Current Events in April 2005

April 28, 2005
New York Attorney General Eliot Spitzer has sued one of the nation's leading internet marketing companies, alleging that the firm was the source of "spyware" and "adware" that has been secretly installed on millions of home computers.

The suit against Los Angeles-based Intermix Media, Inc. is the most sweeping case to date involving programs that redirect web addresses, add toolbars and deliver pop-up ads.

"Spyware and adware are more than an annoyance," Spitzer said. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers. These issues can serve to be a hindrance to the growth of e-commerce."

Ari Schwartz, the Associate Director of the Center for Democracy and Technology in Washington D.C. said, "One of Internet users' biggest frustrations today is unwanted software that sneaks onto computers without their owner's consent and cannot be uninstalled."

"Companies have gotten away with unethical and illegal software download practices for too long. The practices alleged in this case are widespread on the Internet and we hope that both federal and state authorities follow Attorney General Spitzer's lead in making this a priority," Schwartz said.

The suit follows a six-month investigation in which the Attorney General's office found that the company had installed a wide range of advertising software on home computers without giving consumers proper notice.

Intermix owns and operates a wide range of web sites, including mycoolscreen.com, cursorzone.com and flowgo.com, which advertised "free" software available for download, including screensavers, screen cursors and games.

The Attorney General found that along with these programs, Intermix secretly downloaded a number of ad-delivery programs. One such program was called "KeenValue" and it delivered pop-up ads to its unsuspecting users. Another program, "IncrediFind," redirected web addresses to Intermix's proprietary search engine. Other programs placed advertising "toolbars" on users' screens.

The Attorney General documented at least ten separate web sites from which Intermix or its agents were downloading spyware, providing either no warning or other misleading disclosures. In this way, Intermix and its agents downloaded more than 3.7 million programs to New Yorkers alone, and tens of millions more to users across the nation.

Intermix also went to great lengths to protect the spyware and adware it secretly installed. The programs were hidden in unlikely locations on the computer and could not be removed through a computer's "Add/Remove" function. In addition, the programs omitted "un-install" applications, and even reinstalled themselves after being deleted.

The Attorney General's suit seeks a court order enjoining Intermix from secretly installing spyware, an accounting of all revenues made on these products, and payment of penalties.

The lawsuit arises under the State's General Business Law, which prohibits false advertising and deceptive business practices, and New York's common law prohibitions against trespass. Legislation specifically directed at "spyware" and "adware," including bills applying or strengthening criminal sanctions for its distribution, has been proposed both in Congress and in the New York legislature, as well as legislatures across the country.

Patients requesting specific medications can have a profound effect on physicians prescribing medications for major depression, according to a new study in the April 27 issue of the Journal of the American Medical Association.

Critics charge that direct-to-consumer (DTC) advertisements lead to overprescribing of unnecessary, expensive, and potentially harmful medications. Proponents counter that they can serve a useful educational function and encourage patients to treat conditions that may be poorly recognized or highly stigmatized.

The study noted that antidepressant medications consistently rank among the top DTC advertising categories -- with $3.2 billion spent on consumer ads for antidepressants in 2003.

Richard L. Kravitz, M.D., M.S.P.H., from the University of California, Davis, and colleagues conducted a randomized trial using trained actors as standardized patients to determine the effects of patients' DTC-related requests on physicians' initial treatment decisions in patients with depressive symptoms. The patients were middle-aged, white, non-obese women, most with professional acting experience.

They were trained to portray six roles and represented two clinical conditions: symptoms consistent with major depression or adjustment disorder, and three request types: a brand-specific drug request, a general drug request, or no request (control condition).

The scenarios included patients telling their doctor that they had seen an advertisement for Paxil on TV and asked for that drug by name; or patients saying they had watched a program on TV about depression and asking the physician if medication might help them.

The researchers chose Paxil because at the time of the study, it was widely promoted, priced higher than the generic fluoxetine, and available through the participating health care organizations in all three cities. In the control scenario, the patients reported the same symptoms but made no request for medication.

"Antidepressant prescribing rates were highest for visits in which standardized patients made general requests for medication (76 percent), lowest for visits in which standardized patients made no requests for medication (31 percent), and intermediate for visits in which standardized patients made brand-specific requests linked to DTC advertising (53 percent)," the authors found.

"Among standardized patients portraying major depression, paroxetine was rarely prescribed (approximately 3 percent) unless the standardized patient specifically requested Paxil; if Paxil was requested by name, 14 (27 percent) of 51 received Paxil/paroxetine, 13 (26 percent) received an alternative antidepressant, and 24 (47 percent) received no antidepressant," they said.

For standardized patients portraying adjustment disorder, physicians were less likely to prescribe antidepressants.

"These results underscore the idea that patients have substantial influence on physicians and can be active agents in the production of quality," the authors write. "The results also suggest that DTC advertising may have competing effects on quality, potentially averting underuse, while also promoting overuse."

"The results of this trial sound a cautionary note for DTC advertising but also highlight opportunities for improving care of depression (and perhaps other chronic conditions) by using public media channels to expand patient involvement in care," the study's authors said. "Furthermore, physicians may require additional training to respond appropriately to patients' requests in clinically ambiguous circumstances."

