Current Events in January 2004

The city of Philadelphia is the latest to file suit against Ford Motor Co. demanding that the automaker fix its Crown Victoria police cars, which have been involved in the deaths of at least 16 police officers.

Philadelphia joined lawsuits now pending in at least eight other states. It said taxpayers should not have to pay to improve the safety of the police cars, which are used by about 85 percent of U.S. police departments.

"Despite the lawsuits and deaths of police officers, Ford refuses to independently test their proposed fixes, refuses to pay for the best fix available and the fires continue," Philadelphia City Solicitor Nelson Diaz said.

The fuel tank on the Crown Victoria is behind the rear axle, exposing it to damage in high-impact rear-end collisions. Police cars are at high risk of such accidents since they are often parked on the shoulder of busy streets and highways at accident and crime scenes.

National Highway Traffic Safety Administration last year conducted an investigation of the Crown Victoria and concluded there was nothing inherently wrong with the car.

NHTSA said the car withstood a 30 mph rear-end collision without fuel spillage in excess of established limits. But the city of Dallas said last July that in two 75 mph crash tests, Crown Victorias equipped with an optional "trunk pack" had significant fuel leaks.

The trunk pack provides extra shielding, as do rubber and plastic shields Ford began adding to 2003 Crown Vics' gas tanks.

Philadelphia criticized Ford for charging extra for the trunk pack and for not seeking an independent source to recommend changes to the Crown Victoria.

Philadelphia officials say no police officers have been hurt in their city as a result of fuel tank explosions. But with 700 Crown Victorias in its fleet, the city wanted to offer the best protection available.

Herman has won multi-million dollar class action suits against Wal-Mart and Home Depot and has suits pending against other retail giants. He has not sought any money for himself and has not received any.

In the latest suit, Wal-Mart agreed to pay $7.35 million to settle Herman's suit charging the company with failing to comply with Massachusetts' tough item-pricing regulations.

Most of the money will be spent putting scanners in stores that will allow consumers to quickly learn the price of any item and print their own adhesive price tags. $1 million of the settlement will go to various charities and community services organizations in the Bay State.

Earlier, Home Depot agreed to pay $3.8 million in grants and to spend $20 million complying with the item-pricing regulations.

Herman's victories had humble beginnings. In 1999, he asked Home Depot's Quincy store to comply with the state regulation that requires retailers to mark the price on most items.

Home Depot ignored him. So Herman, a free lance writer with no legal background, asked Massachusetts Attorney General Thomas F. Reilly to assist him. Reilly did nothing. Herman then sued Home Depot in Small Claims Court and won $25.

Despite the Small Claims action, Home Depot still refused to bring its stores into compliance with the law. Herman then sued the chain in Quincy District Court. The case was eventually certified as a class action, affecting all stores in Massachusetts.

It was at this point that Attorney General Reilly finally swung into action. Stung by the cries of other retailers upset by the Home Depot verdict, Reilly softened the law to make life easier for the retailers.

Reilly's innovation? He amended the regulation to permit stores to install bar code scanners that let consumers print out their own adhesive price tags after scanning the item they are thinking of purchasing.

Herman had no comment on the most recent settlement. Neither he nor his attorney would identify the other chains still facing legal action.

January 21, 2004
Browning is recalling the CR123A lithium batteries sold with Browning Black Ice flashlights. The batteries can short out, causing the flashlight's canister to rupture and possibly injure the user.

There have been two reports of the flashlights rupturing. No injuries have been reported.

The recalled 3-volt lithium batteries were packaged in pairs with Browning Black Ice 6-volt Xenon 6 LED flashlights. The batteries were also sold separately in packs of two. No other Black Ice model flashlights are involved in this recall.

The flashlights were sold at hunting and sporting goods stores nationwide during December 2003 for about $50.

Consumers should remove the batteries from the flashlights and contact Browning for information on receiving a refund or replacement.

Consumer Contact: Contact Browning at (800) 637-0230 between 8 a.m. and 4:30 p.m. MT Monday through Friday or visit the firms Web site at www.Browning.com/recall.

The Federal Trade Commission has settled charges with four operations that allegedly lured consumers into investing in businesses that provided little or no return on their investment.

Internet Treasure Chest
In an Internet get-rich-quick scheme, operators claimed to offer a one fee, turn-key get-rich-quick Internet home-business, but tacked on requirements that cost hundreds or thousands of dollars more, have agreed to settle FTC charges that their advertising was deceptive and violated federal laws.

