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    Minnesota Charges Capital One Ads Are Misleading

    Barbarian ad is cute but untrue, state charges

    Anyone who watches TV has seen the commercial where a couple is making a large credit card purchase. At the same time, a hoard of barbarians begins to descend on them. When one spouse cautions that putting the purchase on a credit card will cost a lot in interest, the other says "It's OK, we're using our Capital One card." The barbarians stop and walk away, in utter dejection.

    Cute commercial, but the state of Minnesota contends that basically, it's a lie.

    Minnesota Attorney General Mike Hatch filed suit against Capital One Bank and Capital One F.S.B. for using false, deceptive and misleading television advertisements, direct-mail solicitations, and customer service telephone scripts to market credit cards with allegedly "low" and "fixed" interest rates that, unlike its competitors' rates, will never increase.

    In fact, the lawsuit alleges that Capital One increases the interest rate on such cards up to 400% for consumers who trigger a "penalty" rate by defaulting in any number of ways.

    "Capital One aggressively markets its brand image as the credit card company with the nation's lowest fixed rates," Hatch said. "But that image is false. If you do something as simple as pay a day late, your rate with Capital One can sky-rocket overnight."

    The State's suit alleges that Capital One uses "penalty rate" pricing to offer a supposedly "fixed" interest rate to consumers, but then increases that rate when an individual account holder defaults. Capital One also retains the right to unilaterally increase an account holder's interest rate -- for any reason or for no reason at all -- based upon a "change in terms" provision in its credit card agreement.

    Specifically, the lawsuit faults Capital One's marketing practice as follows:

    ? Television Ads Capital One runs television ads with the same basic format, script, graphics and visual punch line designed to create the false and deceptive impression among consumers that its competitors' rates will increase, but Capital One's rates will not. In Capital One's "No-Hassle" ads, for instance, two people compete to pay for lunch, one with a competitors' card, the other with a Capital One card which has a "low and fixed" rate. When the man with a competitor's card asks what's going to happen to his rate, he is physically shot upward by a catapult operated by barbarians or a breaching whale. Capital One then orally and visually tells consumers that it offers the nation's lowest fixed rate at 4.99%.

    ? Written Solicitations Capital One bolsters its false television ads with deceptive direct mail solicitations. In one solicitation, for instance, Capital One describes its 4.99% interest rate as "low" thirteen times and as "fixed" seventeen times, including on both sides of the envelope, in the body of the text, in the application itself and elsewhere, including boxes comparing the interest rates and "savings" of Capital One's credit cards with consumers' other loans.

    ? Customer Service Scripts When consumers contact Capital One to apply for the card, Capital One scripts its customer service representatives to evade a direct response to the question "What does fixed mean?" Capital One answers: "Unlike most credit card companies, Capital One's fixed rate is not variable and will not go up and down as interest rates change." Only if a consumer "probes" another two times does Capital One concede that it cannot guarantee that its rates will stay the same forever.

    The state's lawsuit alleges that Capital One's marketing practices violate Minnesota's laws prohibiting false advertising, consumer fraud, and deceptive trade practices. The suit seeks injunctive relief prohibiting Capital One's false, deceptive and misleading conduct and civil penalties.

    The defendants are Capital One Bank and Capital One F.S.B. Both are Virginia-based entities that offer credit card products to prime and subprime consumers. Capital One is one of the top ten largest credit card issuers in the United States. According to Capital One Financial Corporation's most recent Form 10-Q filing with the U.S. Securities and Exchange Commission, Capital One's domestic credit card loans totaled $46.1 billion as of September 30, 2004. These loans generated net income of $414.4 million for July, August and September, 2004, a 50% increase from the same period in 2003.

    Capital One's marketing expenses were $826.6 million from January through September, 2004. Capital One's solicitations claim that the company has 46 million customers.

    Consumers who believe they were victimized by Capital One's practices may contact the Citizen Assistance Line of the Minnesota Attorney General's Office at 651-296-3353 or 1-800-657-3787.

    Minnesota Attorney General Mike Hatch filed suit against Capital One Bank and Capital One F.S.B. for using false, deceptive and misleading television adver...
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    Study Finds Convenience Drives Online Banking

    Study: reasons for online adoption are heavily influenced by generation

    Convenience, time savings and around-the-clock access to account information are the top three reasons why more consumers are turning to online banking, according to a study by Bank of America.

    The new research revealed that reasons for online adoption are heavily influenced by generation. Gen X and Gen Y customers view online banking as a routine part of their daily lives. These consumers value ease of use and educational features that enhance the online experience.

    However, baby boomers -- often with more complex banking needs -- view security as the primary factor in adopting online banking. They want a full range of features, but presented in an easily understood format. The survey also revealed that the No. 1 impediment for consumers to online banking is security.

    Customers can help reduce the chance of fraud by using online access to account information and eliminating paper statements and bills that go through the mail, said Sanjay Gupta, e-Commerce executive at Bank of America.

    Overall, when consumers were asked, "What prompted you to start banking online?" 64% cited 24-hour access to their accounts, 54% noted convenience and 48% answered that online banking saved time.

    "For most consumers, the primary impetus for banking online is the inherent value in time savings and convenience," Gupta said. "Our goal is to use a variety of methods to understand what we call 'Voice of the Customer,' then introduce new products and services that make it easier for customers to bank online."