In an accompanying editorial, Matthew F. Hollon, M.D., M.P.H., from the University of Washington, Seattle, writes, "Relying on emotional appeals, most advertisements provide a minimal amount of health information, describe the benefits in vague, qualitative terms, and rarely offer evidence to support claims."

More than 80 percent of physicians believe that DTCA does not provide balanced information, he added.

MBNA's surging profits may make it popular with investors but its propensity for self-surging interest rates isn't going over so well with its cardholders.

Consumers writing to ConsumerAffairs.com complain that their MBNA interest rates have jumped from a reasonable 5.99% fixed rate to a 15.99% variable rate, from 18.99% to 26.99% and even from 7.99% to 26.99%. That unlucky customer, Kevin M. from Hamden, CT, was outraged.

"It's just plain robbery. I went from being able to comfortably pay my bills to an overnight crisis situation," he said.

MBNA claims to offer written advance notice any time an interest rate changes for any reason, yet consumers repeatedly claim they received no notice about their rate changes. It's only upon opening their monthly statement that they learn of the increase.

In July 2004, Jason M. of Ridgecrest, California opened his MBNA bill to find his rate had increased from 7.9% to 17.98%, "claiming that the increase was the result of information gained from my credit report and was unrelated to my payment history with their company."

When Jason contacted MBNA's customer service department, he was told that written notification had been sent out to consumers, advising them of the potential rate increase.

"I was told that the notification was mailed with my July statement. As luck would have it, my July statement was still unopened in the kitchen as I recently moved and paid my bill online. When I opened the statement there was no notification in it," he said.

Asked to comment, MBNA representatives did not return calls and e-mails.

Dale B. of Minneapolis, Minnesota received MBNA's Gold Option account, a personal installment loan with a fixed rate of five years, and a fixed payment amount. Although MBNA's Gold Option website states that "Your APR is not guaranteed for any period of time and may be changed by MBNA," Dale was nonetheless surprised to find his loan rate had jumped from 18.99% to 27.98% after applying for an auto loan.

"MBNA now sees me as a risk and has drastically increased my APR and extended the term of the loan," he stated. "I have never been late with a payment, and have not defaulted in any way with this or any other credit account that I have ... MBNA claims I received a mailing telling me about the rate increase, and that it was due to me taking on additional credit. I do not recall such a mailing."

The MBNA representative offered Dale the chance to pay the loan off in full and close the account, which he was unable to do, leaving him saddled with a 72-month installment loan at a much higher rate.

Customer Service

MBNA is generally considered the leading credit card issuer. Most other companies follow its lead. But MBNA's reputation for customer service appears to be in steep decline, judging by the complaints received by ConsumerAffairs.com.

Dutch B., from Marana, Arizona, missed a payment on his MBNA card when he moved circa October 2004. He was shocked to find that his interest rate had jumped to 25 percent, and that he owed MBNA another $112. He tried to dispute this charge but to no avil.

"In the meantime, they are phoning me all hours of the day and night, not showing up on the caller ID, then [when I call], I'm asked to wait for the next operator. The operators are very nasty, threatening, overbearing and extremely rude," he said.

Other consumers have complained of continual calls at their workplace, MBNA representatives asking co-workers for customers' cell phone numbers, and of offering deliberately false terms of rates and loans.

Jeff Stroman, of Norridgewock, Maine, a former MBNA call center employee, describes an atmosphere of constant pressure to push cards and "encouraging representatives to 'bend' the rules in order to make a sale."

"You are competing against your peers, constantly trying to outsell them. If your stats fall below a certain measure -- and they will when representatives don't (bend the truth to make a sale) -- you will be placed on probation and lose your incentive for a time no matter what your performance," he said. "If you don't improve your statistics, you will be let go."

"When the management 'team' at MBNA in Farmington was comfortable around you they joked about targeting the elderly and young adults," Stroman said in an interview.

Stroman noted the willingness of other employees to be less than truthful about interest rates in order to clear a sale and earn their incentive pay.

"It is amazing to me that I lasted there for nearly two years. I can only wonder how many hundreds of customers opened a credit card from MBNA believing the rate was 9.99%, because that's what they were told, but in reality were stuck with 19.99% or higher."

Universal Default

Even in a sluggish economy and amid reports of losses by other credit and financial companies, MBNA continues to turn a healthy profit. The company reported a gain of $432.5 million, or 33 cents per share, as its first quarter earnings this year. This was an increase from $369.9 million, or 28 cents per share, for the same period last year.

One analyst credited this to MBNA attracting "a higher class of consumer than the rest of the market," and company spokespeople said that the average MBNA customer earned over $70,000 a year. MBNA has also backed away from offering zero-percent interest loans in order to attract consumers, whereas competitors such as Capital One and Citigroup have faced rising loan defaults.

Further improving profits, MBNA was also one of the first creditors to adopt the "universal default" policy, raising the interest rates on a consumer's debt if they are late with any kind of payment on any bill, regardless of whether they pay their credit card balance on time every month.

