Current Events in August 2004

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    Fire Safety Often Overlooked in Dorms

    Parents just assume residence halls are safe

    Gail Minger is an advocate of campus fire safety with good reason. In 1998, her son, Michael, died in a residence hall fire during his sophomore year at a large university in Kentucky. In hindsight, she wishes she had quizzed the university and asked more questions to learn about its policies on fire safety and prevention.

    Minger says that when they visited the campus, they just assumed the residence hall was safe. After the fire that killed her son, she says she learned the residence hall had been written up by the fire marshal's office two years in a row for not having sprinklers, as well as other safety code violations.

    She's sharing her experience in the hope that other students and their parents take steps to understand the importance of campus fire safety. Figures from the National Fire Protection Association show an average of 1,500 fires occur in residence halls and Greek housing each year. That means firefighters respond to campus fires five times a day somewhere in the United States.

    Ed Comeau, director for the Center for Campus Fire Safety, says there are basic questions that parents should ask the person responsible for fire prevention at each school when considering student housing. "The answers to these questions," he says, "can give you an idea of the priority the school places on fire safety."

    • How many fires have occurred on campus in the past few years?
    • Does every room have a smoke alarm?
    • Are the residence halls equipped with an automatic fire sprinkler system?
    • How much fire prevention training do the staff and resident assistants receive?
    • How many false alarms have occurred in the residence halls?
    • How often are fire drills conducted?
    • What is the school's disciplinary policy against students who cause false alarms or fail to evacuate when an alarm sounds?

    Safety experts also recommend that parents encourage their college-bound students to pay attention to fire safety once they've moved into their new residence.

    John Drengenberg, manager of Consumer Affairs at Underwriters Laboratories Inc., notes that whether they live in a residence hall, Greek housing or an off-campus apartment, student living areas are overfilled with books, paper, bedding, curtains and clothes that make rooms a fire waiting to happen. In this environment," he says, "even the smallest spark can be deadly."

    The safety professionals at UL, a not-for-profit organization that tests products for safety, offer these tips to help keep students safe.

    Electrical tips

    • Look for the UL Mark on any electrical product you use.
    • Do not overload extension cords, power strips or outlets.
    • Never staple wires or extension cords.
    • Be wary of cords and electrical outlets that are too hot to touch.
    • Do not connect multiple extension cords together.
    • Do not route cords under doors or carpets.
    • Use light bulbs with correct wattage for lamps.

    Cooking tips

    • Cook only where rules allow and pay attention.
    • Never plug more than one high-wattage appliance into a single outlet.
    • Keep surfaces clean of grease.
    • Never pour water on a grease fire. Use baking soda.
    • Keep an all-purpose fire extinguisher handy.

    What if there is a fire?

    • Evacuate immediately.
    • Call the fire department or 911 when you're out of the building.
    • Have an escape plan and know two ways to exit the building from your room.
    • Memorize the number of doors to the nearest exit.

    Drengenberg says careless smoking, unattended candles and cooking, as well as overloaded extension cords and power outlets, are among the most common causes of fires when students are living so closely together. He also notes that because arson is the number one cause for fires on campuses students not only need to be proactive about fire prevention but be ready to react if a fire alarm sounds.

    "Smoke alarms are there to provide you time to escape if a fire occurs," he said. "Students should never disable any smoke alarm or assume any alarm is a prank or false. Whenever an alarm sounds, get out immediately. Fires can spread so quickly that students should understand the difference between safety and tragedy could be just a few minutes, so every second counts."

    Minger is an advocate of campus fire safety with good reason. In 1998, her son, Michael, died in a residence hall fire during his sophomore year at a large...

    Missouri Sues Accused eBay Scammer

    Advertised retail gift cards but didn't deliver

    Missouri Attorney General Jay Nixon has suit against a Kansas City man who advertised retail gift cards on the Internet and collected at least $9,000, then failed to deliver the goods. The lawsuit says Ryan Gabriel Flint violated Missouri's Merchandising Practices Act in many ways.

    Nixon says Flint's scheme worked like this: he bought gift cards or in-store credit cards for retailers such as Lowe's, Home Depot and Best Buy from a flea market for 40 cents on the dollar of the face value of the cards. Then, Flint advertised the cards through eBay.

    When some consumers contacted Flint to buy the cards, he offered to sell them similar cards not yet placed for auction on eBay. Flint told consumers they would have to pay for the cards before he would send them.

    At least four consumers from across the United States paid Flint up front in amounts ranging from $1,499.99 to $3,550.00. The consumers then expected to receive the cards but they did not. The consumers asked for refunds, and Flint has refused to give them.

    "Internet auctions are based on trust, and this man violated that trust. Now he'll realize Missouri is serious about protecting the rights of consumers even if they make purchases in cyberspace," Nixon says.

    The Attorney General says Flint violated Missouri's consumer protection laws by misrepresenting that he would sell consumers gift cards or in-store credit cards, deceiving consumers and engaging in the unfair trade practice of advertising and selling on eBay, then failing to act in good faith to deliver the goods he promised.

    Nixon is asking the court to order Flint to make full restitution to all consumers taken by this scheme, to order him to pay a civil penalty of $1,000 per violation and to prohibit Flint from violating Missouri's consumer fraud laws.

    Missouri Attorney General has suit against a Kansas City man who advertised retail gift cards on the Internet and collected at least $9,000, then failed to...

    New Jersey Targets Ephedra Distributor

    The state of New Jersey is going after a dietary supplements manufacturer. Attorney General Peter Harvey says N.V.E. Pharmaceuticals advertised its ephedra-based supplements as safe despite receiving hundreds of complaints from consumers who reported that they experienced significant adverse side effects from using the products.