    Research revealed that reasons for online adoption are heavily influenced by generation. Gen X and Gen Y customers view online banking as a routine part of...
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    Beware of Payday Loans

    Lots of ads touting payday loans during the holiday season

    Illinois Attorney General Lisa Madigan is warning consumers to be wary of the many advertisements appearing in newspapers and on the radio touting low-cost payday loans during the holiday season and trying to lure in customers with items ranging from t-shirts to free turkeys.

    Madigan said while these short-term loans may seem to be the answer to a cash crunch, they come at an incredibly high cost to the consumer.

    Madigan noted the media is filled with advertisements and offers of extended hours during the holiday shopping season because they know this is the time of year when people need extra cash. However, what the payday lenders dont advertise about the loans are the enormous cost of taking out such loans, loan terms that enable the lenders to dodge regulations set by state law, and annual percentage rates (APR) that often are well above 250 percent.

    During the holiday shopping season, consumers are flooded with a deluge of advertisements for payday loans appearing in the newspapers and on the radio, Madigan said. I recently saw a payday loan ad offering free turkeys and another shop is offering free t-shirts that say Its better than borrowing from your mother. The reality is that these loans will take the shirt right off of your back with costly fees and outrageous interest rates.

    A payday loan is a short-term loan obtained when a borrower writes a check dated in the future. To get a loan, a borrower must show the payday lender a pay stub and then write the lender a check for the cash loan. The check is usually made out for a later date often one month and one day after the date of the loan. The lender gives the borrower cash in return, but for an amount less than the value of the check.

    The difference between the amount for which the consumer writes the check and the amount the consumer is paid in cash is the lenders profit, or finance charge. Payday l enders often charge between $15 and $50 for every $90 borrowed, which only covers the few short weeks of the loan term. After that, the consumer must pay the lender back or pay the lender even more in finance charges.

    Most of the time, a consumer doesnt have the funds in his or her checking account to cover the post-dated check when it is written, and may not have the funds when it comes time for the check to be cashed. When payment comes due, if consumers cant cover the check, they are often encouraged to roll the overdue loan into a new loan, incurring new fees and increasing the amount of the loan. This loan flipping easily can lead to the consumer using most or all of the money borrowed to pay the lenders costly fees.

    Madigan said the Truth in Lending Act gives consumers the right to know the cost of any type of credit they apply for, including payday loans. Therefore, the lender is required to provide in writing both the APR and the dollar amount of all applicable finance charges.

    While the Illinois Department of Financial and Professional Regulation regulates payday loans, payday lenders have found clever ways around the rules. For example, the industry dodges the rules by writing loans for 31 days or more, when the loans covered by state regulations have a 30-day limit on the loan term.

    Madigan reminded consumers there are some community banks, credit unions and small loan companies that compete for consumer business by meeting their needs without making them pay exorbitant fees and interest rates. These banks will make short-term loans at comparatively low interest rates, and they require little more paperwork than the payday lenders to qualify the consumer for the loan. These lenders may prove to be far more affordable for the consumer when it comes to paying back the loan.



    Beware of Payday Loans...
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      Time Warner Cable Plans Cell Phone Service

      Cable giant Time Warner is said to be in talks with Sprint to provide cell phone service to its cable customers

      Telephone and cable companies have been in a race to provide a quadruple play -- telephone, television, wireless and high-speed Internet service...

      Who's Watching the Food Safety Watchdogs?

      Federal watchdogs snuggle up to their masters, consumer group charges

      Providing consumers with timely information about food safety risks and giving them the tools to take action to effect change is the goal of a new Web site launched by Consumers Union.

      "To an alarming degree, the federal agencies that are supposed to be our watchdogs bow to the pressures of the food industry, even when the end results clearly endanger public health," said Reggie James, director of www.NotInMyFood.org.

      In light of a mad cow scare in November -- in which an animal tested positive for infection twice before being cleared in a third test -- and the confirmed case in December, 2003, in the state of Washington, James said it is urgent for the Food and Drug Administration to act to keep the disease agent out of animal feed and for the U.S. Department of Agriculture to test more cows annually.

      As part of the new campaign, Consumer Reports is making an investigative report titled "You are what they eat," available in the free portion of its web site. The report raises concerns that the federal government isn't doing enough to protect the feed supply in the U.S. According to the article, regulatory loopholes are leaving consumers vulnerable to pathogens, drugs and contaminants consumed by the animals they eat.

      Consumers Union is proposing a 4-point action plan to make beef safer for American consumers:

      • Provide USDA and the FDA with the power to order mandatory recalls of contaminated food products, rather than voluntary recalls.
      • End secrecy agreements between USDA and individual states that keep the public in the dark about recalled beef.
      • Promptly enact rules prohibiting materials that may transmit mad cow disease.
      • Increase the number of cows tested annually by USDA for mad cow disease.

      Neither the USDA nor the FDA have the power to order mandatory recalls of contaminated food products other than infant formula, leaving it up to food producers instead to conduct voluntary recalls.

      "While government agencies have the authority to recall faulty products ranging from toys to tires and impose penalties if products aren't pulled off the market, when it comes to our food supply, industry calls the shots," James said.

      Consumers are also kept in the dark about food-borne health risks. Federal regulators refuse to tell state officials about the locations of stores and restaurants that have received potentially contaminated products unless they agree to keep that information secret from the public. Currently, 12 states are reported to have signed such secrecy agreements.

