they transfer money to someone else.

While PayPal is an obvious rival, the banks said traditional checks and cash are its biggest competitors.

"People are used to doing it the old-fashioned way, with writing checks or paying cash," said Mike Kennedy, head of payments strategy at Wells Fargo. "But there's a large and growing market for online person-to-person payments, and we think clearXchange is the best thing in the market for it."

by Aaron Smith and Blake Ellis CNNMoney May 25, 2011

Banks launch clearXchange transfer system to rival PayPal - May. 25, 2011

May 28, 2011

Yahoo CEO vows to clean up mess tied to spinoff in China

SAN FRANCISCO - Yahoo Inc. CEO Carol Bartz found herself in a familiar position Wednesday: assuring stock-market analysts that she will clean up a mess damaging the long-slumping Internet company's market value.

The latest challenge to confront Bartz in her nearly 2 1/2-year tenure emerged two weeks ago. That's when Yahoo jarred investors by informing them of an abrupt change affecting the value of its 43 percent stake in Alibaba Group, one of the leaders in China's rapidly growing Internet market.

Alibaba had spun off a potential jewel, its online-payment service Alipay, into a separate company controlled by its CEO, Jack Ma, without giving Yahoo anything in return.

Yahoo's stock price has plunged by 13 percent since the May 10 revelation, leaving Bartz little choice but to place the issue at the top of the agenda for a meeting that Yahoo had scheduled to provide an update on its turnaround strategy. The Associated Press monitored the San Jose meeting through a webcast because Yahoo wouldn't allow reporters to attend.

Although she provided few specifics, Bartz spent most of the first hour trying to reassure analysts that Yahoo will be "appropriately compensated" for the loss of Alipay from its investment portfolio.

Bartz made her points flanked by Yahoo's chief financial officer, Tim Morse, and company co-founder Jerry Yang, who also is a member of Alibaba's board of directors. Both men flew to Asia last week to discuss the Alipay matter with Alibaba's major shareholders, who include Ma and Japan's Softbank Corp. Bartz said all the key shareholders have committed themselves to negotiating a fair payment for the Alipay spinoff and preserving the value of another Alibaba asset, online auction site Taobao.

"This is a very complex situation," Bartz said. "We have approached this thoughtfully and methodically. We think this is the right path to protect shareholder interests."

Bartz wouldn't predict when the Alipay issue would be resolved.

Yang, who spent 19 months as Yahoo's CEO before being replaced by Bartz in January 2009, said the Alipay spinoff was necessary to ensure that Chinese regulators licensed the service. The licensing wouldn't have been possible if Alipay wasn't wholly owned by Chinese citizens, Yang said.

Yahoo said Alibaba notified it about the change in Alipay's ownership on March 31. None of the executives explained why Yahoo waited nearly six weeks to disclose it. "We believe our disclosure was timely and appropriate," Bartz said.

by Michael Liedtke Associated Press - May. 26, 2011 12:00 AM

Yahoo CEO vows to clean up mess tied to spinoff in China

21st-century money laundering: Pre-paid cards anonymous, easy to transport

BOGOTA, Colombia - Forget bulk cash. It's not the most convenient cross-border conveyance for a 21st-century money launderer.

A safer and increasingly attractive alternative for today's criminal is electronic cash loaded on stored-value or prepaid cards. Getting them doesn't require a bank account, and many types can be used anonymously.

U.S. crime fighters consider the cards a burgeoning threat that regulators haven't adequately addressed.

In the past year, said John Tobon, a senior U.S. Immigration and Customs Enforcement agent, the cards have become the preferred means of paying couriers who transport illicit drugs across the U.S.

No one knows how big a role the cards play in moving more than $20 billion in drug earnings that U.S. authorities estimate crosses from the U.S. to Mexico annually. While anyone crossing that border with $10,000 or more in cash must declare it, prepaid cards are legally exempt.

"These prepaid cards are offering them (criminals) a great alternative to sneak into our financial system," Tobon said.

It was bank and wire-transfer records that enabled law enforcement to identify the 9/11 hijackers and their overseas cells. "Had the 9/11 terrorists used prepaid (stored-value) cards to cover their expenses, none of these financial footprints would have been available," a U.S. Treasury Department report observed.

The cards are barely distinguishable from credit or debit cards and the most versatile let users reload them remotely without having to reveal their identity. Some cards can process tens of thousands of dollars a month.

