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BestBank Executives Indicted

The bank's founder can't be found

Federal agents are looking for the founder of BestBank, the Colorado bank that collapsed in 1998, leaving taxpayers to pick up the $200 milion tab....

Federal agents are looking for the founder of BestBank, the Colorado bank that collapsed in 1998, leaving taxpayers to pick up the $200 milion tab.

Edward P. Mattar III, 63, and four others were indicted by a Denver grand jury last week. His last known addresses were in San Diego and Deerfield Beach, Fla. Mattar faces ten years to life in prison on charges that he made at least $5 million in a scam that bilked thousands of consumers and led to the bank's collapse. The other four defendants were taken into custody earlier this week.

BestBank worked with Century Financial of Fort Lauderdale, Fla., selling credit cards as part of a travel-club scheme aimed at consumers with poor credit histories.

Century Financial used telemarketers to contact potential customers and offered them travel-club membership. If they accepted, they were issued a BestBank credit card which was immediately hit with a $458 enrollment fee and other charges.

BestBank was closed by the Colorado Banking Examiner in July 1998. It had a portfolio of 500,000 Visa cards, at least half of which were in default.

The FDIC has written off the balances of those who paid exorbitant dues for the travel club. All accounts that were acquired by the FDIC through the failure of BestBank were cancelled as of March, 1999. Pueblo Bank and Trust. Co. acquired BestBank's assets, including some accounts not related to the travel club.

Indicted with Mattar were Jakc O. Grace Jr., 50, Hermosa Beach, Calif., former chief financial officer of the bank' Glenn M. Gallant, 45, Fort Lauderdale, co-owner of Century Financial; and Douglas R. Baetz, 52, Key West, Fla., another co-owner of Century Financial. They were arrested by the FBI in their home cities.

Besides the travel club scam, BestBank attracted customers with some of the country's best rates on certificates of deposit.

Besides taxpayers, large purchasers of CDs were big losers in the collapse. The FDIC says that depositors who had more than $100,000 in their accounts -- the maximum covered by the agency -- lost $27 million in the collapse.

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Leasecomm Settles Fraud Charges, Cancels $24 Million in Judgments

Leasecomm financed the purchase of business opportunities such as work-at-home schemes

Leasecomm Settles Fraud Charges, Cancels $24 Million in Judgments...

A finance company that allegedly used shady agents, deceptive contracts, and false claims to target thousands of would-be entrepreneurs will cancel $24 million in judgments allegedly obtained through deception and will reform all business opportunity financing contracts to settle charges by the Federal Trade Commission and an eight-state task force that the practices violated federal and state laws.

The law enforcement agencies charged that Leasecomm financed the purchase of business opportunities such as work-at-home operations using business opportunity sellers as its agents. According to the FTC, the contracts contained provisions purporting to waive consumers' defenses and allowing Leasecomm the right to sue consumers in Massachusetts, where it is based, rather than where consumers lived and purchased the business opportunity.

The FTC alleged that most consumers could not afford to travel to Massachusetts to contest Leasecomm's charges and had default judgments entered against them in the Massachusetts court. If they didn't pay, Leasecomm resorted to aggressive collection measures such as wage garnishment and property attachment to collect, even though Leasecomm knew or should have known that their vendors used deceptive practices to sell their business ventures and promote the financing, according to the FTC's complaint.

Leasecomm is a wholly-owned operating subsidiary of MicroFinancial Incorporated. Both companies are based in suburban Boston, Massachusetts.

"Leasecomm's customers got a one-two punch," said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "Leasecomm used sellers of highly suspect business opportunities to sell its financing, and then claimed it had no responsibility for their deception. Companies that try to hide behind the fine print in contracts and lie to consumers about what they're were signing, whether directly or through agents, simply do not pass muster."

"Leasecomm knowingly participated in a scheme that used the 'get-rich-quick' allure of selling products on the Internet to take advantage of thousands of consumers who were ultimately forced into debt," Massachusetts Attorney General Tom Reilly said. "This agreement relieves the debts of customers who fell prey to these 'business opportunities' and helps protect future consumers by requiring Leasecomm to change its business practices."

According to the FTC, the scheme worked as follows: Leasecomm Corporation financed business opportunities, including Internet web malls, multilevel marketing programs, medical billing software, coupon clipping programs and similar, often worthless, get-rich-quick schemes sold by third-party vendors.

