Current Events in July 2000

WASHINGTON, July 27, 2000 -- In cooperation with the U.S. Consumer Product Safety Commission (CPSC), Hufco-Delaware Co. is recalling about 111,000 Gerry TrailTech backpack baby carriers with plastic frames. Small infants can shift to one side, slip through the leg openings of these carriers and fall.

CPSC and Hufco-Delaware have received four reports of infants slipping through the leg openings of these carriers. There were two reports of infants suffering fractured skulls and two reports of infants suffering bumped heads when they fell to the ground.

Department and baby products stores nationwide sold these backpack carriers from January 1996 through July 2000 for about $65.

These Gerry TrailTech backpack baby carriers have black, plastic contoured frames. They were sold in color combinations of slate blue with teal trim, green with black trim, navy blue and purple with green trim, and blue and purple with silver trim. A tag on the outside of the carrier reads "GERRY." A long tag, originally inside the carrier when sold, reads, "GERRY TRAIL TECH/TRAIL TECH HP." Writing imprinted on the plastic frame reads, "GERRY." The carrier has a removable, washable seat; a storage pouch; a loading stand; and a padded hip belt.

Consumers should stop using these backpack carriers immediately, and call Hufco-Delaware at (800) 881-9176 anytime for a free repair kit that replaces the seat of the carrier with one that has smaller leg openings.

WASHINGTON, July 24, 2000 -- Operators of "free" adult Web sites, who claimed they required a credit card number just to verify consumers' age, but then placed unauthorized charges on consumers' credit cards, have agreed to settle Federal Trade Commission allegations that their scheme violated federal laws.

The settlement will require the Web operators to provide refunds to consumers who were improperly billed, to post "clear and conspicuous" disclosures of their billing practices on their Web site, and will bar violations of the Truth in Lending Act and the FTC Act in the future.

The FTC alleged that Xpics Publishing, Inc., and its principals, Mario G. Carmona and Brian M. Shuster, hosted a variety of adult web sites offering "free" viewing, or "free 30-day" or 90-day trials. Consumers were required to provide credit card information to verify their age. But consumers who visited the sites soon discovered that their credit cards were billed, sometimes in a matter of hours, after they registered for the "free" trial, the agency alleged.

Xpics advertised that consumers who canceled in a timely manner would not be charged any fees, but Xpics used a variety of tactics to make it impossible for consumers to cancel their registration. In some instances, consumers who attempted to cancel were "upgraded" to a more expensive and also unwanted service. In certain cases, unauthorized charges were placed on the credit card accounts of consumers who had never visited any of Xpics' adult sites.

The FTC alleged that the defendants failed to inform consumers that if they submitted their credit card and signed up for the "free" trial, the consumers would be automatically billed; that by submitting their credit card information, consumers were consenting to allow the defendants to bill their accounts; and that consumers would have to observe a waiting period or view additional material before they could cancel. In addition, the FTC alleged that some consumers who canceled and asked for refunds never received them; others received them only months later.

The settlement requires the defendants to issue refunds to consumers and to place banner ads on Yahoo that link to a site where consumers can file online claims. Refunds will go to consumers who said that they had never subscribed, but were billed; consumers who said the membership was purchased by a minor; consumers who canceled or attempted to cancel their membership and were subsequently billed; and consumers who enrolled for a free trial, canceled their membership, and then were billed. Consumers who believe they were improperly billed by xpics.com, sexmuseum.com, sexroulette.com, assawards.com, livestreamsex.com, or xxxsexphotos.com can complete a claim form by clicking on the banner ad that will be posted on Yahoo at http://dir.yahoo.com/Society_and_Culture/Sexuality/Activities_and_Practices, shortly. Consumers also can file for a refund by using the Online complaint form on the FTC's home page at http://www.ftc.gov

Finally, the settlement requires that the defendants post a statement that discloses what information about the consumers they are collecting, the uses that will be made of the data, and to whom it may be disclosed. The settlement also contains record keeping provisions to allow the FTC to monitor compliance with its order.

