Current Events in April 2002

General Motors is buying many of the assets of bankrupt Daewoo Motor Co. of South Korea, not including its U.S. sales and parts operations. GM will pay about $400 million for three plants and the company's sales networks in Europe and Puerto Rico.

GM says it will use the plants to build "a new generation of cost-competitive vehicles that can be marketed around the world." Two of the plants are in Korea; the third is in Hanoi, Vietnam.

The company did not rule out the possibility that vehicles built in Korea and Vietnam would eventually be imported into the U.S. and sold under a GM brand name. It will continue to use the Daewoo brand name in parts of Europe and Korea.

GM says it will honor warranties on Daewoo vehicles in North America. But as for Daewoo's 525 U.S. dealers and their thousands of employees, the future looked bleak.

A trade publication estimated there are about 7,000 Daewood vehicles sitting in port, waiting to be shipped to Daewoo dealers, who are already wondering what to do with the unsold vehicles sitting on their lots. Most will probably be sold at auction.

Daewoo entered the U.S. market in 1988. it sold 68,000 cars in 2000, its peak year, but sales plunged the following year when the company declared bankruptcy.

On April 2 in Los Angeles, 2-year-old Edwin Campos and two of his young cousins were critically injured when they accidentally tipped over a kitchen stove and were doused with a pot of scalding water.

"In the best case scenario, this boy will have years of reconstructive surgery," states Peter Grossman, a Los Angeles burn specialist who is caring for the toddler. Inside Edition reveals many similar accidents over the years when children have caused stoves to tip and investigates why these tragedies continue to occur.

Roger Boisjoly is an engineer and safety expert, who tells the newsmagazine that almost every stove sold in America has a design flaw that can seriously injure children. Roger explains that young children will sometimes use the oven door as a step, causing it to tip over.

"When that goes down, this whole stove comes over, and if anybody's in front of it, they're in trouble," he warns. To solve this problem, the home appliance industry actively promotes the use of special anti-tip brackets. Manufacturers say if the simple metal brackets are installed correctly, they fasten the stove to the kitchen floor or wall and avert potential disaster.

But attorney Dan Sciano of San Antonio, TX, who has worked on more than a hundred lawsuits involving stove tip-overs, maintains that brackets are often installed incorrectly or not at all.

"We now know within the industry that most of the time, it's not being used... that's the reality," he said. Sciano provided Inside Edition with internal industry documents that he says show that major manufacturers are well aware that the safety bracket solution is not working. One e-mail reveals that, as far back as 1996, one major stove company estimated that less than 10% of their stoves were being properly installed with safety brackets. Another major oven manufacturer estimated that less than 5% of their customers had safety brackets installed.

To get an idea how pervasive the problem still is, Inside Edition "spot-checked" recently-built homes in Mesquite, NV. The newsmagazine found that only one family in four had safety brackets properly installed. One had improperly installed brackets, rendering them useless, and two of the four homes the newsmagazine visited had no safety brackets at all, leaving their stoves dangerously vulnerable to a tip- over.

Many engineers like Roger Boisjoly believe the tip-over effect can be eliminated completely by changing the design of the stoves. One solution that's been discussed for years within the industry is a breakaway door. When too much weight is applied, the oven door would fall safely to the ground, instead of pulling over the whole appliance.

The Association of Home Appliance Manufacturers, an industry trade group that represents oven makers, declined Inside Edition's requests for an on-camera interview. But in a statement the group said safety is a priority in the industry and that their ranges, "...adhere to all safety and stability requirements set by U.S. safety organizations."

Regarding safety brackets, the group said the industry has "...developed an effective and reliable anti-tip device that can be easily installed."

Attorney Dan Sciano says that the continuing tragedies are proof the industry's solution is just not working. "The injuries are catastrophic... I see children getting injured over and over and over and there's just simply no reason for this anymore...it needs to be stopped. Period."

The U.S. Consumer Product Safety Commission tells Inside Edition the agency has received reports that anti-tip brackets are not being properly utilized and are currently looking into the matter.