Consumers typically made little or no up-front payments, but signed a contract, which Leasecomm called a lease, requiring payments ranging from $3,000 - $4,000 over a three or four year period. While consumers thought the contracts covered many items included as part of a business venture -- training, Web site design, and consumer leads, for example -- they didn't. They covered only one small part of the venture -- a "virtual terminal," for example.

Leasecomm drafted its contracts to ensure that customers paid even when the vendors used misrepresentations or fraud, or when the products or services failed to perform as represented, according to the FTC complaint.

The FTC alleges that Leasecomm knows or should know that many of its vendors engage in deceptive practices to sell their business ventures. In one case, a vendor signed up 1,882 consumers for a "business opportunity,"and nearly 1,500 went into default, the complaint alleges. Nevertheless, Leasecomm aggressively collected from many of those customers. Leasecomm pursues its customers "even when the customers have been defrauded and received nothing of value," the complaint alleges.

When consumers argued that the lease really financed an entire business venture that was fraudulent and that the virtual terminal was worthless without the other elements of the package, Leasecomm took the position that the consumer still had an obligation to pay in full. When consumers set up their own internet Web sites to share information on how to fight Leasecomm, company employees falsely posed as consumers and made misleading statements about other consumers' absolute obligation to pay Leasecomm, according to the complaint.

According to the FTC, when consumers failed to pay, Leasecomm sued them. The FTC alleges that Leasecomm has sued over 27,000 consumers in the past three years in Massachusetts courts, and, as of January, had 2,200 suits pending. Few of the customers could afford the expense of litigation in a distant city and most suffered default judgments the FTC alleges.

Although Leasecomm files its suits in Massachusetts, it aggressively enforces its judgments in the consumer's local forum. "Had Leasecomm filed the suits in the local forum in the first instance, customers might have been able to appear and present a defense," the complaint says.

According to the FTC, Leasecomm adds to the consumer injury by imposing high collection fees, not only for late payments, but for every collection call it makes and letter it sends. These practices substantially increase the total payments due under the Leasecomm contract, the complaint says.

Leasecomm, and its parent corporation, Microfinancial, Inc., have agreed to settle the FTC charges and similar suits filed by members of the State Task Force, comprised of the attorneys general of Massachusetts, Florida, Illinois, Kansas, North Carolina, North Dakota and Texas, and by the District Attorney's Office for Ventura County, California.

The settlement will:

  • bar misrepresentations about the terms of any contract -- including misrepresenting that consumers cannot raise defenses against Leasecomm;
  • require disclosure of material facts about a contract, including disclosure that Leasecomm, not the vendor, is financing the transaction;
  • require that if Leasecomm sues consumers, it does so "where the customer resides or signed the contract;"
  • require Leasecomm to vacate pending lawsuits filed in the wrong forum and correct any damage to the consumer's credit record;
  • require that Leasecomm invalidate illegal provisions of existing contracts, including waivers of defenses;
  • require that Leasecomm cancel and cease collections on approximately $24 million in final court judgments;
  • require that Leasecomm give consumers who are the target of more than 2,000 pending Leasecomm lawsuits currently filed in Massachusetts the option of having the suit conducted locally;
  • require that consumers who were unlawfully required to agree to electronic funds transfers be given the option to switch to another payment method.

The FTC has set up a special Web site for consumers who may be affected by this case at http://www.ftc.gov/ro/leasecomm/index.htm. It also has established a special phone number to provide information for consumers at: 202-326-3445.

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Dog Food May Carry "Mad Cow Disease"

The Canadian government prevented the BSE positive cow from being processed for human food

The Food and Drug Administration reports that a Canadian cow that tested positive for BSE, also known as mad cow disease, may have been used to manufacture...

The Food and Drug Administration (FDA) reports that a Canadian cow that tested positive for bovine spongiform encephalopathy (BSE, also known as mad cow disease) may have been used to manufacture dry dog food, some of which was reported to have been shipped to the United States.

The Canadian government prevented the BSE positive cow from being processed for human food.

The FDA noted that there is no scientific evidence to date that dogs can contract BSE or any similar disease. In addition there is no evidence that dogs can transmit the disease to humans.

FDA notified the U.S. pet food firm, The Pet Pantry International, of Carson City, Nevada, when FDA learned that the pet food that the firm received may have included rendered material from the BSE positive cow. The manufacturer of the pet food is Champion Pet Food, Morinville, Alberta.

