Current Events in November 2004

Massachusetts and Connecticut are taking a chain of shopping malls to court. The states have filed suit against Simon Malls, charging the national mall chain is selling gift cards that violate state consumer protection laws.

"These 'gift cards' are riddled with additional charges that Massachusetts consumers should not have to pay," Massachsetts Attorney General Tom Reilly said. "Despite the name, these gift cards are not what they seem."

Reilly said the cards violate the Massachusetts Gift Certificate law, which requires that gift cards be redeemable at full face value for seven years.

"Simon says - but Simon Property fails to tell the truth, when it subtracts $2.50 a month from consumer gift cards six months or older," Connecticut Attorney General Richard Blumenthal said. "Simon illegally picks its customers' pockets to reactivate cards with unused balances."

"Card purchasers intend to give a gift to friends or loved ones, not to an already wealthy mall owner. State law - as well as logic and fairness - demand that gift cards retain their value just like dollars in a drawer," Blumenthal said.

In the Massachusetts lawsuit, Reilly charges that Simon Malls imposes a one-year expiration date on its cards and charges consumers numerous fees that significantly reduce the value of the card before it expires. Those charges include a $2.50 dormancy fee that Simon automatically charges after the card has been held for six months, an initial fee to purchase the card, and fees for checking the card's balance or transferring the balance to another card.

While the state gift certificate law requires gift cards to be redeemable at full face value for seven years, a Simon Gift Card with a $25 face value is worth only $12.50 after the eleventh month, and would expire - be worth nothing at all - after one year.

The lawsuit alleges that these gift cards are subject to Massachusetts law, and not immune from state enforcement under the National Bank Act because they are not a bank product, as Simon Malls contends in a recent lawsuit. Reilly also alleges that Simon Malls does not sufficiently disclose fees connected with the card before consumers purchase them.

Connecticut's suit charges Simon is illegally imposing expiration dates on gift cards and charging fees on unused balances. The suit also charges that Simon fails to properly inform customers of two additional fees: a 50-cent charge to check the card balance and a $5 fee to replace a stolen or lost card.

Simon Property Group is based in Indiana and owns and operates regional malls throughout the United States, including 14 in Massachusetts.

The Federal Trade Commission has asked a U.S. district court judge to shut down an operation that used illegal spam to make deceptive claims about an "automotive fuel saver" that doesn't save fuel.

The FTC charges that the spam violates the CAN-SPAM Act and the deceptive claims violate the FTC Act. The agency will ask the court to permanently bar the law violations and order the defendants to provide redress for consumers.

An FTC complaint filed in U.S. District Court in Chicago alleges that International Research and Development Corporation manufactures and markets a "magnetic device" under the names FuelMAX and Super FuelMAX. The company claims that when the device is attached to an automobile's fuel line, it will fracture gasoline hydrocarbon chains through magnetic resonance and:

• Increase mileage by up to 27%;
• Reduce Fuel Consumption;
• Reduce Emissions;
• Provide Accelerated Combustion; and
• Burn Fuel That is Normally Exhausted as Un-burned Pollution.

In November 2001, the FTC issued a warning that these product claims and advertising were false, lacked substantiation, and likely violated the FTC Act.

Other defendants, acting as Super FuelMAX resellers, set up Web sites, including www.fuelsaverpro.com to sell the magnetic devices under the pseudonym Fuel Saver Pro. The Web sites made claims such as:

• Increase gas mileage 27%+ by helping fuel burn better;
• Reduce emissions by 43%;
• Smoother engine;
• pays for itself FAST!!!!
• Gives an extra 10% more horsepower; and
• Based on the size of your gas tank you will save from $8 for a typical 15-gallon gas tank, but larger V8 SUVs and trucks will save up to $20 per tank.

The defendant resellers used spam that made deceptive claims to drive traffic to their Web sites. According to the FTC, the spam contained the names of innocent third parties in the "from" or "reply to" fields - a practice known as spoofing - and did not contain a valid physical postal address.

