Consumer News & Alerts

July 14, 2008

By Martin H. Bosworth
ConsumerAffairs.com

FEDS SEIZE INDYMAC; MORE TO COME?
Financially-pressed consumers have had their backs to the wall for quite some time and now those higher up the financial food chain are learning what fear feels like. Bear Stearns and Countrywide had already gone down for the count. Now the FDIC has seized mortgage lender IndyMac, the California lender that pioneered subprime and low-doc mortgages. The action followed an old-fashioned run on the bank by depositors Friday, following IndyMac's announcement that it was shuttering most of its lending operations. Next stop? Many think Feddie Mac and Fannie Mae will have to be bailed out by you-know-who. Read more ...

• Some Blame Obscure Accounting Rule for Financial Crisis By now, everyone knows about the problems with subprime mortgages but what is driving the current credit crisis? Wall Street denizen Fred Yager reports that many economists are blaming an obscure accounting rule.

• Obama Calls for Bankruptcy Law Reform Says process should be improved for military, disaster victims.

• Is Obama Dragging Down Stock Prices? Or would the economy improve under a President Obama?

• Whatever Happened to Retirement? Consumers fear they don't have enough money to quit working.

AIRLINES JOIN EFFORT TO LIMIT OIL SPECULATORS
Despite mounting evidence that speculators were driving up the price of oil to profit off lucrative contracts for oil futures, both Wall Street and the White House said that it would be irresponsible to, well, speculate on such an idea. But the airline industry, stung by reductions in service and fare hikes to cover fuel costs, is taking that risk. The executives in charge of 12 major airlines have published an open letter to consumers on the StopOilSpeculation.com Web site urging them to push Congress to limit oil speculation in the hope of pushing prices down. Read more...

• Southwest Turns North, Heads for Canada International flights will be a first for Southwest.

• Screens Go Dark on US Airways Carrier scraps in-flight movie systems.

CONSUMER GROUP WANTS STRONGER REGULATION OF ENERGY TRADING
It's not just the airlines that are urging more oversight and control of the energy futures market. Public Citizen's Energy Program Director Tyson Slocum told Congress this week that lack of transparency enables investment banks and financial players to purchase energy assets while also investing in futures contracts for those same assets, effectively giving them a leg up in the market and the ability to set or drive up prices. Slocum said that Congress institute much stronger oversight and limitations on collusive practices in the energy market, while ending subsidies to the auto and oil industries in favor of supporting alternative energies and mass transit. Read more...

BBB FLUNKS MYGALLONS.COM FOR FALSE CLAIMS
If it sounds too good to be true, it probably is, and MyGallons.com may be no exception. The Miami company claims it enables customers to buy gas at today's prices and store up credit on prepaid debit cards, which can then be used at a specific list of filling stations. But the Better Business Bureau (BBB) gave MyGallons.com an "F" rating when it discovered that founder Steven Verona's claims of setting up deals with credit card processors to use the prepaid debit cards were in doubt. Verona, for his part, claims that a major announcement about a new deal with a processing network for his company is coming soon. Read more...

MAYBE A COROLLA'S THE ANSWER?
Hybrids are fine but for American families who are having trouble making ends meet, they're just too expensive. We have long thought most hard-working consumers with families to feed would be better off in the Toyota Corolla or a Honda Civic or something similar than in the much-hyped Prius. Toyota let us test a Prius and a Camry (world's dullest car) but wouldn't loan us a Corolla. So our chief leadfoot rented one for a week of hauling four adults around the Los Angeles area. Read his report ...

More automotive news ...

• Toyota Plans Prius Plant in Mississippi Company can't keep up with surging hybrid demand.

• 30 Days of Gas Above $4, No End in Sight Feds predict high prices for at least the next year.

• Solar Panels to Power Prius Air Conditioning Toyota hopes new option helps it maintain its green image.

• New Cars Get Global Warming Score in California Score tallies production and operation impact of each model.

• Feds Plan New Car Crash Tests Female dummies to be used for the first time.