Even though there is no known risk to dogs from eating this dog food, as a prudent measure to help assure that the U.S. stays BSE free The Pet Pantry International is asking its customers who may have purchased the suspect product to hold it for pickup by the distributor so that the dog food will not mistakenly be mixed into cattle or other feeds if any of the dog food is discarded.

The suspect dog food was produced by Champion Pet Food between February 4, 2003, and March 12, 2003.

The Pet Pantry products were packaged in 50 lb bags, distributed to franchises around the country, and sold by home delivery only. There was no retail distribution of the product. Consumers purchase Pet Pantry products by phone or email orders. The product is then delivered by the nearest franchisee directly to the consumers home.

The product subject to this notification includes Maintenance Diet labeled with a use by date of 17FEB04 and Beef with Barley with a use by date of 05MAR04. Consumers who have purchased dog food from The Pet Pantry since February of this year are asked to check their present supplies and see if any match the description of the product being removed. If so, consumers are asked to contact The Pet Pantry at 1-800-381-7387 for further information on how to return the product to The Pet Pantry for proper disposal.

Consumers are asked not to destroy or discard the product themselves. The Pet Pantry will also use its sales records to contact consumers who purchased the affected product.

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Ford Recalls F150, F250 Pickups & Expedition

Ford Recalls F150, F250 Pickups & Expedition...

May 24, 2003
Ford is recalling 185,000 pickup trucks and sport-utility vehicles to inspect a steering part that might have been improperly installed and could lead to a loss of control.

Ford said the recall would cover 1997 model year F150 and F250 pickups, as well as Ford Expedition SUVs. It said it has three reports of accidents with two reports of minor injuries relating to the problem.

The automaker said an intermediate steering shaft yoke may have been installed improperly. It expects that less than 1 percent of the vehicles will have a problem and need to be repaired.

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Girls Gone Wild Producer Faces Criminal Charges in Florida

Joe Francis gets his jet back but not his Ferrari

Girls Gone Wild Producer Faces Criminal Charges in Florida...

A judge in the Florida Panhandle has returned a business jet leased by the producer of "Girls Gone Wild" but is letting the sheriff keep the keys to Joe Francis' Ferrari, at least for now.

Francis, 30, of Las Vegas, faces 22 criminal charges, including racketeering and promoting the sexual performance of children after being arrested in Panama City during spring break. Three crew members also face various criminal charges.

Judge Dedee Costello released the 12-seat Grumman jet after a hearing. Bay County sheriff's deputies seized both the jet and the Ferrari on April 2, claiming they were used to transport people and equipment for videos featuring underage girls.

Lawyers had argued that no crimes were alleged to have been committed in the jet or the car.

Francis and his production company, Mantra Films Inc., may also find themselves facing civil actions from angry consumers and federal and state agencies. There have been hundreds of complaints filed with consumer Web sites and regulators about the company's sales practices.

Most of the complaints are similar to one from David of Damascus, MD: "I ordered 2 videos from GGW. I received those videos. They continued to send me other videos which I did not ask them to send. They have charged these videos to my bank account without my knowledge."

Consumers who order a single tape for $9.95 from an infomercial or the Internet soon find that they are receiving a tape each month for $24.98. The subscription arrangement is disclosed in fine print on the company's Web site but consumer advocates say the company's practices are deceptive.

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Credit Rating Can Affect Insurance Premium

Practice May Be Illegal if Disclosure Is Lacking

Credit Ratings Can Affect Insurance Premiums...

May 19, 2003
Your credit rating can affect a lot more than you may think. Increasingly, insurance companies are factoring in credit ratings as one of the elements they use to set rates for new and existing customers. Credit card companies may jack up the interest rate on existing accounts because of adverse entries on your credit report.

While controversial and, to many, disasteful, such practices are not, by themselves, illgal. However, if the insurance company or credit card issuer fails to send the consumer a notice of adverse action under the Fair Credit Reporting Act, there may be a violation of that federal statute.

The FCRA requires a company that uses a credit report to take an adverse action (raising rate/premium amount) to give the consumer written notice, thus giving the consumer a fair opportunity to examine the credit report and dispute any entries.

It has been alleged in a class action filed in Florida in March that homeowners were hit with PMI policy premium increases after a check of their credit report, without being given the required legal notice. Consumers, like David of Clarksville, have told us of similar increases on their homeowner's policy.

