Current Events in July 2003

July 31, 2003

Hedstrom Corp. is recalling about 116,000 trampolines. Welds on the frame can break during use, causing consumers to fall to the ground and suffer injuries.

Hedstrom has received about 700 reports of one or more welds breaking from the trampoline frame rails during use, resulting in 10 minor injuries.

These are 12-foot, 13-foot, and 14-foot trampolines, which were sold separately, and also banded together with safety enclosures. They were sold under the brand names Hedstrom and NBF. The brand name is written on the warning labels found on the products.

The recalled trampolines have model numbers 10136, 101366, 101442, 10146, 102369, 102949, 10321, 103217 or 10381. They also have four-digit date codes ranging from 0403 through 2103 with the last two digits always being 03. Model I.D. labels showing the model number and date code are located on one of the frame rail legs on the trampoline.

The units were sold at department, toy, and discount stores nationwide between January 2003 and May 2003 for between $160 and $225 for the single trampolines, and between $320 and $360 for the trampolines banded together with safety enclosures.

Hedstrom is providing consumers with a free, in-home repair kit. Call Hedstrom at (800) 841-4351 between 8 a.m. and 8 p.m. ET Monday through Friday, or go to the company's Web site at www.hedstrom.com and click on Customer Service.

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

For the second time in three years, Equifax is in trouble for failing to promptly answer consumer inquiries about their credit reports.

Equifax Credit Information Services, Inc. will pay $250,000 to settle Federal Trade Commission charges that its blocked-call rate and hold times violated provisions of an earlier consent decree that settled a 2000 lawsuit for violations of the Fair Credit Reporting Act (FCRA). That lawsuit settled charges that Equifax did not have sufficient personnel available to answer the toll-free phone number provided on consumers credit reports.

"Their being fined apparently didn't make an impression on them or change their behavior," said Phyllis of Manteca, CA, in a recent complaint to ConsumerAffairs.com. She was turned down for a loan when Experian said her address of 23 years was not correct.

"I have been unable to get a person to answer the phone, just recorded messages. I can't reach them on their web site because I wasn't turned down so I don't have a copy of the report which they require," she said, one of many similar complaints from consumers around the nation.

The FCRA is designed to promote accuracy, fairness, and privacy of information in the files of every consumer reporting agency. To provide consumers with the ability to resolve more easily inaccuracies in their credit reports, in 1996 Congress amended the FCRA to require Equifax and the two other major credit bureaus, Trans Union LLC and Experian Information Solutions, to provide consumers who receive a copy of their credit report with a toll-free telephone number and access to credit bureau personnel during normal business hours.

In January 2000, the three credit bureaus paid a total of $2.5 million to settle charges that each violated this provision of the FCRA. According to the FTCs complaints, the bureaus blocked calls from over a million consumers who wanted to discuss the contents of, and possible errors in, their credit reports, and kept others on hold for unreasonably long periods of time.

To ensure that credit bureau personnel were accessible to consumers, the settlements required that the bureaus meet specific performance standards, including limiting the number of calls that the agencies could block and the amount of time consumers could be placed on hold.

Equifax failed to meet the specific performance standards in the consent decree for blocked calls and hold times for certain periods in 2001. The settlement announced today will require Equifax to pay an additional $250,000 for violating the original consent decree.

Matt of Molalla OR writes (7/28/03): Like the legions of mystified Taurus owners I too have had my share of head gasket problems. I'm having a svc. tech. actually come to my house and repair the problem for around $300. It's a new system that I've never heard of before, called ThermalWeld). If it doesn't fix the problem there's no charge.

A few days later, Matt wrote:

The technician from ThermalWeld stopped by the other day and the whole process was fairly painless. It took about an hour of prep work on my part. Nothing more really than doing a common radiator "flush". If you're not handy you might want to have someone help you here.

After only a few minutes and some simple questions the tech was ready to proceed and within moments of the treatment the plume of steam that came out of my exhaust pipe ceased and normal compression and performance resumed. There is something of a "break-in" period but the directions are clear and most anybody should be able to follow them. Make no mistake, my Taurus has plenty of other problems but leaky head gaskets is no longer one of them.

When I called a different dealer here in my local area he suggested I have an entirely new engine put in for around $5,000. All I could think is, I'll be back to square one with this same problem within 20,000 miles! I'll keep you posted as to longevity of the repair.

Automan replies:

There is a lot of magic stuff being advertised in even respectable trade magazines. The bottom line is if the head or gasket is slightly porous, or has a very small leak, it is possible to seal it if you are lucky. Bottom line is its easier to seal a drip than a flow.

