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Congressional Hearings Likely on Firestone Tire Recall

Congressional Hearings Likely on Firestone Tire Recall...

More trouble for Bridgestone/Firestone. Sen. John McCain, combative chair of the Senate Commerce Committee, wants to hear from CEOs' mouths how the Firestone-Ford tire crisis escalated so far, so fast.

The Arizona Republican also wants to know why the National Highway Transportation Safety Agency (NHTSA) didn't pick up on the problems until May, when Ford had been replacing tires in other nations for a year or more.

Also sharpening the knives is Rep. Billy Tauzin (R-La.), who chairs the House subcommittee on consumer affairs. He says he'll hold hearings on the matter but no date has been set.

Insiders see rough going in Washington for Bridgestone/Firestone, a Japanese company that does not keep its fences mended with Congress.

Ford, on the other hand, knows how the game is played. In the current election cycle, Ford has given $56,000 to the Republican Party and $303,950 to Republican candidates for federal office. Bridgestone/Firestone hasn't coughed up anything during the current cycle. In the 1995-96 cycle, it gave $35,000 to the Republicans.

The Center for Responsive Politics reported that give GOP members of the Senate Commerce Committee have taken money from Ford this year, led by Sen. John Ashcroft (R-Mo.), who is facing a tough re-election battle. He took $10,000 from Ford, more than any other Senator so far.

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$2 Million Penalty for Debt Collector

$2 Million Penalty for Debt Collector...

WASHINGTON, Aug. 24, 2000 -- The Federal Trade Commission today announced a proposed settlement with a California-based debt collection agency, Performance Capital Management, Inc. (PCM), under which the company would be fined $2 million and enjoined from what the FTC called "serious violations" of Section 623 of the Fair Credit Reporting Act (FCRA). According to the terms of the proposed settlement, payment of the fine would be waived due to the company's poor financial condition.

The FCRA regulates the collection and dissemination of sensitive information about consumers by credit bureaus and other types of consumer reporting agencies. Section 623 was added by Congress in the 1996 amendments to increase the accuracy of consumer reports by imposing specific duties upon any entity that furnishes information to a consumer reporting agency. The settlement announced today is the Commission's first enforcement action under Section 623.

PCM is a California corporation with headquarters in Irvine, California. It specializes in buying and collecting consumer debt that has been charged-off by the original creditor as uncollectible. PCM is currently in bankruptcy, and the Commission has waived the $2 million civil penalty based upon the financial condition of the company.

In its complaint against PCM, the Commission alleges that PCM violated a number of requirements imposed by Section 623. First, the complaint alleges that PCM provided credit bureaus with inaccurate "delinquency dates" for its accounts. Section 623 defines the delinquency date for an account as the month and year that an account first became delinquent. This date is important because it is used by credit bureaus to measure the seven-year period that negative credit information may be reported under the FCRA.

According to the Commission, PCM systematically reported accounts with delinquency dates that were more recent than the actual date of delinquency, resulting in negative information remaining on consumers' credit reports long beyond the seven-year period mandated by the FCRA. The Commission's complaint also alleges that PCM violated Section 623 by ignoring or failing to investigate consumer disputes referred by credit bureaus, and by failing to notify credit bureaus when consumers disputed collection accounts with PCM.

The proposed settlement would require PCM to provide correct delinquency dates when reporting collection accounts to credit bureaus. The agreement also mandates the proper investigation of disputes. Where PCM learns during an investigation that account records no longer exist for a disputed debt, the company must delete the information from credit bureau files within five days. Finally, the agreement would require PCM to report as "disputed" all accounts where consumers have disputed the information with PCM.

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Action Loan to Pay Penalty for Violations

The complaint also contains an allegation brought by the Department of Housing and Urban Development that Gus Goldsmith violated the Real Estate Settlement...

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FTC Files Charges in Travel Schemes

FTC Files Charges in Travel Schemes...

WASHINGTON, Aug. 23, 2000 --The Federal Trade Commission today announced that for the third time in four years it has completed a law enforcement sweep of the United States travel industry.

The FTC has been working together with state authorities to uncover fraud and deception that are costing consumers hundreds of thousands of dollars each year and often ruining what are supposed to be relaxing and enjoyable vacations. Today's announcement of "Operation Travel Unravel" caps investigations by the FTC and 19 state law enforcement agencies, resulting in 85 actions for alleged violations ranging from failure to disclose the actual cost of travel packages to misleading consumers by telling them they have won a free trip and failing to tell travelers that in purchasing a package they will be required to attend one -- and possibly more -- timeshare presentations.