Motorists can also be hit with premium increases because of their credit report, even though it's hard to see how this relates to their likelihood of having an accident. It happened to Erin, though her insurer apparently stayed within the letter of the law by informing her of the reason for the increase. Many others aren't so lucky and thus don't have a chance to contest the increase.

If this has happened to you, please let us know about it by filing a consumer complaint.

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Sony Playstation 2 Defective, Class Action Charges

Suit alleges the company deceived thousands of consumers by marketing PlayStation 2 as a DVD player and a video-game unit

Sony Playstation 2 Defective, Class Action Charges...

Consumers have been complaining for more than a year that Sony's Playstation 2 video game machine stops reading DVDs and certain types of games, often when the unit is just a few months old. Now, a class-action lawsuit has been filed against Sony, alleging the company deceived thousands of consumers by marketing PlayStation 2 as a DVD player and a video-game unit.

"My son bought a Sony Playstation 2 in September. By Christmas, it stopped working with a Disc Error, cannot read disc," Janet of Graniteville, SC, complained to ConsumerAffairs.com.

Despite numerous consumer complaints, the company claims it's an insolated problem.

"I have spoken to numerous people who have called Sony about this -- mind you, which isn't caused by normal wear and tear or misuse of the system -- and Sony still refuses to confirm that this is a mistake within the system," said Andrew of Warren, PA in his report to ConsumerAffairs.com.

The suit charges that PlayStation 2 is not a reliable DVD player and that playing certain DVDs can shut down the unit. Sony denies deceiving consumers.

Sony is fighting the suit and contends the problem is not caused by the unit's design or by Sony's manufacturing process. It blames dust particles, dirt, fingerprints and scratches on the discs for the problems.

Sony urges consumers with PlayStation 2 problems to contact the company at (800) 345-7669 or check the PlayStation 2 Support Web site.

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Bad-Check Chasers Charged with Fraudently Collecting Millions

Threatened consumers with arrest unless they paid off non-existent debts

Bad-Check Chasers Charged with Fraudently Collecting Millions...

The Federal Trade Commission (FTC) has obtained a temporary restraining order against three corporate defendants in Secaucus, New Jersey, halting an alleged nationwide scheme to extract millions of dollars from consumers by falsely threatening them with arrest and prosecution unless consumers immediately pay off non-existent debts.

The complaint alleges the six defendants violated the FTC Act and the Fair Debt Collection Practices Act (FDCPA) by:

  • threatening to initiate civil and/or criminal charges against consumers if they failed to pay the debt, when the defendants had no intention to do so;
  • making harassing telephone calls and using abusive techniques to collect or attempt to collect the supposed debts;
  • falsely claiming that consumers owed up to $130 more than the amount of the actual debt; and
  • stating or implying that certain communications were from an attorney, when often they were not.

The complaint also charges the defendants with misrepresenting the amount of the debt when they added extra charges without telling consumers. In addition, the defendants allegedly failed to inform consumers of their right to receive more information about the debt or to dispute the defendants' claims prior to payment.

The following defendants are named in the complaint:

  • Check Investors, Inc., d/b/a National Check Control (NCC), a New Jersey Corporation with its principal place of business in Secaucus, New Jersey;
  • Check Enforcement, Inc., d/b/a Goldman Check Systems, of Secaucus, New Jersey;
  • Jaredco, Inc., d/b/a Goldman & Co., of Secaucus, New Jersey;
  • Barry S. Sussman of Fort Lee and Secaucus, New Jersey, principal of Check Investors, Jaredco, and Check Enforcement;
  • Elisabeth M. Sussman (a.k.a. Elisabeth Rabin), wife of defendant Barry S. Sussman and a principal and sole director of Jaredco; and
  • Charles T. Hutchins of Farmingdale, New Jersey, an attorney who has been general counsel to corporate defendants Check Investors, Check Enforcement, and Jaredco.

"Threats, lies, and harassment are never legitimate debt-collection techniques," said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "In this case, they were the foundations of a fraud. These defendants not only extracted money that consumers didn't owe, but also falsely threatened them with criminal prosecution."

According to the Commission, between 1995 and the present, the defendants operated Jaredco, Check Enforcement, and Check Investors (the NCC defendants), firms designed to collect consumer debts for checks returned for non-sufficient funds (NSF checks). Since at least January 2001, the companies employed Hutchins as their general counsel.