    The state seeks to bar the company from making false and misleading claims and seeks civil monetary penalties as well as restitution to affected consumers.

    Prior to the federal Food and Drug Administration's ban on the sale of all dietary supplements containing ephedra, which took effect April 12, 2004, N.V.E. promoted more than 80 products that contained ephedra - including Stacker 2, Stacker 2 Lite, Stacker 3 with Chitosan, Yellow Jacket (later known as Yellow Swarm), Black Beauty (later known as Midnight Stallion), and Sizzle.

    The manufacturer still makes Stacker 2 Ephedra-Free, a caffeine-based weight-loss supplement. Harvey says the company made unsupported claims about the products' ability to burn fat and boost energy, and failed to provide consumers with meaningful warnings about the dangers of using products containing ephedra.

    "The defendants allegedly received numerous complaints from consumers who, after using their products, reported adverse effects such as high blood pressure, rapid heart beat, chest pains, seizures, abnormal bleeding, kidney problems and insomnia," the attorney general said. "These symptoms are typical of those who use other ephedra products, and the public should have been warned of these dangers."

    New Jersey Consumer Affairs Director Reni Erdos says the state alleges that even after receiving complaints from consumers about serious adverse effects, the defendants continued to advertise the products as being safe.

    "In essence, they recklessly risked the health and lives of consumers to make a buck, which is shameful," he said.

    Ephedra is a stimulant derived from the Chinese herb ma huang that has been proven to cause headaches, irritability and heart palpitations, and has been associated with strokes, seizures, high blood pressure and heart attacks. The dangers of using ephedra and other ephedrine alkaloids as a diet supplement for weight loss are, especially when used with caffeine, widely documented in medical literature.

    The complaint alleges that the defendants repeatedly violated the New Jersey Consumer Fraud Act by making false claims in their catalogue, Internet and television promotions that wildly exaggerated the benefits of the supplements while downplaying the risks.

    For example, the complaint says the defendants' promotional materials stated:

    • that a typical consumer who used Stacker 2 would lose between 2 and 3 pounds per week and between 24 and 36 pounds in 12 weeks;
    • that Stacker 2 and some of its other ephedra-based products were the "World's Strongest Fat Burner," and
    • that Stacker 2 and some of its other products were safe when taken as recommended.

    Additionally, the complaint states that the defendants did not have evidence to substantiate these claims and that, despite having more than 100 full-time employees on staff, they never employed a scientist to test the products' safety or efficacy.

    The complaint alleges that once the defendants began manufacturing and marketing Stacker 2 Ephedra-Free, they also advertised the supplement as being the "world's strongest fat burner." In reality, the supplement has the same stimulant effect on the body as drinking coffee that contains an equivalent amount of caffeine, according to the complaint.

    This is the third lawsuit that New Jersey has filed against a manufacturer of ephedra-based dietary supplements for alleged violations of the Consumer Fraud Act.

    In July 2003, the state filed suit against Cytodyne Technologies, the manufacturer of Xenadrine RFA-1 and Xenadrine EFX, alleging it misrepresented the efficacy of the dietary supplements and deliberately withheld troubling information about the potentially life-threatening side effects of the products.

    Last October, New Jersey sued Goen Technologies and its founder Alex Szynalski, promoters of Goen weight-loss and stop-smoking seminars, charging that they and other defendants intentionally misled consumers through a series of false and deceptive claims that extolled the benefits of hypnosis as a drug-free alternative to other weight-loss and smoking-cessation programs. In fact, the complaint contends, the seminars were nothing more than a ploy to sell dietary supplements, including ephedra-based TrimSpa.

    Attorney General Peter Harvey says N.V.E. Pharmaceuticals advertised its ephedra-based supplements as safe despite receiving hundreds of complaints from co...

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      VW Admits Sludge Problem

      Chrysler May Be Next

      Volkswagen is warning owners of VW Passats and Audi A4s about an engine sludge problem. The company won't say how many engines it has replaced or repaired so far.

      Affected are turbocharged four-cylinder engines on 1998 through 2004 Passats and 1997 to 2004 A4s, Automotive News reported.

      Consumers have been complaining about the problem for years. "At just under 36k miles my oil pump blew and the car went crazy," Tim of Grand Blanc, Michigan, said in a complaint to earlier this year.

      "The oil pump was full of sludge (so they told me) which caused blockage and massive heat build-up, which blew out the turbo. $5000 later I received a call from the service manager who told me that it was ready to be picked up," Tim said. VW refused to pay for the repairs, he said.

      It's the latest in a long line of quality problems for VW, which has seen its U.S. market share slip in recent years.

      Sludge problems aren't unique to VW. The Center for Auto Safety is asking Chrysler to correct sludge problems and extend the warranty on 2.7-liter V-6 engines in its 1998-2002 model year vehicles. Many consumers have complained of problems in the engine used in the Dodge Durango

      "My Dodge Durango oil gauge would show fine one second then terrible the next. If I let it cool it would be ok and then go back to 0 pressure when I got going," said Milet of Mart, Texas, in a complaint to "I showed them all the oil changes I had done and they told me I must have been getting ripped off because I had "sludge" everywhere.

      Toyota has had sludge problems in its the 1MZ V-6 and the 5SFE inline 4 engines and faces the prospect of replacing or repairing 3.3 million engines.

      Volkswagen is warning owners of VW Passats and Audi A4s about an engine sludge problem. The company won't say how many engines it has replaced or repaired...

      Ultra Carb, Chito-Trim Promoters Face $1 Million Settlement

      Two promoters of dietary supplments will pay nearly $1 million to settle federal charges that their advertising claims were deceptive and misleading.

      In separate actions, the Federal Trade Commission charged that Pinnacle Marketing, LLC and VisionTel Communications, LLC falsely claimed that their products caused substantial weight loss without diet or exercise.