In Jeff Stroman's words, "MBNA is so big now, and in their minds they are such 'fearless innovators,' that they are willing to be the first to use such a dragnet as 'universal default,' while Citigroup and Capital One will wait and watch to make sure they get the green light in Washington."

MBNA's continued success has earned it unrivaled clout in the political arena. As has been widely reported, it was one of the biggest financial backers of President George W. Bush's 2004 campaign, and a leading supporter of the recent tightening of bankruptcy laws.

Consumer Affairs.Com's special report on the bankruptcy legislation details how high credit card debt and inability to pay back the rapidly ballooning interest and fees often leads consumers to bankruptcy. These are the circumstances facing many credit card users, even those who have never missed a payment or used their card irresponsibly, or -- as in the case of Teresa W. from Madison, Tennessee -- never used at all.

Teresa's husband had suffered many hospitalizations, was forced to declare bankruptcy, and died, leaving her with a $12,000 debt on an MBNA card she didn't know he had. Evidently not MBNA's preferred class of customer, she was forced to deal with abusive collection agents constantly, and had her formerly low interest rate increased to 27.9% after missing two payments.

"I was a widow, no money, tired, at the point of wishing for my last breath, and now I am sending them the last of my husband's insurance death benefit of $6,000," she said in a complaint to ConsumerAffairs.com.

In fact, it is very possible that Teresa had no obligation to pay MBNA. If the credit card was in her husband's name, she had no personal obligation to pay even one dime to MBNA. The proceeds from her husband's life insurance policy were presumably hers, not his estate's.

MBNA would have a legitimate claim against her husband's estate but not against any of Teresa's personal assets. Teresa should consult an attorney, as she may be able to recover some or all of the funds in court.

Unfortunately, credit card companies and other creditors routinely demand payment from the families of deceased debtors, knowing full well that in many cases the families have no obligation whatsoever to pay any of the deceased's debts.

"It's very sad that many have died fighting for freedom in this country, only to find they can never truly be free because the corporations that supply you with food, electricity, water, they can ruin your air if they wish, poison your water, take every penny you have and reduce you to nothing," Teresa said.

The New York Insurance Department will appoint a consultant to audit years of alleged improper booking of workers' compensation premiums at American International Group (AIG).

According to Attorney General Eliot Spitzer and Insurance Superintendent Howard Mills, the practice to be audited, now apparently discontinued, involved booking premiums for workers' compensation coverage as premiums for general liability coverage.

The conduct appears to have taken place for over a decade, and continued even after AIG insiders repeatedly challenged its legality.

By booking the income as something other than workers' compensation premiums, AIG avoided paying its true share into various workers' compensations funds. One AIG document dating from the early 1990s roughly estimated unlawful benefit to AIG at tens of millions of dollars annually.

A purpose of the consultant is to determine what of this money, if any, is owed to the State of New York or others.

In 1992, an internal AIG legal memorandum to top management reported that the practice was illegal. This followed similar warnings made years earlier. It remains unclear when the practice stopped. AIG, which has recently been cooperating with the Attorney General and Insurance Department's inquiries on this subject, has uncovered no evidence that AIG disclosed the practice to regulators or made restitution.

The assessment funds at issue are designed to pay for the operations of the workers' compensation board and provide certain other claim benefits for injured workers.

A broad investigation of the company by the Attorney General's Office and the Insurance Department is continuing.

Although hybrid vehicle sales are off and running, American manufacturers are being left at the starting line, with Japanese manufacturers capturing more than 96 percent of hybrid sales in the U.S.

New hybrid vehicle registrations totaled 83,153 in 2004, an 81 percent increase over the year before. The huge increase occurred before the latest dramatic run-up in gasoline prices. Nevertheless sales nearly doubled as a wider variety of models attracted consumers.

Hybrids still represented less than 1 percent of the 17 million new vehicles sold in 2004. But the U.S. hybrid market has grown by 960 percent since 2000, when 7,781 were sold, according to the Polk data, and major automakers plan to introduce about a dozen new hybrids during the next three years.

Despite the arrival of Ford Motor Co.'s Ford Escape hybrid in showrooms last year, Japanese automakers continued to control the vast majority of the U.S. market, Polk said. Japanese brands accounted for more than 96 percent of the hybrid vehicles registered.

Toyota Motor Corp., which was the first automaker to mass produce and sell hybrid cars, dominates the market. The Toyota Prius, which went on sale in the United States in 2000, occupied 64 percent of the U.S. hybrid market last year, with 53,761 new Priuses registered, Polk said.

Toyota is on track to double Prius sales again this year. The company sold 22,880 Prius cars in the first three months of the year, more than double the number it sold in the first three months of 2004. Toyota has announced it plans to produce 100,000 Priuses for the North American market this year.

The Honda Civic hybrid was second, with a 31-percent market share. Honda Motor Co. also sold several hundred Accord and Insight hybrids, which each commanded 1 percent of the market. Ford sold 2,566 Escape hybrid SUVs, or about 3 percent of the market, Polk said.