YOU'RE IN BAD HANDS: LAWYERS RATE ALLSTATE AS WORST INSURANCE COMPANY
While Allstate publicly touts its slogan of "You're in good hands," a new report from the American Association for Justice (AAJ) finds that Allstate's good hands are covered with boxing gloves when it comes to denying claims from its customers. AAJ, a trial lawyers' association, compiled its findings from a massive collection of court documents and news records, and determined that Allstate engages in a systematic pattern of forcing customers to accept lowball claims, or be aggressively denied any claim whatsoever. Other insurers chided for bad business practices by AAJ include Unum, State Farm, AIG, and Liberty Mutual. Read more...

VERIZON SETTLES TERMINATION FEE LAWSUIT FOR $21 MILLION
Less than a month into hearings over its charging of expensive penalties to cancel contracts, Verizon agreed to settle a class-action lawsuit over the fees for $21 million. The move might be a bellwether for other wireless carriers, many of which are facing similar lawsuits over the expensive fees, and a signal that new regulation of the fees from Capitol Hill and the FCC is closer to becoming reality. Read more...

This week's consumer protection news...

• Consumer Understanding of Credit Scores Remains Poor Consumers could save billions through better use of credit.

• Senator Prods FTC to Investigate Craftmatic Complaints Elderly consumers complain of pushy door-to-door salesmen.

• Class Action Charges Botox Killed, Injured Consumers Allergan failed to adequately warn of dangers, suit claims.

• Melted Gold Isn't Always Green Jewelry may be worth more than its weight in gold.

• Emergency Regs Needed for Tracking Produce, Food Groups Say Traceability would speed response to outbreaks.

• 'Red Flags Rules' for Identity Theft on the Way Feds push for better fraud and theft prevention.

iFAILURE: GLITCHES, LONG LINES PLAGUE INTRO OF 3G iPHONE
The new 3G iPhone represents a quantum leap from the original game-changing device--faster network speeds, lower prices, and GPS navigation--but on the phone's launch day of July 11, buyers found themselves swamped with some very old-fashioned problems. Eager iPhone buyers clogged Apple stores only to find that the demand temporarily shut down Apple's servers, hampering their ability to activate the new phones. Worse yet, Apple sent out an upgrade to the original iPhone via iTunes on the same day, causing more server problems and leaving buyers stuck with "iBricks" that worked sporadically or could not be activated at all initially. AT&T remains the only network that the iPhone will work on as well, although consumers can pay several hundred dollars extra to buy a phone without submitting to a contract. Read more...

• Report: New Cable Rules Don't Lead To Lower Prices FCC's promises of lower prices, better service unfulfilled.

• Comcast Cuts Deal With Vonage on Internet Traffic Companies to work togther on "network management".

• Civil Rights Coalition Slams DTV Transition Advocates say more action, better planning needed.

• Court Upholds FCC's Video Rules Decision gives telecoms a leg up on cable.

• Digital TV Transition Threatens Portables Homeowners' preparedness plans may be derailed.

• Report: U.S. Broadband Adoption Slowing Price, lack of access remain barriers to new customers.

CLASS ACTION CHARGES BOTOX KILLED, INJURED USERS
Botox users and their families have filed suit against drug maker Allergan, charging that the drug killed at least three people and left other users with a wide variety of injuries and disabilities. The muscle relaxant drug is most popular as an alternative to cosmetic surgery for wrinkles, but the suit alleges that Botox has been prescribed for a wide variety of uses, including treatments for cerebral palsy and limb pain--many of which are not approved by the Food and Drug Administration (FDA). Read more...

More health news...

• Aspirin May Prevent Osteoporosis Lowly aspirin may help keep bones healthy as we age.

• FDA Wants Black Box Warning on Antibiotics Tendinitis, other side effects can occur.

• Serotonin Imbalance May Contribute To SIDS New study finds low levels of serotonin a risk factor for crib death.

THE WEEK'S RECALLS

• Parragon Books Recalls Children's Necklaces with Ballet Shoe Charms
• Wal-Mart 'Faded Glory' Lip Gloss, Jewelry
• Honda Lawn Mowers
• Children's Charm Shoelace, Necklace Charms

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