      The FTC also alleged that the VisionTel defendants made unsubstantiated claims that their dietary supplements for male and female sexual dysfunction were safe and effective.

      The proposed settlements, which require court approval, would permanently bar both companies and their principals from making the false weight-loss claims and from making efficacy and safety claims for weight loss and other health-related products, services, and programs without scientific evidence.

      The Pinnacle defendants have agreed to pay $219,000 and the VisionTel defendants have agreed to pay $750,000 to settle the charges. The amounts are based on the defendants' ability to pay.

      Pinnacle Marketing, LLC ("Ultra Carb")

      Pinnacle Marketing, LLC, based in Biddeford, Maine, marketed a purported weight loss system called "Ultra Carb" consisting of two tablets: a "carb blocker" with white kidney bean extract, chromium picolinate, and other ingredients; and a "fat blocker" with chitosan.

      Pinnacle's advertisements claimed that Ultra Carb would block the absorption of carbohydrates and fat in the body, enabling users to lose a substantial amount of weight - as much as 20 pounds and two to three dress or pant sizes in one month - without diet or exercise.

      Pinnacle advertised Ultra Carb in radio ads broadcast in metropolitan areas including Los Angeles, Chicago, and Boston; through ads in newspapers such as The Washington Post and the Detroit Free Press; in panel advertisements on television Interactive Programming Guides; and with an Internet coupon. Pinnacle sold a two-month supply of Ultra Carb directly to consumers for $99.95, plus shipping and handling.

      The FTC's complaint names Pinnacle Marketing, LLC (also doing business as Health Remedies, Acadia Skin Care, Atlantic Skin Care, Atlantic Skin Care Products, and Pinnacle Marketing Group, LLC), and its principals, Todd Flaherty, Matthew Tasker, and Kevin Curty. The complaint alleges that the defendants made false and unsubstantiated weight loss claims for Ultra Carb, including false claims that Ultra Carb causes substantial weight loss by blocking the absorption of fat, and causes quick and substantial weight loss without diet or exercise.

      The proposed stipulated final order prohibits the defendants from:

      • representing that Ultra Carb, or any other dietary supplement, food, nonprescription drug, or device causes substantial weight loss by blocking the absorption of fat, or causes quick and substantial weight loss without diet or exercise;
      • representing that Ultra Carb, or any other product, service, or program that purportedly provides health benefits, causes rapid or substantial weight loss or fat loss, or causes substantial weight loss by blocking the absorption of carbohydrates, unless the representation is true and supported by scientific evidence;
      • making false or unsubstantiated claims about the benefits, performance, efficacy, safety, or side effects of any product, service, or program that purportedly provides health benefits; and
      • misrepresenting any test, study, or research.

      VisionTel Communications, LLC

      The VisionTel defendants have sold various dietary supplements and other products directly to consumers through print, radio, and television ads; TV infomercials; and on the Internet. The FTC's complaint names VisionTel Communications, LLC, also doing business as Vision Laboratories, and its officers, Michael McNaboe, Robert Dall and David Amato, all based in Eliot, Maine; MJ Management, based in Scarborough, Maine; and MAD Marketing, Inc. and LLAD Management, Inc., both based in Cape Elizabeth, Maine.

      The complaint targets claims for four products:

      • Chito-Trim - The defendants advertised that Chito-Trim, a dietary supplement containing chitosan, "work[s] to attract fat like a magnet, forcing your body to pass it out of your system naturally, giving you the benefits of dieting without the hassle of calorie counting." A one-month supply of Chito-Trim cost $59.95. The FTC's complaint alleges that the defendants made false and unsubstantiated claims that Chito-Trim causes substantial weight loss without diet or exercise and causes substantial weight loss by blocking the absorption or fat or calories.
      • TurboTone - TurboTone contains chromium, garcinia cambogia, phaseolamin (white kidney bean extract), citrus aurantium, and other ingredients. Ads included statements such as: "TurboTone is perfect for you if you want to be able to eat what you want and lose weight and get firm without calorie counting or long strenuous workouts." TurboTone cost $59.95 for a 30-day supply. The FTC alleges that the VisionTel defendants falsely claimed that TurboTone causes substantial weight loss without diet or exercise and is clinically proven.
      • Impulse Female Herbal Blend - The FTC alleges that the defendants made unsubstantiated efficacy and safety claims for Impulse, a dietary supplement containing androstenediol and other ingredients, marketed for female sexual dysfunction. A 30-day supply cost $59.95. According to the FTC complaint, endocrinologists and other health professionals have raised concerns about the lack of testing of androgen supplements for potential health risks and negative side effects for women.
      • Maximus Male Herbal Blend - The FTC alleges that the defendants made unsubstantiated efficacy, safety, and "no harmful side effects" claims for Maximus, a supplement containing yohimbine, l-arginine and other ingredients, marketed for male sexual dysfunction. A 30-day supply cost $59.95. According to the FTC complaint, Maximus contains yohimbine and other ingredients that may substantially increase blood pressure and interact adversely with other drugs taken by men with conditions that cause erectile dysfunction.

      To settle the FTC's charges, the proposed stipulated final order prohibits the defendants from claiming that Chito-Trim, TurboTone, or any other weight loss product containing similar ingredients causes substantial weight loss without diet or exercise, or causes substantial weight loss by blocking the absorption of fat or calories.

      The order requires the defendants to have competent and reliable scientific substantiation for future efficacy, safety, and "no side effects" claims for the four challenged products, as well as any other weight loss, sexual dysfunction, or health-related product, program, or service. The order further prohibits the defendants from misrepresenting any test, study, or research for any health-related product, service, or program.

      Ultra Carb, Chito-Trim Promoters Face $1 Million Settlement...