I would be inclined to put this product in the same catagory as Motor Up, Tornado airflow gizmo, Fuel Magnet mpg optimizer.

As far as any "quick" repairs to a really blown head gasket, nothing will correct it short of gasket replacement/overhaul.

All the head gasket failures I have seen are from:

1. Lack of maintenance;
2. Clogged radiator, overheating cooling system, engine;
3. water only, no coolant;
4. wrong coolant;
5. bad gas, low octane gas, pinging, detonation;
6. engine in poor state of tune;
7. excessive hard usage, towing, mountain driving, teenage driving.

Some do have engineering defects but I have yet to really see them.

Small engines run hot and have less of a tolerance for the above-mentioned issues.

Sixteen moving companies and 74 individual owners, operators and employees are under federal indictment in connection with schemes that lured customers into doing business with the companies by offering low estimates and then fraudulently inflating the price of the move and withholding delivery of their goods until customers paid the inflated price.

The indictments, handed down after an extensive undercover operation by the FBI and other agencies, charge conspiracy, wire fraud, extortion, mail fraud, and making a false bill of lading. Some defendants have also been charged with conspiracy to commit money laundering.

"(These) indictments mark the most significant, concentrated attack by law enforcement against alleged corruption in the household goods moving industry," Special Agent in Charge William P. Tompkins of the U.S. Department of Transportation Inspector General's office said.

"Fraud in this industry affects thousands of victims every year in the United States," Tompkins added. "The unsealing of the Indictments today should make it clear that law enforcement efforts are focused on eradicating these types of illegal activities."

Investigators said the defendants represented themselves as a reputable and long-established moving company. They provided low moving estimates to customers to induce them to hire the company to move their goods. Once the customer retained the company, employees would arrive at the customers home, pack the customers belongings in a moving truck, and then typically rush the customers through the paperwork, causing them to sign blank or incomplete bills of lading and other documents, and failing to inform them of the total price of the move.

Once the customers goods had been loaded, the defendants would fraudulently inflate the total price of the move, often by thousands of dollars, claiming that the customers goods occupied more cubic feet than had been originally estimated and/or by overcharging the customers for packing materials.

When contacted by customers requesting the delivery of their goods, the defendants demanded full payment of the inflated price before delivery of the goods.

In many cases, the defendants would ignore customers repeated complaints about the inflated price and/or lied to the customers about the delivery of their goods, often using false names when dealing with customers over the telephone and in writing. When customers refused to pay the inflated price, the defendants arranged to warehouse customers goods and refused to divulge the location of the goods to customers. In some cases, the companies would refuse to adequately compensate customers for any damaged or undelivered goods.

Also, as part of this FBI investigation dubbed Operation Stow Biz, undercover agents posed in some cases as potential customers interested in moving their belongings. In each case, the moving company provided an estimate before loading the household goods into moving trucks. On each occasion, the moving company would later fraudulently inflate the price of the move and would thereafter refuse to deliver the goods until the inflated price was paid. In some cases, the inflated price was well over twice the original estimate.

Although the indictments charge 16 companies, the individual defendants charged are the listed owners and/or operators of over 40 different moving companies. In addition to the undercover operation, the Indictments identify 82 victims whose moves were fraudulently inflated by thousands of dollars.

"One of our quintessential freedoms is the freedom to move about the country, to change homes, careers, and, in essence, change our lives," said Marcos Daniel Jimnez, the United States Attorney for Florida's Southern District.

"These defendants struck at that freedom and used the victims own personal property to extort money. Their scheme is now over. These Indictments are a clear statement that we will not allow people to be cheated out of their own belongings by unscrupulous practices, Jimnez said.

Companies indicted include:

• Advanced Moving Systems
• Majesty Moving & Storage, Inc.
• Apollo Van Lines, Inc.
• America's Best Movers Company
• First Class Moving, Inc.
• The Movers Express, Inc.
• Star Movers, Inc
• All Points USA Relocation Systems, Inc.
• Century Express Van Lines
• Elite Van Lines Moving & Storage, Inc.
• Express Van Lines
• Moving Systems, Inc
• AAA Van Lines, Inc.
• Ameri Van Lines, Inc.
• Si Trucking, Inc.
• Southeastern Van Lines, Inc.

Federal safety regulators they have opened an investigation into 450,000 Dodge Durango SUVs and have upgraded an investigation into 217,000 Chrysler cars.