      In the wake of the discovery of the first mad cow case in the U.S., the FDA promised in January to make changes in its animal feed rules. But FDA never followed through. FDA Commissioner Mark McClellan initially announced that the agency would ban cow blood and several other materials that pose risks in terms of transmission of mad cow disease in cattle feed. However, the agency never published the regulations in the Federal Register. In July, the FDA said it was considering broader restrictions, thereby postponing any action even further.

      "FDA must immediately close loopholes in its rules on animal feed that could allow the disease to spread," said Michael Hansen, Ph.D., a research biologist at Consumers Union and advisor to the www.NotinMyFood.org project.

      "The agency has known for a while that cow blood and chicken coop floor waste could be vehicles for transmission of mad cow disease. It should act immediately to prohibit these substances as well as restaurant waste and pig and poultry slaughterhouse waste, in ruminant feed."

      USDA, Hansen noted, is testing less than 1% of the cows slaughtered each year, far less than the percentage tested in Japan and most of Europe. The USDA has tested 113,000 cows since it began a broader test program earlier this year, but more than 35 million cattle are slaughtered for food in the U.S. annually.

      Hansen said that while the risk of buying infected meat may be low for any given piece of steak, consumers who want to minimize their risk can:

      • buy organic beef, which is not fed any of the animal byproducts that can carry the infectious prions, and
      • stay away from organ meats -- especially brains - as well as beef sausage, hot dogs, and pre-packaged hamburgers, which may combine meat from many cows.

      "While testing alone will not fully protect the public, we should be testing all animals over 20 months, said Hansen. "Even animals that test negative can be silent carriers of this infection."



      Who's Watching the Food Safety Watchdogs?...
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      R.J. Reynolds To Cut Ads Aimed at California Teens


      R.J. Reynolds Tobacco Co. will cut back advertising aimed at teens and pay more than $17 million to settle a lawsuit brought by California Attorney General Bill Lockyer.

      "This settlement is an important victory in the ongoing effort to end tobacco advertising that targets our children and helps get them hooked on a deadly product," said Lockyer. "After almost four years of hard- fought litigation and appeals, R.J. Reynolds finally has agreed to adopt serious, effective limits for advertising in magazines that have disproportionately large numbers of young readers."

      The settlement approved by San Diego County Superior Court Judge Ronald S. Prager ends a lawsuit Lockyer filed against RJR in March 2001. The complaint alleged the firm's placement of cigarette ads in magazines with large numbers of underage readers violated the Master Settlement Agreement (MSA) reached in 1998 between state attorneys general and RJR and other tobacco companies. The MSA banned marketing of tobacco products to youths.

      Under the settlement's terms, if a publication's teen audience comprises 15 percent or more of its total readership, RJR will be prohibited from advertising in the publication, except under limited circumstances.

      Additionally, the total number of teens exposed to RJR tobacco ads must always stay at least 30 percent below the adult exposure level. The settlement also prohibits RJR from skewing the advertising for any of its brands to appeal to youths. RJR will pay the state more than $11.4 million in civil penalties under the settlement, and about $5.85 million to cover costs.

      The settlement applies to all RJR cigarette brands, including Camel, Winston, Salem and Doral. It also covers Kool, Lucky Strike, Pall Mall and the other brands RJR acquired in July 2004 when it merged with Brown & Williamson Tobacco Co.

      Following a four-week trial, Prager in June 2002 ruled RJR had targeted minors by exposing millions of California youths on multiple occasions to thousands of ads for Camel, Winston, Salem and Doral cigarettes. RJR placed these ads in magazines popular with teens, such as Sports Illustrated, Spin, Vibe, Rolling Stone, Hot Rod and Car and Driver.

      Prager issued a permanent injunction requiring RJR to take reasonable measures to reduce teens' exposure to its advertising, relative to adults' exposure. Prager also ruled RJR had to pay a $20 million civil penalty.

      RJR appealed Prager's ruling, but in February 2004 lost a unanimous decision from the 4th District Court of Appeal. In upholding Prager, the appeals court found that the fact youths were exposed to RJR magazine ads at substantially similar levels as adults showed Reynolds intended to target teens. The appeals court did, however, order Prager to recalculate the fine and tie it more specifically to the effect the targeted advertising had on California teens. RJR asked the California Supreme Court to review the 4th DCA ruling, but the high court declined.

      Protecting children from tobacco use has been one of Lockyer's top priorities. Aside from enforcing the MSA prohibition on marketing to youths, he also has focused on reducing tobacco-product sales to minors. Lockyer helped lead a multi-state enforcement effort focused on retailers with poor records of such sales to minors.

      Launched in 2000, the initiative by a group of 30 Attorneys General has produced six voluntary compliance agreements with major retailers to reduce tobacco-product sales to minors at more than 40,000 retail outlets across the country.

      These "Assurances of Voluntary Compliance" cover the nation's top retail chain (Wal-Mart), number one drug store chain (Walgreens) and largest oil company (ExxonMobil). The other agreements cover stores and gas stations operated by Rite Aid, BP, ARCO and Amoco.

      In addition, Lockyer on December 2, 2004 announced a lawsuit settlement with Safeway, Inc. which requires California's second-largest grocery chain to implement policies to reduce tobacco-product sales to minors at its 538 Safeway, Vons, Pavilions and Pak N' Save stores in the state.