"I'm not so sure we have a sophisticated understanding of how to deal with this," said Richard Stana, who oversaw a report on prepaid access for the General Accounting Office, the U.S. Congress' research arm.

Prepaid cards also are changing the way law-abiding citizens, businesses and governments handle money. Walmart uses them to distribute payrolls, U.S. government agencies to deliver benefits and migrant workers to send money home.

In the U.S. alone, an estimated $107 billion moved on branded prepaid cards last year, according to Aite Group, a financial-research firm. Globally, the Boston Consulting Group forecasts, transactions with reloadable prepaid cards will reach $840 billion a year by 2017.

An October report by the 34-nation Financial Action Task Force cites just a half dozen laundering cases involving prepaid cards in their short history - each involving from $200,000 to $5 million and most in the U.S.

The Treasury wants businesses selling cards that can be used internationally to keep customer identity records and report suspicious transactions. That would affect more than 43,000 U.S. sellers. The prepaid-card industry objects, saying that would hike administrative expenses, with the costs passed on to consumers.

by Frank Bajak Associated Press May. 24, 2011 12:00 AM

21st-century money laundering: Pre-paid cards anonymous, easy to transport

May 22, 2011

Online reviews: Which sites can you trust?

Everybody has an opinion about food, travel and the products they use. Online, there are plenty of places to express them.

Anyone with a smartphone, iPad or computer can write and post commentary on dozens of websites that accept unsolicited reviews of restaurants, travel, consumer products, home-repair services and many other buying categories.

Once reserved for stuffy, often anonymous critics at newspapers and magazines, such social commentary has become the avocation of millions of people. Their opinions have reshaped how businesses respond to customers, recast their marketing strategies and rewired how those looking for information find it before they buy.

For many businesses, such public scrutiny can be jarring at first. Some go on the defensive. But savvy operators use criticism as important customer feedback and an opportunity to improve.

For new businesses, reviewers add to the tension of a make-or-break situation. A positive write-up can bring new customers; a negative one can keep them away.

As the commentary culture has grown, all the opinions have influenced sales and spun off further business opportunities. They help online retailers such as and sell products to consumers, sight unseen. They also are the main attraction of review sites such as Citysearch, Yelp and TripAdvisor, which rate businesses according to the reviews and also sell them advertising and other business services.

All the openness, and all the dollars at stake, carry the potential for abuse.

Many review sites sell advertising and sponsorships to businesses that are reviewed on their sites, creating the possibility of unfair play.

Review site Yelp continues to be dogged by complaints from business owners and executives who believe they are being "blackmailed" into buying advertising.

And when anyone can post a comment, it's possible to stack the deck with positive or negative reviews by authors with ulterior motives.

To prevent people from gaming the system, the websites employ sophisticated filters and computer programs to weed out bogus commentaries.

Influencing buyers

Anything with an address is fair game for so-called "Yelpers," who review everything from restaurants to chiropractic clinics on the burgeoning online site Yelp .com.

Hotels, restaurants and tourist attractions are the target of reviews submitted to TripAdvisor, which is owned by travel-booking-site Expedia.

Angie's List focuses on services providers, from doctors and dentists to roofers and house cleaners.

Other review sites include Zagat, Urban Spoon, Citysearch, Restaurant DB among countless others. Travel-booking sites, including Priceline and Yahoo Travel, also encourage travelers to post reviews.

Retailers' market research shows that Internet shoppers increasingly rely on online reviews to make decisions and that those who browse a site's top-rated products list were significantly more likely to make a purchase than those who didn't. The review-readers also typically spent more per order.

Russell Dicker, director of community for, said that user-generated product reviews are a critical aspect of online retailers' operations.

"They make the system work," he said.

Product reviews helped Amazon sell more than $34 billion worth of goods via the Internet in 2010. Dicker said reviews ease online shoppers' anxiety about buying products sight unseen and also help drive traffic to Amazon's Web site. When people search for a product online, they often start by reading reviews which provide links to sellers.

Millions of voices

For review sites, the reviews are the main draw.

Anything with an address is fair game for so-called "Yelpers," who critique everything from restaurants to chiropractic clinics on

Hotels, restaurants and tourist attractions are the target of reviews submitted to TripAdvisor, which is owned by travel-booking-site Expedia. The estimated 45 million hotel and restaurant reviews posted on TripAdvisor draw 40 million visitors a month to its website. That traffic enabled the company to generate $480 million last year in advertising and booking revenue.