WASHINGTON, April 18, 2002 -- Brunswick Corp. is voluntarily recalling about 103,000 Mongoose and Roadmaster mountain bicycles with Ballistic 105 front suspension forks. The forks can break apart, causing riders to lose control, fall and suffer serious injury.

By Us International Co. Ltd., of Taiwan, the manufacturer of the bicycle forks, previously announced the recall of 13,500 of these forks in May 2000. The recall was expanded to about 40,000 forks in February 2001. By Us International is no longer cooperating with the recall.

Brunswick Corp. is expanding the recall to include all Ballistic model 105 forks sold on the Mongoose and Roadmaster mountain bicycles they manufactured (except the Mongoose A40). The previous recalls were limited to forks with certain serial numbers.

There have been 34 reports of forks on these bicycles breaking resulting in 31 riders, including children and teenagers, suffering serious head and bodily injuries, abrasions, bruises and chipped teeth.

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

The recall includes only Ballistic 105 forks installed on Mongoose and Roadmaster model bicycles manufactured by Brunswick Corp. The forks on these bikes are black with decals that read "BALLISTIC" and "105" on the sides of the suspension fork legs. A small label on the bottom of the bicycle reads "Brunswick." The forks on the Mongoose A40 model bicycles and forks on bicycles not manufactured by Brunswick Corp. are not included in the recall.

Discount department stores and toy stores nationwide sold the bicycles with these forks from June 1998 through December 2000 for between $125 and $150. Additionally, consumers could have received a Ballistic model 105 fork as a replacements when participating in one of the previous recalls.

Consumers should immediately stop using these bicycles and call the firm to obtain information on receiving a $65 refund for the bicycle fork. This applies to all owners of bicycles with Ballistic model 105 forks manufactured by Brunswick (except the Mongoose A40), even if they received a new Ballistic model 105 fork as a result of a participating in a previous recall.

For more information, consumers should call Brunswick Corp. at (800) 508-2762 between 8 a.m. and 5 p.m. CT Monday through Friday, or visit the recall web site at www.ballisticforkrecall.com.

WASHINGTON, April 17, 2002 -- Houston-based United Recovery Systems, Inc. (URS) has agreed to pay a $240,000 civil penalty to resolve allegations that the company violated the Fair Debt Collection Practices Act (FDCPA).

The Federal Trade Commission said it was its first enforcement action against a debt collection company for allegedly violating the rights of Spanish-speaking consumers.

"Spanish-speaking consumers are a growing and vital part of America's economy. They deserve the same strong protection from abuse as other members of our society," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "Regardless of the language they speak, the FTC will protect the rights of all consumers."

According to the FTC's complaint, the company's debt collectors communicated with consumers at improper times or places, engaged in prohibited communications with third parties, harassed and abused consumers, and used deceptive practices to collect consumer accounts.

In addition to the civil penalty, the proposed consent decree to settle the FTC charges includes broad prohibitions on future FDCPA violations and would require URS to inform consumers in writing that they may stop the company from contacting them about the debt and may contact a special URS phone number or address should they have a complaint about the way URS is collecting the debt.

The settlement also includes a comprehensive consumer complaint and resolution program under which every consumer complaint about URS collection practices must be thoroughly investigated and responded to by the company.

In effect since March 1978, the FDCPA prohibits abusive, deceptive and unfair debt collection practices. For example, in an effort to collect a debt, a collector may not discuss the debt with anyone other than the consumer and certain other persons, such as the consumer's attorney or spouse. In addition, under the FDCPA, collectors may not make false statements, use obscene or abusive language, threaten to take legal action they cannot or do not intend to take, call consumers at work if they know it is inconvenient or not permitted by the employer, or call consumers at other times they know to be inconvenient to the consumer, such as before 8:00 a.m. or after 9:00 p.m.

WASHINGTON, April 16, 2002 -- A member of the Federal Trade Commission wants media companies to take a stronger role in policing advertising touting vitamin supplements and weight loss products.

"There is nothing that prevents us" from going after media companies, Sheila Anthony said during a speech to the Food and Drug Law Institute. "We are looking at the advertising and where it is running."

Ms. Anthony said that newspapers, magazines, radio broadcasters and direct mail companies need to follow the lead of the major television networks, which review the content of advertising and reject ads that do not stand up to scrutiny.