      R.J. Reynolds To Cut Ads Aimed at California Teens...
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      Illinois Charges Storm Chaser with Home Repair Fraud

      Door-to-door salesmen misled homeowners, state charges

      Illinois Attorney General Lisa Madigan charges a door-to-door home repairman soliciting storm-related roofing repair jobs in the Chicago area, accepted down payments for repair work and then either never began or never completed the projects or, in some cases, actually made the damage worse.

      Since February, Madigans office has received 52 consumer complaints alleging Robert K. Olson and his company, Hail Restoration, Inc., accepted more than $225,000 in down payments from Illinois residents and then failed to repair damages to the consumers roofs. Sixteen of the 44 complaints have been filed by senior citizens.

      Hail Restoration, an Illinois corporation registered in the state since December 2003, either has or has had offices in Elgin, Joliet, Naperville, Berwyn and Chicago. Currently, Hail Restorations main office is located at 75 Market St. in Elgin. Madigans case was filed in Cook County Circuit Court.

      Madigans lawsuit alleges Olson travels the Chicago area going door-to-door to solicit work by claiming consumers homes have sustained roof damage during storms. Olson allegedly tells customers his company will repair damaged roofs and negotiate with insurance companies for a settlement. Many of the consumers allege they signed contracts with Olson during his first visit to their homes.

      Our case alleges that Robert Olson walks up to consumers doors with claims that he will fix damaged roofs, Madigan said. The fact that weve received so many complaints indicates that his real plans may have more to do with fraud and deception than actually providing repair services.

      According to the complaint, on one occasion in June 2004, the defendants informed an elderly Maywood resident that she was entitled to have the hail storm damage to her home repaired at no cost. The elderly woman signed a contract with the defendants and signed over a $7,843 insurance check to the defendants. Following that, the defendants never showed up at her home to begin the repair work.

      The defendants have been charged with multiple violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Home Repair and Remodeling Act for failing to complete the work for which they contracted and, in many cases where work was begun, for performing substandard work. Madigans complaint also alleges the defendants violated the law because they have never been obtained either a roofing license or a public adjusters license in Illinois and failed to inform customers of this. Finally, the complaint charges that consumers were not provided with the legally-required Home Repair: Know Your Consumer Rights pamphlet.

      Madigans lawsuit asks the court to prohibit the defendants from engaging in the business of home repair and remodeling and from further violating Illinois consumer protection laws. The lawsuit also seeks a civil penalty of $50,000 and additional penalties of $50,000 per violation found to be committed with the intent to defraud. Additionally, the suit seeks $10,000 per violation committed against a person 65 or older. Finally, Madigans lawsuit asks the court to order the defendants to pay restitution to consumers.

      Consumers who believe they have been the victim of Hail Restoration or another consumer fraud scam can file a complaint on the Web at www.IllinoisAttorneyGeneral.gov/consumers or call the Attorney Generals Consumer Fraud Hotline at the following numbers:

      • Chicago 1-800-386-5438 TTY 1-800-964-3013
      • Springfield 1-800-243-0618 TTY 1-877-844-5461
      • Carbondale 1-800-243-0607 TTY 1-877-675-9339



      Illinois Charges Storm Chaser with Home Repair Fraud...
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      Inside Ross Dress for Less

      A Ross employee (12/28/04):
      I'm tired of rude customers -- people who think we have to bend over backwards and break all the rules for them. Yes, customer service is important but the customer is not always right! Yes items do go down to as little as 49 cents. If you don't have your reciept too bad! Learn to hold on to your receipts. And yes there are customers that change the tags on items. Unfortunatly you might pick one up that they left behind.

      If it looks too good to be true, then it probably is. Ask an employee if the price is right. We have so much theft in Ross that we have to make strict rules and keep an eye out.

      We get paid lousy money! But some of us really love our jobs, that's why we stick around. So please stop complaining. And one other thing -- CLEAN UP AFTER YOURSELVES! We spend hours picking up clothes off the floors. If people would pick up after themselves we could have more time to be at the registers (always a problem at Ross, never enough cashiers open causing long lines) or walking around greeting and helping customers and preventing theft!

      If it looks too good to be true, then it probably is. Ask an employee if the price is right. We have so much theft in Ross that we have to make strict rule...
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      VW Recalls Golf, GTI, Jetta Models

      December 24, 2004
      Volkswagen is recalling 369,284 cars for various defects, including leaking fuel pumps and defective hazard light switches, the National Highway Transportation Agency (NHTSA) said.

      VW is recalling 300,000 Golf, GTI and Jetta cars from 2000-2002 model years because the hazard switch and flasher system function may degrade over time due to high electrical current load from turn-signal bulbs, according ot NhTSA.

      VW, Europe's biggest automaker, is also recalling 19,284 Golf, Jetta, Beetle and Passat cars from 2004-2005 model years because a leaking diesel fuel pump could lead to a fire. The high pressure diesel pumps were produced with an improper fastener, which could allow diesel fuel to escape from the pump.

      Also, Volkswagen said it is checking as many as 447,000 cars made between 2001 and 2003, including the Golf, GTI and Jetta models, for possible airbag problems after officials came up with 107 cases in which side-door airbags may have deployed improperly.