The FTC alleges that the magnetic "fuel saver" doesn't save fuel, doesn't increase gas mileage, and doesn't reduce emissions. According to the complaint, the claims are false and misleading and violate the FTC Act.

The agency also alleges that by providing promotional materials with the false claims to distributors, resellers, and affiliates, the defendants have provided them with the means and instrumentalities to violate the FTC Act. The agency also alleges that the spoofing and failure to provide a valid physical postal address violate the CAN-SPAM Act.

The FTC charges that consumers throughout the country have suffered substantial monetary loss and the defendants have been unjustly enriched. It has asked the court to halt the deceptive claims, bar future violations of the CAN-SPAM Act, and order redress for consumers.

The FTC's complaint names International Research and Development Corporation of Nevada; Anthony Renda; Net Marketing Group, LLC; Micro System Technologies; Floyd J. Tassin, Jr; Marcia Tassin; Diverse Marketing Group, Inc.; Diverse Marketing Group, LLC; Mark C. Ayoub; and Epro2000, Inc. as defendants.

Pennsylvania Attorney General Jerry Pappert has filed a civil lawsuit accusing 16 defendants of engaging in an elaborate statewide living trust sales scheme that deceived older Pennsylvanians into buying Revocable Living Trusts, long term annuities or charitable gift annuities that were costly, not in their best interest or unnecessary.

The alleged victims documented approximate losses that range between $1,800 and $80,000.

Along with the complaint, Pappert filed a preliminary injunction seeking to ban the defendants from engaging in the unlawful advertising, promotion or sale of estate planning products or services in Pennsylvania.

"This alleged scheme was heavily promoted and potentially hurt hundreds of senior citizens across the Commonwealth who may be unaware that they were cheated," Pappert said. "Today, I'm asking the court to ban the defendants from engaging in the illegal advertising, promotion and sale of estate planning products or services in Pennsylvania."

The seven-count complaint accuses the various defendants of violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law, Solicitation of Funds for Charitable Purposes Act, Telemarketer Registration Act, as well as the Judicial Code Provisions barring the Unauthorized Practice of Law.

According to investigators, defendants Barry O. Bohmueller and Brett B. Weinstein between 2001 and 2004 promoted their estate planning services using telemarketing, newspaper ads, mass mailings, senior expos and local seminars held in restaurants, country clubs, synagogues or other facilities throughout the state.

The two attorneys used sales agents from the marketing, insurance or brokerage firms to sell the estate planning products. The sales efforts were primarily focused on consumers located in Central, Northeastern and Southeastern Pennsylvania. Those responding to the ads or promotions were typically senior citizens often 70 to 80 years old.

According to the lawsuit, the defendants encouraged consumers to meet with their "Estate Planning Advisors" or "Certified Senior Advisors" to explain "What Everyone Should Know About Estate Planning Techniques, Financial Planning Strategies" and "Estate Preservation." The promotional materials from the defendants' estate planning advisor companies led consumers to believe that they were receiving impartial estate planning advice.

The complaint claims that consumers who attended the presentations or allowed the defendants into their homes were advised to purchase a Revocable Living Trust. The trust was presented as an estate planning document that was in the consumers' best interest, regardless of their individual financial holdings. Many were sold living trust kits for approximately $1,800 whether they needed them or not. Consumers said they were unaware that the sales representatives were insurance agents who received sales commissions.

To encourage the sale of living trusts, the suit claims that the defendants used scare tactics and deceived consumers by falsely claiming that living trusts are superior to wills.

The alleged victims said they fully trusted the representatives and followed their advice because they were led to believe that they were lawyers or estate planners. Consumers said the sales agent defendants gave them Bohmueller Law Offices business cards and wrote their names at the top, implying that they are lawyers who work in Bohmueller's firm. None of the consumers met or spoke with Bohmueller, yet his name appeared on all of their completed estate planning documents.

"In reality, the individuals advising consumers about estate planning products are not unbiased legal professionals but sales or insurance agents working on commissions," Pappert said.