      GE, Hotpoint, Kenmore, Americana Ranges and Wall Ovens

      August 26, 2004
      More than 28,000 General Electric, Hotpoint, Kenmore, and Americana brand freestanding electric ranges and double wall ovens are being recalled.

      The ranges and wall ovens have faulty wiring, which can melt and cause the oven to short circuit. The appliance can then stop working and pose a shock hazard to consumers.

      The recall includes electric coil top freestanding ranges and wall ovens. The coil ranges are 30 inches wide with controls in the rear. The wall ovens include the 27- and 30-inch models, with the lower oven controlled by a knob and not self-cleaning. The upper oven is self-cleaning. The following models are included in this recall:

      Freestanding Coil Ranges
      Double Wall Ovens
      Hotpoint Brand
      General Electric Brand
      General Electric Brand
      Kenmore Brand
      Americana Brand
      Kenmore Brand

      Appliance retail outlets and builder distributors nationwide sold the ranges from June 2004 through July 2004 for between $250 and $500, and the wall ovens from April 2004 through July 2004 for between $950 and $1500.

      Consumers should stop using the appliances immediately and contact GE to schedule a repair at no charge.

      Consumers should call the GE Recall Hotline at (800) 326-1076 anytime to see if their range or wall oven is included in this recall and arrange for the free repair.

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

      GE Ranges and Wall Ovens Recalled...

      Debt Solutions Inc. Settles Washington Suit

      More than 1,000 Washington state state consumers will be getting refunds totaling over $300,000

      More than 1,000 Washington state state consumers will be getting refunds totaling over $300,000 as part of a settlement with a debt reduction firm accused of violating telemarketing and consumer protection laws.

      Attorney General Christine Gregoire says the settlement involves Debt Solutions, Inc., DSI Financial Inc., and their affiliates. State attorneys contend the firms used high-pressure sales tactics and misrepresented consumers in a sophisticated telemarketing operation to sell the debt reduction service.

      DSI, based in Boca Raton, Florida, operates call centers in Spokane and Seattle, targeting consumers throughout the country who are trying to reduce their debt.

      In the settlement, filed in Spokane County Superior Court, DSI has agreed to operate in compliance with state and federal telemarketing regulations.

      The investigation of DSI uncovered a telemarketing operation using a 3-person team: a "fronter" or "opener," who initially called to "qualify" the consumer based on his/her credit, a "closer," who pitched DSI's services to the consumer and made the sale, and a "verifier," who tape recorded the conversation as evidence of the deal.

      The "fronter" asked the consumer to provide a major credit card number and the last four digits of his social security number, then he checked to make sure the consumer had $520 left to spend on a credit card before moving him on to the "closer" to pursue the sale.

      Gregoire says DSI used "high-pressure tactics and misleading pitches" to sell their product to people who couldn't afford more debt, adding that "consumers deserve every penny back."

      A lawsuit, filed simultaneously with the settlement, alleges DSI violated the Commercial Telephone Solicitation Act and the Consumer Protection Act by: requiring credit card payments, misrepresenting the $499 charge to consumers and the $2,500 guaranteed savings, telling consumers there was a "no-cancellation" policy when in fact there is a three-day right of cancellation after receiving notice of the sale, and using high pressure sales tactics such as telling consumers not to check with their spouses before buying.

      DSI's president Kenneth Schwartz is named in the lawsuit along with Debt Solutions, Inc., DSI Financial, Inc., DSI Direct, Inc., and Jennifer Ruth Whalen, who operates another named defendant, Pacific Consolidation Services in Spokane.

      Civil penalties total $250,000, $225,000 of which is suspended as long as DSI adheres to the settlement agreement. The company will pay $35,000 in attorney fees and court costs.

      Washington state consumers who request a refund will be provided one in full, minus any partial refunds already received, within ten business days of DSI receiving the request. DSI will mail out notices to Washington consumers instructing them on how to obtain a refund as part of the settlement.

      Debt Solutions Inc. Settles Washington Suit...

      Ohio Sues Best Buy

      A lot of Ohio residents say the pledges and promises made by electronics super store Best Buy aren't worth the paper they're written on.

      Because of the hundreds of consumer complaints he's received about the giant retailer, the state's Attorney General, Jim Petro, is suing Best Buy, charging that it's engaged in a pattern of unfair and deceptive acts and practices.

      Petro says the primary objective of the lawsuit is "to bring Best Buy into conformity with Ohio's consumer protection laws and ensure that Best Buy's Ohio customers receive the service they deserve."

      The complaints filed by Ohio consumers claim -- among other things -- that Best Buy repackaged used goods and sold them as new, failed to honor rebates, failed to honor refund and exchange programs, and failed to honor extended service contracts.

      Additional Consumer Sales Practices Act violations charged in the lawsuit include: failure to honor implied warranties of merchantability, substandard and/or inadequate customer service, and making false and misleading statements to consumers.

      In the complaint, Petro is asking the court to prohibit Best Buy from engaging in practices that violate the Consumer Sales Practices Act, and to order the company to reimburse consumers who lost money or otherwise did not receive the full service they were promised. The complaint also asks that Best Buy pay a civil penalty of $25,000 for each violation of the Consumer Sales Practices Act.

      Because hundreds of consumer complaints, Attorney General, Jim Petro, is suing Best Buy, charging that it's engaged in a pattern of unfair and deceptive ac...

      Massachusetts Sues Companies Selling Weapons Online

      You can buy just about anything online, and state boundaries sometimes blur on the Information Highway. But Massachusetts officials are cracking down, with Attorney General Tom Reilly suing seven out-of-state weapons sellers and three out-of-state ammunition sellers, charging they sold illegal products in Massachusetts.