Angie's List focuses on services providers, from doctors and dentists to roofers and house cleaners.

Other review sites include Zagat, Urban Spoon, Citysearch, Restaurant DB among countless others. Travel booking sites, including Priceline and Yahoo Travel, also encourage travelers to post reviews.

Yelp's 17 million posted localized reviews of restaurants, retail stores and other businesses attracted 50 million visitors to its site last month, up from 46 million the month before.

Yelp is privately held and doesn't release financials, but analysts at Up Next Research estimate the company took in $57 million in 2010 and is on target to pass $100 million by 2012.

Because of the growing importance of reviews, companies such as Amazon, Yelp and others go to great lengths to cultivate and nurture their colonies of reviewers.

Contributors can range from one-time authors eager to share a good or bad consumer experience to serial commentators such as Pennsylvania resident Harriett Klausner, who, at last count, has written 24,514 book and product reviews for

While the companies typically don't pay for reviews, top contributors at Amazon can be inducted into its exclusive Vine program and receive products from manufactures for their use and review. While Harriet Klausner is Amazon's most prolific reviewer, A. Chandler is Amazon's top critic, based on the 27,127 out of 27,816 readers that found her 467 reviews useful.

At Yelp, which opened a 200-plus-employee regional sales office in Scottsdale last year, so-called "elite" reviewers are regularly feted at social events hosted by the company. Yelp reviewers are nominated, sometimes by themselves, to become "elites" and are evaluated based on the quantity and quality of their reviews. Readers on most sites can rate the quality and usefulness of the critiques.

"The reviewers are constantly being reviewed themselves," said Gabi Messinger, director of marketing for Yelp's southwest regional office in Scottsdale.

Every day, Yelp picks a top review in each of the numerous markets it covers to be prominently featured on its site.

Sarah Grimwood has written 245 reviews of Phoenix-area restaurants and businesses since becoming a "Yelper" in 2007. Besides creating a platform for her comments, Grimwood has found Yelp an important social network and a source of many friendships.

"I didn't know anybody when I moved here and met most of my friends through Yelp," she said at a recent function for "elite" Yelp reviewers at Luci's Healthy Marketplace in central Phoenix.

Andrea Karetsky, whose Yelp mantra is "party like a rock star," has written 143 reviews and also spends a lot of time socializing with fellow "Yelpers."

Kurdy Sin of Glendale is attracted to the writing process and constantly strives to improve his commentary.

"I love to write reviews," he said.

Sin has created 115 reviews and hopes to have one selected as the top review of the day in the Phoenix market.

Army of reviewers

When everybody has an opinion, every business has to be on alert.

On opening night for Sam Fox's latest restaurant, the Arrogant Butcher, there were practically as many critics as customers at the downtown Phoenix restaurant.

"They were out in force with their cellphones and iPads, taking pictures of the food and making notes," Fox said.

His company, Scottsdale-based Fox Restaurant Concepts, operates 30 restaurants that are constantly being reviewed on Yelp and other sites.

There are 91 reviews of the Arrogant Butcher already posted on Yelp and 276 criticisms of Fox's more established True Food Kitchen.

Fox takes his reviews in stride.

"We don't live and die by reviews," Fox said, offering that some can be off-base. "If we get a bad review of a restaurant that is packed every night with satisfied customers, we take it with a grain of salt."

But he acknowledges the company can't ignore the commentary.

"If it's a valid complaint, we look at it as an opportunity to improve," he said.

With more people relying on reviews to make decisions about where they spend their money, they can make or break a new business. And for entrepreneurs unaccustomed to public criticism, a bad review can be a jarring experience.

Erik Angermeier, owner of Slippery Pig Bike Shop in central Phoenix, said he was shocked when a Yelper complained about the dirty couch and being offered used parts for less money.

"Most people are happy to have the option of getting parts for less money," he said.

Then, he said, he got a call from a salesperson at Yelp offering to "improve the company's online reputation" for $300 per month.

"I took it as if they were offering to take down the negative review," he said.

He turned them down and now wonders if the spate of negative reviews of his business is a result of his refusal to advertise.

Business of opinions

How opinions pop up on sites, and how the purchase of advertising can alter that, remains a big focus for the businesses being rated.