"These older citizens were given legal advice from non-attorneys who intentionally steered them toward purchasing living trusts as a way to find out the contents of their financial portfolios. After profiling the portfolios, the defendants deceptively convinced consumers to convert their stocks or other non-real estate investments into charitable gift annuities or long-term deferred annuities that paid the agents even higher commissions," he added.

The defendants, among other charges, are accused of knowingly providing legal advice and services that can only be lawfully performed by licensed attorneys.

Pappert said the defendants exploited the trust that many elderly consumers placed in them when they knew these older citizens could not determine what was in their best interest. In one case, an 85-year-old Delaware County man unknowingly was sold a 10-year deferred annuity with his first payment due when he turns 95.

"In my view, these actions are unconscionable. Consumers were lied to and deceived into purchasing long-term annuities based on what the defendants would make in commissions. The sales commission rate was higher if the payout period to consumers was longer. I am proceeding against these defendants with every appropriate remedy available under the law," said Pappert.

Pappert said undercover agents from his Charitable Trusts and Organizations Section posed as potential customers and presented the various defendants with a dummy portfolio. Even though the bogus investments paid generous dividends and interest, the defendants recommended that the entire portfolio be liquidated and converted to deferred annuities.

Pappert said several consumers told his office that they lost thousands of dollars in their life savings due to the failure to realize the promised returns, extra fees or costs, additional tax expenses and the inability to have access to their investments without paying huge penalties.

The Commonwealth also claims that the sales representatives for New Life Corporation were not registered and bonded as professional solicitors, in violation of the Charities Act. Additionally, defendant Weinstein is accused of violating a November 2001 agreement with the Office of Attorney General involving similar alleged illegal business practices.

Prosecutors asked the court to ban the defendants from engaging in the unlawful telemarketing, advertising, promotion or sale of estate planning products or services in Pennsylvania.

The complaint asks the court to:

• Require the defendants to pay full restitution to consumers who come forward with proof that they were harmed in the case.

• Require defendants to pay civil penalties of $1,000, $3,000 or $5,000 per violation.

• Permanently ban defendants from engaging in the illegal telemarketing, advertising, promotion or sale of estate planning products or services.

• Require defendants to pay for attorney fees, investigation costs and an accounting and audit of their commissions and income.

November 3, 2004
adidas America is recalling its Superstar Ultra and Pro Team Shoes. A portion of the sole of the heel can separate or tear during use, which can result in injuries.

adidas America has received two reports of injuries involving these shoes, including one sprained ankle and one strained Achilles tendon.

The adidas Pro Team and Superstar Ultra basketball shoes come in various color combinations. The recalled shoes have a six-digit article number on the inside part of the shoe tongue. A complete list of the article numbers of the shoes involved in the recall can be found at www.adidas.com/recall or by calling the firms recall hotline.

The shoes were sold at adidas stores, major athletic shoe stores, independent shoe stores nationwide, and at thestore.adidas.com. The Superstar Ultra shoes were sold between January 2004 and October 2004 for about $120. The Pro Team shoes were sold between July 2004 and October 2004 for about $80.

Consumers should immediately stop using the recalled shoes, and contact adidas America to receive a prepaid mailing label and a refund or gift certificate.

For more information, call adidas America toll-free at (877) 568-4632 anytime, or visit the adidas America Web site at www.adidas.com/recall

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

The Food and Drug Administration (FDA) today warned consumers not to purchase or consume Actra-Rx or Yilishen, two products promoted and offered for sale on Web sites as "dietary supplements" for treating erectile dysfunction and enhancing sexual performance for men.

The products contain an active prescription drug ingredient, the FDA said. The agency has also issued an Import Alert instructing FDA field personnel to stop the importation of the supplements.

A research letter published in the Journal of the American Medical Association described the results of a chemical analysis of Actra-Rx, finding that each capsule analyzed contained prescription-strength quantities of sildenafil.

Sildenafil is the active drug ingredient in Viagra, a Pfizer prescription drug product approved in the United States for the treatment of erectile dysfunction. FDA conducted its own tests of Actra-Rx and found that the product contained prescription-strength sildenafil.