The settlement provides for $500,000 in consumer redress, bars deceptive claims associated with the sale of any goods or services, and requires the defendants to discontinue airing an infomercial they used to generate sales.

In May 2003, the FTC charged that End70 Corporation and its principal, Damien Zamora, used a Web site and infomercials to claim that their Internet Treasure Chest (ITC) business opportunity was very profitable and inexpensive.

Infomercials and a Web site claimed that Internet Treasure Chest will give you everything you need to start your own exciting Internet Business including your own worldwide Web site all for the unbelievable price of only $59.95. The Web site and infomercials also made earnings and income claims and testimonials such as: You dont need a lot of money to start an Internet Business. In fact, we started out of our home and now were on track to do $1 million in sales this year.

The FTC alleged that the cost and earnings claims were deceptive and misleading in violation of the FTC Act, and that the defendants misrepresentations violated the Telemarketing Sales Rule.

Based on financial statements provided by the defendants, they will pay $500,000 in consumer redress. Should their financial statements be found inaccurate, they will be required to pay $36 million.

The FTC has created a hotline for consumers affected by ITCs deceptive advertising scam. Consumers may call 202-326-3205 for more information

Vendco
In June 2002, the FTC filed a complaint against the operators of a Las Vegas, Nevada-based vending machine business scam. The defendants placed classified ads in newspapers and on the Internet soliciting telephone calls to the company.

The FTC charged that when consumers returned the calls, the defendants claimed that those who purchased an eight-machine package at $3,300 could gross $81,000 a year and net almost $50,000 a year while working only a few hours a week. The defendants also allegedly claimed that the vending machines would be placed in quality locations, with heavy customer traffic. They allegedly told consumers that their machines were backed with a one-year warranty and a 60-day location replacement warranty.

The FTC charged that the claims were false. According to the agency, investors did not achieve the earnings they had been promised. The FTC alleged that few even recovered the amount they had invested, and that the locations that the defendants provided were not high traffic areas. The agency charged the defendants with violating federal law, including the Franchise Rule, which requires parties covered by the Rule to provide general disclosure documents and an earnings claim document to prospective purchasers.

The settlement with Vendco, LLC and its principal, Curt Briguglio, also known as Curt Briggs, prohibits them from making any representations about the income a consumer will make from a vending machine or about the location at which a vending machine sold or provided by the defendants will be placed.

In addition, the defendants will pay $10,000 for consumer redress, which is based on their ability to pay. Should the representations about their financial condition be found to be inaccurate, $1.8 million, the total of their ill-gotten gains, will be due.

North American Vending
In another vending machine scheme, the FTC charged North American Vending, Inc and its principal, Terry Bird, with making unsubstantiated income claims in ads in business opportunity magazines. The ads included testimonials from apparent customers that said they made between $698 and $3,016. The FTC alleged that when prospective investors called, NAV employees made similar unsubstantiated claims.

The agency alleged that: (1) the ads did not disclose the number and percentage of prior purchasers who had done as well or better that the claims, as required by the Franchise Rule; and (2) the defendants failed to provide the complete basic disclosure documents required by the Rule. The settlement permanently bars the defendants from violating the FTC Act and the Franchise Rule and requires $22,000 for consumer redress.

"Operation Guardians is helping ensure that the 250,000 elderly and dependent adults who reside in the state's 1,400 skilled nursing homes are receiving the care they deserve," Lockyer said. "This program is succeeding in preventing loss, injury and death by identifying health and fire hazards, theft of patients' trust account funds and failures to provide adequate medical services to these vulnerable citizens before they can escalate into life-threatening problems."

Established in April 2000 by Lockyer as a pre-emptive, pro-active program, Operation Guardians uses multi-agency teams to conduct unannounced inspections of facilities and identify problems that threaten the dignity, safety, welfare and quality-of-life of the residents. Operation Guardians operates and inspected facilities in 16 counties: Alameda, Contra Costa, Fresno, Humboldt, Los Angeles, Monterey, Napa, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, Santa Barbara, Santa Clara, Sonoma and Ventura. Additional inspections were conducted at the request of three counties: Marin, San Mateo and Yolo.

"Elder abuse and neglect are very serious problems in California's nursing homes," said Patricia McGinness, executive director of the California Advocates for Nursing Home Reform, California's largest nursing home watchdog group. "Attorney General Lockyer's Operation Guardians program provides the scrutiny needed to protect the residents of the state's nursing homes."