      The suits claim the weapons sellers sold and shipped stun guns, switch-blade knives, swords, nunchaku, throwing stars, sling shots and dirk knives to an undercover investigator in violation of statutes banning the sale of such items.

      "We cannot allow these dangerous weapons to get into the hands of anyone in Massachusetts, particularly our children," AG Reilly said. "If sellers think that they can hide behind a website and ship these illegal items into our state, they are mistaken."

      The cases arose from undercover stings conducted by Reilly's Office in 2002 and 2003. Four of the companies,, Discount Martial Arts Supply, Lifestyle Fascination, and Talley Security Products, agreed to orders banning all future sales of weapons into Massachusetts and requiring payments of $5000 each to the Commonwealth of Massachusetts.

      These companies must place a posting on their websites stating that they do not ship weapons into Massachusetts. They must also equip their sites with software that blocks any orders from a Massachusetts address.

      The other cases are set for a preliminary injunction hearing on September 10.

      Under Massachusetts law, the sale or possession of various weapons, such as switch blade knives, dirk knives, sling shots, throwing stars, numchucks, sword canes, and black jacks, is illegal. There is a separate statute that prohibits the sale or possession of electrical weapons, including stun guns.

      "Our investigator had no trouble getting stun guns, switch blades, and cane swords on the Internet," AG Reilly added.

      These cases are part of an overall initiative by Reilly's Office targeting the sale of illegal or age-prohibited products in Massachusetts, such as alcohol, cigarettes, ammunition and fireworks. During last year's holiday season, the Attorney General's Office worked with Toys "R" Us to remove a sling shot that violated the Massachusetts weapons statute from the company's store shelves and website.

      Massachusetts Sues Companies Selling Weapons Online...

      Cyberrebate Was Too Good to be True claimed that it would obtain rebates equal to 100 percent of the purchase price of items listed on its Web site

      It was one of those schemes that just sounded too good to be true. claimed that it would obtain rebates equal to 100 percent of the purchase price of items listed on its Web site.

      In fact, the Federal Trade Commission charged, the defendants sold products marked up to 10 times the retail value of the products, but still failed to pay the 100 percent rebate they promised to purchasers.

      The FTC today announced a court order against the company, now in bankruptcy, charging it unfairly took in millions of dollars by promising rebates that were never paid. The company and its owners have been permanently barred from offering certain types of rebates in connection with the sale of any product, are prohibited from making misrepresentations like those alleged in the complaint, and will pay $40,000 to the United States Treasury.

      The order settles the FTCs charges against the company and its owners Joel Granik and Joseph Lichter, who operated the corporation out of Valley Stream, on New York' Long Island.

      Companies cant use rebates to bait consumers with the promise of cash back and then not live up to their end of the bargain, said Lydia Parnes, Acting Director of the FTCs Bureau of Consumer Protection.

      Consumers who comply with the requirements of a rebate deserve prompt payment in full. By banning these two defendants from ever running a similar business, were protecting consumers and reminding companies to honor their rebate promises.

      Cyberrebates Alleged Business Practices

      The FTC contends that since at least 1998, and continuing until Cyberrebate filed for bankruptcy in May of 2001, the individual defendants sold consumers products on the Internet through their own Web site, In early 2001, they changed their pricing policy from moderately marking up prices and promising rebates to pricing products at up to 10 times their retail value.

      To induce customers to purchase these high-priced products, in many cases, the defendants told consumers that the products would be free after they sent in and received a rebate for the purchase price.

      For example, the defendants sold a 13-inch RCA television, which retailed for several hundred dollars, for $1,099.99 and promised to provide consumers with a $1,099.99 rebate within 10 to 14 weeks after it was submitted.

      The defendants allegedly continued using this tactic to induce customers to buy their products, even after it became apparent that purchasers rebate return rate was very high exceeding their ability to live up to their promises of free merchandise. They then simply failed to pay the promised rebates either within the time promised or at all according to the Commissions complaint.

      Cyberrebate Was Too Good to be True...

      Coupon Connection of America Barred From Operating in Iowa

      Company promotes a business opportunity supposedly based on grocery coupons

      You've seen the signs tacked to telephone poles and classified ads in the paper saying you can earn big bucks working at your own business - even working from home in your spare time.

      The idea appeals to lots of people, but in practice, few of these pitches ever pan out, and most come with expensive strings attached. In Iowa, Attorney General Tom Miller has cracked down on a Texas company that promotes a business opportunity supposedly based on grocery coupons, barring it from operating its program in Iowa, and ordering it to refund over $100,000 to an Iowa consumer.

      Coupon Connection of America, Inc., based in Houston, Texas, and its owner, Texas resident Don Farmer, are barred from operating their business opportunity in Iowa under a formal agreement that arose out of allegations that the company violated Iowa's Consumer Fraud Act.

      "This was a so-called business opportunity pushed by Coupon Connection of America," Miller said. "It was supposedly based on selling books of grocery coupons supplied by Coupon Connection to individual consumers and to organizations to re-sell as a fundraiser, but we alleged that people were unable to make back their investment, let alone make a go of the business," he said.

      "People who invested in the business opportunity quickly found that there was very little demand for the coupon books, either on the part of individuals or organizations," Miller said. "Coupon Connection claims the opportunity leads to riches, but we suspect they have known for years that in fact it leads to losses and ruin."

      Miller said Coupon Connection of America had used direct mail solicitations and high-pressure sales tactics to entice a Fairfield, Iowa, woman, Mayumi Koide, to spend tens of thousands of dollars for the company's "business opportunity." Miller's office required Coupon Connection to provide a refund of over $100,000 to Koide, the only known Iowa victim of the alleged scheme.