According to the FTC, NCC first buys NSF checks at a substantial discount from large commercial retailers and others. It then collects payment on the checks - most of which are more than two years old - on their own behalf. NCC contends it holds more than three million NSF checks and makes initial contact with more than 150,000 consumers per month nationwide in order to collect payment.

NCC collects the debt through letters and telephone calls to consumers. The FTC alleges that for every purported NSF check, NCC demands immediate payment of a total sum that includes the face value of the NSF check and additional fees of $125 or $130, regardless of the amount of the original NSF check. While most states limit the amount a debt-collector can charge for an NSF check to about $30 per check, NCC typically charged consumers three to four times as much, according to the FTC.

For example, one woman allegedly wrote an NSF check for $22 to a pizza delivery company in 1999. Although she had already paid the debt, NCC contacted her in 2002 and demanded $152.

In its letters and phone calls to consumers, NCC does not explain the basis for the additional charges, the FTC alleges. NCC's letters to consumers lump together the amount of the initial check and the additional charges, identifying the debt as "Total Due," "Amount Due," or "Amount Required." These additional charges are illegal in many states.

According to the FTC, he letters also represent that NCC, or commercial clients of NCC, will bring civil and/or criminal action against the consumers unless they pay the full amount NCC claims they owe.

For example, one form letter sent to consumers under the letterhead "Charles T. Hutchins, Attorney at Law" warns that Hutchins' "client" is considering criminal and civil action against the consumer for issuing "fraudulent checks." Another form letter identifies itself as a "NOTICE OF INTENT TO RECOMMEND CRIMINAL PROCEEDINGS," stating, in part: "YOU ARE HEREBY ADVISED THAT CRIMINAL CHARGES ARE BEING RECOMMENDED AGAINST YOU."

Along with the threatening letters, the Commission alleges that defendants often called the purported debtor and his/her relatives as well, threatening arrest for check fraud if they failed to make immediate payment to NCC for the full amount demanded. These phone calls continued for up to six months, during which time the defendants allegedly failed to inform consumers of their right to verify the debt or file a dispute of the charges as required by the FDCPA.

Despite NCC's alleged threats to prosecute, the FTC is aware of no consumers who were ever arrested for failing to pay NCC.

The FTC complaint charges defendants with numerous violations of the FDCPA, which protects consumers from unfair or threatening debt collection practices, and the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce. The complaint contains seven separate counts:

Alleged FDCPA Violations

  • Count I - communicating with third parties without permission;
  • Count II - harassing, oppressive, or abusive debt collection;
  • Count III - false threats of criminal and civil prosecution;
  • Count IV - unfair and unconscionable practice of collecting amounts not authorized by law; and
  • Count V - failing to notify consumers of their right to dispute and obtain verification that debt is actually owed.
    FTC Act Violations
  • Count VI - falsely representing the debt owed which is not due;
  • Count VII - falsely representing that: a) communications are from an attorney; b) nonpayment of the debt will result in imprisonment, garnishment of wages, or attachment of property; c) NCC will take legal action, and; d) the consumer has committed a crime.

In filing its complaint, the FTC seeks injunctive relief to stop immediately the alleged activities, disgorgement of ill-gotten gains, restitution and consumer redress as deemed appropriate by the court.

Assistance in the case came from: U.S. Postal Inspection Service; Postal Inspectors from the North Jersey/Caribbean Division; the U.S. Attorney's Office for the District of New Jersey; the Secaucus, New Jersey Police Department; and the following states -- Colorado, New Jersey, Maine, Minnesota, Washington, and West Virginia.

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Bridgestone Steeltex Tires Recalled

Bridgestone Steeltex Tires Recalled...

May 15, 2003
Bridgestone/Firestone is recalling 42 Steeltex radial tires. The tires have the same type of defect that led to the massive recall of Firestone Wilderness tires used on popular SUVs, the National Highway Traffic Safety Administration (NHTSA) administration said.

The NHTSA announced the recall of Steelex tires manufactured between March 9 and March 15 because of potential tread separation defects that "can possibly lead to a vehicle crash, resulting in serious injury or death," it said on its Web site.

The recall comes just as NHTSA is reviewing whether it should reopen its investigation of 27 million Steeltex R4S, R4SII and A/T tires.

Los Angeles attorney Joseph Lisoni, who has been pressing NHTSA to take a second look at the tires, has filed a $3 billion proposed class action accusing Bridgestone of concealing defects in the heavy-duty tire.