An interaction between sildenafil and certain prescription drugs containing nitrates (such as nitroglycerin) or nitrates found in illicit substances (such as amyl nitrate) may cause a significant lowering of blood pressure to an unsafe level. Consumers with diabetes, high blood pressure, high cholesterol, or heart disease often take nitrates.

Because erectile dysfunction can be a common problem in individuals with these conditions, these consumers may take Actra-Rx or Yilishen and risk experiencing serious adverse effects. Anyone experiencing erectile dysfunction should seek guidance from their health care provider before purchasing a product to treat that condition.

Consumers who have taken Actra-Rx or Yilishen should stop taking it and consult with their health care providers regarding erectile dysfunction treatment. Consumers who are seeking treatment for erectile dysfunction should not take Actra-Rx or Yilishen as either can be dangerous to their health and even life-threatening.

New versions of a tired but effective scam are making the rounds. It's the "government grants" scam in which recipients of phone calls are promised government grants in return for a one-time "processing fee."

The scam occurs when an unsuspecting consumer gives out personal bank account information that enables the allegedly fraudulent company to take money - between $199 and $249 - out of a consumer's account.

"Losing hundreds of dollars can be a devastating financial blow to many consumers and seniors who live on fixed incomes," Illinois Attorney General Lisa Madigan said. "If you receive a call like this, just hang up the phone. Never, ever give out financial or bank account information to someone you don't know and trust."

Madigan said her Consumer Protection Division has received several recent complaints about unsolicited calls which offer to obtain government grants for consumers in exchange for "processing" fees that reportedly range from $199 to $249.

"I am $249.00 poorer and without no grant money or answers," said Lori of Midland TX, one of hundreds of consumers who have complained to ConsumerAffairs.com about the myriad of "free money" scams.

The scam depends on a consumer's willingness to reveal routing information found at the bottom of personal checks. This information allows the scam artist to use desktop software to create what looks like an actual check from the consumer's checking account and debit the so-called processing fees without the consumer's signature.

"He said that in order to insure that the grant money was received by me and did not get into the wrong hands he would need my bank account number," said Gena of Montgomery AL in her complaint to ConsumerAffairs.com.

Madigan also warned of a variation of the grant scheme in which consumers are told they have been awarded a government grant and need to pay a fee to collect the grant money. This also is a scam, she said.

Madigan reminded consumers that a wealth of information about government grants is readily available online or at local libraries. In addition, Madigan said grants typically are not awarded for personal use.

"Some consumers told us the caller said the grant can be used to pay off credit cards or personal loans with no questions asked. That's simply not true," Madigan said.

She added that consumers who were victimized by the scam should immediately contact their banks to request a stop payment or credit for the amount.

Although they are often thought of as toys, BB guns annually injure as many as 21,000 Americans, many of them children, according to a study in the November issue of Pediatrics.

Nonpowder guns kill an average of four Americans yearly, and from 1990 to 2000, there were 39 such deaths -- 32 of children younger than 15, the study found.

Nationally, an estimated 21,840 injuries related to nonpowder guns were treated in emergency departments in 2000 -- most in children ages 5 to 14, according to a report prepared by the American Academy of Pediatrics' Committee on Injury, Violence and Poison Prevention.

"They're being given as toys without recognition that there may be a serious injury risk," said the report's author, Dr. Danielle Laraque, a New York pediatrician.

The report covers all nonpowder guns, also called air guns, not just the popular BB guns. Air guns have been used since the 16th century in warfare and to kill game as large as deer. Besides metal projectiles, air guns can launch gelatin balls filled with paint, such as those used in war games.

The U.S. Consumer Product Safety Commission (CPSC) estimates that there are approximately 3.2 million nonpowder guns sold yearly. Nonpowder guns are sold in many department stores, including toy stores.

According to data from the Centers for Disease Control and Prevention (CDC) and the CPSC, there were 21,840 nonpowder gunrelated injuries treated in emergency departments. Of these, 49% occurred in children 5 to 14 years of age and 33% in those 15 to 24 years of age.