The National Highway Traffic Safety Administration NHTSA) opened the Durango investigation after receiving four complaints that the upper ball joint in the front suspension could fail, causing the driver to lose control. In two complaints, the wheel separated; in the other two, the suspension collapsed.

ConsumerAffairs.com has also received several reports of problems with the front suspension.

NHTSA also said it had 81 complaints that the ball joints wore out prematurely. The investigation covers 1998 through 2003 Durangos.

The upgraded investigation involves problems with the interlock between the ignition and the transmission on 1999 Plymouth Breeze and Dodge Stratus cars and Chrysler Sebring convertibles.

NHTSA said it had found 113 complaints where the key could be removed from the ignition without the transmission being in park, or where the transmission could be shifted out of park with the ignition off, both of which led to the vehicles rolling unexpectedly. The complaints include reports of 28 accidents and five minor injures.

July 9, 2003
HHS Secretary Tommy G. Thompson announced today that food labels will be required to list the amount of unhealthy trans fatty acids, or trans fat, to give consumers better information when choosing their foods.

The new requirement, issued by HHS' Food and Drug Administration (FDA), will mean that manufacturers of most conventional foods and some dietary supplements will have to list in the Nutrition Facts panel the trans fat content of the product, in addition to the information about its overall fat content and saturated fat content.

The additional information will give consumers a more complete picture of fat content in foods -- allowing them to choose foods low in trans fat, saturated fat and cholesterol, all of which are associated with an increased risk of heart disease. Reducing the intake of trans fat and saturated fats is recommended by the federal Dietary Guidelines for Americans.

However, while the new labels must state how many grams of trans fat a food contains, they won't put this amount in context by stating what percent of the Recommended Daily Value of trans fat you get from the product.

"It will be hard for people to tell if a given number of grams of trans fat is a lot or a little," said Margo Wootan of the Center for Science in the Public Interest, which petitioned the Food and Drug Administration to require trans fat labeling. "Five grams may not seem like a lot, but it is."

Nevertheless, Wootan said, the new label will allow consumers to compare trans fat from product to product, "and that will be a great step forward." The label also will spur food companies to reduce trans fat, she said.

Under the new FDA regulations, by Jan. 1, 2006, consumers will be able to find trans fat listed on food nutrition labels directly under the line for saturated fat. The new information is the first significant change on the Nutrition Facts panel since it was established in 1993.

The new labeling reflects scientific evidence showing that consumption of trans fat, saturated fat and dietary cholesterol raises low-density lipoprotein (LDL) cholesterol ("bad" cholesterol) levels that increase the risk of coronary heart disease. Nearly 13 million Americans suffer from coronary heart disease, and more than 500,000 die each year from causes related to coronary heart disease.

Trans fat occurs in foods when manufacturers use hydrogenation, a process in which hydrogen is added to vegetable oil in order to turn the oil into a more solid fat. Trans fat is often but not always found in the same foods as saturated fat, such as vegetable shortening, some margarines, crackers, candies, cookies, snack foods, fried foods, baked goods, salad dressings, and other processed foods.

"Our choices about our diets are choices about our health, and those choices should be based on the best available scientific information. This label change means that trans fat can no longer lurk, hidden, in our food choices," said Mark B. McClellan, M.D., Ph.D., commissioner of FDA.

"Americans will now be armed with better information to reduce their intake of saturated fat, trans fat and cholesterol - which could significantly lower the risk of heart disease, the leading cause of death in America today."

By providing more useful information to consumers seeking a healthy diet, the new labels are expected to reduce the costs of illness and disease for Americans. The FDA estimates that the changes in regulations will save between $900 million and $1.8 billion each year in medical costs, lost productivity and pain and suffering.

The new label is part of the department's broader efforts to more effectively inform consumers about the health consequences of their dietary choices. The agency hopes to improve the nutrition label to provide clearer, up-to-date guidance on a healthy overall diet. FDA is also working to increase the focus on health in food product development and promotion, as well as encouraging research that would foster greater science-based competition among food producers to improve health.

The National Heart, Lung and Blood Institute (NHLBI) at HHS' National Institutes of Health (NIH) supports the new labeling.

"Trans fat, like saturated fat and dietary cholesterol, raises LDL "bad" cholesterol levels in the blood, which increases the risk for heart disease," said Dr. Claude Lenfant, director of NHLBI. "It is therefore desirable to have food labels display all the information that can help consumers choose foods low in saturated fat, trans fat and cholesterol as part of a healthy diet."