      VW Recalls Golf, GTI, Jetta Models...
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      After-Christmas Return Policies Get Stricter

      Shoppers may be in for some nasty surprises after Christmas as stores implement increasingly complicated and restrictive return policies, including checking a newly created "blacklist" of "serial returners" before accepting merchandise for a refund.

      Stores swipe the shopper's driver's license each time a return is being made, and if the store-set return limit is exceeded, the customer's tendered return..

      More States Sue Friedman's Jewelers

      The states of Florida and Tennessee have joined Texas in filing lawsuits against Friedman's Jewelers. for using deceptive tactics in the way the jeweler charged customers for insurance.

      Texas sued the retailer earlier this week, charging that it duped customers into paying for life, property, and other insurance while they thought they were insuring their financing of jewelry purchases.

      Florida Attorney General Charlie Crist said some 19 states are expected to join the litigation against Friedman's, which has 650 stores nationwide. Crist estimates that Friedman's allegedly sold $46.7 million of the insurance in 19 states, but failed to adequately disclose the costs to customers.

      According to the Florida complaint, between 1998 and 2002 Friedman's added charges to retail contracts for life, credit disability and property insurance. Friedman's allegedly collected approximately $46,709,000 from the 19 states combined. In Florida alone, it is estimated that the company collected more than $2,265,000.

      The company allegedly did not provide full disclosure about the purpose and price of the insurance charges to its customers. Instead, it allegedly added the amount to the total price of retail installment contracts without obtaining consumers' signatures to authorize the transactions. These contracts included an application for insurance that includes a designated spot for the consumer's signature, but the majority of applications for insurance were not signed by consumers, Crist said.

      "This wrongful conduct ranged from duping consumers into purchasing products they did not ask for to charging them for something that may have had no value," said Crist. "During this time of year we like to think of sharing gifts and good will, but this week we join with other states to take action on behalf of consumers who were treated poorly."

      Based on his investigation, Frist estimated that Floridians purchased insurance on 80 percent of the contracts they signed for Friedman's jewelry merchandise. At a sampling of six Friedman's stores in Florida, investigators found that between 10 percent and 40 percent of the contracts offered to consumers did not have signatures on the appropriate insurance paperwork.

      Friedman's said in a statement that it does not condone any improper practices. "The company believes that the transactions challenged primarily arose years ago and stated that the company has in place measures designed to monitor and assure compliance with company policy concerning credit insurance sales practices."


      The states of Florida and Tennessee have joined Texas in filing lawsuits against Friedman's Jewelers for using deceptive tactics in the way jeweler charged...
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      Report: Importing Drugs Wouldn't Save Money

      A just-released federal report is likely to increase the debate over the importation of prescription drugs

      A just-released federal report is likely to increase the debate over the importation of prescription drugs. The report, authored by 13 federal officials, said any small savings consumers might realize would be eaten up by the government's regulatory costs of ensuring the imported drugs' safety.

      The panel, appointed by the Bush administration, also suggested that legalizing the importation of medicines would probably have an adverse effect on the future development of new drugs for American consumers. That's roughly the same view expressed in previous studies of the subject by the Food and Drug Administration and the Congressional Budget Office.

      But the report runs counter to growing political demands from elected officials of both parties and consumer groups, who want Americans to be free to purchase prescription drugs from Canada, where drug prices are regulated by the government, and therefore are lower. Lawmakers in the House and Senate who are pushing for drug import legalization said the report does nothing to change their minds, and that they'll continue to push for legislation to set up commercial imports of prescription drugs.

      Lobbying groups like AARP argue that allowing commercial drug imports - and regulating them - would be much safer that having Americans buying imported drugs illegally, which many are now doing. But the report flatly rules that out, saying it's unworkable. Instead, it urged American consumers to purchase generic drugs, which are cheaper than name brands.

      "A commercial importation scheme could be feasible with adequate resources and authorities, however, it would be extraordinarily difficult to achieve this result if personal importation were legalized," the report said, adding "safety should not be sacrificed for affordability."



      Report: Importing Drugs Wouldn't Save Money...
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      Aleve Ingredient Seen as Health Risk

      Life not getting easier for pain sufferers

      The news for pain sufferers isn't getting any better. After one prescription pain reliever has been pulled from the market and questions raised about two others, the Food and Drug Administration has stopped a study involving naproxen, an over-the-counter remedy used by millions. It's the active ingredient in Aleve and Naprosyn.

      Researchers discovered the problem last week during a review of data from a large three-year-old study of whether anti-inflammatory drugs can delay the onset of Alzheimer's disease. The National Institutes of Health stopped the study when the data showed a 50 percent increase in heart attacks and strokes among study participants taking naproxen compared with those taking placebos.

      A Food and Drug Administration (FDA) official said it was the "first evidence" suggesting a risk since the drug was introduced in 1976. But she acknowledged that there have been no long-term studies of the safety of naproxen or any of the other popular nonsteroidal anti-inflammatory drugs (NSAIDs).

      Until now, the NSAID safety issue had been limited to the so-called COX-2 inhibitors, Vioxx, Celebrex and Bextra.

      The FDA has not issued a warning about Aleve or any other naproxen product, but has advised consumers who are taking it to carefully follow the instructions on the label. Patients should not exceed the recommended doses for naproxen (220 milligrams twice daily) and should not take naproxen for longer than ten days unless a physician directs otherwise.