The FTC complaints resulting from this sweep come one year after the Commission brought similar complaints in "Operation Trip Trap" and three years after those brought in "Operation Trip Up."

The Commission today also announced the settlement of one other travel fraud case brought as part of "Operation Trip Trap." In this matter, the FTC approved a stipulated final order settling a court action brought last year against American International Travel Services, Inc. (AITS) and its owners.

"This is the third travel fraud law enforcement sweep the Commission has coordinated since 1997, illustrating the FTC's continued commitment to working with the states to take action against these bad actors," said Jodie Bernstein, Director of the Commission's Bureau of Consumer Protection. "We're working diligently to ensure that consumers' plans for enjoyable travel do not unravel, and we appreciate the help we have gotten nationwide in focusing attention on the continuing problem of travel-related fraud and misrepresentation."

Through "Operation Travel Unravel," the FTC has filed three complaints in federal District Court seeking to permanently enjoin the alleged law violations and award consumer redress. The complaints were brought against Leisure Time Marketing, Inc./Discovery Rental, Inc. of Cocoa Beach, Florida; Med Resorts International, Inc. of Clearwater, Florida; and Epic Resorts, Inc. of King of Prussia, Pennsylvania. In each case, the Commission is seeking an temporary restraining order with asset freeze and appointment of a receiver to ensure that no additional consumers are defrauded while the permanent injunctions are being sought. The Commonwealth of Virginia is a co-complainant with the FTC in the Med Resorts matter, and is filing additional state-related charges.

"OPERATION TRAVEL UNRAVEL" LAW ENFORCEMENT:

The FTC filed its actions in "Operation Travel Unravel"against:

  • Leisure Time Marketing, Inc./Discovery Rental, Inc.; Marlin Swanson; Britt Shenkman; Edward Sebastian; and Fereidoun "Fred" Khalilian (collectively "DRI"). According to the Commission's complaint, DRI violated the FTC Act by misrepresenting that they would provide free round-trip airline tickets to Hawaii or Mexico to consumers purchasing their vacation package, by misrepresenting the total cost of the vacation travel package offered, and by failing to disclose material restrictions on the use of the package, such as requiring attendance at timeshare sales presentations. DRI primarily generated leads by sending unsolicited faxes to consumers and receiving return calls. The use of such unsolicited faxes has been increasing as a means of conducting travel fraud. DRI also faces allegations of violating the FTC's Telemarketing Sales Rule (TSR) for failing to disclose material costs and restrictions on their travel packages and the supposedly "free" airline tickets. In addition, they allegedly violated the TSR by failing to disclose their refund policies.
  • Med Resorts International, Inc.; World Connections, Inc.; Mediterranean Resorts, Inc.; Destinations Unlimited of Delaware, Inc.; Bay Financial Services, Inc.; V-Pac, Inc.; J. George Claveau; and Marianne Borden-Meyers (collectively "Med Resorts"). According to the joint complaint filed by the Commission and Virginia, Med Resorts violated the FTC Act and Virginia law by misrepresenting that consumers purchasing their long-term vacation travel memberships could travel worldwide any time they liked, the total cost of the vacation travel membership, and that members could obtain discount airfares.

In addition, Med Resorts allegedly violated the Commission's Holder in Due Course Rule by not including required disclosure language in consumers' membership contracts, then reselling those contracts to third-party finance companies.

  • Epic Resorts, LLC; Epic Travel; Thomas Flatley; and Scott Egelkamp (collectively "Epic Resorts"). According to the Commission's complaint, Epic Resorts violated the FTC Act by misrepresenting that consumers had won or were specially selected to receive a vacation, misrepresenting the total cost of the package and failing to disclose material conditions and restrictions on the use of the vacation package. In addition, the company sent out unsolicited faxes and "cold-called" consumers based on leads obtained at public events where consumers registered to win a vacation. Accordingly, the complaint cites violations of the TSR, because in these solicitations Epic Resorts failed to disclose material costs and restrictions concerning the vacation packages. Finally, the company is charged with additional TSR violations for not abiding by the Rule's "Do Not Call" provision. This is the first time the Commission has alleged a violation of the "Do Not Call" provision of the Rule.