The FTC has already prosecuted several drug companies for making fraudulent or unsupported claims about their products and has also brought charges against celebrity endorses and advertising agencies. It has also prosecuted shopping channels on occasion but has stayed away from "mainstream" media. Ms. Anthony's speech made it clear that may be about to change.

The agency has brought more than 60 law enforcement actions in the last five years challenging false or unsubstantiated claims about the efficacy and safety of a wide variety of dietary supplements.

"We have many more in the pipeline," she said.

Ms. Anthony said that since passage of the Dietary Supplement Health and Education Act (DSHEA), a law that restricts FDA review of supplements, there has been a "dramatic increase in the marketing of supplements and, with that increase, we have seen more examples of questionable claims."

WASHINGTON, April 15, 2002 -- The Federal Trade Commission (FTC) today announced the filing of 11 federal district court complaints against inbound telemarketers. Among those charged were the purveyors of advance-fee loans and credit cards, at-home medical billing programs, work-at-home envelope stuffing schemes, and a "consumer protection" agency that was, in reality, no more than a shill for a vending machine business opportunity.

The FTC said it was potentially the most far-reaching law enforcement sweep ever against inbound telemarketing fraud _- where consumers call companies based on classified ads, Internet banners, or other promotions.

"Consumers spotting a classified ad or telephone pole promotion and acting on their curiosity by calling the number face the same risk of being misled, deceived, or defrauded as they do when responding to a high-pressure sales call from a telemarketer," said FTC Bureau of Consumer Protection Director Howard Beales III. "If the offer appears too good to be true, be on guard."

"White collar crime is on the increase and a favorite weapon of choice is the telephone. Don't abandon common sense just because you initiated the call, and it would be wise to check with the Better Business Bureau first," Ken Hunter, president and CEO of the Council of Better Business Bureaus, advised consumers.

A Focus on Medical Billing Scams

Beales said that in addition to the general message that consumers should be careful when calling companies in response to classified ads or similar promotions, five of the cases filed by the FTC illustrate the fact that consumers interested in working at home doing medical billing should be particularly wary of pitches that promise easy money with little or no effort. While the telemarketers may provide lists of local doctors they say are interested in having their billing done by consumers, many times these doctors have not consented to have their information distributed, are not looking for outside help, or may need more skilled employees to complete this technical task.

"I would advise someone looking to start his or her own medical billing business to learn about the challenges involved in medical billing, including the complex laws which apply to [it]," said Cyndee Weston, Executive Director of the American Medical Billing Association. "I would also advise them that up to one year of training may be necessary in order to even begin to market his or her medical billing services to healthcare providers."

In 2001, the FTC and 43 Better Business Bureaus (BBBs) across the United States and Canada surfed the Internet and newspaper classifieds looking for ads promising consumers they could make fast, easy money running medical billing businesses from home. Hundreds of ads from dozens of companies were identified, with the worst purveyors of medical billing fraud targeted by the five cases announced today. The remainder received warning letters that their practices may be in violation of federal law.

The Commission's Complaints

The 11 complaints announced today were filed against the following companies and individuals for alleged violations of either the Federal Trade Commission Act, the Telemarketing Sales Rule, or both.

