Current Events in September 2002

WASHINGTON, Sept. 19, 2002 -- Black & Decker is voluntarily recalling to repair about 140,000 cordless electric lawn mowers. An electrical component in the lawn mower can overheat, posing a possible fire hazard.

Black & Decker has received 11 reports of electrical components overheating. One of these resulted in a minor hand burn and nine resulted in reports of minor property damage extending beyond the mower.

The mowers were sold under both the Black & Decker and Craftsman brand names. The recalled Black & Decker cordless electric lawn mowers have the model number CMM1000 or CMM1000R and date codes from 9534 through 200230, both of which are located on the silver and black label affixed to the rear door of the mower. The lawn mowers have either an orange or green deck cover with a black motor cover. The lawn mowers have the words "Black & Decker" and "Cordless" on top of the motor cover.

The Craftsman-brand mowers, which were sold at Sears, have model number 900.370520 and include all date codes. The model number is located on the silver and black label affixed to the rear door of the mower. The Sears lawn mowers have a dark green deck with a black motor cover. The lawn mowers have the words "Craftsman" and "24 Volt Cordless" on top of the motor cover.

Home centers, hardware and discount stores nationwide sold the Black & Decker lawn mowers from February 1996 through August 2002 for between $360 and $400. Craftsman-brand mowers were sold at Sears stores nationwide from January 1998 through December 2000 for between $360 and $400.

Consumers with either brand recalled lawn mower should stop using it immediately. Black & Decker mower owners should call Black & Decker toll-free at (866) 229-5570 between 8 a.m. and 4:30 p.m. ET Monday through Friday, or log onto the company's web site at www.blackanddecker.com to receive information on the free repair.

Craftsman mower owners should take their mower to the nearest Sears store or Sears product repair center for a free repair.

Black & Decker recalled 1,300 cordless electric mowers with model number CMM1000R on January 23, 2002. For more information about that recall, contact Black & Decker at the toll-free number listed above. The recall is being conducted in cooperation with the U.S. Consumer Product Safety Commission (CPSC).

September 18, 2002
The high cost of dialing 555-1212 for directory assistance got even higher this summer. MCI, Sprint and VarTec all increased their rates to $2.49 per call. Consumers won't do much better with AT&T at $1.99 for each 555-1212 call.

However, lower rates are available from other providers, 10-10 dial-around numbers and cellular plans. Listings are also free on the Web.

"Smart consumers can beat the phone companies at the rate increase game," says independent consumer advocate Rich Sayers of 10-10PhoneRates.com. Competitive long distance providers charge as little as 75 cents for 555-1212. Sayers advises that it's not necessary to switch carriers to get a lower rate. Dial-around services can be accessed instantly via 10-10 numbers.

The best rates Sayers has found come from WorldxChange Communications and Everdial. It's just 75 cents to call 555-1212 via those companies 10-10 numbers. Using your cell phone is another option. Several major cell phone companies charge about $1.25 per call.

If you have Internet access, phone numbers can be looked up for free at numerous online phone books. While Sayers notes that listings are not as current online, he uses the Web sites regularly and finds most of the numbers he's looking for. The biggest savings come when searching for foreign phone numbers or addresses. They are free at over 200 sites. Calling a live operator for international numbers costs $7.95 a call.

For links to U.S. phone book Web sites point your Web browser to: 10-10phonerates.com/links.html

For links to foreign Web sites (many are in English) point your Web browser to: 10-10phonerates.com/sitemap.html

The FTC filed its complaint against No. 9068-8425 Quebec, Inc., doing business as Bio Lab, and its president, Jean-Francois Brochu. The FTC alleged that the defendants, using mainstream U.S. media, targeted U.S. consumers by advertising and selling "Quick Slim" - a purported weight-loss product which they claim causes users to lose rapid and substantial weight without dieting or exercise; and "Cellu-Fight," a product which they claim completely eliminates cellulite without any effort by users.

The FTC alleged that the defendants advertised Quick Slim in Glamour and TV Guide magazines, in free standing inserts (weekend coupon inserts) distributed through newspapers, such as the Philadelphia Inquirer, the Dallas Morning News, the San Francisco Examiner, the Los Angeles Times and the Washington Post, and on the Internet.