Automakers are introducing hybrid versions of several models this year, including the Lexus RX400h, Mercury Mariner and Toyota Highlander SUVs. General Motors Corp. and DaimlerChrysler AG already sell hybrid pickups, but the system they use is less fuel-efficient.

March 22, 2005
Graco is recalling 1.2 million toddler beds. A childs arm, leg or foot can become entrapped between the slats in the guard rails or footboard. This can result in broken bones, sprains and other injuries to young children.

Graco has received reports of 77 entrapments. This resulted in 13 broken arms and legs, 1 broken foot, a sprained ankle, and 54 other injuries including bruised, scratched, and swollen limbs.

The recalled Graco toddler beds are white plastic and steel with openings between the slats in the guard rails and footboard. The beds were sold under the names Cozy Toddler Bed, Glow-in-the-Dark Toddler Bed, and Classic Toddler Bed. There is a label on the guard rail or leg containing one of the following model numbers: 8801, 8801WR, 8821, 8824, 8828, 8833, 30066, 34434 and 11030, a serial number, and the manufacturers address. Model 8828s headboard has a blue sky with a yellow moon and stars. Model 8801WR has red legs. Graco is printed on all of the beds footboards.

The beds were sold at discount, department and juvenile product stores nationwide from February 1994 through March 2001 for between $50 and $70.

Consumers should remove the guard rails from the recalled Graco toddler beds immediately and call the firm to receive a free retrofit kit. The kit includes custom designed mesh coverings that must be attached to the guard rails and footboard to prevent entrapment. The mesh coverings will be available in 6 to 8 weeks.

Consumer Contact: Graco at (800) 837-4404 between 8 a.m. and 5 p.m. ET Monday through Friday or log on to the firms Web site at www.gracobaby.com.

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

At the same time that insurance rates in some areas have been climbing, the number and total value of malpractice payouts to patients have been flat since 1991 and, in fact, show a significant decline since 2001, when the spike in insurance rates began, the Public Citizen study found.

"The hard, factual evidence cannot be any clearer: We have no medical malpractice lawsuit crisis in America," said Joan Claybrook, president of Public Citizen.

"Insurance companies may be padding their bottom lines by jacking up rates on doctors, but it is not because of patients seeking relief for bad medical care through our courts. The true crisis continues to be in inadequate measures for patient safety and incompetent medical care by a small number of physicians," she said.

The data show that from 1990 to 2004, only 5.5 percent of doctors account for 57.3 percent of all malpractice payments. In addition, only 11.4 percent of doctors who have made three or more malpractice payouts have ever been disciplined.

The medical malpractice payment trends report analyzes the most current information from the federal government's National Practitioner Data Bank (NPDB). The NPDB reports on malpractice payments made on behalf of doctors by malpractice payers, such as insurance companies, state-run insurance funds and self-insured health care providers. Those making malpractice payments are required by federal law to report them to the NPDB.

The NPDB also contains information about disciplinary actions taken against doctors and provides a repository of data that those employing doctors can query for background checks.

In analyzing records from the NPDB, Public Citizen found that:

• The annual number of malpractice payments is down. Despite alarms by doctors and insurers about a "crisis," the number of malpractice payments paid on behalf of doctors - chiefly by their insurance companies - has fallen over the past three years, from 16,682 in 2001 to 14,441 in 2004, a drop of 13.6 percent. The 2004 number is only 5.5 percent higher than the 13,687 payments recorded for 1991. Adjusting for population growth, the number of payments per 100,000 people has fallen from 5.85 to 4.91 from 2001 to 2004, a decline of 16.1 percent. Since 1991, the number of payments per 100,000 people has dropped by 9.2 percent, from 5.41.

• The total value of malpractice payments has been flat since 1991. Total malpractice payments increased from $2.1 billion in 1991 to $4.2 billion in 2004. However, from 1991 to 2004, the inflation-adjusted amount has changed little, rising from $2.1 billion to $2.3 billion - an average annual increase of only 0.8 percent.

• Jury verdicts are not out of control. The median size of payments from judgments appears to have soared, from $125,000 in 1991 to $265,000 in 2004. But adjusted for inflation, the median payment grew from $125,000 in 1991 to $146,100 in 2004 - an average annual increase of only 1.2 percent.

• There has been a 56 percent decline in million-dollar payouts. The incidence of payments of $1 million or more, adjusted for inflation, is down 56 percent from 1991 to 2004, from 2.25 percent of all payments to just 1 percent of all payments. Even during the so-called "crisis" years between 2001 and 2004 when insurance rates were spiking, the incidence of large payments declined 31 percent, from 1.44 percent of payments to 1 percent.

• The incidence of surgical and obstetrics payouts has not increased. Although surgeons and obstetricians complain the loudest about malpractice insurance rate hikes, the incidence of surgical and obstetrics payouts is virtually unchanged from 1991 to 2004. In 1991, 9.5 percent of all payouts were for obstetrics cases; in 2004, the figure was the same. Surgical cases accounted for 25.6 percent of payments in 1991, and 26.1 percent of payouts last year.