The Commission vote to authorize the filing of the three complaints was 5-0. The Discovery Rental and Epic Resorts complaints were filed in the U.S. District Court for the Middle District of Florida, in Orlando, on August 14, 2000. The Med Resorts complaint was filed in the U.S. District Court for the Northern District of Illinois in Chicago, on August 9, 2000. The FTC's Midwest Region would like to thank the Pinellas County, Florida Department of Consumer Protection for their significant assistance in bringing the Med Resorts complaint. A table listing all of the federal and state actions in "Operation Travel Unravel" is also available.

In addition, the Commission today announced a stipulated final order settling a complaint against the following:

  • American International Travel Services, Inc. (AITS); Silver Lake Resort, Ltd. (SLR); Alfred H. Jugo; A.J. Stanton, Jr.; and Lawrence S. Gilbert for violating the FTC Act and the TSR by misrepresenting that consumers had either won or been specially selected to receive a vacation package, misrepresenting the contents of the package and their cancellation policy, and failing to disclose that consumers were expected - or would be pressured - to view timeshare property. Under the terms of the settlement, the defendants will pay the Commission $1 million in consumer redress (in addition to the $1.4 million already refunded or charged back), will be enjoined from future violations of the FTC Act and TSR, and will be required to post a $200,000 performance bond before engaging in the business of telemarketing travel-related products or services in the future.

"OPERATION TRAVEL UNRAVEL" CONSUMER EDUCATION

The "Operation Travel Unravel" consumer education program includes a variety of materials, including several recently revised FTC products. The first, "Facts for Consumers: Telemarketing Travel Fraud" contains information on how telemarketers obtain consumers' names and the techniques they employ to convince people to purchase their products. It also explains how consumers can protect themselves from travel-related telemarketing scams. The second product, a Consumer Alert titled "Avoid a School Break Bust," is designed to help students and their parents identify and avoid travel scams when planning vacations. It includes a variety of tips regarding the companies that market these trips, as well as useful contact information on organizations such as the American Society of Travel Agents' Consumer Affairs Department and the Department of Transportation's Public Charter Licensing Division. Finally, it describes how individuals can file a complaint with the FTC if they feel their school break has been a "bust."

In addition, a Consumer Alert and two Facts for Consumers publications remain available to the public. They are: "Traveler's Advisory: Get What You Pay For," "Timeshare Resales," and "Timeshare Tips," respectively.

Tips provided in the Commission's consumer education material include:

  • Be wary of "great deals" and low-priced offers. Few legitimate businesses can afford to give away products and services of real value or substantially undercut other companies' prices;
  • Don't be pressured into buying. A good offer today will be a good offer tomorrow. Legitimate businesses don't expect you to make snap decisions;
  • Ask detailed questions. Find out exactly what the price covers and what it doesn't. Be sure to ask about additional charges, as well;
  • If you do decide to buy, get all information about the trip in writing. Once you receive the written information, make sure it reflects what you were told over the phone and the terms you agreed to;
  • Don't give your credit card number or bank information over the phone unless you know the company with whom you are working;
  • Be aware that when you place your business card or name into a drawing for a free vacation, you may be added to a telemarketing call-out list;
  • Know that your personal information also can be collected via the Internet when you are visiting travel-related sites seeking deals on trips or airfare;
  • Don't send money by messenger or overnight mail. Some "scam artists" may ask you to send them money immediately. If you pay with cash or check, as opposed to using a credit card, you lose your right to dispute any potential fraudulent charges under the Fair Credit Billing Act; and
  • When in doubt, say "no." If you have any doubts about the trustworthiness of a company, trust your instincts. It's less risky to turn down the offer and hang up the phone.

All consumer education pieces can be found on the FTC's Web site and from the FTC's Consumer Response Center (see address below).



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Playgirl.com Accused of Scamming Web Surfers

Playgirl.com Accused of Scamming Web Surfers...

WASHINGTON, Aug. 23, 2000 -- The owners and operators of www.playgirl.com, www.highsociety.com and scores of other adult Web sites have been charged by the Federal Trade Commission with illegally billing thousands of consumers for services that were advertised as "free," and for billing other consumers who never visited the Web sites at all. The FTC and the New York Attorney General have filed suit in U.S. District Court seeking to halt the illegal billing practices and have asked the Court to freeze the defendants' assets, pending trial, to provide for consumer redress.