Quick Slim is a dietary supplement advertised as a "fat blocker" that uses apple pectin to control weight. Promotions for Quick Slim, which costs $70.00 for a bottle of 180 caplets, promised rapid and substantial weight loss without diet and exercise. The defendants' ads contain statements such as, "Lose Up to 2 Pounds Daily Without Diet or Exercise," and claims that the weight loss would be permanent. In fact, the FTC alleged, Quick Slim does not cause rapid or significant weight loss without the need for diet and exercise, and does not cause permanent weight loss.

Bio Lab also marketed and sold Cellu-Fight on the Internet and through direct mail brochures. The ads contained statements such as, "Cellu-Fight ... New Tablet for A Direct Attack on Cellulite," and "New Tablet Completely Eliminates Cellulite." A bottle of 60 tablets costs $40.00. According to the FTC, the ads falsely claim that the product is clinically proven to eliminate cellulite from the stomach, backside, hips and thighs. In fact, the FTC alleges, Cellu-Fight does not eliminate or substantially reduce cellulite.

On September 6, 2002, U.S. District Court Judge David N. Hurd entered a temporary restraining order against defendants prohibiting dissemination of misleading advertising for Quick Slim and Cellu-Fight and freezing defendants' assets. A preliminary injunction hearing is scheduled for September 20th.

September 17, 2002
The staff of the Federal Trade Commission today released a "Report on Weight-Loss Advertising: An Analysis of Current Trends." The report concludes that false or misleading claims, such as exaggerated weight loss without diet or exercise, are widespread in ads for weight-loss products, and appear to have increased over the last decade.

The Commission also announced that it will hold a public workshop on November 19, 2002, to explore the impact that these ads have on public health and new approaches for fighting the proliferation of misleading claims for weight-loss products.

Many marketers, the report states, use false claims, misleading consumer testimonials, and deceptive before-and-after photos to market their products. According to the report, nearly 40 percent of the ads in the study, including ads that appeared in mainstream, national publications, made at least one representation that is almost certainly false and 55 percent of the ads made at least one representation that is very likely to be false.

Often ads promised weight-loss results beyond what is possible. Nearly half of the ads claimed that the users could lose weight without diet and exercise. In one ad, for example, the headline proclaimed: "LOSE UP TO TWO POUNDS DAILY WITHOUT DIET OR EXERCISE!" Other ads cited rapid, prolonged weight-loss claims - such as claims that consumers can lose 8 to 10 pounds per week over an extended period of time.

"We have known for some time now that there is a serious problem with weight-loss product advertising. This report demonstrates the extent of that problem," said FTC Chairman Timothy J. Muris. "Reputable marketers continue to take care to avoid false and misleading claims, but it appears that too many unscrupulous marketers are making false claims promising dramatic and effortless weight loss to sell their products. It is not fair to consumers; it is not fair to legitimate businesses, it is illegal, and it will not be tolerated."

The report, which examined 300 promotions that appeared in all major forms of media between February and May 2001, was prepared with the assistance of the Partnership for Healthy Weight Management (PHWM). The Partnership is a coalition of representatives from science, academia, the health care profession, government, commercial enterprises, and organizations whose mission is to promote sound guidance on achieving and maintaining a healthy weight.

"There is no such thing as a miracle pill for weight loss," Surgeon General Richard Carmona said. "The surest and safest way to weight loss and healthier living is by combining healthful eating and exercising. First eat healthfully - cut fats, eat at least five servings of fruit a day, and cut down on the amount of alcohol you drink. Next, get some physical actvity in your day. Walking just 30 minutes a day, five days a week can reduce weight, and make you feel better."

According to the report, a comparison of current ads to ads that ran in 1992 suggests that there has been a dramatic increase in the number of weight-loss products and the amount of deceptive weight-loss advertising, during the last decade.

The report noted two major trends: 1) a shift away from weight-loss products advertised as "low-calorie meal-replacements" in 1992 to pills and other products that commonly claimed to work without diet or exercise in 2001; and 2) that although ads from both 1992 and 2001 contain deceptive or false claims, the recent ads were much more likely to make specific misleading performance promises.

Since 1990, the Commission has filed 93 cases challenging false and misleading weight-loss claims involving over-the-counter drugs, dietary supplements, commercial weight-loss centers, weight-loss devices and exercise equipment. Despite the unprecedented level of FTC enforcement over the last decade though, misleading and deceptive ads continue to saturate the market.

According to health and nutrition experts, many of the weight-loss products and programs most heavily advertised are either unproven or unsafe, and frustrate efforts to promote healthy weight-loss efforts by promising unrealistic results.