Approximately 12% of injuries were to the eye; 24% were to the head and neck, 63% were to extremities; and 1% were to other body areas. With the exception of the age group of 0 to 4 years, most victims were males.

The report found a correlation between the increasing popularity of paintballs used in war games and an increase in eye injuries and noted that the visual outcome for many of these injuries is poor. Many of the injuries have occurred even with eye-protective devices, though none to players properly wearing an eye protector that meets current U.S. safety standards.

There have been no reported deaths directly related to paintballs, but the CPSC issued a warning on March 24, 2004, because of its investigation of 2 deaths caused by carbon dioxide canisters flying off paintball guns.

Internal Merck & Co. e-mails and documents show the company knew for years that its popular pain reliever Vioxx posed serious risks of heart attack and stroke, The Wall Street Journalreported.

When it pulled Vioxx off the market in September, Merck said it was "putting patient safety first" but the Journal says company officials had fought for years to protect the highly profitable drug and to keep news of the health risks quiet.

Vioxx was a big moneymaker for Merck, generating about $2.5 billion in yearly sales.

In early 2000, Merck research chief Edward Scolnick e-mailed Merck colleagues that the health risks "are clearly there." But the company continued to publicly reject any link between Vioxx and increased health risks.

Older and cheaper pain relievers such as aspirin and naproxen, known commercially as Aleve, block the COX-1 and COX-2 enzymes that are involved in inflammation and pain. Blocking COX-1 enzymes can upset the stomach but research indicates it may also help prevent blood clots, the leading cause of heart attacks and strokes.

Vioxx blocks only the COX-2 enzyme, thus providing powerful pain relief with no stomach upset. But clinical tests have indicated that it also fails to protect against blood clots and may even cause additional clots to form.

As far back as 1997, the Journal says Merck executives and scientists were discussing the risk. One said flatly that unless patients taking Vioxx also took aspirin, "you will get more thrombotic events," meaning blood clots. But adding aspirin would increase the risk of stomach irritation, leading to what another Merck official called "a no-win situation," the Journal said.

Merck responded that the comments were taken "out of context" and denied that it had purposely endangered its customers. In a statement, Merck said it had acted "responsibly and appropriately" in developing and marketing Vioxx.

Merck shares fell as much as 7 percent to their lowest level in more than eight years after the report.

Merck withdrew the drug September 30 after a study showed that prolonged usage could double the risk of heart attack and stroke in patients who took it for 18 months. That left about 1.3 million Americans looking for a substitute.

Researchers say the number of patients who have had heart attacks or strokes as a result of taking Vioxx could range from 30,000 to 100,000.

Monetary terms were not disclosed according to an agreement between the family of Carla Jeanette Gann and the hospital, said the Gann family's attorney, Steven Laird.

"This settlement will ensure that the Ganns' three young children will be cared for, for the rest of their lives," Mr. Laird said in a statement. "Although there's no way it can make up for the loss of a mother and wife, the family is glad that this case has resulted in the hospital focusing more training on policies and procedures in order to prevent a similar tragedy," he said.

On Nov. 30, 2002, Ms. Gann, 23, was admitted to Harris Methodist for kidney stone pain. She was given several narcotics for pain and scheduled for kidney stone surgery within two days.

Testimony showed that, despite doctor's orders, hospital nurses administered a central nervous system depressant almost immediately after she had received other heavy narcotics. This resulted in her central nervous system shutting down and a loss of her ability to protect her airway when she became nauseous.

When her family came to visit Mrs. Gann prior to surgery, they found her pale, non-responsive and not breathing. After alerting hospital staff, Mrs. Gann's husband, mother and stepfather were ordered into the hallway while hospital staff tried to save Mrs. Gann with mouth-to-mouth resuscitation.

Doctors told the family that Mrs. Gann had suffocated on her own vomit and showed no neurological function due to swelling of the brain. The family reluctantly agreed to take Mrs. Gann off life support and she died that evening.