      Patients with questions about naproxen should consult their physician.

      Non-steroidal anti-inflammatory drugs like naproxen are used for the management of mild to moderate pain, fever, and inflammation. They work by reducing the levels of prostaglandins, chemicals that are responsible for pain, fever and inflammation. Naproxen blocks the enzyme that makes prostaglandins. Naproxen was first sold as a prescription drug under the trade name Naprosyn in 1976. FDA approved its use as an over-the-counter drug in 1994.

      Vioxx was withdrawn from the market in September after its maker, Merck, said studies indicated use of the drug, most often prescribed for arthritis pain, might increase the risk of heart attack and strokes in people taking it for long periods of time. More recently, questions have been raised about Bextra and Celebrex, with the latter's advertising suspended this week.

      While the drug's manufacturer, Pfizer, continues to express confidence in Celebrex, concerns about its possible health risks were enough to prompt the National Cancer Institute to suspend clinical trials in which patients were taking Celebrex.

      The NSAID class also includes ibuprofen (often sold as Motrin and Advil) and, for that matter, aspirin.

      Researchers warned the association between naproxen and heart attacks and strokes among study participants may be a fluke. More research will be needed to answer that question.

      Patients taking over-the-counter naproxen should carefully follow the label instructions and should not take naproxen for longer than 10 days, the FDA warned.

      Aleve is manufactured by Bayer, which recently has been advertising the product as an alternative to Vioxx and other COX-2 inhibitors.



      Pharmaceutical giant Merck & Co. has agreed to a massive $950 million settlement with the U.S. government and 43 states over the way it marketed the painki...
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      California Files Major Securities Fraud Lawsuit Against Edward Jones

      Documents Detail How Secret Mutual Fund Payments Conflicted With Investors' Interests

      California Attorney General Bill Lockyer has filed a securities fraud lawsuit against Edward D. Jones & Co., alleging the St. Louis, Missouri-based broker dealer failed to tell investors about so-called "shelf space" payments it received from seven mutual funds to recommend and sell those funds.

      "Edward Jones broke the law, and broke faith with the working families of California who placed their trust in the company's investment recommendations," said Lockyer.

      "The documents we have obtained show Jones blatantly disregarded investors' interests as it collected some $300 million in secret payments from mutual funds. California law requires full disclosure of information that raises questions about whether broker-dealers' recommendations serve clients' best interests. Investors deserve nothing less. I will settle for nothing less from Edward Jones."

      The lawsuit filed in Sacramento County Superior Court seeks disgorgement of all profits Jones gained as a result of violating anti-fraud provisions of the state Corporate Securities Law (CSL). It also seeks restitution and damages for investors who bought mutual fund shares from Jones. Additionally, the complaint asks the court to impose civil penalties for each violation of the CSL. The maximum civil penalty for each violation is $25,000.

      Lockyer also seeks "injunctive relief" requiring Jones to fully disclose to investors, at the point of sale, the incentive payments it receives from mutual funds. Stressing the disclosure requirements will be stringent, Lockyer said, "California will demand full honesty from Edward Jones in its dealings with this state's investors."

      Under the "shelf-space" agreements at issue in the case, seven mutual funds paid Jones either cash or "directed brokerage" commissions (on portfolio transactions) to sell those funds, place them on lists of recommended buys or obtain other preferential treatment.

      From January 2000 through the present, Jones extracted approximately $300 million in shelf space payments, according to the complaint, with cash comprising the bulk.

      The complaint alleges the seven mutual funds (called "preferred funds" by Jones) that maintained shelf space arrangements with Jones include: American Funds, Federated Investors, Goldman Sachs, Hartford, Lord Abbett, Putnam Funds, and Van Kampen Investments.

      The sale of these preferred funds comprised about 98 percent of all Jones' mutual fund sales from January 2000 through the present, according to the complaint. Sales of just one preferred fund - American Funds - accounted for 50 percent of all Jones' sales during the same period, the complaint alleges. In California, Jones' sale of the preferred funds totaled an estimated $5.8 billion from January 2000 through October 2004, said Lockyer. As of October 2004, he added, Jones had about 294,000 California customers, representing more than 177,000 households.

      Evidence obtained by Lockyer's office to support the complaint includes internal emails and other documents that show: Jones maintained policies and procedures, including incentives, to ensure its "investment representatives" sold only the seven preferred funds; and Jones sold the preferred funds to investors despite knowing the funds underperformed.

      "'Who pays us the most - who helps us the most' seems to be all I ever hear about funds and their wholesalers," one email states. "What about 'Who makes our clients the best returns with the least risk?' Maybe it's time the SEC shook up the fund business. When everyone except the client wins-there's something wrong."

      In a March 27, 2001 letter to its preferred fund partners, Jones attached a spreadsheet detailing their poor performance during the prior year. "We at Edward Jones do not want to be in the business of explaining to our customers that one of their funds has lost one-half or three-quarters of its value," the letter states. Yet, despite the poor performance, Jones continued to sell the preferred funds to investors while collecting shelf space payments.

      Jones violated the CSL's anti-fraud provisions, the complaint alleges, by failing to tell investors about the existence of the shelf space arrangements, and failing to disclose the potential conflict of interest created by the arrangements. The CSL requires broker-dealers to disclose all material facts that investors need to make informed decisions.