• Credit Enhancement Services, LLC, et al. Based in Camden, New Jersey and Woodhaven, New York, the defendants allegedly used postcard mailers and in-bound telemarketing to pitch advance-fee credit cards to consumers for a one-time fee ranging from $219.99 to $289. According to the FTC, some consumers who made the payments for their "pre-approved" and "unsecured" card got nothing, while others simply received an information package welcoming them to a discount buying card service, along with applications for major credit cards (for an additional fee).
• Antoine J. Peissel, d/b/a The Woodway Group, et al. Operating out of telemarketing boiler rooms in Houston, Texas, the defendants allegedly operated an advance-fee scheme, originating through "want ads" that promised consumers a loan or other extension of credit after they paid a "processing fee" of between $69 and $89. Few, if any, consumers ever received the loan promised them.
• Capital Choice Consumer Credit, Inc., et al. Operating a large-scale advance-fee scam based in Miami, Florida, the defendants allegedly either debited customers' bank accounts of $199.95 or obtained payments of $43 after promising to provide a credit card with a $4,000 to $7,000 credit limit. For their money, however, consumers only received an "approval certificate" and application package, and were told that to "activate" their card they had to pay even more money up front. The defendants also sent consumers a blue plastic card - that was not a bank card - for use only with the defendants' merchandise catalog.
• Universal Bancom, LLC and John Sarabia, d/b/a Nissan Bancorp. Based in Chatsworth, California, the defendants allegedly misrepresented to consumers that they could get a Visa, MasterCard, or other major credit card by paying a $287.25 fee. They also did not disclose that the card was actually a merchant card, not a bank card; that the card could only be used to purchase items from the defendants' catalog; or that consumers could only pay for 50-75 percent of the cost of the items with the card.
• Electronic Processing Services, Inc., et al. Based in Las Vegas, Nevada, the defendants marketed a $480 medical billing work-at-home opportunity, allegedly misrepresenting that the doctors whose names were supplied were likely to hire consumers to process their billing claims, and that consumers could expect to make a certain amount of money as medical billers.
• International Trader, d/b/a Premier Business Solutions, et al. A Nevada corporation, based in Los Angeles, California, the defendants marketed work-at-home medical billing opportunities through classified advertisements for $189. Through their telemarketing pitch, they allegedly misrepresented: 1) that they would provide consumers with the names of doctors likely to use them to process billing claims from home; 2) that consumers buying their materials could expect to earn a specific level of income (between $15 and $45 per hour); and 3) that consumers could readily obtain a refund upon request. Medical-Billing.Com, Inc., d/b/a Professional Management Consultants, et al. A Texas corporation based in Carrollton, Texas, the defendants sold their medical billing package for between $3,500 and $9,500. In telemarketing their program, they allegedly made numerous misrepresentations, including promises that:
  
  1) they would help recruit doctors who would use the consumers to process their billing; 2) customers would earn substantial income providing billing services for health care professionals; and 3) they would give customers a full refund if the program did not meet their performance expectations.
• Electronic Medical Billing, Inc., et al. A Nevada corporation operating in Mission Viejo, California, the defendants sold a medical billing work-at-home business opportunity to consumers for $325. They allegedly misrepresented: 1) that the doctors whose names they provided to consumers were likely to hire them to do their billing; and 2) that consumers could expect to make a certain level of income through medical billing (between $25,000 and $50,000 a year, according to their classified ads).
• Physicians Healthcare Development (PHD Billing), Inc., et al. Based in Burbank, California, the defendants pitched a work-at-home medical billing opportunity for $319 to $425, telling consumers that they could make between $3 and $15 for each claim processed. They allegedly misrepresented that the system they sell will instantly enable consumers to launch a home-based billing business, that consumers can earn substantial income for this work, and that the doctors whose names they provided were prepared to hire the consumers to process their claims.
• Terrance Maurice Howard, d/b/a True Techniques and Absolute Mailers. Based in San Antonio, Texas, the defendants marketed an at-home envelope stuffing business opportunity that they deceptively told consumers could earn between $2,000 and $4,000 a week. They also allegedly deceptively represented that after paying an initial "registration" fee, consumers could expect to make $5 for each envelope stuffed.
• Affiliated Vendors Association, Inc. et al. A for-profit company operating out of Grand Prairie, Texas, the defendants allegedly ran a sham Better Business Bureau-type organization that gave consumers glowing reports about its members - sellers of vending machine business opportunities. The company was allegedly paid by the vending machine sellers for pitching their businesses to consumers over the phone, never told consumers of its connection to the sellers, and misrepresented the support and services that they would provide to business opportunity purchasers.

We know a couple of Ford owners who may be looking for a Chevrolet dealer next time they're in the market for a car.

Scott of Loda IL writes (4/9/02):

Own a 1995 Windstar and the head gaskets blew. 12,000 miles later I had to put in a new Ford engine for $3500. This happened in July of 2001.