The lawsuit claims the tire, installed on 43 types of vehicles such as pickups, vans and mobile homes, has caused thousands of serious accidents including fatalities. Bridgestone says the latest recall is unrelated to the lawsuit.

NHTSA is expected to make a decision by May 27 on whether it will reopen that investigation.

Bridgestone is still fighting rollover lawsuits in courts across the United States stemming from tread separation in its Wilderness tires, which were standard equipment on the Ford Motor Co. Explorer and other SUVs. About 20 million Wilderness tires were recalled, 14 million by Ford and 6.5 million by Firestone.

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Yale Hospital Will Stop Foreclosures

Yale-New Haven Hospital says it will stop foreclosing on the homes of patients unable to pay their bills and will wipe out $84,000 owed by 170 patients....

May 9, 2003
Yale-New Haven Hospital says it will stop foreclosing on the homes of patients unable to pay their bills and will wipe out $84,000 owed by 170 patients whose bills are more than five years old.

In February, Connecticut Attorney General Richard Blumenthal sued the hospital for failing to use millions of dollars in so-called "free bed funds" money donated for the purpose of providing free patient care to the indigent. Blumenthal alleges that rather than use available free bed funds, Yale New Haven billed and sought to collect payment from needy patients.

Blumenthal charged that although the hospital's free bed fund has grown to $37 million, it has systematically failed to inform patients about the fund's existence, has made it difficult for them to apply and has adopted aggressive collection policies.

"The hospital billed needy patients when it had millions of dollars donated specifically to provide free medical care. Yale New Haven failed to use the money as donors intended, violating its legal fiduciary duty. It hoarded millions intended to help provide health care, and hired collection agencies to pursue patients improperly billed," said Blumenthal.

"In many instances it required patients to apply for government assistance, shifting the financial burden to taxpayers. As the amount of free bed funds rose, the Hospital reaped the interest income for other purposes."

Yale-New Haven has not formally responded to Blumenthal's lawsuit and the hospital's latest action stops short of addressing all of the issues Blumenthal raised.

Although the hospital initially said it was "shocked and surprised" by the suit, the issues are hardly new. As early as May 2001, the New Haven Advocate wrote about the hospital's billing practices in an article headlined "Heartless Hospital."

According to the lawsuit, Yale New Haven Hospital:

  • Improperly created a number of barriers to the use of free bed funds by needy patients. For example, the Hospital has determined that Medicare Patients, regardless of their financial status, are automatically disqualified from receiving free bed funds even though their bills may exceed the amount reimbursed by Medicare or may not be covered by Medicare at all.
  • Failed to inform patients who might be eligible of the existence of the funds and has instead initiated aggressive collections actions including wage garnishment and attaching real estate -- against them when they are unable to pay their bills.
  • Improperly set arbitrary income eligibility requirements that are not contained in the gifts creating the funds.

Earlier this year, The Wall Street Journal profiled a New Haven widower who was still sruggling to pay a $38,000 hospital bill that resulted from his late wife's treatment there in 1982. The hospital forgave the bill after the story appeared.

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Court Order Snags Cell Phone "Radiation Protection Patches"

Defendants claimed that their products could block up to 99 percent of radiation

Court Order Snags Cell Phone Radiation Protection Patches...

The Federal Trade Commission has reached a settlement with Comstar Communications, Inc. and its president, Randall A. Carasco, who marketed and sold "WaveShield," "WaveShield 1000," and "WaveShield 2000" -- so-called cell phone "radiation protection patches."

Using television, radio, and Internet advertising, the defendants allegedly claimed that their products could block up to 99 percent of radiation and other electromagnetic energy emitted by cellular telephones, thereby reducing consumers' exposure to this radiation. In February 2002, the FTC issued a complaint against the West Sacramento, California-based defendants alleging that the claims were false and unsubstantiated.

The order prohibits the defendants from the future marketing or selling of any product that claims to reduce consumers' exposure to radiation and electromagnetic energy, unless the claims are true and can be substantiated by competent and reliable scientific evidence. The order also prohibits the defendants from making unsubstantiated representations about the benefits, performance, or efficacy of any product or service.

The settlement requires the defendants to clearly disclose that most electromagnetic energy emitted by cell phones comes from parts of the phone other than the earpiece, where the WaveShield is placed, and that the WaveShield has no significant effect on this other radiation.