      Regarding conflict of interest, the complaint states, "Shelf space payments create an incentive for a broker-dealer to highlight, feature or recommend funds that best compensate the broker-dealer or to meet other secret promises rather than to recommend the best performing investments and/or investments that meet the customer's personal investment needs."



      California Files Major Securities Fraud Lawsuit Against Edward Jones...
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      Free Money? Don't Think So

      Lots of government grant money out there for the taking? Think again

      Multi-million-dollar advertising and a new book by author Matthew Lesko are peppered with exaggerations and half-truths about government grants. ..

      Can Pfizer Prevent Celebrex Ban?

      Study: it may pose a risk of heart attack and strokes

      Pressure is building on pharmaceutical maker Pfizer, Inc. to withdraw its pain-relieving drug, Celebrex, from the market in the wake of a study indicating it too may pose a risk of heart attack and strokes. The pain reliever Vioxx, made by Merck, was withdrawn in September because of similar health risks. Both drugs are so-called Cox-2 inhibitors.

      Pfizer announced last week that clinical trials conducted by the National Cancer Institute had shown an increased risk of heart attack and strokes for those taking Celebrex. The trials were suspended, and the drug maker said it would push for further study.

      While some consumer groups began calling for a Celebrex ban, company officials went on the defensive. In press interviews, the company's CEO, Dr. Henry McKinnell Jr., stood firm on the position Pfizer took last week, when it disclosed the new data.

      But you won't see any ads for Celebrex for a while. Pfizer has suspended its marketing campaign for Celebrex, withdrawing all radio, newspaper and magazine advertising. According to Medical News Today, Pfizer has spent $71 million so far this year advertising the drug.

      Pfizer not only faces the prospect of losing the revenue from its profitable drug, it could share the expensive fate of Merck, which now faces mounting lawsuits in connection with Vioxx. So far, the Food and Drug Administration has not taken a position on a mandatory recall.

      "Although these are important findings, at this point FDA has seen only the preliminary results of the studies. FDA will obtain all available data on these and other ongoing Celebrex trials as soon as possible and will determine the appropriate regulatory action," the agency said in a statement.

      "While we have not seen all available data on Celebrex, these findings are similar to recent results from a study of Vioxx (rofecoxib), another drug in the same class as Celebrex. Vioxx was recently voluntarily withdrawn by Merck. Another drug in this class, Bextra (valdecoxib) has shown an increased risk for CV events in patients after heart surgery. Bextra and Celebrex are the only two selective COX-2 agents currently on the U.S. market," the statement added.

      The FDA said physicians should consider "this evolving information" in evaluating the risks and benefits of Celebrex in individual patients. The agency says patients who are currently taking Celebrex and have questions or concerns about the drug should discuss them with their physicians.

      Celebrex was approved in 1998 for the treatment of osteoarthritis and rheumatoid arthritis. Along with Vioxx and Bextra, also Cox-2 inhibitors, it has come to be widely used by those with chronic pain, largely because it avoids the risk of gastric irritation that accompanies older, cheaper pain relievers like aspirin and ibuprofen.


      Can Pfizer Prevent Celebrex Ban?...
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      Spitzer: Drop That Gun


      Two wholesalers have agreed to stop distributing toy guns that violate New York State law. New York Attorney General Elliott Spitzer says the agreements are part of an effort to keep unsafe toys off the shelves of New York stores.

      "Realistic-looking toy guns pose a threat to the law enforcement community and to the general public," Spitzer said. "My office's agreements with these two wholesalers will help keep unsafe toys off the shelves of scores of retail stores across the state and possibly prevent tragic incidents."

      The two New York City-based wholesalers - Rubie's Costumes Company, Inc. and Franco American Novelty Co., Inc. which distribute costumes and accessories, including toy guns, to approximately 160 retailers throughout the state - entered into settlement agreements with Spitzer's office and agreed to pay civil penalties and costs of $27,000 and $10,000 respectively.

      It is estimated that since early 2001 Rubie's and Franco American have distributed over 12,000 toy guns in violation of state law to retailers.

      As a result of Spitzer's investigation, retailers have pulled thousands of unlawful toy guns from store shelves, and the two wholesalers have replaced them with toys that meet state law requirements.

      New York state law prohibits the sale of any imitation toy gun in realistic colors such as black, blue, silver or aluminum unless it has a non-removable orange stripe running down both sides of the barrel. The stripe must be one inch wide if the barrel is at least one inch wide.

      As part of a continuing effort by Spitzer's office to enforce public safety laws, several other retailers across the state also have stopped selling realistic-looking toy guns in violation of state law, including Wal-Mart Stores, Inc., Rite-Aid Pharmacies, four "dollar stores" in Westchester County, eight retailers in Manhattan and a popular costume store in Monroe County.

      Realistic toy guns have been prohibited in New York State for the past 15 years. Improperly marked guns have led to tragic consequences. In four separate incidents in New York State alone since 1997, four individuals were killed and one child was seriously wounded when law enforcement officers mistook toy guns for real ones. More recently, a Rochester man holding a "B-B" gun was shot by a city police officer.

      "Imitation weapons have the potential to be extremely dangerous to anyone who possesses one and the people in the area. Therefore, we need to continue these efforts to remove items from the streets," said Mike Green, District Attorney of New York's Monroe County.