"As health professionals, we are concerned about the epidemic of obesity and are equally concerned about false and misleading claims in advertising of weight-loss products and services," said George L. Blackburn, M.D., PhD, chair in nutrition medicine at Harvard Medical School and a member of the PHWM. "Many promise immediate success without the need to reduce caloric intake or increase physical activity. The use of deceptive, false, or misleading claims in weight loss advertising is rampant and potentially dangerous. Many supplements, in particular, are of unproven value or have been linked to serious health risks."

The cases included advance fee credit card, credit repair, pay day loan, debt adjustment, and debt negotiation schemes, as well as new credit identity scams. The FTC has filed a series of federal court complaints alleging violations of law in the following areas:

• Seven separate enterprises offer consumers "major credit cards," such as a MasterCard or Visa, or a loan, for a one-time advance fee, that never produce the promised credit cards or loans.
• A California firm calling itself a "debt negotiation" company promises financially strapped consumers that it could reduce their debt and restore their credit by negotiating with creditors. But the company does little other than charge exorbitant fees while consumers stop making required payments to their creditors and plunge deeper and deeper into financial ruin.
• An Oregon firm calling itself a "financial finder and matching service," offers to match consumers to charitable foundations that are most likely to give cash grants - which, unlike loans, never need to be repaid - to individuals who have "genuine reasons for needing the money," regardless of credit history or collateral. But what consumers receive is a useless list of foundations and general instructions on applying for a grant.

"In these uncertain economic times, finance-related scams are especially outrageous because they prey on the most vulnerable consumers - those out of work, those with poor credit ratings, or those who need money right away for emergencies," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "Working with our federal, state, and local partners, we are stopping scam artists who make false promises with no intention of delivering the goods. Our warning to these disreputable businesses is: we will track you down and stop your illegal practices."

Advance-fee credit schemes continue to be among the most commonly-reported complaints in the Consumer Sentinel database that the FTC maintains and that hundreds of law enforcement agencies use. In advance-fee credit card scams, the perpetrators tell consumers that for an advance fee - sometimes several hundred dollars - they will receive an unsecured credit card. Frequently, the consumers get nothing of value. Other times they only receive a list of banks or a booklet of tips on how to obtain a credit card. In no case did the defendants issue a major credit card to a consumer.

Among companies charged in the latest crackdown are:

• Jubilee Financial Services, Inc., of Downey, California; Jabez Financial Group, Inc., and company officers.
  
  These defendants allegedly lured consumers with false promises that consumers would be able to eliminate all of their unsecured debt by paying off only a fraction of what the consumers actually owed. According to the FTC, the defendants told consumers that if the consumers made monthly payments to the defendants' debt negotiation program, the consumers would eliminate their debt and improve their credit rating. The defendants also told consumers to allow the defendants to handle all aspects of the debt negotiation. The FTC alleges that the defendants rarely contacted consumers' creditors, causing consumers to damage their credit ratings and accrue additional late fees and finance charges.



• Grant Search, Inc., Grant Pac, Inc., of Ashland, Oregon; company officers.
  
  The defendants allegedly told consumers that they would match consumers with a suitable foundation "most likely to approve your grant," regardless of the purpose of the grant. The defendants offered the purported grants as substitutes for traditional credit to consumers who have bad credit histories.
  
  The FTC alleges that although consumers could buy the program at two different prices, they received the same outdated list of foundations regardless of which program they purchased. Consumers learned that individuals were not eligible for the vast majority of the grants. The defendants offered a 100 percent money-back guarantee of the application fee, but when consumers requested a refund, the defendants denied the refund based on certain conditions or restrictions that the defendants did not previously disclose.



• Bay Area Business Council, Inc.; Bay Area Business Council Customer Service Corp.; America Leisure Card Corp., of Largo, Florida; Peter J. Porcelli, II; Christopher Tomasulo; and Bonnie A. Harris.
  
  The defendants purportedly offered consumers guaranteed low-interest unsecured MasterCard credit cards. According to the FTC, although consumers paid as much as $499 to receive the credit card, most consumers did not receive the promised credit cards. A few received a "temporary" or "dummy" card with the MasterCard logo, the name "Bay Area Business Council," and a non-magnetic black stripe on the back. When consumers called to activate the card, the defendants told them for the first time that they had a debit card and not a credit card. The defendants also told consumers that they had to pay an additional fee and deposit money for any purchases made on the account. The FTC alleges that the defendants told consumers a specific amount during the sales call, but charged additional amounts.