New York City-based Crescent Publishing Group, Inc., its owner, Bruce Chew, and principal David Bernstein, are named as defendants in the federal court complaint detailing the charges, along with 64 affiliated corporations that operate the adult entertainment Web sites. According to the complaint, the "Free Tour Web Sites" generated income of $188 million between 1997 and October 1999 -- $141 million of which was generated in the first 10 months of 1999 alone.

According to the complaint, the defendants operate scores of adult entertainment Web sites, promoting them as "free." The "Free Tour Web Sites" claim that consumers' credit card numbers are required solely to prove that the consumers are of legal age to view the adult material, and that the credit cards will not be billed. But thousands of consumers were charged recurring monthly membership fees ranging from $20 to $90, the complaint says. Consumers who tried to dispute the charges were met with a variety of barriers designed by the defendants to thwart their efforts. According to the complaint, the defendants use billing names different than the names of the Web sites, so consumers often had no idea who was billing them or why. Moreover, consumers often had difficulty the contacting defendants to get refunds from information provided to them on their billing statement.

According to the joint FTC/ New York A.G. complaint, the defendants routinely change corporate billing names and merchant banks in an attempt to avoid the fraud detection systems of credit card organizations such as Visa U.S.A. When it realized what the defendants were doing, Visa U.S.A. disqualified them from using its credit card system. The defendants moved their merchant banking relationship to Guatemala, adopted several new merchant names, and continued to process credit card transactions.

The FTC and the New York Attorney General allege that Crescent and its principals have violated the FTC Act and New York state law. They have asked the Court to halt the deceptive and unfair practices, to appoint a receiver to oversee the businesses and to freeze the defendants' assets pending trial to preserve them for consumer redress.

The Commission vote to file the complaint was 5-0.

The complaint was filed August 23, 2000 in the United States District Court for the Southern District of New York.


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Rollover Fears Led to Lower Inflation of Firestones on Ford

Rollover Fears Led to Lower Inflation of Firestones on Ford...

Firestone has gotten a huge black eye from the problems with its ATX and Wilderness tires, used mostly on Ford vehicles. But Ford may wind up with a few scrapes and bruises too.

The Washington Post is reporting that Ford specified a lower-than-normal inflation pressure for the tires because of concerns that its popular Explorer would be more prone to roll over if tires were inflated beyond 26 pounds per square inch.

That's a bit lower the 30 pounds normally recommended for tires of this type -- and could contribute to the tires becoming overheated under certain conditions. That, in turn, could be a factor in the treat separations that have been blamed for hundreds of accidents, many of them fatal.

The Post said a 1989 test showed that a Ford Explorer with tires inflated to 35 pounds per square inch could roll over when making a sudden turn. Ford then recommended the lower inflation pressure, which increases adhesion to the roadway and lends the likelihood of rollovers.

Firestone initially blamed underinflation for some of the accidents but, fearful of alienating Ford, has lately had little to say about the matter.

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CarOrder.com folds its Web site

CarOrder.com had been filling orders by buying cars from dealers and reselling them but strategy ran into trouble after Ford and General Motors warned deal...

August 21, 2000 CarOrder.com has abandoned on-line car retailing, at least for now. After spending $100 million over the last two years, the company said it was stymied by roadblocks thrown up by car dealers.

The Austin, Texas, venture hopes to return at some point. Its strategy is to buy up existing dealerships, giving it a reliable source of cars that it can then sell online. On the other hand, it's been trying to buy up dealerships for the last several months and has so far come up empty-handed.

CarOrder.com had been filling orders by buying cars from dealers and reselling them. But that strategy ran into trouble after Ford and General Motors warned dealers not to do business with online concerns.

Dealers, in turn, have been putting pressure on the manufacturers to "blacklist" online dealers and have also been flexing their powerful lobbying muscle on the state level, throwing up all kinds of barriers to anyone tying to sell cars without being licensed as a dealer in each state.

Ironically, the most hostile state was Texas, where CarOrder.com is based. The legislature there has made it illegal to sell cars over the Web -- except for sites operated by Texas dealers, of course.

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Heilig-Meyers Furniture Files for Bankruptcy

Heilig-Meyers, the nation's largest furniture retailer, has filed for bankruptcy protection after failing to make debt payments and failing to find a buyer...

