Current Events in January 2003

The Federal Trade Commission has charged a Switzerland-based company and its U.S. counterpart with making numerous unsubstantiated claims for a variety of dietary supplements and devices that they sell on the Internet. In its complaint filed in federal court, the Commission alleges that the defendants advertise that their products and programs can cure advanced and terminal cancers, AIDS, and other serious diseases.

The FTC's complaint names Dr. Clark Research Association (DCRA), a California corporation that uses a San Diego address; Dr. Clark Behandlungzentrum GMbH, a company based in Munchenbuchsee, Switzerland, and doing business as Dr. Clark Zentrum (DCZ), and their owner, David P. Amrein.

The products at issue are:

• the "Zapper," (sold as the "Super-Zapper Deluxe") a device that purportedly kills disease causing parasites in the body with electricity;
• the "Syncrometer," a device that purportedly can diagnose diseases;
• "Dr. Clark's New 21 Day Program for Advanced Cancers," a regimen that includes dietary supplements. It purportedly cures advanced cases of cancer, and, when used with the "Super-Zapper Deluxe," renders surgery and chemotherapy unnecesssary; and
• the "Complete Herbal Parasite Program" - also called the Herbal Parasite Cleanse.

"Zapping outlandish promises that appeal to health and safety concerns of U.S. consumers is one of our top priorities" said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "Unfortunately, questionable products abound on the Web. The FTC, with its partners, will continue the fight to protect consumers from these compelling but deceptive health claims."

Said FDA Commissioner Mark McClellan, M.D., Ph.D., "The FDA takes a dim view of devices that make phony claims to cure or treat serious disease or illness. Besides being a waste of money, such products can prevent the user from obtaining needed medical treatment.

According to the FTC, the defendants advertise and sell their products on the Internet at "www.drclark.net" and "www.drclark.com" The Web sites contains statements such as:

• "Cancer can now be cured....just like many other illnesses."
• "Electricity can now be used.....to kill bacteria, viruses and parasites in minutes, not days or weeks as antibiotics require." (Zapper claim)
• "We have seen amazing results in hopeless cases with this program that are nothing short of miraculous." (The 21 day cure for advanced cancers claim)

The FTC charges that the defendants did not have a reasonable basis to substantiate the claims made in their advertisements.

Hufco-Delaware Company and Evenflo Company Inc. are recalling about 364,000 portable wood cribs. If the hardware used to assemble the crib is not tight, the mattress support platform and mattress can fall to the floor. This poses a risk of injury to young children in the crib.

There have been 41 reports of mattresses falling through portable wood cribs. Of these incidents, 17 children suffered bumps, bruises or scratches.

The portable cribs are made of wood and are smaller than traditional baby cribs. The majority of these portable wood cribs were sold under the Gerry brand name, and some were sold under the Evenflo brand name. The recalled portable wood cribs have one of the following model numbers that can be found on a label on the mattress platform underneath the mattress:

Department and baby products stores nationwide sold these portable wood cribs from January 1991 through December 2002 for about $99.

Consumers should stop using these portable wood cribs immediately, and call (800) 582-9359 anytime for a free upgrade kit that provides additional support for the mattress platform. Consumers also can obtain further information about the portable wood cribs by logging onto www.evenflo.com (eventually this link will also be at www.portablewoodcrib.com).

No other cribs are included in this recall.

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

The Better Business Bureau (BBB) system warns consumers not to be misled by a web site that is "masquerading" as a consumer protection agency.

The site, www.consumerprotectionagency.us, offers to file a consumer's complaint with the BBB and various government agencies for a fee.

The site includes a form to file a complaint and pay $4.95 by credit card.

"There is no need for consumers to use third parties or to pay a fee in order to file a complaint with the BBB," said Ken Hunter, president and CEO of the Council of Better Business Bureaus.

Complaints can be mailed directly to BBBs for the price of a postage stamp. Or, anyone can file a complaint online with the BBB, for free, by visiting www.bbb.org and clicking on "File a Complaint."

The consumerprotectionagency.us has no address, phone number or other information posted on the site to enable a consumer to request additional information or assistance from that business, Hunter said.

In addition to the BBB, the consumerprotectionagency.us site indicates it will file complaints with the State Attorney General's office, the Federal Trade Commission and the U.S. Office of Consumer Affairs, a government office that was closed several years ago.

The site is registered to Online Application Corp., Forest Hills, NY. The BBB of Metropolitan New York reports that Online Application Corp. is one of several services of Taxes by CPA, a firm that has an unsatisfactory record with the BBB.

The company has been the subject of 43 complaints in the Bureau's three-year reporting period, and although the company has answered the complaints, customers are not always satisfied.

A federal district court has ordered several marketers to stop using Internet spam to sell so-called "international driver's permits" (IDPs). The Federal Trade Commission charges sellers who, under the guise of "international law," pitched their worthless documents to immigrants and other consumers who were seeking an alternative to a government-issued driver's license or identification document.

Authentic IDPs, which are available in the U.S. from only two authorized agencies, American Automobile Association (AAA) and American Automobile Touring Alliance (AATA), have a very limited use and purpose.