"When we entrust the care of a loved one to a nursing home, we expect them to receive the best possible care in a clean, safe and caring environment," said Tom Porter, state director of AARP, the nation's largest elder advocacy organization. "Operation Guardians creates a strong incentive for nursing homes to maintain the quality of their staff and facilities and ensure patients receive the best care possible."

Lockyer said most of the nursing homes inspected during the past two years quickly responded by making improvements in the facilities and the medical and health care provided. The most prevalent problems identified were failure to meet the state's minimum staffing requirements of 3.2 nursing care hours per day, ensure that nurse assistants possess valid certification, document tuberculosis tests of employees and prevent and document the loss of residents' property.

The inspections showed performance levels ranged from near compliance with federal and state standards of care to situations which required referrals to law enforcement, regulatory or licensing agencies. The inspections resulted in two felony convictions. In one, a licensed vocational nurse was convicted of stealing narcotic pain medication intended for residents in an Oxnard facility. In another, an administrator-in-training at a Napa facility was sentenced to three years in state prison for stealing $49,000 from facility residents and their families, and using threats and intimidation to discourage them from reporting the theft.

"Although the goal of Operation Guardians is to prevent injury by identifying even the smallest of problems that, if left unchecked, could grow into dangerous situations for residents," Lockyer said, "we also are there to root out criminal activities that then can be prosecuted."

Of the 38 facilities statewide that underwent follow-up inspections, more than half either had corrected or were in the process of correcting the problems identified. All of the 328 fire safety-related violations discovered were corrected or in the process of being corrected. Three physicians were referred to the California Medical Board for investigation; two were sanctioned and one is still under investigation. At least 34 facilities have received Department of Health Services-issued deficiencies substantiating Operation Guardians' findings, and in several cases in which the loss or theft of residents' property was identified, the residents have received compensation.

Deficiencies discovered during the Operation Guardians inspections were divided into five general categories:

1. Environmental Non-Compliance, ranging from foul odors emanating from urine and fecal matter, to loose handrails and improperly stored food items.
2. Resident Care Non-Compliance, ranging from failure to adequately document patient care, implement medical staff orders, safely store controlled substances and medical instruments, to over-medicating patients and failing to report alleged abuse to appropriate authorities.
3. Administrative Non-Compliance, which includes failure to maintain proper personnel files of medical staff, protect patients' personal items or document required tuberculosis (TB) tests.
4. Fire Safety Violations, which include inoperable fire extinguishers or fire alarms, obstructed fire exits, exposed wires and unsafe chemical storage.
5. Staffing Level Non-Compliance. Of the 116 facilities in which staffing levels could be inspected, 79, or 68%, failed to meet state laws requiring a minimum of 3.2 hours of nursing care per resident per day. Nursing care does not include services provided by housekeeping, maintenance, kitchen, clerical or non-clerical staff.

Headed by the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA), Operation Guardians includes local elder abuse ombudsmen, fire departments, prosecutors, police and the University of Southern California School of Medicine. The inspections complement regular inspections conducted no less than every 15 months by the Department of Health Services, which is responsible for licensing and regulating the state's skilled nursing facilities.

The program illustrates the Attorney General's commitment to combating elder abuse, both through prevention efforts and aggressive prosecution. Since Lockyer began his first term as Attorney General in 1999, the Attorney General's BMFEA has increased criminal prosecutions of elder abuse in the state's skilled nursing homes by 749 percent, and convictions by 574 percent.

A class action lawsuit against Equity Residential, the largest owner of apartment buildings in the United States, has been certified as a class action by a Florida judge.

Palm Beach County Circuit Court Judge Jorge Labarga made the certification ruling. The suit charges that Equity Residential violated Florida law by charging tenants an extra 60 days' rent plus a one-month penalty fee for terminating their leases early.

The Illinois-based company also allegedly charged tenants an extra two months' rent if they stayed through their lease term but failed to give 60 days' notice of their intention to vacate.

Plaintiffs in the case include tenants and their co-signers who moved or left their Equity residential Florida apartments from December 1, 1998 to date, who signed an Equity form lease and who received a demand for fees resulting from "insufficient notice," "early termination," "cancellation," "lease fulfillment," "no notice given," or "liquidated damages."

"Tenants in this state who terminate early are required to only pay rent for the days the property goes unrented. You shouldn't have to pay any extra penalty," attorney Rod Tennyson said.

The suit charges that Equity has collected millions of dollars of illegal fees from tenants of its 33,000 rental units in Florida. Besides charging illegal fees, lawyers said the company is very aggressive and "hard-nosed" in its collections practices.