      New York Attorney General Elliott Spitzer says the agreements are part of an effort to keep unsafe toys off the shelves of New York stores. ...
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      Pfizer Finds Health Risk With Celebrex

      Study finds increased risk of heart problems with patients taking its painkiller Celebrex

      Pharmaceutical giant Pfizer Inc. says new research has found an increased risk of heart problems with patients taking its painkiller Celebrex, a Cox-2 inhibitor similar to Vioxx, which was removed from the market in September because of concerns about increased risk of heart attack and strokes.

      Pfizer said it received new information about the cardiovascular safety of Celebrex based on an analysis of two long-term cancer trials. As reported to Pfizer by the Data Safety and Monitoring Board, one of the studies (the APC cancer trial) demonstrated an increased cardiovascular risk over placebo, while the other trial (the PreSAP cancer trial) revealed no greater cardiovascular risk than placebo.

      "These clinical trial results are new. The cardiovascular findings in one of the studies (APC) are unexpected and not consistent with the reported findings in the second study (PreSAP). Pfizer is taking immediate steps to fully understand the results and rapidly communicate new information to regulators, physicians and patients around the world," said Hank McKinnell, Pfizer chairman and chief executive officer.

      Celebrex is approved for use in the United States for the treatment of arthritis and pain, at recommended doses of 100mg to 200mg daily for osteoarthritis and 200mg to 400mg a day for rheumatoid arthritis. It is also approved for a rare condition called familial adenomatous polyposis in doses up to 800mg per day. The APC cancer trial studied Celebrex at doses of 400mg to 800mg per day. In the PreSAP cancer trial the dose was 400mg per day.

      "In placing this new information in context, it is important to understand that the APC trial results differ from both the PreSAP cardiovascular results as well as the large body of data that we and others have accumulated over time, in which an increased risk of serious cardiovascular events in arthritis patients, even at higher-than-recommended doses, had not been seen," said Dr. Joseph Feczko, president of worldwide development for Pfizer.

      A third long-term study involving Celebrex in patients at high-risk for Alzheimer's disease is also under way with about 2,000 patients enrolled, about 750 of whom are on 400mg per day of Celebrex. As with the cancer studies, this study is monitored by independent safety experts who meet regularly to assess adverse events. The company said a review by this board as recent as December 10 did not result in any recommendations to change the conduct of this study.

      Pfizer said it will continue to work with the FDA on the company's plans to sponsor a major clinical study to further assess Celebrex in osteoarthritis patients at high-risk for cardiovascular disease.


      Pfizer Finds Health Risk With Celebrex...
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      Settlement Reached in NY Pay Phone Scam

      A New York firm will pay $1.65 million to victims of a pay phone pyramid scheme

      A New York firm will pay $1.65 million to victims of a pay phone pyramid scheme, under an agreement with New York Attorney General Eliot Spitzer.

      Financial Network Investment Corp. (FNIC) is one of the defendants in a lawsuit that was filed by Spitzer in June 2002. The scheme also involved Goldome Capital Management (GCM) of Depew, which targeted senior citizens with the sale of pay phones for $7,000 each.

      "The cooperation of this financial services firm will provide much needed relief for dozens of senior citizens - many of whom had liquidated their retirement savings," Spitzer said. "This case demonstrates the need for investors to be wary of guaranteed' returns on investments that sound too good to be true, even if the sales pitch is made by an established company."

      State Supreme Court Justice Joseph G. Makowski of Erie County approved a consent order whereby FNIC will pay $1.65 million to 80 investors. The settlement represents an average recovery of over $20,000 per victim.

      ETS Payphones, a Georgia company that manufactured the phones and orchestrated the scheme, paid GCM and its salespeople a commission to sell the phones. These same salespeople were also registered to sell securities for FNIC, a Torrance, California-based financial services company.

      Victims were told that they could buy the phones, lease them back to ETS to operate, and receive a "guaranteed" 14 percent return on their investment. Furthermore, the investors were told that they could sell the phones back to the ETS for the original purchase price at any time after six months. Typically, investors were persuaded by the brokers to liquidate conservative investments, such as retirement annuities, to fund their purchases.

      A federal investigation revealed the scheme to be a Ponzi scheme in which investors' monthly checks from ETS were coming out of new investors' principal payments and not ETS' profits. The scam began in November 1998 and came to an end when ETS declared bankruptcy in September 2000.

      Spitzer acknowledged that FNIC's efforts will greatly benefit the victimized investors, most of whom are senior citizens, and noted that the company itself received no monies from its brokers' unauthorized sales of the ETS phones.

      FNIC had no relationship with GCM or ETS, and the payphones were not FNIC products. Moreover, FNIC had told its brokers not to sell the ETS contracts, yet Spitzer alleged in legal papers that FNIC could have halted the scam if it had adequately supervised its brokers.

      In December 2001, Spitzer obtained over $5 million for over 300 other ETS victims from National Planning Corp., FNIC's successor as the company through which the brokers who sold the phones were registered. Spitzer also noted that a number of defendants have settled the charges against them by agreeing to be barred them from the securities industry and by either paying cash towards restitution or agreeing to money judgments. The lawsuit is still going forward against the remaining defendants who sold ETS phones.



      A New York firm will pay $1.65 million to victims of a pay phone pyramid scheme, under an agreement with New York Attorney General Eliot Spitzer....
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