The sites insist that buying an ad or extra services has no bearing on the nature of the reviews they publish. But when a site is selling services to businesses of which it also is publishing reviews, there is at least the potential for abuse.

Basic hotel, restaurant and business listings on TripAdvisor and Yelp are free - but can be enhanced for a fee.

Businesses that advertise on Yelp pop at the top of searches, ahead of competitors with better ratings. Those businesses don't have to worry about their listing being cluttered with Google ads from competing establishments.

On TripAdvisor, an extra fee nets a video and a link that, for example, allows customers to book directly with a hotel instead of through a booking site such as Expedia. And companies such as Expedia, which owns TripAdvisor, can pay to be listed as the top default booking site.

Restaurant-review site Zagat .com gets around the potential appearance of impropriety by charging consumers to access the site and not accepting advertising from restaurants.

Angie's List requires reviewers to identify themselves and take an oath of honesty. Only businesses with high consumer marks are allowed to advertise.

At other sites, you have to take executives at their word that there "it doesn't happen."

Adam Medros, vice president of product at TripAdvisor, said that a business owner generally would not be happy with a bad review.

But he added, "There is no correlation between buying an ad and the reviews that appear on our site."

He said the company encourages advertisers to publish a response to a negative review and to respond to legitimate criticism.

Yelp controversies

Yelp continues to be the subject of reports from small-business owners who contend that Yelp salespeople offer to hide negative reviews in exchange for advertising, a practice the company denies.

Yelp spokeswoman Stephanie Ichinose acknowledged that sales people may refer to a business' reviews when making a sales call but never would offer to quash negative comments in exchange for advertising.

"Some businesses may leap to that conclusion, but that's not the case," she said.

Last year, two law firms filed a class-action lawsuit against Yelp on behalf of a Long Beach, Calif., veterinary hospital that drew that conclusion.

The suit, which accused Yelp of "implied extortion," was dismissed by a U.S. District Court judge in April, who noted that the claims could not be backed up.

Owners of the veterinary hospital alleged that negative reviews reappeared when the business refused to buy advertising and that Yelp salespeople said they could control which reviews appeared on the site.

Yelp denied the allegations and said the business owners misunderstood how the site works.

Still, Yelp made changes. It took steps to enhance the integrity of its site by allowing access to reviews that had been flagged by its filters and quashed and also did away with the practice of allowing advertisers to feature a favorite review.

Yelp employs a complex system of algorithms and teams of investigators that weed out and remove from the site reviews that contain inaccuracies or authored by friends of the business, disgruntled employees or competitors attempting to manipulate the process.

"People can look at the reviews that get taken down and see there is no pattern of manipulation," Ichinose said.

Gaming the system

Because anyone can post a review, it's possible to take advantage of the system. Business owners could solicit friends to write positive reviews - or write them themselves. On the other hand, competitors or disgruntled employees could type in negative ones. Most reviews sites employ elaborate filters and algorithms to weed out potential bogus commentary.

Many of the complaints from businesses about Yelp have to do with positive reviews being taken down from the site while negative ones are allowed to remain.

"Nobody complains when a negative review gets taken down," Ichinose said, adding that some of those positive critiques may have been written by friends of the business owner.

"It's important to have controls in place so the site can remain trustworthy," she said.

At most businesses, other reviewers and readers also can flag reviews that seem suspect.

At and other sites, flagged commentaries are turned over to a team for analysis and possible suppression.

"We're always on the lookout for people trying to game the system," said Tiffany Herklots, a spokeswoman for the restaurant rating site.

Ichinose acknowledged that legitimate reviews could be caught by Yelp's filters and suppressed, but that the company continued to fine-tune and improve its monitoring systems.

"When we started in 2005, it was mainly looking at a review and asking ourselves, 'Does this seem legitimate?' " Ichinose said of the review-filtration process. "Now it's gotten very complex and a lot more accurate."

TripAdvisor also employs computer programs and algorithms to weed out bogus reviews. On its site, hotels and restaurants suspected of trying to game the system are identified by a red badge.

"The red badge tells users that this hotel tried to manipulate the system," said TripAdvisors' Medros. "It's a huge deterrent and can cost a hotel a lot of business."

Medros suggested that instead of complaining about reviews and trying to beat the system, hotels, restaurants and other businesses should put effort into improving their products and responding to and addressing customer complaints.