• Cases of serious injury to patients continue. Three-quarters of payments for 2004 involved major or significant injuries, or death, and these most severe cases account for 89 percent of the value of payouts made. "Failure to diagnose" cases have grown from 16 percent of payouts in 1991 to 20 percent in 2004, while "improper performance" cases have grown from 10 percent to 15 percent of payouts.

"The evidence shows that the system is working as it should, with minor injuries receiving little compensation and the great bulk of malpractice awards going to cases of major, debilitating injuries - or death," said Frank Clemente, director of Public Citizen's Congress Watch.

"Rather than complain about medical malpractice lawsuits, the medical community should address its own failings and strive aggressively to improve the performance and competency of its doctors and better protect patients. That is the surest way to keep both doctors and patients out of the courtroom."

Will Chrysler soon carry the "Made in China" label? The world's fifth-biggest carmaker is trying to work out an agreement to build cars in China and export them to the United States. According to a company executive, DaimlerChrysler is holding the discussion with one of its Chinese partners. The decision on whether to go ahead is due in the second half of 2005.

If Daimler and the unspecified partner decide to proceed, the automaker would be the first Western player to consider export-oriented factories in China. Japan's Honda Motor Co. is already building cars for export in China.

"We would like to establish here in China an export joint venture for Chrysler products," Ruediger Grube, head of the carmaker's Chinese business told reporters on the sidelines of the Shanghai auto show. "Today we are not talking about Europe. We are talking about North America."

Car manufacturers worry that cheap made-in-China cars will someday swamp the automobile markets, especially with vehicle sales growth declining.

The United States and other developed economies have complained that cheap Chinese goods are threatening U.S. industry and millions of manufacturing jobs.

April 21, 2005
North Dakota has put some limits on insurance companies making your car testify against you. The legislature decided that insurance companies will be barred from using data from a vehicle's "black box" to set drivers' premiums.

After the vote, insurance industry groups said they believe North Dakota is the first state bar the use of the "black box" information to set rates. Of course, the insurance group says it never uses the data for that purpose anyway.

At least eight other states are considering black-box regulation this year, according to the National Conference of State Legislatures.

The North Dakota bill also requires cars and trucks, starting with the 2007 model year, to include information about the recorders in their owner's manuals, and says dealers must notify their customers about the presence of a recorder.

The state still allows data to be retrieved without the owner's consent for use in medical research, or for improving motor vehicle safety, as long as the driver's identity is not disclosed. The courts can also order disclosure of the information.

GM Leads the Way

When you think about leadership in the automobile industry, General Motors does not often come to mind but the aging giant does lead the way installing the "black box" technology in automotive products.

GM began installing the devices in vehicles as early as 1996. "Black boxes" are really computer chips used to activate airbags and other safety apparatus but they also store information that can be used to investigate an accident. These chips are common in newer vehicles and are sometime called Event Data Recorders or EDRs.

The chips record a car's speed, braking and steering efficiency, and whether the driver was wearing a seat belt.

Whether or not General Motors has sided with government regulators and investigators who are proponents of "black box" technology is not longer an issue. "Black boxes" are now installed in every GM car in the company line since the 2004 model year. The units are also in a number of Ford Models.

That means that roughly 15 percent of all the vehicles on the road in the U.S. today now carry some sort of "black box" device that could eventually be turned against the driver.

Proponents of the technology include the National Transportation Safety Board and the National Highway Traffic Safety Administration (NHTSA). NHTSA has proposed standards for the data collected by "black boxes" and EDRs. The agency emphasized in a recent notice that it is not mandating "black boxes" despite growing pressure.

Highway safety advocates say the data is valuable for studying how accidents happen and how to make roads and cars safer and the NTSB lists the "black box" as one of its "most wanted" measures.

Rental car companies routinely use global positioning systems (GPS) to track renters driving habits, where they go and how fast they drive. GPS will also allow the rental car companies to shut off the engine of a car and lock a renter out.

This is the same technology used by OnStar, which promises to be a guardian angel for car owners who are locked out or report a vehicle stolen.

Parents with teenage drivers are turning to technology in growing numbers to deal with never ending problems of young drivers. A parent can now place a "black box" under the hood or seat of the family sedan and keep up with any teenager.

Verizon says it will phase in a policy of allowing customers to buy stand-alone high-speed Internet service. Qwest is currently the only major local telephone company that will sell DSL service to customers who do not have a local telephone number at the same location.

Verizon said current customers in 13 Northeastern states will be allowed to drop telephone service but continue to receive DSL service. However, the company said customers would have to transfer their number to a wireless carrier, to a VOIP provider like Vonage or to a cable company -- not to a competing local phone company that uses Verizon's lines.

Verizon said it will expand the stand-alone option to all of the states in which it operates. Eventually, the company said, it will offer stand-alone DSL to new customers as well as exissting customers but said a timetable has not been established.

Not everyone was pleased. Gene Kimmelman of Consumers Union said Verizon's new policy was "less than what consumeres need to have a vibrant, competitive marketplace."