The settlement bars the defendants from making misrepresentations about "free" services and misrepresentations that a credit card will be used for age verification only. In any future advertising or sale of adult entertainment goods or services on or through the Internet, the defendants will be required to disclose monthly or recurring charges; the length of any free trial; how to cancel membership in order to avoid charges; how to contact Xpics; and the terms and conditions of their membership. In addition, the defendants must explain to consumers what information they are collecting about them and obtain consumers' authorization before selling it to third parties. Each of the disclosures must be made, and must be verifiable, before the defendants request any payment information from consumers.

The settlement also requires that the defendants take certain steps to assure that they are not placing unauthorized charges on consumers' credit cards by using reasonably available commercial means to verify that credit card information provided by users of their sites is valid. The settlement also requires the defendants to notify consumers when their free trial is about to expire by posting an automatic notice on the Web site that consumers will clearly see. In addition, the settlement prohibits the defendants from blocking access to their cancellation page, requires that they cancel accounts in a timely manner, and requires prompt refunds where charges were unauthorized or where they were "authorized" by a minor. The settlement also prohibits the defendants from changing the terms and conditions of their membership - "upgrading" consumers' service, for example - without consumers' approval.

PayPal promotes itself as the most trusted payment service for Web auctions. And so it is, with 2.6 million registered users. PayPal simplifies the process of buying and selling online -- making it quick and easy to transfer payments from one party to another without sending checks through the mail and paying fees to credit card companies.

But consumers are finding out the hard way that, while it may be quick and easy, PayPal lacks many of the protections of banks and credit card companies.

In just the last few weeks, dozens of consumers were cheated out of $100 or more each by a scam artist selling on-existent hard drives on Yahoo! auctions. When the hard drives didn't arrive, the "successful" bidders learned there was no way they could stop payment or get their money back.

When consumers turned to PayPal for help, they got a terse statement from the company that say: "PayPal is not an escrow service, and cannot proect buyers from sellers with illegal or unsavory business practices."

In other words, tough.

When buyers pay by check, they can stop payment if a deal goes bad. And credit card users can contest a charge through the card issuer. But PayPal takes a hands-off approach, saying its job is to transfer funds. Period.

To use PayPal, consumers open an account and fund it with a check or credit card, or even with an online payment from someone else. They can then use the account to instantly pay others online.

The company does make clear in its terms of service that it is not a bank or escrow service and that it has no obligation to "ensure the quality, safety or legality of the merchandise received." Thus, it's not an escrow service -- where funds are held until the buyer receives the validates the merchandise.

Should PayPal offer more consumer protections?

Congress, the Federal Trade Commission and several state attorneys general are looking into the issue and it's likely that litigation or legislation -- or both -- will result. An FTC spokesman last week said that at the very least PayPal may have to do a better job of spelling out what it does and does not do to protect its customers.

Jill of Miami writes:

I have had nothing but trouble from Paypal.com and unfortunately for me being both a purchaser and seller on Ebay, it is very convenient for all to use. The first problem I had with Paypal was right before Christmas 2000. I made several transactions for purchases and a few days later, I received a statement from my bank showing overdrafts and overdraft fees of $450.00. This was because when making a transaction, Paypal took the money directly out of my bank account, but also put a hold for the same amount of money on my credit card (for their protection) which was my debit card. Because I used my debit card, there was a double hold for each transaction on my checking account. When I went back through Paypal to see if they had indicated that this would happen, I had to go through 4 windows in order to see that they did state that a double hold would incur. If they had written out their policies on paper, the debit card info would have been so small, I would have needed a magnifying glass to read it.

When I informed Paypal of this and to see if they could reimburse any of my overdraft fees (since I technically wasn't overdraft), they were not sympathetic at all and I had to call them everyday for two weeks before I finally got a live person in accounting who would tell me this. The second problem I had with Paypal was on 12/28/00. I had a 'gift card' which is a Visa Card with a set amount in my account. I tried to make a purchase using my gift card and when I entered it into the computer, it would not allow that credit card and cancelled the transaction. No problem except that the $50 I had in my account is now on hold with Paypal for 5 days and they won't release it, even though the transaction was null and void and was never completed.