"Travel is a variable experience and not every day will be good," he said. "Most consumers realize that and look at the body of reviews and not a single out the negative ones."

A lot of negative reviews, of course, could indicate a problem, he said.

"It is critical, then, that the owner responds," Medros said.

Some popular review sites


Focus: Hotels, restaurants, attractions.


Website visits per month: 50 million.


Focus: Restaurants, retail stores, businesses.


Website visits per month: 50 million.


Focus: Hotels, restaurants, retail shops, nightlife.


Website visits per month: 15 million.

Angie's List

Focus: Household, personal and medical services.


Website visits per month: 1.5 million.


Focus: Restaurants.


Website visits per month: 300,000.

by Max Jarman The Arizona Republic May. 22, 2011 12:00 AM

Online reviews: Which sites can you trust?

Bartab smartphone app available at 70 metro Phoenix bars

Bartab application

Bartab, a smartphone application new to the Valley, is allowing users to buy drinks for their friends - even if they're not in the same bar.
Partiers at a Scottsdale club can order a cold beer for friends at a bar in Glendale, or even Manhattan.
It's all possible through a smartphone app developed in San Francisco called Bartab, now in use at more than 70 Valley bars.

The app allows users to buy vouchers for specific drinks and then redeem them at selected bars.

"I noticed how people could send fake drinks to their friends on Facebook, and thought, let's make this real," creator Steve Johnson said.

Users download the free app and connect to it via Facebook. Once they've chosen a participating bar in one of 15 U.S. cities, the app shows what drink deals are available, typically $1 for a beer, a shot or a well drink. Then the user selects recipients and pays through a secure transaction system.

At the bar, users show the bartender the voucher on their phones and pay an additional $1 to receive the drink.

For users such as Dennis Moran, 38, of Scottsdale, the app is a great way to save money. He has used it at the Lodge, Upper Deck Sports Grill, Chop and Wok and Loco Patron, all in Scottsdale.

"It's very convenient and makes going out affordable and simple," Moran said. "I saw that the Chop and Wok was on the list, and hadn't been there in 20 years, so I thought I would try it out since I live nearby. I've been there a few times now, and have been checking out other new places, too."

For bars, the app provides unique marketing. They get customers in the door, and when the drink is redeemed, a notification is posted on Facebook, visible to the customer's friends.

Athena Pauly, general manager for the Canyon in Scottsdale, formerly Fox Sports Grill, said for two months Bartab has been creating a buzz at her restaurant, bringing in about five app users a night.

"Social marketing is so crazy right now, so I decided to give the app a test run," Pauly said. "It showed up on Facebook that I bought a friend a drink, and a few of my friends were jealous. It's quickly caught on.

"And since we changed the name and concept of our restaurant, this is a good tool to utilize so we can spread the word."

David Wachs, founder of Chicago-based mobile marketing company Cellit, said the app is a smart idea, but it begs some questions.

"It leverages social networking and this whole viral aspect," Wachs said. "The bar has brought the person in once, and you get that Groupon effect. But what do you do now? How do you communicate to the user after they leave the bar? And how do you get them back?"

Wachs says many coupon programs get customers in once for their cheap drink, but the customers don't linger, or return, and the bar ends up losing money.
But Pauly said the app is paying off so far.

"We offer drinks like domestic beer and well drinks, something we won't lose on, and it brings people in the door," Pauly said. "Usually people stay here for some appetizers and additional drinks."

Another issue is fraud, but Johnson said his program is low risk.

Bartenders are supposed to ask customers to hit the "I got my drink" button after being served, so they can't use it again.

Users only need to be 17 years old to download the app, making them able to purchase vouchers and send drinks. But it's up to the bar to check IDs. Users are asked to confirm that they are over 17 when downloading the app, but there's little oversight.

The Bartab application is available in iPhone App Store and Android Market, and more information about the app can be found at

by Kellie Hwang The Arizona Republic May. 19, 2011 12:13 PM

Bartab smartphone app available at 70 metro Phoenix bars

Smart homes in Phoenix area run by iPads, iPhones

David Wallace/The Arizona Republic Home builder Rod Cullum demonstrates setting an alarm with an iPad at the front door of the luxury new home development The Village at Paradise Reserve in Paradise Valley.

Instead, you may fire up an app on your smartphone, log in, press a button and hear the front door click open.