Although some food products already list trans fat on the food label, food manufacturers have until Jan.1, 2006, to add it to the nutrition label. This phase-in period minimizes the need for multiple labeling changes and allows small businesses to use up current label inventories. The FDA will allow manufacturers to implement the change more quickly, and in fact expects many manufacturers to start listing trans fat content soon.

In addition, dietary supplement manufacturers will now need to list trans fat, as well as saturated fat and cholesterol, on the Supplement Facts panel when their products contain more than trace amounts (0.5 gram) of trans fat. Examples of dietary supplements that may contain trans fat are energy and nutrition bars.

The new requirements are included in final FDA regulations to be published in the Friday, July 11, Federal Register.

FDA today also is issuing an advanced notice of proposed rulemaking to solicit information and data that could lead to further changes in nutrition and product labels related to trans fat, saturated fat, and cholesterol.

"While giving consumers accurate information about the trans fat content of their foods is an important step forward, we must do more to help consumers improve their nutrition," said Dr. McClellan. "Consequently, we are also giving notice that we intend to take further steps to increase consumer understanding of the importance of limiting consumption of trans fat, saturated fat, and cholesterol in their diet."

While Japanese-branded vehicles continue to dominate in terms of long-term vehicle quality, the Europeans have lost their edge over the U.S. domestic-branded vehicles, according to the latest J.D. Power and Associates 2003 Vehicle Dependability Study.

The 2003 study, which measures problems reported by original owners of 2000 model-year vehicles at three years of ownership, finds that although there is near parity between U.S. Domestics and Europeans in terms of initial quality, substantial quality gaps appear between the Domestics and the Europeans in long-term durability. On average, models by domestic automakers outperform the Europeans by 49 problems per 100 (PP100) vehicles at three years of ownership.

"Conventional wisdom said that dependability was the property of the Japanese and Europeans," said Joe Ivers, partner and executive director of quality/customer satisfaction at J.D. Power and Associates.

"While thats still true for automakers like Toyota and Honda, its no longer the case for many of the Europeans. Porsche, Jaguar, Saab and BMW perform well above the industry average in dependability, but many other European brands are bought based on a reputation for long-term quality and fall far short of even the average. This is in stark contrast to the results of the first vehicle dependability study, conducted in 1990, when Mercedes-Benz led the industry."

Toyota boasts nine models with top segment rankings, followed by Ford Motor Company and General Motors with three each, and American Honda and Porsche with one each. Lexus is the top-ranked nameplate for the ninth consecutive year. Porsche leads the corporate ranking, while Toyota leads among the full-range vehicle manufacturers. General Motors is the only domestic manufacturer to rank above the industry average in the corporate rankings, with 12 models finishing in the top three of the segment rankings, second only to Toyota Motor Sales with 13.

Other notable performances in the 2003 results include Subaru and GMC, which both performed considerably better when measured at three years than when they were measured at 90 days of ownership. At the other end of the spectrum is Mercedes-Benz, which experiences the largest quality gap between initial quality and long-term quality measurements. Also deteriorating more rapidly than the average vehicle are Audi and Volvo.

Some problems that occur much more frequently as vehicles age include excessive brake wear, air conditioning system issues, wind noise and the replacement of components not called for under the normal maintenance schedule. New problems that arise as vehicles age include issues with shocks and struts; faded, cracked or worn materials; worn or broken moldings; cracked and peeling paint; and various fluid leaks.

Long-term quality measures have a big consumer impact. Among new-vehicle buyers, 52 percent indicate that long-term durability is among their most important factors in choosing a vehicle. Further, among used-vehicle buyers, 42 percent report buying a used vehicle instead of a new vehicle because they felt that the quality of the used vehicle is as good as a new one. This is particularly true among luxury used-vehicle buyers.

"With the proliferation of long-term warranties being offered on new vehicles and the increasing popularity of manufacturer-sponsored used-vehicle certification programs, long-term quality issues are critical to manufacturers and their bottom lines," said Ivers.

"Manufacturers must align themselves with consumer expectations for durability. Long-term quality issues have a substantial impact on customer retention, even among got to have models that seem impervious to quality issues at their introductions."

The 2003 Vehicle Dependability Study is based on responses from more than 55,000 original owners of 2000 model-year cars and light trucks. The study covers 147 specific problem symptoms grouped into nine major vehicle systems. For the first time, the study reviews models at three years of ownership instead of the historical four- to five-year period in order to better support manufacturer product improvement efforts in next-generation replacement models.