With the growing popularity of Internet telephone service, many consumers would be expected to get rid of their regular telephone service and rely solely on VOIP, which is not only cheaper in most instances but also offers many features not available with regular telephone service.

Verizon's move leaves SBC and BellSouth as the hold-outs. Neither company currently provides DSL-only service.

April 20, 2005
It's one thing when cyber-thieves break into computer systems and steal sensitive personal information. It's quite another when the information simply gets lost in the mail. But that's what's happened with 200,000 present and former clients of the online brokerage service, Ameritrade.

Ameritrade has sent emails to the former and current clients in question, explaining that a backup tape containing their names, Social Security numbers, account numbers and other sensitive personal data, is unaccounted for.

The company said four backup tapes, full of information from 2000-2003, were lost during shipping earlier this year. Three of the tapes have turned up. The fourth remains missing.

The mishap occurred in February, but an Ameritrade spokeswoman said the company waited to announce it until they had determined exactly which current and former clients were on the missing tape. Those clients have received emails, notifying them of the problem.

The announcement comes against the backdrop of recent security breaches at data collection firms like ChoicePoint and LexisNexis, but Ameritrade said this situation is very different. No security system was breached, and the information on the missing tape is compressed, requiring special equipment to read it. Ameritrade said it is confident no customer accounts have been compromised or misused.

"We sincerely apologize for this unusual event, and any discomfort it may cause you," Ameritrade said in the e-mail to affected clients. "That's why we wanted to notify you as quickly as possible, and let you know what actions we are taking."

April 19, 2005
Don Pedro's Meat, a La Puente, Calif., firm, is voluntarily recalling approximately 40 pounds of sausage products that may be contaminated with Listeria monocytogenes, the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) announced today.

Products subject to recall include: 2- and 10-pound packages of "DON PEDRO'S MEAT, RELLENA, COOKED PORK BLOOD SAUSAGE." The establishment code "EST. 20946" appears inside the USDA mark of inspection.

The sausage was produced on April 8 and was distributed to retail establishments in Los Angeles, Calif. The problem was discovered through routine FSIS regulatory sampling. FSIS has received no reports of illnesses associated with consumption of these products.

Consumption of food contaminated with Listeria monocytogenes can cause listeriosis, an uncommon but potentially fatal disease. Healthy people rarely contract listeriosis. However, listeriosis can cause high fever, severe headache, neck stiffness and nausea. Listeriosis can also cause miscarriages and stillbirths, as well as serious and sometimes fatal infections in those with weakened immune systems including infants, the elderly and persons with chronic disease, such as HIV infection or undergoing chemotherapy.

Media with questions about the recall should contact company HACCP coordinator Miguel Jimenez at (626) 336-8900. Consumers with questions about the recall should contact company Sales Director Karla Hernandez at (626) 336-8900.

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

April 19, 2005
New York Attorney General Eliot Spitzer and representatives of consumer advocacy and crime victims organizations are urging the State Legislature to protect consumers from identity theft and the unauthorized use of personal data.

Spitzer has submitted a package of bills aimed at providing consumers better control over the dissemination of their personal information, strengthening government's ability to prosecute crimes leading to identity theft and increasing penalties for such crimes.

"It has been said that the theft of one's identity and personal information is not a matter of 'if' but a matter of 'when'," Spitzer said. "New York State must enact reforms to strengthen consumers' ability to control personal information and to facilitate the prosecution of identity theft crimes."

In February, the Federal Identity Theft Data Clearinghouse reported that 38 percent of all fraud claims in 2004 related to identity theft, and New York State ranked seventh in the nation in per-capita identity theft reports. Moreover, a national survey conducted by the Federal Trade Commission estimated that the number of victims in 2002 approached 10 million, including 663,300 New Yorkers.

Spitzer noted that in the last nine weeks alone, numerous incidents have highlighted the issue including:

• Two major information brokerage companies, ChoicePoint, Inc. and LexisNexis have admitted that data files of over 455,000 consumers were breached;
• One of the world's largest financial institutions, Bank of America, confirmed that backup tapes containing personal data on 1.2 million accounts were missing;
• Federal authorities confirmed an investigation into the electronic hacking theft of eight million credit card accounts from the processor of credit transactions for MasterCard, Visa, Discover and American Express;
• A popular shoe store chain, DSW Shoe Warehouse admitted that customer credit information was stolen from over 100 of its stores; and
• Approximately 180,000 GM Mastercard holders will soon receive notification that someone might have stolen their personal information in a data breach at Polo Ralph Lauren Inc.