Homebuilder Rod Cullum is almost there. With his new luxury homes, the Village at Paradise Reserve in Paradise Valley, buyers still get a key to their front door, but they also get an iPad in their welcome basket.

How the iPad controls new luxury homes

Using that Apple iPad or an iPhone, homeowners can perform functions from viewing their security cameras to closing their window shades and turning on (or off) every light in the house. They can also let a visitor through the main gate or check to see whether a garage door was left open.

"You can be anywhere in the world and control your house from that iPad," Cullum said, adding that he chose an Apple-based Savant home-automation system. "I could be in my place in Utah and see if someone is swimming in my (Phoenix) pool. I could be in London . . . ."

Cullum, whose Paradise Reserve homes start at about $1.5 million, isn't the only homebuilder embracing smart-home features. Even homes starting at prices under $200,000 are starting to offer Web-based automated perks.

At Meritage Green homes throughout the Valley, homebuyers can use a smartphone application to adjust their thermostat and can see their energy production, usage and hot-water temperature through an app tied to their Echo solar systems.

And at Shea Homes' Trilogy at Vistancia in Peoria and Encanterra Country Club in Queen Creek, new homebuyers can unlock at least one door remotely, turn on a light and adjust their thermostat using a Schlage Link smartphone app.

Hal Looney, president of Shea Homes active-lifestyle communities in Arizona, recently demonstrated how a homeowner, while at work or away, can let someone in their home with a touch of the smartphone screen. People with second homes or vacation homes especially appreciate such automated features, Looney said.

Although new homebuilders look at home automation as a good value-added perk, homeowners don't have to buy new construction to get some of these features.

In the age of smartphone and computer-tablet applications, automated systems are getting increasingly affordable.

On the lower-tech end of the spectrum, homeowners can buy for less than $50 light switches with motion sensors that turn on automatically when someone enters a room and shut off when the room is empty. Faucets that turn on and off just by lightly touching the spout or handles are now sold at home-improvement stores.

Homeowners can buy automated irrigation systems that monitor local weather-service information and adjust irrigation levels to prevent overwatering. Several area homebuilders, including Shea Homes, include the automated WeatherTRAK irrigation systems to save water in communities.

And through a local home-automation specialist or, homeowners can buy systems that help them control lighting, appliances and anything that can talk to a Web-enabled system through their smartphone.

The ability to control the main functions of a home from one Web-enabled device can make running a household a little easier. Think the Jetsons or Bill Gates' smart mansion, said to be nicknamed Xanadu 2.0. No home-automation system can cook dinner - yet, but it can turn on the spa on your way home from work and have your favorite song playing as you walk through the door.

"One of the things I think automation adds is just peace of mind," said Cullum, who has offered automated features in his custom homes for years. He likes the simplicity of the Apple-based Savant system, which was installed by Cyber Sound in Scottsdale.

"You don't have to keep track of so many things."

Adds Cullum: "They haven't figured out how to make it to do laundry yet. That would be James Bond cool."

Home automation

Want an automated home? Home-automation gadgets and systems linked to smartphone and computer-tablet applications are getting increasingly affordable. Here's a sampling of automated home features.

- Light up a room. Occupancy sensor switches, $20 to $40 at home-improvement stores, automatically turn on the light when someone walks into a room and turn it off when the room is empty. An energy-saving move, many homebuilders now install occupancy sensor switches in walk-in closets and bathrooms where people often forget to turn off lights.

- Unlock a door. Schlage Link is a system that lets homeowners control Schlage door locks, Trane thermostats, Schlage security cameras and plug-in lights or appliances via its smartphone application. Some local Lennar and Shea Homes houses include the Schlage Link system for new homebuyers. A Schlage wireless-keypad deadbolt starter kit, which lets homeowners unlock a door remotely, costs $299.99 plus an $8.99 monthly fee. A Trane thermostat, security cameras and plug-ins that allow lights and appliances to be controlled remotely can be added for an additional fee. For details, visit

- Adjust a thermostat. Locally, homebuilders Meritage, Cullum Homes, Trend Homes and Joseph Carl use the Echo solar system by EchoFirst. The system produces both energy and hot water and is tied to a smartphone application that lets homeowners adjust their thermostat and see how much energy they're producing and using in real time. For details, visit

- Stop overwatering. Several local homebuilders, including Shea Homes, include the WeatherTRAK automated irrigation system as a standard feature in some communities. It uses local weather information to adjust amount of water needed to maintain one's landscaping. For details, visit

- Turn on a faucet hands-free. Shea Homes homebuyers can order an optional hands-free Delta kitchen faucet that turns on and off by lightly touching the handles or spout - even with an elbow. Homeowners can buy a Delta Pilar Touch pull-down faucet in stainless steel at Lowe's stores or at for $312.79.