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firms quality and satisfaction measurements are based on responses from millions of consumers annually.

You'll soon be able to switch cell phone carriers without losing your number. Verizon Wireless has lost a court challenge that sought to overturn a federal rule requiring companies to let users keep the same phone numbers when they switch carriers.

An appeals court in Washington upheld the Federal Communications Commission regulation, which takes effect Nov. 24. Some members of Congress, under heavy lobbying by the cell-phone industry, have said they may seek to postpone the rule.

Mobile-phone companies say the so-called number portability rule will cost the industry $1 billion to upgrade their networks, plus $500 million a year. They say the fact that millions of customers switch carriers each month without number potability proves it isn't needed.

At an April hearing, judges on the appeals court were skeptical and said they doubted claims that the phone number rule isn't necessary to protect consumers.

"The simple truth is that having to change phone numbers presents a barrier to switching carriers, even if not a total barrier, since consumers cannot compare and choose between various service plans and options as efficiently," Judge Harry Edwards wrote for the three-judge panel of the U.S. Court of Appeals for the District of Columbia.

The Federal Communications enacted a rule requiring number portability in 1996. Verizon Wireless and the cell phone's trade association -- the Cellular Telecommunications and Internet Association -- challenged the rule in court.

Association President Tom Wheeler said his group is disappointed by the decision and said the FCC will now have to define "basic how-tos" involving number portability.

Verizon said it will not appeal the court's decision but called it "bad public policy" and said the rule will divert resources from improving network quality, customer service and developing new products.

There are about 146 million U.S. mobile phone users, or about half the population. At the six largest U.S. cellular operators, an average 2.5 percent of customers disconnect their service each month, which amounts to several million people.

These products, which are being marketed as dietary supplements, actually contain a prescription drug ingredient that poses possible health risks. The products are being sold over-the-counter and are claiming to increase stamina, confidence and performance.

FDA has determined that the products actually contain the prescription-strength drug ingredient, tadalafil. Tadalafil is the active ingredient in Cialis, an Eli Lilly product approved in Europe to treat male erectile dysfunction.

An interaction between certain prescription drugs containing nitrates (such as nitroglycerin) and tadalafil may cause a drastic lowering of blood pressure. There is real danger that this product may be taken by patients taking nitrates since erectile dysfunction is often a common problem in people with diabetes, hypertension (high blood pressure), hyperlipidemia (high cholesterol), ischemic heart disease and in people who smoke.

FDA's Office of Criminal Investigations, with assistance from FDAs New Jersey and Atlanta Districts, executed federal search warrants in Georgia and New Jersey after finding these dietary supplements.

Consumers who have used these products and have medical concerns should consult with their health care providers. All consumers should be aware of the risks associated with these products.

The Federal Trade Commission has filed suit in U.S. District Court to shut down a cross-border scam that targets elderly U.S. citizens in a bogus foreign lottery scheme.

The scam operator and his telemarketers allegedly phoned consumers to tell them that they had won the Australian lottery, but that to claim their winnings, they would have to pay certain fees variously characterized as offshore account processing fees, taxes, or other fees.

The FTC complaint names Nanda Kumar Duraisami, also known as Nanda Kumar and D.N. Kumar, doing business as Best American Investment Service; Bellfield Rose International Corporation; BIC; and Melbourne International Bank.

The agency will seek a permanent ban on the operators deceptive and illegal practices and redress for consumers. The British Columbia Ministry of Public Safety and Solicitor General has initiated a parallel enforcement action and asset freeze in the Province of British Columbia, Canada.

The sale and trafficking in foreign lotteries is a crime in the United States, a fact that the telemarketers did not disclose to consumers. According to the FTC, consumers who sent money received nothing.

The FTC alleged that Duraisami and his telemarketers solicited cashiers checks and bank drafts made payable to these entities for thousands sometimes tens of thousands of dollars, claiming that these payments would secure winnings of several million dollars for each consumer.

Duraisami and his telemarketers, who used aliases to make these calls, also directed some consumers to make checks payable to International Banking Services, according to the FTC. Consumers mailed these checks to addresses in British Columbia. The FTC alleged that consumers payments were deposited into Costa Rican accounts that Duraisami controlled.

Earlier this year, the Federal Trade Commission launched a new Web site, www.ftc.gov/crossborder, to help consumers spot, stop, and avoid cross-border fraud. It contains information on recent FTC law enforcement actions against cross-border scam artists, as well as FTC coordination with law enforcement agencies in other countries to combat this multi-billion dollar problem.