      Miller said the solicitation Koide received from Coupon Connection promoted an "easy," "million-dollar opportunity" business selling books for of grocery coupons. Miller noted that the idea of building a business based on saving money on groceries had clear appeal - as the company brochures proclaimed, "Everybody buys groceries" -- but, in reality, Miller said, there appears to be virtually no demand for the coupon books.

      The company's brochures also featured glowing testimonials from individuals who supposedly had successfully applied the money-making formula. Koide contacted the company to express an interest, and was then subjected to a series of high-pressure phone calls from company representatives. They told her that to succeed she needed to pay substantial sums for supplies, mailing lists, and promotional services. They urged Koide to pay for higher levels of Coupon Connection promotional support by going ever further into debt on her credit cards.

      By the time Koide discovered that there was no way she could make the business profitable, she had paid Coupon Connection over $100,000 and was deeply in debt. Koide appealed to the company for a refund, but was turned away by the company, which Iowa's consumer protection staff concluded was practiced at "stiff-arming" victims who asked for their money back.

      Questionable Testimonials

      The Consumer Protection Division contacted several of the individuals prominently featured in testimonials about their "success stories" with the business opportunity. But the Division found none of the testimonial-givers contacted was still pursuing the business opportunity.

      Two testimonial-givers were on the Coupon Connection company payroll. One of them admitted that the market for the coupon books was "dying," and that he himself had lost money trying to pursue the business opportunity.

      Another testimonial-giver was the cousin of the owner of Coupon Connection, Don Farmer. Yet another denied that he had ever had the business success claimed by Coupon Connection, and said he did not even use the coupon books himself to try to save money on groceries.

      The Consumer Protection Division invited Coupon Connection to provide the name of someone who'd been successful with the program, but company representatives declined to do so.

      "Consumer testimonials can be powerful persuaders," Miller said. "That's why testimonial success stories must be scrupulously accurate, and anything that compromises the reliability of a testimonial must be fully disclosed. Coupon Connection violated both of these basic principles."

      Miller said the Consumer Protection Division uncovered many victims in other states, including Colorado, North Dakota, Ohio, Oklahoma, South Carolina, Vermont and Wyoming. Eight of the victims had individual losses exceeding $5,000, and some ranged as high as $60,000.

      "All had similar stories to tell," Miller said. "They were ensnared by slick promotional claims and high pressure sales, only to invest in a business that no amount of hard work could make successful. Coupon Connection of America has crushed a lot of dreams and hurt a lot of good people."

      Miller said his office is pleased to get a refund for Koide of over $100,000 and to bar the company from operating its business in Iowa. "But it's a shame anyone anywhere could still fall prey to this operation. We'll make the evidence we uncovered available to any other law enforcement authorities who also want to bring these schemers to justice," he said.

      Coupon Connection now is strictly prohibited from marketing its business opportunity in Iowa. It must not accept payments from Iowans, and must not solicit Iowa residents for its programs. Coupon Connection and Farmer also have agreed that violations of the agreement "will trigger the maximum allowable civil penalties" in a suit brought by the Attorney General's Office.

      "This business opportunity scheme won't claim any more Iowa victims," Miller said.

      You've seen signs tacked to telephone poles and classified ads in the paper saying you can earn big bucks working at your own business - even working from ...

      Make sure gift cards don't have strings attached

      Illinois Passes Law to Protect Consumers

      Buying someone a gift card has become a popular solution to the birthday-holiday quandary when you haven't a clue as to what to buy. It's not as crass as handing someone an envelope full of cash, and it allows the recipient to get what they really want.

      But you may be paying for that convenience, in the form of hidden fees or charges. In Illinois, the legislature has passed and the governor has just signed a law to protect consumers from these charges.

      "Gift cards have a cash equivalent, but when stores start charging unnecessary or hidden fees, it's as if gift cards are the gift that keeps on taking," said Illinois Attorney General Lisa Madigan, who helped draft and secure passage of the legislation.

      "This legislation is critical when it comes to protecting consumers and ensuring they have the information they need to make decisions that won't cost them later."

      The use of gift cards has grown 20% every year since they were introduced in 1996 and now constitutes a $32 billion industry. Hidden fees and dormancy charges are often attached to gift cards without the knowledge of the purchaser of the user. For example, some gift cards deduct $2 a month if the card is not used for six months.

      The new Illinois law offers an incentive to retailers who remove all fees and charges from gift cards, exempting them for the Uniform Disposition of the Unclaimed Property Act. It also requires clear disclosure of all fees, charges and expiration dates to the purchaser or user of the gift cards.

      The Illinois law could well become a model for other states, since it drew bipartisan support - and even had the backing of the business community. David F. Vite, President and CEO of the Illinois Retail Merchants Association, lent his groups support to the measure, saying it was a common sense measure that Republicans, Democrats, business and consumers could all agree on.

      Three years ago Illinois State Treasurer Judy Baar Topinka worked with Vite's group to pass consumer legislation removing expiration dates from gift certificates and gift cards.

      Make sure gift cards don't have strings attached...

      FDA Updates Analysis of Prozac in Children

      Explores link to suicidal tendencies

      The Food and Drug Administration (FDA) has issued an update of its previous analysis of a possible link between some anti-depressant medication used by children and suicidal tendencies. The agency said it is preparing to issue new warnings.

      "FDA has completed a new analysis of pediatric suicidality (suicidal thoughts and actions) data submitted to the agency and will be posting its analysis on its web site. FDA will also be posting on its web site additional summaries of pediatric efficacy studies from drugs that have been studied in depression in pediatric patients. Although specific new labeling language has yet to be developed, FDA will assure that the labels of the antidepressants used in pediatric patients reflect the most recent information obtained from these studies and analyses," the agency said in a news release.

      The update may alarm some parents whose children are on anti-depressants, especially since FDA was not specific about which medications may be the subject of the warning.