- Manage lights and appliances., which specializes in home-automation gadgets and systems, sells a whole-house Insteon control kit. It controls lighting and appliances via an iPhone (not included) for $1,101.45. For details, visit

- Control a household. The Savant Automation, Control and Entertainment System, sold locally by Cyber Sound in Scottsdale, ties together a home's whole-house music system; intercom and video; security; lighting control; heating and cooling systems; security cameras; pool and spa controls; garage door and gate control to an iPhone, iPad or iPod control panel. The system lets a homeowner control all these functions remotely. Jon Summer, president of Cyber Sound, said installing the system starts at about $15,000 but can cost $100,000 or more, depending on the size of one's home. For details, visit

by Kara G. Morrison The Arizona Republic May. 19, 2011 01:26 PM

Smart homes in Phoenix area run by iPads, iPhones

Playboy puts all 57 years of its magazines on website

CHICAGO - Good news for those who thought their copies of Playboy were gone forever when their moms found them and threw them away.

Playboy launched a Web-based subscription service Thursday called that allows viewers to see every single page of every single magazine - from the first issue nearly 60 years ago that featured Marilyn Monroe to the ones hitting the newsstands today.

"They no longer have to store 57 years - 682 issues - of Playboy under their mattress," said Jimmy Jellinek, the magazine's chief content officer.

Chicago-based Playboy has seen its circulation plummet from 3.15 million in 2006 to 1.5 million today and has been trying all sorts of gimmicks to attract readers in recent years. One issue, for example, included a set of 3-D glasses to better see a centerfold shot in 3-D; another turned over the cover to cartoon character Marge Simpson.

But if those moves were widely viewed as efforts to attract a younger audience, this one is also aimed at Baby Boomers and even their parents, who might recall pictorials of long-gone movie stars, interviews with the likes of John Lennon and the Rev. Martin Luther King Jr. and the time Jimmy Carter famously revealed the lust in his heart.

And, for those who have claimed they bought the magazine just for the articles, the online service also offers a way to look at the works of such writers as John Updike, Jack Kerouac, Kurt Vonnegut, Hunter Thompson and Norman Mailer just by typing in their names.

Jellinek is optimistic people will pony up the $8 per month or $60 per year for a service that's "meant to appeal to that sense of collective nostalgia and affinity."

He calls the website "the world's sexiest time machine" and "an anthology of cool" for a magazine he refers to as "the Mount Rushmore of literary greatness."

But one industry analyst makes Playboy sound more like a tired, dusty half-empty amusement park.

"The problem with Playboy is it not only lost its powerful interviews, but it lost its lead," said Samir Husni, director of the Magazine Innovation Center at the University of Mississippi School of Journalism. "This is no longer the '50s and '60s, when people talked about the interviews. And who cannot see the girl next door naked in this day and age?"

Husni doubts the service will do much for the company at all.

"The questions are: Do I need it? Do I want it? Is it relevant to me?' " Husni said. "The answer is: No, no and no.' "

Husni also said it is likely that those who do subscribe will drop the service once they see whatever issues they were curious about.

Jellinek concedes the whole thing is something of an experiment aimed at a niche audience, but he also insists the service has value because it offers a unique window into the past.

"We're not trying to achieve mass scale here and move the needle for the company in a great way," he said.

by Don Babwin Associated Press May. 20, 2011 12:00 AM

Playboy puts all 57 years of its magazines on website

LinkedIn valued at $9 billion after IPO

SAN FRANCISCO - There was an unmistakable echo of the dot-com boom Thursday on Wall Street.

LinkedIn, a trailblazer in the online networking craze, went public with a roaring stock offering. Within minutes, shares were trading at twice the value set by the company.

Buyers crowded the floor of the New York Stock Exchange, and financial-news networks flashed LinkedIn's stock price urgently all day. By the closing bell, the company had a market value of $9 billion, the highest for any Internet company since Google had its initial public offering seven years ago. Millionaires and even one billionaire were made, at least on paper.