I am very frustrated with them because although they do state on their website all of the info you need, it is hidden behind so many windows that unless you specifically know what you are looking for, it could take you forever to find it. By that I mean the debit card (or instant purchase) info vs. what they call an e-check. Also, when you go to make a payment to anyone, Paypal automatically defaults to the instant purchase (which causes the double holds when you use your debit card) and you have to go manually change which type of payment you want to make. It can be tricky if you don't know what you are doing and I think that consumers should be aware of the problems.

I don't think I have to tell anyone of the emotional stress I was caused by the $450.00 overdraft fees for holds which were not taken off my account even though the transaction amounts were taken out of my checking account immediately and paid. (I had plenty of money in my account, but not enough to cover double what I charged).

The U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA) today announced a safety recall of Britax child safety seats.

The recall involves 9,922 Roundabout convertible safety seats manufactured between Jan. 13, 1999, and March 14, 1999, that do not comply with the federal safety standard for child safety seats.

The shells for these seats were improperly molded during manufacture and could allow a child's head to move farther forward in a crash than allowed by Federal Motor Vehicle Safety Standard No. 213, "Child Restraint Systems." The fault is an inadequate bond in the area of the harness adjuster attachment. In a crash, excessive head movement could permit a child's head to strike part of the vehicle, causing injury.

Britax has developed a shoulder pad kit that can be easily installed by the owner. Consumers who returned a registration card to Britax will automatically receive a free remedy kit. Owners who did not submit a registration card should call Britax at (888) 427-4829 to obtain a free repair kit. Customers should not return their safety seats to retailers because retailers do not have the remedy kits.

"Parents should obtain and install the repair kit as soon as possible, so that the child seat provides maximum protection for the child," said NHTSA Deputy Administrator Rosalyn Millman. "Parents and caregivers should properly restrain children in the back seat for every trip."

Millman advised parents to continue to use the seat while waiting to receive and install the repair kit because it will still provide better protection than an adult seat belt or no restraint.

For more information, owners can call (888) 427-4829, or write to Britax Child Safety, Inc., 460-R Greenway Industrial Drive, Fort Mill, S.C. 29708.

Consumers with questions about this or any other safety recall campaign should call NHTSA's toll-free Auto Safety Hotline at 1-888-DASH-2-DOT (1-888-327-4236).

WASHINGTON, July 12, 2000 -- Operators of a group of online pharmacies that promoted themselves touting medical and pharmaceutical facilities they didn't actually have and making privacy and confidentiality assurances they didn't keep, have agreed to settle Federal Trade Commission charges that their promotional claims were false and violated federal laws.

The settlement with the promoters prohibits the deceptive claims; requires disclosures about medical and pharmaceutical relationships; bars the billing of charge cards without consumer authorization; prohibits disclosure of the information collected from consumers without the consumers' authorization; and, requires them to notify consumers of their practices regarding the collection and use of consumers' personal identifying information.

The FTC alleged that Worldwidemedicine.com, Focusmedical.com and a group of other Web sites, individuals and corporations made claims such as "Focus Medical Group is a full service clinic with a full time staff dealing with the treatment of sexual dysfunction. The clinic's licensed medical physicians network with an organization of physicians throughout the United States and Internationally." The FTC alleged there was no clinic, and that the "network of physicians throughout the United States and Internationally," consisted of one physician in a distant state. Consumers who requested prescription drugs for the first time were asked to provide billing and shipping information and to answer questions about their medical history on a form titled, "Secure Viagra Order Form Personal and Payment Information." They were charged $75.00 for a "medical consultation." According to the FTC, the medical information was faxed to an out-of-state physician who reviewed it and approved or denied prescription requests. The physician was paid $10.00 per review, but only if he approved the prescription request.