Britax Child Safety, Inc. is conducting a voluntary recall on Husky child restraints. It was determined that certain uses of the restraints may not meet federal standards for head excursion. No other products are involved.

Affected restraints are Husky restraints installed with lap belt only installation as described in the current users manual for a long/serpentine belt path. When installed in this manner, in the event of a crash in the motor vehicle, head excursions higher than allowed by Standard 213 could result.

All Husky owners who returned a registration card are automatically receiving labels and instructions for placement of the new labels over the corresponding instructions in the current users guide and restraint cover label. Owners should be receiving this information within the week (by January 21). These labels and instructions will advise consumers using the lap belt only installation to reroute the lap belt to use an alternative, short belt path. This reinstallation will reduce loads to assure aafety standard compliance.

The affected seats should not be returned to the Britax retailer. The retailers do not have access to the labels and instructions. After January 21, all consumers who did not return a registration card, but own a Husky child restraint should contact Britax at 1-888-4BRITAX (1-888-427-4829).

In order to receive the label and instructions, owners will need to provide Britax with the following information: Name, Address, Daytime Telephone Number, Manufacturing Date, and Batch of the Husky. This information can be obtained from the label affixed to the back of the restraint.

January 19, 2004
H&R Block, the nation's biggest provider of tax anticipation loans, is the target of consumer protests as another tax season gets underway. The loans, popular among low-income taxpayers, typically carry extremely high interest rates and provide cash-starved consumers with only a marginal increase in the speed with which they get their refunds.

"We are warning our members to stay away ... and making sure they know they can get their refunds fast without a loan and often without paying for tax preparation at all," said Maud Hurd, president of ACORN, the Association of Community Organizations for Reform Now, which staged protests outside H&R Block offices around the country last week.

Why should any company be able to skim off hundreds of millions of dollars in tax refunds meant for and earned by working families? Hurd asked. Why should we be charged interest rates in the hundreds or even thousands of percent range to be loaned the money we are owed?"

Victims of the fast-refund pitch are often taxpayers who qualify for the Earned Income Tax Credit, which averages around $1,600. Interest charges on the loans are often $500 or more -- typically a third of the refund. Consumers get their money only a week or so earlier than if they had not taken out the loan.

The loans are based on estimated income tax refunds. Preparers figure clients' taxes, calculate the amount of the refund, and offer to lend clients the refund amount minus an array of fees up front. The client pays the loan back when the refund check arrives.

A 2002 study by the Brookings Institute found that 39 percent of families who qualified for earned income tax credits in 1999 took out tax refund loans.

H&R Block holds the dominant share of the refund anticipation loan market. More than 40 percent of H&R Block's electronically prepared returns were packaged with a refund loan, Hurd said.

The company has been the target of class action lawsuits in Illinois and Texas. In 2001, New York City's Consumer Affairs office filed its sixth case against the company for misrepresenting rapid refunds.

Industrywide, the cost of borrowing the average $1,980 refund equals to an annual percentage rate of 222.5 percent, according to the National Consumer Law Center. For the convenience of getting the refund immediately vs. waiting 10 to 14 days through a no-cost IRS e-filing, refund loans siphoned off $1.8 billion, mostly from low-income wage earners, in 2001.

Between the refund loan fee, electronic filing fee and handling fees, the National Consumer Law Center calculated that in 2001 tax preparers drained $1.2 billion from money intended for Earned Income Tax Credit recipients.

Opponents celebrated one victory last fall when Intuit agreed to drop refund loan offers through its TurboTax software.

The Federal Trade Commission is setting up a hotline for consumers who believe they were victims of an alleged Web cramming scam operated by National Online Services, Inc., Liberty Online Services, Inc., B2B Advantage formerly known as SBA Online, Inc., and Ameripages, Inc. a/k/a Amerilinc, Inc.

The FTCs hotline, which will open shortly at 202-326-2998, will advise consumers on what steps to take if they receive a notice from the defendants, and what they should do to obtain a refund.

In October 2003, the FTC sued the defendants and their parent company, Epixtar Corporation, alleging that they deceptively marketed a free, 30-day trial of Internet services to small businesses and non-profit organizations. The FTCs complaint alleged that the defendants crammed a charge of $29.95 per month on the telephone bills of those businesses that did not cancel the service during the trial period, without obtaining consumers permission to bill them. The FTC then obtained a temporary restraining order that froze the defendants assets.