      In 2003 British health authorities published a list of commonly prescribed anti-depressants that might increase the risk of suicidal behavior in young people, and declared only Prozac as suitable for children.

      FDA says it has been closely reviewing the results of antidepressant studies in children since June 2003, after an initial report on studies with paroxetine (Paxil) appeared to suggest an increased risk of suicidal thoughts and actions in the children given Paxil, compared to those given placebo. Later reports on studies of other drugs supported the possibility of an increased risk of suicidal thoughts and actions in children taking these drugs. There were no suicides in any of the trials.

      In mid September, the agency said, FDA officials will be discuss this issue at a public meeting of its Psychopharmacologic Drugs and Pediatric Advisory Committees, at which time the agency will hear from the public and solicit the advice of the committees on these labeling changes and other possible regulatory actions.

      Earlier this year the FDA urged medical professionals to closely monitor patients of all ages for warning signs of suicide, especially when they first start the pills or change a dose. Researchers believe starting medication may cause agitation, anxiety and hostility in some patients who may be sensitive to rare side effects.

      Doctors say it's hard to tell if medication triggers suicide or if it's a product of the depression the medication is designed to treat. So far, Prozac is the only FDA-approved drug for pediatric depression.

      FDA Updates Analysis of Prozac in Children...

      Illinois Hits LCR Telecom With 22 Complaints

      A Slammer Gets Slammed

      Unscrupulous long distance providers continue the practice of "slamming," even though it's illegal. Not content to harass consumers by switching their long-distance service without telling them, some companies have been preying on small businesses as well.

      Illinois Attorney General Lisa Madigan has filed suit against a Michigan company for allegedly "slamming" more than 20 small businesses across her state.

      In the suit, Madigan charges that LCR Telecommunications, LLC has perpetrated a classic telephone "slamming" scheme. During its investigation of individual complaints, Madigan's office uncovered the fraudulent telephone slamming scheme that has hit small businesses in at least 11 Illinois counties.

      Madigan says telephone slamming deprives consumers of their right to choose a long distance telephone rate plan and often forces the consumer to pay increased long distance costs and carrier switch fees. Consumers also must spend time investigating and undoing the switch.

      Her suit also alleges that the company provided her office with falsified proof of authorization, attempting to cover up its fraudulent activities passing off long distance switches as having been approved by employees who, in several cases, didn't even work at a victimized business.

      "Slamming is inconvenient, expensive and illegal," Madigan said. "Small businesses have enough work to do without trying to fight fraudulent activities. My office will seek to ensure that this company pays for the time and trouble these companies have had to spend dealing with this billing nightmare."

      Madigan's office has received 22 complaints against LCR from small businesses in Champaign, Cook, Douglas, Jefferson, Macon, McLean, Moultrie, St. Clair, Tazewell, Vermilion and Woodford Counties. The businesses allege they were billed by LCR but deny ever having authorized the company to be their long distance carrier.

      Madigan's suit charges LCR with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act by switching companies' telecommunications service without proper authorization and then trying to cover up the fraud.

      LCR allegedly provided Madigan's office with proof of authorization for the long distance telephone service switches. The proof included the name, title and birth date of the person who provided the authorization or an audio recording of a telephone conversation authorizing the switch. Madigan said that in numerous cases, the person named was not an employee of the company, the information about the person is inaccurate or the voice on the recording does not match the voice of the person who supposedly authorized the call.

      Madigan's suit seeks to prohibit LCR from slamming consumers in Illinois. Additionally, it seeks restitution for LCR's customers, civil penalties of up to $50,000 and up to $50,000 for each violation found to have been committed with the intent to defraud. LCR, a long distance telecommunications service resale company, has been authorized to provide service in Illinois since November of 2002.

      According to a recent Federal Trade Commission survey, "Consumer Fraud in the United States," 6.5 percent of the U.S. population has fallen victim to telephone slamming schemes. Madigan's office has brought 29 slamming enforcement actions since 1995.

      To help prevent telephone slamming, Madigan suggested that consumers check their telephone bills carefully to see if their long distance carrier has changed; look for hidden charges on their telephone bills or unexpected fees for a provider switch; and put a PIC Freeze on their telephone lines. A PIC Freeze form can be obtained from the consumer's local telephone company and instructs the telephone company not to change the consumer's long distance carrier without proper authorization.

      Illinois Attorney General Lisa Madigan has filed suit against a Michigan company for allegedly "slamming" more than 20 small businesses across her state....

      NY Survey Shows Value of Comparison Shopping for Rx Drugs

      With drugs and everything else, it pays to shop around

      Consumers do a lot of comparison-shopping for tires, cars, home furnishings and airline flights, but what about prescriptions? New York's attorney general says that if you're not doing comparison pricing on prescriptions, you should be.

      Attorney General Eliot Spitzer says the results of a statewide survey of prescription drug prices shows that prices for the same medication can vary significantly among local pharmacies and can differ widely across the state.

      Granted, it's not easy to comparison shop for prescriptions. Drug stores don't advertise their prices. But in New York, at least, it's just gotten easier. Spitzer has launched a new interactive website - - the first of its kind in the nation - - that allows consumers to check for certain prescription drug prices charged by pharmacies in the survey. The new website can be found at

      "The escalating cost of prescription drugs is a burden for all New Yorkers but especially for seniors on fixed incomes, the uninsured and those lacking adequate prescription coverage," Spitzer said. "By posting the prices of common prescription drugs at pharmacies across the state on our new website, we hope to make it easier for all consumers to comparison shop and keep their costs as low as possible."