Bought a 1993 taurus in july of 2001 that had just had new gaskets installed at 60,000 miles when we bought it. 4,000 miles later it spun the same main bearing that the Windstar had spun. This cost me another $3500 for another new Ford engine. That is $7000 on the last 7 months.

Ford needs to admit that their gasket problem causes engine failure and needs to take the responsibility of fixing their junk.

Rick of Brookfield, WI writes:

We just found out that the engine in our 1995 Windstar is junk, due to a headgasket failure. This is a well-maintained car with 68,000 miles on it. We went through a similar and very frustrating run-around with Ford on similar engine issues on a 1992 Taurus with the same 3.8L engine a few years ago.

Unfortunately, we already owned the Windstar, despite my vow never to deal with Ford again. Just like the last time, no matter who we called or tried to call in Ford, not an ounce of concern could be detected. They've also mastered the art of stonewalling, by not providing any ability to speak to a supervisor or anyone else in a decision making capacity. So for now, we're faced with a good car and no engine. Ford offered to replace it with a remanufactured engine for only $3300.

We'll be looking for a new car ASAP rather than spend that kind of money on a repair that should never have happened in the first place. This has also resulted in erasing virtually all resale value we might have had in the Windstar before last week. This is especially critical for my family, since we need a dependable car. We have four childrein, and our 10-year old son has muscular dystrophy. Being stranded in the middle of anywhere just isn't an option.

Neither is spending the kind of money chasing a "well-known problem" that Ford simply refuses to admit or act upon.

WASHINGTON, March 5, 2002 -- Murray Inc. is voluntarily recalling about 89,500 rear-engine riding lawn mowers and about 6,200 mid-engine riding mowers. The fuel tank can crack and leak fuel, posing a burn or fire hazard to consumers.

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

Murray has received 950 reports of fuel tanks leaking. These leaks resulted in six reports of fires including one report of minor burns.

Rear-Engine Riding Mowers

The recalled riding lawn mowers have 30" cutting decks. The mowers were sold under Murray, Murray Select, Craftsman and Wizard brand names. The brand name is printed on the front or side of the mowers. Model numbers can be found under the seat or on a nameplate on the rear of the mower. Models included in this recall include:

Department and hardware stores, including Sears, Western Auto and Home Depot, sold the riding mowers nationwide from January 1995 through January 2002 for between $700 and $1,200.

Mid-Engine Riding Mowers

The recalled mid-engine riding mowers have 30" cutting decks and the brand names "Murray" and "Yard King" printed on the front. A nameplate under the seat of the mower displays the model number. Models involved in this recall are 309005X10, 309304X8 and 309306X89.

Department and hardware stores including Home Depot and Western Auto, sold the mid-engine mowers nationwide from February 2001 through January 2002 for between $800 and $950.

Consumers should stop using these riding mowers immediately and contact their nearest Murray Service Dealer for a free replacement fuel tank. For more information, consumers should contact Murray toll-free at (800) 246-5896 between 8:00 a.m. and 5:00 p.m. CT Monday through Friday, or visit the firm's web site at www.murray.com. Consumers with Craftsman rear-engine mowers should contact Sears toll-free at (800) 659-7026 anytime.

April 3, 2002

General Motors is recalling about 1.9 million 1995-97 Chevrolet Cavalier and Pontiac Sunfire and 1996-97 Buick Skylark, Pontiac Grand Am, and Oldsmobile Achieva models. the company said a faulty ignition switch could cause a fire in the steering column.

GM said the problem seldom occurs while the cars are being driven. Rather, it tends to occur shortly after an unsuccessful attempt to start the car. Although no accidents or fires have been reported, there have been a few cases of smoke inhalation.

"The ignition switch may deteriorate if the engine fails to crank and the driver holds the key in the 'start' position for an extended period," said Lori Queen, GM small car vehicle line executive.

If the switch is damaged, the plastic internal components may heat up, melt, and eventually ignite. This could occur even with the engine off and the key removed, she said.

GM said dealers will repair the vehicles to prevent high electrical currents from flowing through the ignition switch. Until cars are repaired, Queen said motorists should no hold the key in the start position for an extended period of time.

The company began mailing notification letters to owners On March 27. The repairs will be performed at no cost to customers.