"The defendants deceptively marketed bogus documents," said J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection. "They misled people with limited English proficiency and those whose licenses have been revoked about the value and the purpose of the IDP. And they charged them exorbitant fees. We're pleased that the FTC can put this scam in park." He noted that while the permits being deceptively marketed on the Internet typically sold for between $65 and $375, the real IDPs offered by AAA and the AATA are just $10 apiece.

Legitimate IDPs, which are issued under the United Nations Road Traffic Convention of 1949, assist a person with a valid driver's license to drive in foreign countries that have also signed the Convention. Notably, an IDP is not a substitute for a government-issued driver's license; rather it is simply a booklet that translates that government-issued driver's license into a number of different languages. Therefore, IDPs merely serve as a translation document for a government-issued driver's license, and they have no value independent of such government-issued licenses. IDPs do not protect their holders from traffic enforcement or from "points," and cannot be used in place of suspended or revoked license, or as identification in lieu of a government-issued document.

"The FTC's action helps alert consumers to these scams, while letting bogus marketers know this conduct won't be tolerated," said Sandra Hughes, vice president of AAA Travel. "These scams lead innocent travelers to spend hundreds of dollars for false documents. Even worse, they encourage unlicensed drivers to return to our highways, endangering all of us."

The Complaints

The FTC filed complaints in federal district court against the following defendants:

• Yad Abraham (Abraham), also known as (a.k.a.) Tim Thorn and Timothy Thorn, individually and doing business as (d.b.a.) Sharpthorn Internet Solutions and Internex, LLC;
• Jaguar Business Concepts, LP d.b.a. Libertymall.com, Cheyenne Investment Alliance, LLC (Cheyenne), and Jacqueline Demer, individually and as member/manager of Cheyenne;
• Jordan Maxwell, a.k.a. Russell Pine, individually and doing business as BBCOA, a.k.a. BBC of America, a.k.a. Better Book and Cassette of America, and Vic Varjabedian, a.k.a. Victor Varjabedian, a.k.a. Varouj Varjabedian, individually;
• William Scott Dion, individually and d.b.a. PT Resource Center and PTRC, a.k.a. Don Glessner;
• Carlton Press, Inc., Carlton Press, Ltd., and Kim Fleming Bo Weiss; and
• one or more parties d.b.a. the Institute for International Licensing (IIL), Aladdin Financial Management, University Systems, and Wheelie International Limited.

In each complaint, the Commission alleges that, in violation of the FTC Act, the defendants falsely claim that their IDPs are a legitimate alternative to a state-issued driver's license, and misrepresent that: 1) their IDPs authorize consumers to drive legally in the United States; 2) their IDPs allow consumers to avoid points or traffic violations, as well as sanctions for driving with a suspended or revoked driver's license; and 3) their IDPs can be used in the United States as an identification document in the same ways that a person uses a government-issued photo identification document.

Consumer Education

Consumers seeking more information about how to avoid potentially deceptive ads for IDPs are encouraged to read the new FTC consumer alert: "Ads for International Driver's Licenses or Permits Could be a Dead End." This publication, which is available on the Commission's Web site also cautions consumers that it is against the law for U.S. citizens and residents to use an international driver's permit in place of their state-issued driver's license.

Another freebie is about to become a memory. Hertz, the world's largest car-rental company, has started charging car rental customers who want to collect frequent-flyer miles and other major companies are about to do the same.

The rental car business is in only slightly better condition that the big airlines, thanks to the slumping economy and the aftermath of 9/11. Hertz' fee, 50 cents a day, is an effort to close the profit gap without raising rates across the board.

No. 2 Avis says it will follow suit, as will co-owned Budget, though the amount of the fee has not yet been decided. ANC Rental, which owns National Car Rental and Alamo Rent a Car, says it may go a step further and pull out of the airline programs altogether, The New York Times reported.

Dollar Thrifty Automotive Group, which operates Dollar and Thrifty, says it doesn't have any plans to impose a fee, at least for now.

Travelers may regard the frequent-flyer miles as free -- but they cost the rental companies about two cents per mile. With the average rental car being driven 50 miles a day, that's $1 per day. Multiple that times millions of rentals per year and it's enough to catch a budget-cruncher's eye.

Hotels may be next to pull out of the programs or they may follow Hertz' lead and tack on another fee.

The frequent-flyer programs were once the golden children of travel marketing. But with travel in a prolonged slump and travelers increasingly turning to low-cost airlines, frequent flyer miles are being seen as a significant drain on profits.

Missouri Attorney General Jay Nixon has filed suit against Sprint PCS and Nextel Communications, charging the wireless carriers with listing charges on subscribers bills in an allegedly misleading and deceptive manner.

Nixon filed suit in St. Louis City Circuit Court on Dec. 5. The companies then filed to have the suit moved to federal court. The federal judge overseeing the case agreed to rule expeditiously on whether the case will go forward in federal court or be return to state court for trial.

Consumers are being led to believe that these charges are part of a tax or other government fee, when they are actually part of the companies overhead cost of complying with governmental regulations, said Nixon when the suit was filed.

Nextel and Sprint are understating their monthly rates by deceptively listing this amount on the bills. Other cell phone companies are incorporating the rate increase as part of the basic charge, and these two companies need to do so as well.

Two class action lawsuits have also been filed in Kansas City federal court against Sprint PCS and Nextel, in wireless billing complaints nearly identical to the one lodged by the Missouri attorney general.