The sites also claimed "All of our prescriptions are filled on premises," touting their on-site pharmacy. The FTC alleged they have no on-site pharmacy; their prescriptions are filled by a local drug store. The complaint alleges that the sites misrepresented the security and encryption used to protect consumers' information. It also alleges that the defendants used information in a manner contrary to their stated purpose. Finally, the complaint alleges that the defendants sent "spam" to 11,000 customers informing them that their credit cards would be billed $50 for "Y2K Remediation." The FTC charged that the spam misrepresented that the defendants had the legal authority to debit consumers' credit cards without prior authorization violated federal law.

Settlement of the charges bars the defendants from misrepresenting medical and pharmaceutical arrangements; prohibits misrepresentations about their use of credit card information and bars misrepresentations about any other material fact about the scope or nature of defendants' goods, services or facilities. The settlements bar the defendants or anyone who works for them from operating any Online pharmacy unless they disclose the name, business address and phone number for the pharmacy that will dispense the drugs; the physician who will prescribe them - including the state or states where he is licensed to practice - and the company offering the drugs for sale. They also require the defendants to post a notice on any Web site they operate that offers prescription drugs stating, "Dispensing a prescription drug without a valid prescription is a violation of Federal law. More information on purchasing prescription drugs Online is available at www.fda.gov "

The settlements also prohibit the defendants from "selling, renting, leasing, transferring or disclosing the personal information that was collected from their customers without express authorization from the customer." Finally, the settlements require that the defendants post a privacy policy that discloses the types of personal identifying information they are collecting either actively or passively, through such technologies as computer cookies; the uses that will be made of the data; the means by which a consumer may access and review his or her personal information; and, a means by which a consumer may modify or delete personal information on file. The defendants also are required to establish and maintain reasonable procedures to protect the confidentiality, security and integrity of personal information collected from consumers. The settlements also contain record keeping provisions to allow the FTC to monitor compliance with its order.

The defendants named in the FTC's complaints are: Sandra L. Rennert and Philip Rennert of Las Vegas, Nevada; International Outsourcing Group, Inc.; Focus Medical Group, Inc.; Trimline, Inc.; Affordable Accents, Inc.; Worldwide RX, Inc.; WorldWide Medicine, Inc.; PSRenn, Inc., and; Doctors A.S.A.P., Inc.

An additional defendant, Lyle Mortensen, was not active in the Online pharmacy, but participated in the unauthorized credit card billing scheme. The settlement with Mortensen bars material misrepresentations, prohibits unauthorized billing of credit cards and contains the same Online privacy and security provisions as the other settlement.

WASHINGTON, July 5, 2000 -- Burley Design Cooperative is voluntarily recalling about 2,200 Burley-Bravo bicycle trailers, used to transport young children. The wheel can separate from the trailers, resulting in crashes and injuries to children riding inside. The bicyclist could also be hurt.

Burley has received one report of a wheel coming off, causing the bicycle rider to fall and suffer minor injuries.

The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

Burley-Bravo trailers included in the recall were made between November 1999 and June 2000 with serial numbers 430-01-1 through 430-29- 160. Serial numbers, manufacturing date and the words "BRAVO TRAILER" are located on a label on the underside of the aluminum frame adjacent to the right wheel. The blue and yellow trailers are designed to carry two children. They are 34 inches long (not including hitch), 26 inches wide and 33 inches high with a weight capacity of 100 pounds. Writing on the front of the trailer reads, "BURLEY." Writing on the trailer's rain/sun cover reads, "Burley Bravo."

Authorized Burley dealers and bicycle shops nationwide sold the trailers from November 1999 through June 2000 for about $350.

Consumers should stop using the Burley-Bravo trailers immediately, and return them to the store where purchased for a free inspection and repair, if needed. For more information, contact Burley at (800) 311-5294 between 8 a.m. and 5 p.m. PT Monday through Friday.

No other models of Burley trailers are involved in this recall.