Additionally, the settlement prohibits the defendants from misrepresenting the results of any test, study, or research.

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Baby's Dream Cribs Recall

Baby's Dream Cribs Recall...

May 6, 2003 -- Baby's Dream Furniture is voluntarily recalling about 4,600 wooden convertible cribs manufactured from January to August 2001 to repair hinges on the drop gate.

The three hinges along the fold-down drop gate can crack or break and allow babies to have their fingers pinched. Baby's Dream has received 38 reports of broken or cracked hinges, but there have been no injuries reported.

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

The recalled cribs were sold under either the Baby's Dream Furniture label or the National Baby Furniture label in five different models. The five models included in the recall are "Always Crib," "Crib 4 Life," "Legendary Crib," "Set 4 Life," and "Crib-2-College."

The wooden cribs are honey, amber or cherry in color. The model names and the date of manufacture appear on a label on the lower inside of the frame. "Made in USA" is also printed on the label. Juvenile furniture and retail stores nationwide sold these cribs for between $300 and $400.

In addition, an unknown number of Baby's Dream cribs made between 1996 and 2002 may have drop gate trigger latches that are not correctly aligned to fit securely into the strike plate on the crib post. A misaligned latch where the latch trigger does not lock securely can allow the drop gate to open if a child leans on it, and the child could fall out.

Baby's Dream and CPSC have received two reports of injuries to children when the latches did not hold. Injuries included one report of a child whose head was bruised after falling onto the floor when the drop gate latch failed and one report of a crushed finger when the rail unexpectedly moved inward when the parent leaned into the crib. There were five additional reports of children falling out of cribs who received no injury.

Consumers owning these Baby's Dream cribs should call Baby's Dream at (800) TEL CRIB (835-2742) between 7:30 a.m. and 5 p.m. ET or visit the firm's web site at www.babysdream.com to receive a repair kit for hinges and/or latches or for specific instructions for examining their latches. Consumers can also write to Baby's Dream Furniture Inc., at P.O. Box 579, Buena Vista, GA 31803-0579.

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Visa, MasterCard To Pay $3 Billion in Debit Card Suit

Consumers Win/Lose - Take Your Pick

Visa, MasterCard To Pay $3 Billion in Debit Card Suit...

Visa and MasterCard have agreed to pay $3 billion to settle a suit over debit-card fees filed by Wal-Mart, Sears and other large merchants. The companies will also stop requiring retailers to accept both their credit and debit cards and will lower their transaction fees by about $1 billion per year.

It's a clear win for big retailers, who will save from $1.5 billion to $2 billion annually in fees. It's a strategic win for the card companies, who saved themselves a lot of bad publicity if the case had gone to trial.

But is it a win for consumers? Both sides -- the stores and the card companies -- claimed to be fighting for the rights of consumers, but just how the settlement will help shoppers is open to debate.

"Consumers are the losers in all of this," said David Robertson of a credit card industry publication, the Nilson Report.

"It's a victory for both retailers and consumers because high fees have driven up the price of every product sold," said Mallory Duncan of the National Retail Federation.

Most analysts thought it unlikely that retail prices would drop as a result of the settlement, though it's possible that Wal-Mart and other discounters might shave a few cents off the average purchase.

Sears and Wal-Mart were barred from discussing the suit under a gag order issued by the court.

One thing everyone agrees on: the banks who make big money from debit fees -- J.P. Morgan Chase and Citigroup, among others -- will take a huge hit under terms of the settlement. That means they'll be looking for other ways to increase revenue, possibly through increased fees and interest rates.

In the class action suit on behalf of thousands of retailers, the stores argued that Visa and MasterCard unfairly required merchants to accept their debit cards, which require a customer's signature to verify a transaction. Retailers would rather use less expensive independent networks that clear debit-card purchases using a personal identification number (PIN).

Visa and MasterCard say the policy -- known to retailers as honor-all-cards -- increases consumer choice and offers better protection against fraud. The retailers say the higher fees wind up being passed on to consumers. The card companies charge transaction fees of about 1.7 percent for large retailers and about 2.5 percent for smaller ones.

The costs add up quickly for merchants. On a $100 purchase, a large retailer would pay 25 cents to 50 cents to clear a debit card purchase on a regional network, while it wuold pay about $1.75 to process it through Visa or MasterCard.

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