In November 2003, the FTC and the defendants agreed to the terms of a preliminary injunction that (1) prohibited the defendants from making further misrepresentations; (2) required them to notify current customers that they were being billed for a Web service; and (3) required them to permit these consumers to cancel if they never authorized service.

The preliminary injunction also stipulated that some of the frozen funds would be used for refunds for consumers who claimed that the unauthorized charges had been added to their telephone bills. The case is ongoing the injunction will be in effect until the court issues a final ruling on the FTCs allegations.

The FTC advises consumers who have received notices from any of these defendants, stating that they currently are being billed for Internet services, to determine whether they authorized the charges. If not, the FTC recommends that they call the toll-free number listed on the notice and cancel the service. As the case progresses, further refund information will become available.

January 5, 2004
Ol Man Treestands is recalling about 1,775 tree stands for hunters. A serrated blade that supports the stand on a tree can bend, posing the risk of falls and serious injuries to hunters.

Ol Man Treestands has received five reports of serrated blades bending, but no reports of injuries.

The climbing tree stands included in this recall are the Original Ol Man Double X with model number OMDX-MO, Grand Ol Man Double X with model number GOMDX-MO, Multi-Vision with model number MV- MO, and Grand Multi-Vision with Model number GMV-MO. All units have Warning labels affixed to the stands varying in weight capacities of 250 lbs to 350 lbs. The bottom platform of each tree stand has a lot number stamped on the serrated blades that would indicate when it was produced. Only tree stands having the number 1903 or 2103 stamped on the blades of the stand bottom are included in the recall. The stands have a mesh net seat and are painted green.

The stands were sold at hunting supply stores, Web sites and catalogs nationwide from June 2003 through November 2003 for between $160 and $270.

Consumers should stop using these treestands with 1903 and 2103 stamping on the blades immediately, and call Ol Man Treestands for a repair or replacement product.

The survey, conducted last September and based on the experiences of over 39,000 ConsumerReports.org subscribers in 17 cities, indicates that overall levels of satisfaction for wireless service remain lower than for most other services that Consumer Reports rates.

The report also shows that the overall satisfaction index has only nudged one point, from 65 to 66 points, since the annual survey was begun three years ago.

Although Verizon topped Consumer Reports' Ratings in each city, as it did in the previous two surveys, it wasn't problem-free. And in 10 cities it wasn't ahead of the pack in a statistically meaningful way. In most of the 17 cities, T-Mobile came in a close second. Some other highlights from the survey:

• Thirty-five percent of respondents were seriously considering a switch of carrier. Most of those who had already switched said they were after better service.
• Nearly 70 percent of those who use a cell phone frequently had at least one dropped call in the week before the survey. Nearly 60 percent said they had a bad connection.
• Only 40 percent said the company's response to a billing inquiry was very helpful.
• Only 31 percent said the company's response to a service inquiry was very helpful.

"Our survey findings are particularly troubling in the context of the recent spate of mergers within the wireless industry, which we believe will lead to decreased competition and increased prices," said Jim Guest, President of Consumers Union, nonprofit publisher of Consumer Reports.

"Consolidation is not a panacea to the service and customer satisfaction problems that continue to plague the industry. In the case of the Cingular and AT&T merger, both companies had problems with overloaded circuits. We don't see how a merger could improve that."

For the first time ever, Consumer Reports asked subscribers about their shopping experiences. Respondents complained of the challenges associated with shopping for a wireless plan. At least 83 percent had some trouble shopping for wireless phone service and 52 percent complained that they had to sign up for a long contract to get the best price on a phone.

When trying to compare plans from competing carriers, 48 percent said it was hard, and 43 percent also found it difficult to figure out the true cost of the service.

The Nissan recall covers Sentras built between January 2000 and March 2003. A piece of foam insulation in a box housing the engine computer can emit sulfur, possibly causing corrosion in the computer that can lead to rough running or stalling engines.

Nissan will also recall 24,300 Infiniti FX SUVs to fix a brake caliper bolt that can come loose, leading to brake failure or a flat tire. The recall covers FX35 and FX45 models built between November 2002 and July 2003.

Other Recalls

The Nissan actions were among several vehicle recalls announced by the U.S. National Highway Traffic Safety Administration.

General Motors will recall 95,690 Buick Park Avenue sedans built between October 2001 and June 2002 to fix a fuel regulator that can leak, potentially causing a engine fire.

Volvo will recall 36,000 S40 and V40 cars built between May 1999 and May 2000 to fix a brake vacuum pump that could fail and lead to a crash.