• Credit Card Services and Destyni Enterprises, of Dallas, Texas, and the companies' owner.
  
  The defendants allegedly told consumers that for a $79 up-front fee, they would receive a Visa or MasterCard credit card. The FTC alleges that in many instances consumers received nothing from the company after they paid the fee. In a few instances, consumers received bank credit card applications that included additional fees or only offered secured credit cards. When consumers requested a refund, the defendants either ignored the request or informed the consumers that they must meet specific criteria that the defendants did not previously disclose.



• 1st Beneficial Credit Services LLC, doing business as First Beneficial Credit Services; First Beneficial Credit Services, Inc.; and American Capitol, of Toronto, Canada; and Viktor Golub, doing business as Platinum Express.
  
  The defendants' telemarketers, operating out of the Toronto area, called U.S. consumers and offered guaranteed Visa or MasterCard credit cards with substantial credit limits for a $199 advance fee. The FTC alleges that consumers never received the promised credit card.



• Premier Financial Services International, Inc., of Coral Springs, Florida; Premier Financial Services of Tennessee, Inc., of Nashville; First Financial Debt Consolidation Inc., of Oakland Park, Florida; and company officers.
  
  The defendants' telemarketers told consumers that they had been pre-approved for a major credit card, Visa or MasterCard, for a one-time fee ranging from $189 to $219. The defendants told consumers that the one-time charge was for the credit card and purported benefits packages. According to the FTC, the defendants assured the consumers that if the consumers paid the required fee, they would receive a credit card. In fact, the banks had not approved the consumer's request for a credit card. Consumers had to complete an additional bank application with the bank's own credit criteria, a fact not disclosed to consumers before the defendants debited the consumers' bank accounts.



• Westcal Equipment, Inc., doing business as Pioneer First; PF Member Services., Inc., of Buffdale, Utah; Robert Barr, Candace Rodriguez, Charles Schmidt, and Wayne Wrath.
  
  The defendants advertised their Pioneer First Platinum credit card in exchange for an advance fee of $189. The ads guaranteed consumers a Pioneer First Platinum card, with a $5000 credit limit and zero percent interest for 12 months, as long as the applicant is 18 years old, a legal U.S. resident, and has a checking account. The advertisements included the logo of a major credit card. In fact, the FTC alleges, the Pioneer First credit card is not a major credit card but a catalog card good only for purchasing merchandise through Pioneer First. The FTC alleges that the defendants debited consumers' checking accounts without authorization.



• Star Credit Services Inc. and company officers.
  
  The defendants guaranteed that the consumers who paid an advance fee would always obtain a loan for a desired amount regardless of past credit history, and further guaranteed refunds to any consumer who did not get a loan. Consumers typically did not receive the loans the defendants promised. Consumers also discovered, after they paid the advance fee, that they were required to submit a rejection letter from each and every lender before the defendants would issue refunds. According to the FTC, even those consumers who fulfilled the requirements to receive a refund were unsuccessful.



• Tyme Lock 2000, Inc., of Nevada, doing business as United Family Services and USA Membership Services; Total Resources, Inc.; and company officers.
  
  The defendants make unsolicited phone calls to consumers in some instances, telling them that for a fee of approximately $189, they will receive a major credit card, and either a personal computer, cell phone, or camera. Consumers paid by having the defendants debit their checking accounts. The FTC alleges that instead of receiving a credit card or other promised items, consumers received a packet of materials which included applications to banks for credit cards, and offers for computers or cell phones which required the consumers to contract with an internet service provider or a telephone company.

The FTC alleges that the defendants in all nine of the cases listed above engaged in deceptive practices in violation of the FTC Act and the Telemarketing Sales Rule (TSR). In each case, the FTC is seeking permanent orders prohibiting the defendants from engaging in similarly deceptive finance-related schemes, and is asking the courts to freeze the defendants' assets. Where appropriate, the FTC is also seeking the appointment a receiver.

The FTC also is launching an extensive consumer education campaign, including a Spanish language component, to help consumers avoid credit-related fraud. The FTC has several consumer publications: Advance-Fee Loan Scams Campaign, Knee Deep in Debt, Credit Repair: Getting Back in the Black Campaign; and Payday Loans. They are available on the Internet at http://www.ftc.gov/bcp/conline. Publications can also be obtained in Spanish at www.ftc.gov/spanish.