      In July, Spitzer's office surveyed 170 randomly-selected pharmacies in 25 counties across the state to determine the prices of the 25 most commonly prescribed drugs. Staffers from Spitzer's office visited each selected pharmacy and asked for its Drug Retail Price List of the 150 most frequently prescribed drugs (with the most commonly prescribed dosage and quantity), which state law requires pharmacies to supply to consumers on request.

      State law also requires pharmacies to prominently post a sign informing consumers that their Drug Retail Price List is available. Spitzer's staff reviewed the lists from surveyed pharmacies and posted the prices of the 25 most commonly prescribed drugs at

      A review of the retail prices for these drugs revealed that prices sometimes differed sharply from pharmacy to pharmacy in a county or region. For example:

      In the Albany region, Vioxx (dosage: 25mg; quantity: 30), commonly prescribed to relieve arthritis pain, was $82.49 at the lowest surveyed price and $114.29 at the highest, a difference of nearly $32.
      In the Binghamton region, Lamisil (dosage: 250mg; quantity: 30) a foot fungus drug, was $250.19 at the lowest surveyed price and $372.97 at the highest, a difference of over $122.
      In the New York City region, Allegra (dosage: 60mg; quantity: 60), an allergy relief drug, was $47.20 at the lowest surveyed price and $144.97 at the highest, a difference of nearly $98.
      In the Buffalo region, Cipro (dosage: 500mg; quantity: 20), a commonly prescribed antibiotic, was $110.36 at the lowest surveyed price and $178.25 at the highest, a difference of nearly $68.
      In the Westchester region, Advair Diskus (dosage: 250 mg; quantity: 60), commonly prescribed for asthma treatment, was $134.77 at the lowest price and $190.99 at the highest price, a difference of more than $56.
      In the Syracuse region, Nexium (dosage: 40 mg; quantity: 30), which is prescribed for heartburn, was $124.39 at the lowest surveyed price and $179.30 at the highest, a difference of nearly $55.

      Besides significant price variation within a county, the survey also found that retail prices of seven of the 25 most commonly prescribed drugs varied more than 100 percent across the state. For example, Atenolol (dosage: 50 mg; quantity: 30) a generic blood pressure drug, was $3.42 at its lowest surveyed price, in Broome County, and $30.95 at the highest surveyed price in Kings County - almost 9 times more expensive than its lowest surveyed price.

      "The lesson here is simple -- a good way to keep your prescription prices down is to shop for the best price," Spitzer said. "If you see a lower price for one of your medications on our website, you may want to ask your pharmacy if they will match the lower price."

      Spitzer offered the following 4-step checklist for consumers trying to shop wisely for their prescriptions:

      1. SHOP AROUND. Prescription drug prices may vary widely from pharmacy to pharmacy and county to county.
      2. ASK FOR THE DRUG RETAIL PRICE LIST. Under New York law, every pharmacy is required to give a print-out of its retail prices of its 150 most commonly prescribed drugs. If your medication is not listed, ask your pharmacist for the pricing information and compare prices.
      3. PRICE MATCH. Some pharmacies offer to match prices offered by another pharmacy in the area. If you find lower prices at other pharmacies, do not hesitate to ask if your pharmacy will match the lower prices.
      4. VISIT for prescription drug price comparison information of surveyed pharmacies, which is updated monthly. The website also includes a pharmacy locator that allows consumers to search for local pharmacies; helpful information for consumers about how to shop for prescription drugs; and links to public and private programs that offer discounted or free medication and information about the proper use of prescription drugs.

      Spitzer noted that nearly 5.6 million New Yorkers lacked insurance at some point in the last year and paid the full price for their medications out of their own pockets. Also, many New Yorkers with insurance lack adequate prescription drug coverage and must buy their medications at full price.

      NY Survey Shows Value of Comparison Shopping for Rx Drugs...

      Florida Braces for Charley & Price Gouging

      Consumers urged to report price gouging

      Florida Attorney General Charlie Crist has activated a toll-free hotline and urged Florida consumers to report suspected price gouging associated with Hurricane Charley. The Attorney General's action follows Governor Bush's official declaration of an emergency for the State of Florida.

      "It is important for Floridians to know that they will be protected from any potential price gouger during either of these storms, Bonnie or Charley," said Crist. "Safety is the first priority, then we need to take care of our property and possessions."

      Those who suspect price gouging should call the hotline at 1-800-646-0444 (Florida only). Investigators will then look into the complaint. Florida law prohibits extreme increases in the price of such commodities as food, water, hotels, ice, gasoline, lumber and equipment necessary for use as a direct result of an officially declared emergency.

      "We know that our fellow citizens can be devastated by what is happening and they will need our help," said Crist. "Unfortunately, there are those who would seek to profit from the misery of others. Anyone who seeks to charge unconscionable prices for vital goods should be warned that they will face the full force of Florida law. We encourage Floridians to report suspicious price increases to the hotline. Price gouging will not be tolerated."

      Florida law states that a commodity price is unconscionable if it represents a "gross disparity" from the average price of that commodity during the 30 days immediately prior to the emergency. This applies unless the increase is attributable to additional costs incurred by the seller or to national or international market trends.

      Violators of the price gouging statute are subject to civil penalties of $1,000 per violation up to a total of $25,000 for multiple violations committed in a single 24-hour period.

      The Attorney General also cautioned consumers to be wary of business scams that might arise in the wake of Tropical Storms Bonnie and Charley, including itinerant building repair and tree removal services. Crist said residents should deal whenever possible with local established companies for repairs or for financing to pay for any repairs that might not be covered by insurance.

      Consumers should be wary about a "contractor" who knocks on the door with an offer to fix a roof or windows. Before signing any contracts, they should check the contractor's license, payment terms and other provisions.

      Florida Attorney General Charlie Crist has activated a toll-free hotline and urged Florida consumers to report suspected price gouging associated with Hurr...