Spitzer's legislative proposals would address many of these incidents by:

• Providing identity theft victims better control over their personal identifying information, including: allowing for "security freezes" on credit files; and providing significantly increased protections against a private company's disclosure of a customers' social security numbers;

• Requiring companies to provide notice to individual consumers involved in instances in which a security breach has exposed personal information concerning 500 or more New Yorkers;

• Facilitating the ability of victims to file criminal complaints with law enforcement agencies;

• Requiring that information brokers notify consumers whenever a report containing personal information - such as telephone numbers, bank account information, income, medical information, driving record, and purchasing preferences - has been issued and mandating the disclosure include contact information of the entity that requested the report. The bill also would provide consumers access to their profiles compiled by information brokers;

• Establishing statewide personal information "opt-out" lists, similar to the Telemarketing Do Not Call program, for consumers who want to ensure their confidential personal information is not disclosed;

• Facilitating prosecutions against computer hackers by creating specific criminal penalties for the use of encryption to conceal a crime, to conceal the identity of another person who commits a crime, or to disrupt the normal operation of a computer;

• Increasing criminal penalties for gaining unauthorized access through a computer to data about employment, salary, credit or other financial or personal information;

• Facilitating prosecutions against hackers and others who surreptitiously gain access to computers, but do not steal or destroy computer material.

Cash-strapped families risk losing their cars in the latest form of high-cost small lending spreading across America, according to a new report from the Center for Responsible Lending (CRL) and Consumer Federation of America (CFA).

Consumers who put their cars on the line to borrow a few hundred dollars for one month become trapped in a cycle of repeated loans with interest rates often around 300 percent.

Borrowers often find themselves "rolling over" these loans repeatedly -- paying huge amounts in interest and fees while barely touching the principal. In many cases, the lender repossesses the car after the borrower has made substantial payments. That can be devastating because a car is often the borrower's largest asset and his or her only way to get to work.

"Car title lenders are taking a page out of the payday lender playbook by making very short-term loans without considering the borrower's ability to repay the loan," said Mark Pearce, CRL's President. "Emergency loans should help families out of trouble, not keep them in it."

CRL and CFA have issued a first report on the car title pawn/loan industry, titled "Car Title Lending: Driving Borrowers to Financial Ruin," which describes the title loan product and industry, illustrates predatory aspects of these over-secured small loans, and makes recommendations for stronger protections for borrowers.

To get a title loan, borrowers sign over the title to a paid-for car and, in some states, provide the lender with a spare set of keys. The loan is usually due within a month in a lump-sum payment, making it difficult for families to repay the loan.

Since car title loans are typically made for a fraction of the value of the car, the lender is well-protected if the borrower fails to make the full payment at the end of the month. In some states, title lenders are allowed to keep the surplus from the sale of the car, allowing title lenders to reap a windfall from the borrower's default.

"Some title lenders claim their secured loans are "pawns," "sale leasebacks," or open end credit to evade state usury and small loan protections," stated Jean Ann Fox, CFA's director of consumer protection. "State legislatures should close loopholes and protect consumers' assets from unfair lender terms and practices."

While CRL and CFA do not encourage states to legalize small loans based on titles to vehicles, the report spells out an extensive set of legal protections that should apply to car title loans.

• Establish Fair and Affordable Loan Terms. Title-secured loans should be repayable in affordable installments rather than a lump sum. Rates should be limited, and lenders should be required to consider the borrower's ability to repay. Borrowers should have a right to cancel loans within a reasonable time and to prepay without penalty at any time.

• Protect Borrowers After a Default. States should bar abusive practices such as seizing cars without notice, pocketing the difference between the sales price and what the borrower owes or pursuing the borrower for even more money after repossessing the car.

• Close Loopholes to Ensure Consistent Regulation. States that permit title lending should close loopholes that exempt some loans from the law and ensure that laws apply to all lenders, including those operating across state lines.

• Monitor Lenders Better. States should closely monitor lenders through strong licensing, bonding, reporting and examination requirements.

• Ensure Borrowers Can Exercise Their Rights. Borrowers should be able to sue title lenders and void contracts that violate the law. Binding mandatory arbitration clauses that deny borrowers a fair chance to challenge abuses in court should be eradicated.

Aquarian Associates of Pittsburgh is conducting "open calls" in Rochester on April 21, Schenectady on April 22 and Buffalo on April 24 as part of its "Great American Model Search."

But the CPB said many parents complain that nothing happens at the "free evaluation" because the true evaluation (attended by casting agents and other talent scouts) only takes place in Pittsburgh. That event -- the Great American Model Search -- costs at least $525 to attend plus lodging, transportation and other costs.

CPB Chairwoman and Executive Director Teresa A. Santiago said, "Aquarian claims to select only the most-promising models and actors at these 'open calls.' But parents say virtually everyone is 'selected' and they are then given the option of spending money to attend the Pittsburgh event. When parents think their child has been selected for a special privilege, they're more willing to open their checkbooks."

Even if they attend the Great American Model Search, chances are slim that they will get work as a model or actor are slim, according to agents who are paid to attend the Great American Model Search. The agents also noted that many of these young people won't get work because they live too far away from the big cities where models and actors are hired.

"Parents have to ask themselves: who's profiting from this process -- the kids or this so-called talent company? Talent agencies that charge advance fees, without promising to find work for their clients, have a talent for making money but only for themselves," said Santiago.

On its website, Aquarian says, "We bring together aspiring models, commercial and film talent of all ages and present them in person to industry personnel such as casting directors, film directors, film producers, talent scouts, model agents, and advertising agencies."

