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Current Events in February 2000

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    Lawyers Respond to Ford's Press Release

    CHICAGO, Feb. 29, 2000 -- The consumer law firm repesenting owners of Ford vehicles today issued the following response to Ford's press release regarding its warranty extension.

    On December 9, 1999, in Chicago, Illinois, a class action lawsuit was filed against Ford Motor Company by Horwitz, Horwitz and Associates, Ltd. on behalf of plaintiff Lance Lhotka. Mr. Lhotka owns a 1995 Ford Windstar which experienced premature head gasket failure.

    In June of 1998, Ford issued extended warranty 98M01, which extended coverage on affected vehicles to 5 years or 60,000 miles. However, Ford has failed to honor the explicit terms of 98M01, even though the 1995 Windstar and other Ford vehicles are infamous for repeated instances of premature head gasket failure.

    The suit alleges that Ford's failure to assume full responsibility for the defective condition of the 3.8 liter engine and the costly repairs necessary to the vehicles of Mr. Lhotka and thousands of other Ford customers amounts to Breach of Warranty and Breach of Contract. The suit seeks compensatory damages, punitive damages and attorneys' fees.

    On February 25, 2000, in response to the class action lawsuit and growing consumer pressures, Ford issued a press release which indicates that Ford will extend the warranty on vehicles covered by the lawsuit to 7 years or 100,000 miles. The release also indicates that Ford will either reimburse consumers for head gasket repairs already performed or offer a $4,000 coupon on the purchase of a new Ford, Lincoln or Mercury vehicle.

    Ford's press release leaves unresolved several issues of great importance to consumers:

    • Ford still has not acknowledged that the 3.8 liter engine is defective.

    • Ford has not stated whether it will reimburse consumers for the cost total engine replacement caused by head gasket failure.

    • Ford has not stated what criteria will be applied to consumers seeking reimbursement for repairs.

    • Ford has not stated whether it will provide reimbursement for costs associated with head gasket repair, such as towing bills and car rental bills.

    Even at this late date and after a year of frustration for consumers prior to the filing of the class action, Ford apparently maintains that the class action lawsuit had nothing to do with its newly announced program.

    The attorneys at Horwitz & Associates are presently in discussions with Ford to determine the extent of Ford's newly announced program and its impact upon consumers. The attorneys intend to seek the Court's assistance in obtaining Ford's cooperation in safeguarding the interests of consumers victimized by the 3.8 liter engine.

    -- Horwitz, Horwitz, and Associates, Ltd. Clifford Horwitz, Richard Doherty

    Lawyers Respond to Ford's Press Release...
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    Ford Extends Warranty

    After thousands of customer complaints, two class action consumer law suits and a growing tide of negative publicity, Ford Motor Co. has agreed to extend its warranty on head gaskets in the 3.8L V-6 engine in certain 1994-95 models.

    Response from consumers was heavily negative, both in an online poll and in emails.

    Warranties are being extended to seven years or 100,000 miles, whichever comes first. Ford said it was taking the action "in the interest of customer satisfaction."

    It's the second warranty extension for the groubled engines, found in the 1994 Lincoln Continental, 1994-95 Ford Taurus and Mercury Sable and 1995 Windstar.

    The original extension, issued in 1998, was for five years/60,000 miles for the Taurus, Sable and Windstar vehicles, and six years/75,000 miles on Continental.

    "When Ford issued the original warranty extension, our data indicated that the extension would cover the affected vehicles over the time and mileage where owners were most likely to have a head gasket concern," said Ann O'Neill, director, vehicle service and programs, Ford Customer Service Division.

    "But, as these vehicles have aged, we have received new data that indicate that some owners are having failures outside the original warranty extension."

    Owners of these vehicles who experienced head gasket failures during the 7year/100,000 mile time frame will be eligible for a full refund for past repairs, or for a limited time, may choose a $4,000 certificate to be used towards the purchase or lease of a new Ford, Mercury or Lincoln.

    Vehicle owners will receive a communication from Ford via first-class mail in March explaining the warranty extension, the company said.

    "Victory is ours!" screamed an Internet email from Chuck Catanese, a Windstar owner who has rallied fellow Ford owners through emails and postings to Web sites. But later in the email, Catanese coneded the "victory" may be less than total.

    "Still won't help the now-crappy resale value, but at lease I feel more at ease with keeping the van for a while," he said.

    Attorneys involved in the class action suits against Ford said they were studying the Ford announcement.

    Ford Extends Warranty on Troubled V6 Engine in Lincolns, Windstars, Taurus, Sable...
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      Cadet In-Wall Heaters Recalled

      WASHINGTON, Feb. 17, 2000 -- Cadet Manufacturing today announced the recall of more than 1.9 million Cadet and Encore brand in-wall electric heaters, implicated in more than 320 incidents, including three deaths.

      This recall announcement follows the resolution of the lawsuit filed by the Consumer Product Safety Commission (CPSC) staff against the company on January 14, 1999.

      CPSC alleges that the following Cadet and Encore brand in-wall electric heaters are defective and can overheat and catch fire: models FW, FX, LX, TK, ZA, Z, RA, RK, RLX, RX and ZC. The recalled heaters were distributed mainly in California, Idaho, Montana, Oregon and Washington.