The stock, issued at $45, went as high as $122.70 just before noon and closed at $94.25 on a trading volume of 30 million shares. All this for a company that skeptics say amounts to an online Rolodex, a place on the Internet for professionals to post resumes and connect with one another and potential employers.

It was enough to remind some people on Wall Street of the heady late 1990s and the debuts of companies like Netscape Communications - and, more infamously - long-forgotten names like and Webvan. Investors wondered whether LinkedIn will be a precursor to another financial frenzy in Silicon Valley.

"I definitely think this will be a catalyst," said longtime technology investor and analyst Michael Moe, CEO of Global Silicon Valley Asset Management.

"Investors who like growth stocks have been stuck in a desert for a long time, and now it's like they have found this great pitcher of water."

At $9 billion, LinkedIn already is worth 18 times its projected revenue this year. Major Internet companies, including Google, trade at an average of about five times projected revenue, according to an analysis by Capital IQ.

Using another measure, price-to-earnings ratio, which compares a company's market value with its profit, LinkedIn finished the day at a staggering 554. By comparison, the average P/E ratio of technology companies in the Standard & Poor's 500 index like Google and Apple is 15.

Two-thirds of LinkedIn's revenue comes from the fees it charges to help companies find and hire workers. Francis Gaskins, president of, said that makes the company more like Monster, an employment firm that depends a lot on the health of the job market.

"Can we stop asking if we are in a bubble now?" venture capitalist Mitchell Kertzman said after LinkedIn stock was trading above $100. "We are clearly in a valuation bubble."

If the stock market is thirsty for more businesses that connect people on the Internet, there's a backlog of privately held companies that might satisfy it.

The short list includes Twitter, the 140-characters-or-fewer messaging service; Zynga, which makes online games like FarmVille; Groupon, the coupon site; and Facebook, the social network with more than 500 million users.

None of those companies has revealed specific plans for going public. Facebook has at least dangled the possibility of filing for an IPO before May. A private investment led by Goldman Sachs Group Inc. valued Facebook at $50 billion in January.

The 109 percent first-day gain for LinkedIn, based in Mountain View, Calif., nearly mirrored Netscape's first day when it went public on Aug. 9, 1995. Netscape rose that day from $28 to a close of $58.25, or 108 percent.

Netscape co-founder Marc Andreessen's venture-capital firm, Andreessen Horowitz, has invested in Twitter, Groupon, Zynga and Facebook.

As an individual, Andreessen was an early investor in LinkedIn and is among the more than 102 million people who have posted their resumes and profiles on its website.

LinkedIn has steadily grown since it started in 2003 and it's adding about a million accounts a week.

In a key distinction from the dot-com days, it also makes money - $3.4 million last year on revenue of $243 million. Its revenue more than doubled during the first three months of this year, putting it on pace to bring in about $500 million in 2011 from advertising and fees.

Kertzman, managing director of Hummer Winblad Venture Partners, was CEO of Liberate Technologies, a maker of software for TV set-top boxes, during the height of the dot-com boom. In 2000, its market value soared to $12 billion.

"I knew something was wrong because I knew we weren't worth that much and it scared the hell out of me," Kertzman said.

Aaron Levie, CEO of an Internet storage service called, sees things differently. Levie, who is 26 and was in high school during the dot-com boom, thinks it's a good sign that LinkedIn, Facebook and other companies are taking their time to build companies that make money before going public.

"You can tell this is a very different period than the late '90s," Levie said. "Silicon Valley is definitely back, and much healthier."

LinkedIn's CEO, Jeff Weiner, said he won't dwell on high expectations.

"It's exciting, but it's a point in time," Weiner said a few hours after he rang the opening bell at the stock exchange, where LinkedIn's shares traded under the symbol LNKD. "One day's trading is not going to be too meaningful, and the same holds true for the next few days and the next few months. I know it sounds a little like a cliche, but we are in this for the long haul."

Many of LinkedIn's employees are now millionaires, at least on paper. The richest is co-founder and executive chairman Reid Hoffman. Already considered one of the smartest and best-connected people in Silicon Valley, Hoffman joined the ranks of the world's billionaires Thursday. Hoffman, 43, owns a 20 percent stake in LinkedIn, good for about $1.8 billion.

by Michael Liedtke Associated Press May. 20, 2011 12:00 AM

LinkedIn valued at $9 billion after IPO


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