August 17, 2000
Heilig-Meyers, the nation's largest furniture retailer, has filed for bankruptcy protection after failing to make debt payments and failing to find a buyer. The company said it would immediately close about 300 of its 870 stores and eliminate 4,400 jobs.

The company specialized in extending credit to lower-income purchasers and was experiencing a growing default rate in recent years. Many analysts blamed the problem on credit cards and home-equity lenders who have been targeting lower-income consumers as well, leading many to take on more debt than they can handle.

The company is seeking to reorganize under Chapter 11. It said it has arranged for another company to take over its credit operations and expected that this would improve liquidity and collections. The new company was not identified.

Heilig-Meyers also operates 57 RoomStores and three Homemaker stores. They are not expected to be affected by the bankruptcy filing.

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Firestone Recalls ATX Tires

Firestone Recalls ATX Tires...

WASHINGTON, Aug. 9, 2000 -- Facing a growing swarm of lawsuits, Bridgestone/Firestone today announced that it will replace free of charge about 6.5 million tires sold as standard equipment on Ford Explorers and other sport utility vehicles.

Meanwhile, the National Highway Transportation Safety Administration is continuing its investigation and may order additional actions. There have been at least 46 reported deaths and hundreds of injuries in accidents involving the 15-inch tires.

The recall covers the P235/75R15 ATX, ATX II and Wilderness AT tires.

Bridgestone/Firestone has been moving quickly to try to settle more than 100 lawsuits filed by motorists and their passengers who were killed or injured in crashes involving the tire. Ford has also been named in many of the lawsuits and has also been trying to settle as many cases as possible.

Both companies have insisted on gag orders as part of their settlements, so the dollar value of the out-of-court agreements isn't known.

It's the largest tire recall in history and is likely to produce more lawsuits, as the extensive publicity alerts consumers who weren't previously aware of the problems with the tire.

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Neurologist Claims Cell Phones Caused His Brain Tumor

Neurologist Claims Cell Phones Caused His Brain Tumor...

WASHINGTON, August 4, 2000 -- A Maryland neurologist has filed an $800 million lawsuit against Motorola, Bell Atlantic and others, charging that years of using a cellular phone has given him brain cancer.

Chris Newman, 41, cited a 1994 study on rats that showed breaks in DNA, a possible sign of future cancer, after the animals were exposed to radiation.

The malignant tumor was discovered in 1998 behind Newman's right ear. Attorney Joanne Suder said Newman used wireless hand-held phones several times a day from 1992 to March 1998, when the cancer was diagnosed.

The suit seeks $ 100 million in compensatory damages and $ 700 million in punitive damages.

"It's a really tough issue," said Robert Tufel of the National Brain Tumor Foundation. "We don't want to unduly alarm the public, but some of the information we have read is very compelling." The foundation recommends that people take precautions such as limiting phone time or using an ear piece to put distance between themselves and the phone "until this is resolved," Tufel said.

To try and settle lingering questions, the FDA, with funding from the cell-phone industry, is planning new studies. But those results are not due for three to five years.
The debate started in 1993 when a Florida man alleged cell-phone use caused his wife's brain tumor. Since then, scientists have studied the effects of cell-phone radiation on animals and looked at brain-tumor rates in people who used cell phones.

Brain cancer strikes about six in every 100,000 people in the United States each year.

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Betty Crocker juice extractors recalled

Betty Crocker juice extractors recalled...

WASHINGTON, August 3, 2000 -- Appliance Co. of America is voluntarily recalling about 229,000 Betty Crocker juice extractors. The juice extractor's filter and lid can break apart, and project metal and plastic into the air, causing injuries to those nearby.

Appliance Co. of America has received 17 reports of the juice extractors' filters and lids breaking apart. Six consumers suffered minor cuts to their hands and arms.

Juice extractorThe Betty Crocker juice extractor being recalled is model number 1480, which is written underneath the unit as part of a mark that reads "BC-1480 Juice Extractor." The juice extractor is white, and measures 12.5-inches high, 6-inches wide and 8.75-inches long.

Kmart stores nationwide sold these juice extractors from September 992 through June 1995 for about $21.

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

Consumers should stop using these juice extractors immediately, and contact Appliance Co. of America for instructions on returning their units for a refund. Call Appliance Co. of America at (800) 872-1656 between 8 a.m. and 4 p.m. CT Monday through Friday.

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