      Flames, sparks or molten particles can spew through the front grill cover of the heater into the living area of a residence, putting consumers at risk from fires, including burn injuries, smoke inhalation and property damage. The heaters also can become energized creating a risk of electric shock.

      CPSC is aware of more than 320 reports of heaters that smoked, sparked, caught fire, emitted flames, or ejected burning particles or molten materials. These incidents have allegedly resulted in three deaths, two serious burn injuries and property damage claims exceeding $1.2 million, which include five partial or total house fires.

      The heaters that are part of the recall announcement are the following models of Cadet and Encore brands: FW, FX, LX, TK, ZA, Z, RA, RK, RLX, RX and ZC. The brand and model are located on a label on the front of the heat box, behind the grill. Before removing the grill to check the identification label, consumers must disconnect the power supply to the heater at the circuit breaker. If power is not disconnected, consumers risk electrocution and shock.

      Cadet is offering consumers replacement heaters at a significantly reduced cost. Each heater will cost between $25 and $57, depending on the model. Consumers who already have replaced the recalled units from October 23, 1997, until today can file a claim for partial reimbursement for $25 per heater. Consumers must register to participate in this recall by February 17, 2002. To register, contact Cadet anytime at (800) 567-2613 or at www.cadetco.com/recallprogram.html.

      CPSC routinely requires companies to pay the full costs associated with recalls. In this case, Cadet has recently emerged from bankruptcy and is unable to provide free replacements or full reimbursements.

      In October 1997, Cadet recalled its model FW, FX, LX and ZA heaters to replace defective over-temperature black plastic limit switches. By December 1997, Cadet informed CPSC that it could no longer pay the full costs of the recall, and that the number of heaters involved were far greater than it had originally known.

      While attempting to resolve the problems with the limit switch recall, the CPSC staff discovered additional problems with the heaters involved in the 1997 recall, as well as problems with some other Cadet and Encore models. In addition to the switch defect, the heating elements and internal wiring connections are defective and can fail. Even if consumers have had the heaters' switches repaired, the heaters have additional problems and need to be replaced.

      CPSC strongly urges consumers to participate in this recall. Since the recalled heaters pose a fire hazard until they are replaced, consumers should have at least one fully operational smoke detector on every floor of their home, especially near bedrooms. To ensure that the detector's batteries are working, test the detector every month.

      Consumers also should have a well-defined and rehearsed escape plan and an alternate escape plan in the event of a fire. You can get information about this from "Your Home Fire Safety Checklist." To obtain a free hard copy of this publication, write to CPSC, Washington, D.C. 20207.

      Cadet In-Wall Heaters Recalled...
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      FTC Targets ID Theft

      WASHINGTON, Feb. 17, 2000 -- The Federal Trade Commission has launched a three-part initiative to help consumers combat identity theft.

      Identity theft occurs when con artists hijack a consumer's personal identifying information -- name, address, credit card or Social Security number -- and use the data to open new charge accounts, order merchandise, or borrow money.

      Consumers targeted by identity thieves usually do not know that they have been victims until the hijackers fail to pay the bills or repay the loans, and collection agencies begin dunning the consumers for payment of accounts they didn't even know they had. The Commission's actions follow Congress' mandate that the FTC be the nation's clearinghouse for ID theft information including consumer education and ID theft complaint data.

      "When someone hijacks a consumer's identity, it can be a nightmare," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection.

      "But there are some precautions consumers can take to help reduce the risk of identity theft. And when identity theft does occur, there are some actions consumers can take to mitigate the damage. We hope the initiatives we are announcing today will help give consumers the tools they need to help combat identity theft."

      The FTC has installed a toll-free number, 1-877-IDTHEFT ( 877-438-4338) where consumers who have been victims of identity theft can report the crime and get advice from telephone counselors trained to provide assistance to ID theft victims.

      Using the data from ID theft victims, as well as data from other agencies such as the Social Security Administration that take ID theft calls, law enforcement agencies will be able to target prosecutions where they will be most effective, and the FTC can analyze the data to determine how best to cut down on ID theft.

      The agency also has developed an online consumer complaint form located at www.consumer.gov/idtheft

      ID theft victims can enter their complaint data directly into the FTC's secure database from that site. The site also provides links to numerous consumer education materials, as well as state laws governing ID theft, articles, reports and testimony.

      The third element of the FTC's ID theft program is a strong message to consumers on how to protect themselves against this pernicious form of fraud, and, if already victimized, how to limit the damage to their credit history and other critical information.

      As part of this campaign, the FTC announced today the release of a 21-page booklet that addresses identity theft. This publication, which is available through the www.consumer.gov/idtheft site covers a wide range of topics, including how identity theft occurs, how consumers can protect their personal information and minimize their risk, what steps consumers should take upon finding out they are a victim, and how they can correct credit-related and other problems that may result from identity theft. It also describes federal and state resources available to consumers who have particular problems as a result of identity theft.

      How to prevent ID theft

      FTC Targets Identity Theft...
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