The website continues, "Over the past 18 years this concept has provided many infants, toddlers, children, teenagers and adults the opportunity to succeed in our industry. At our presentations we will provide numerous success stories and specific examples of commercials, TV shows, movies, music videos and modeling printwork."

But Santiago said it's all about money.

"Advance-fee operations continue to make money because young people and their parents don't know enough about how the modeling and talent industries work," said Santiago. "We want to warn consumers about companies that hang on the fringes of the New York fashion and entertainment worlds; charging hundreds -- and sometimes thousands -- of dollars in advance fees for photographs, websites and other services that do little to help find jobs for aspiring models, singers and actors."

Illinois Attorney General Lisa Madigan filed suit against a Texas company for allegedly marketing health care discount cards that misled consumers into believing they were buying health insurance instead of mere discounted fees on health care services - discounts often not even accepted by providers.

Madigan said her office has received more than 120 complaints from Illinois consumers since January 2002 about companies that masquerade as health care. The number of complaints doubled from 2003 to 2004. The discount health care card companies aggressively market their products through radio ads, blast faxes and circulars.

Madigan, noting that more than a million Illinoisans lack health care insurance, said she is also working with lawmkers to craft legislation designed to end deception by companies falsely parading as actual health insurance providers.

"If you see or hear ads that trumpet such terms as 'Affordable Healthcare,' 'Health care for the entire family for only $89.95 a month' or 'All Medical Conditions Accepted,' a reasonable person will probably assume this ad is for a health care plan," Madigan said.

"Illinois consumers are being deceived into thinking that they are finally able to achieve health care security when in fact all they may receive is a few dollars off of a service, and thats only if a provider agrees to accept their health care discount card. What these consumers are truly gaining access to is deception, disappointment, and very often, massive debt."

Madigans complaint charges a Washington, D.C.-based non-profit organization, International Association of Benefits, formerly International Association of Businesses, and a Texas corporation, HealthCorp International, Inc., all doing business as IAB, 701 Highlander Dr., Arlington, Texas, with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.

The company markets its health care-related cash discount cards at www.iabbenefits.com.

According to one of the nine complaints lodged with Madigans Health Care Bureau against IAB, a consumer reported to Madigans office that he signed up with IAB after hearing a radio ad allegedly stating that IAB was an insurance company.

The man alleges the company quoted the savings he would realize when pre-certifying a planned hospitalization. When he submitted his hospital bills to IAB, the consumer allegedly discovered it was merely a health care discount card. While the Attorney Generals office was able to get his premiums refunded, the south suburban consumer now owes more than $7,000 to a south suburban Chicago hospital.

Another consumer received a flyer stating IABs coverage was a nationwide PPO and would provide reimbursements for office visits and access to PPO hospitals, doctors, dentists and other medical services.

The consumer paid a $100 enrollment fee and a monthly premium of $89.95 for the services, and allegedly was told he could cancel the plan within 30 days of purchase. However, he and other consumers reported that IAB refused to refund their money once the consumers realized that IABs product was not insurance. In one case, IAB finally returned the payment only after Madigans Health Care Bureau intervened.

Madigans suit also alleges IAB misled consumers by fraudulently displaying a Better Business Bureau seal on its Web site and listing health care providers as participating in its discount program, when in fact, these providers would not honor the discount. Additionally, IAB was not legally registered with the Illinois Secretary of State or the Illinois Department of Financial and Professional Regulations Division of Insurance.

Madigans suit seeks to permanently prohibit the company from doing business in Illinois. The suit also seeks to recover restitution for consumers, and asks the court to impose a civil penalty of $50,000 and additional penalties of $50,000 per violation committed with the intent to defraud. Madigans suit also seeks an additional civil penalty of $10,000 per violation committed against a person aged 65 and older.

In the complaint, the government also seeks an order directing the defendants to provide the government their customers names, mail and e-mail addresses, and Social Security and telephone numbers. The government alleges that Moser and Newman operate their tax preparation service in Kailua, Hawaii.

According to the complaint, Moser falsely advises military customers that they can claim tax deductions for non-deductible personal expenses such as haircuts, cell-phone and Internet services, and other personal items and services.

Moser allegedly advises non-military customers to use sham corporations to improperly claim deductions for non-deductible personal expenses. Newman allegedly assists Moser and allegedly electronically files returns for customers falsely stating that the customers had prepared them when in fact Moser prepared them.

The government alleges that the defendants have prepared and filed hundreds of returns for customers, and estimates that the defendants conduct cost the federal treasury more than $4 million for tax year 2003 alone.

"The Department of Justice and the Internal Revenue Service (IRS) are working methodically to halt tax fraud scams and the preparation and filing of fraudulent income tax returns," said Eileen J. O'Connor, Assistant Attorney General for the Tax Division. "People who prepare returns claiming false deductions are cheating honest taxpayers and creating legal problems for their customers."

The complaint further alleges that Moser advised customers to lie to IRS agents to obstruct investigations. Moser allegedly told one customer to delay an IRS audit until her husband was deployed to Afghanistan, and then falsely tell the IRS that the husband had receipts needed to substantiate tax deductions.