Current Events in May 2005

Attorneys General from across the country have reached agreements with US Bancorp Business Equipment Finance Group, Wells Fargo Financial Leasing and CIT Technology Financing Services, Inc., ending the companies' attempts to collect leases on behalf of NorVergence, Inc., an allegedly fraudulent telecommunications company that went bankrupt.

Affected consumers and businesses may choose or decline to participate in the settlement agreement. If all affected consumers in the participating states and Washington, D.C., accept the deal, the three leasing companies will write off approximately $24.03 million in debt for 1,123 small businesses.

"Hundreds of Illinois small business entrepreneurs signed telecommunication service agreements with NorVergence because they believed they were making a financially responsible decision for their businesses. But when the service unexpectedly ceased, their collection agency hassles began," said Illinois Attorney General Lisa Madigan "With this agreement, three additional leasing agencies have agreed to work with the states and small businesses to end the nightmares that started when NorVergence deceived its customers."

Under the settlement agreements, US Bancorp, Wells Fargo and CIT - which entered into direct contracts with NorVergence customers or, through other third-party companies, bought out lease agreements between NorVergence and its customers - have agreed to write off or forgive a combined $24.03 million they claimed to be owed by 1,123 NorVergence customers from the states represented in the agreements.

While US Bancorp, Wells Fargo and CIT deny any wrongdoing, they have agreed to forgive approximately 85 percent of the debt they claim consumers owe on rental agreements and provide up to two years for customers to pay any remaining balances.

Signing the US Bancorp agreement, were the Attorneys General of Arizona, Colorado, Connecticut, Delaware, Illinois, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, West Virginia and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The Wells Fargo agreement was signed by the Attorneys General of Arizona, Connecticut, Delaware, Illinois, Kansas, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, South Dakota, Washington and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The CIT agreement involves the Attorneys General from Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, Pennsylvania, Rhode Island and Washington, D.C., and the Georgia Governor's Office of Consumer Affairs.

The settlement agreements provide that small businesses that have not previously reached independent settlement agreements with the leasing companies will have the opportunity to receive an 85 percent write-off of the money owed from the period beginning on July 15, 2004, the approximate date that NorVergence ceased providing any services. Consumers who have made payments to US Bancorp, Wells Fargo or CIT since July 15, 2004, will receive credit for those payments toward their remaining balance.

In addition, any customer or business that previously settled with Wells Fargo or CIT for terms that are less favorable than this settlement can receive the more favorable settlement terms if they choose. Customers that settled with US Bancorp for less favorable terms will have a chance to receive an 80 percent write-off of their balance as of July 15, 2004.

"Deceptive sales pitches lured Connecticut businesses into signing long-term agreements that failed to deliver promised discounts," Connecticut Attorney General Richard Blumenthal said. "When the service ceased, collection agency hassles started. These companies rightly recognized the unfairness of demanding businesses to pay for services promised, but not received. These agreement to forgive the vast majority of the money ends a nightmare for businesses that thought they were getting a useful deal, but ended up with a useless debt."

On May 18, eight Attorneys General announced a similar agreement with General Electric Capital Corporation (GE Capital). That leasing company agreed to write off or forgive more than $2.8 million it claimed to be owed by 216 NorVergence customers from the states represented in the agreement.

In November 2004, Madigan filed a lawsuit against NorVergence, a telecommunications company based in Newark, New Jersey, that set up a sales office in Oakbrook Terrace. Madigan's lawsuit alleged the company's sales pitch offered small businesses discounted telecommunications services through the use of a "Matrix" box.

NorVergence claimed the device was necessary to allow small businesses to reap a 30 percent discount on its current telecommunications costs, including long distance, DSL service, and wireless phone service. The total cost of agreements to lease the matrix boxes ranged from approximately $12,000 to $175,000.

Under NorVergence's alleged scheme, the company would sell its five-year contracts to leasing companies and walk away with the profit. When NorVergence was forced into bankruptcy in June 2004, its customers were left without service but still responsible for the five-year lease payments to leasing companies.

In addition, some finance companies charged customers for replacement insurance premiums based on the total rental contract amount, instead of the smaller value of the Matrix box. These leasing companies have agreed to refund most of the premiums and associated fees collected for this insurance.

Consumers who signed agreements with NorVergence that were bought by US Bancorp, Wells Fargo or CIT, or signed NorVergence agreements directly with one of the three leasing companies, will receive a notice in the mail shortly regarding the opportunity to participate in this settlement. To accept the settlement offer, consumers must follow instructions contained in the notice and execute a Settlement and Mutual Release by the date indicated in the notice.

The new recommendation is designed to help achieve vaccination among those at highest risk for meningococcal disease. As the vaccine supply increases, CDC hopes, within three years, to recommend routine vaccination all adolescents beginning at 11 years of age.

Meningococcal disease -- commonly called meningitis -- strikes up to 3,000 Americans, killing 300 people every year. Ten to 12 percent of people with meningococcal disease die, and among survivors, up to 15 percent may suffer long-term permanent disabilities including hearing loss, limb amputation or brain damage.

The disease often begins with symptoms that can be mistaken for common illnesses, such as the flu. However, meningococcal disease is particularly dangerous because it progresses rapidly and can kill within hours.

"This new vaccine can help protect adolescents and college students from meningococcal disease," said Dr. Stephen Cochi, Acting Director of CDCs National Immunization Program. "CDC encourages those at increased risk to take the opportunity to get vaccinated to help protect them from this serious disease."

CDC recommends routine meningococcal vaccination for young adolescents at the pre-adolescent doctor visit at about age 11-12, and for those who have not previously been vaccinated, before entering high school at about age 15.

CDC also recommends that college freshmen living in dormitories be immunized to reduce disease risk. College freshmen living in the close quarters of dormitories are at a higher risk for meningococcal disease compared with peers the same age who are not attending college. Also, all other adolescents who wish to reduce their risk of disease may elect to receive the vaccine.

The new vaccine should offer longer protection than previous vaccines, is a single shot, and the most common reaction is a sore arm. However, it does not protect people against meningococcal disease caused by serogroup B bacteria. This serogroup of bacteria causes one-third of meningococcal cases in the United States. More than half of the cases among infants under the age of 1 year are caused by type B, for which no vaccine is licensed or available in the United States.

The new meningococcal vaccine was licensed by the U.S. Food and Drug Administration (FDA) on January 14, 2005 for use in people 11-55 years of age. It is manufactured by Sanofi Pasteur and is marketed as Menactra.

Consumer groups are coming to the defense of state attorneys general, in response to a U.S. Chamber of Commerce initiative that claims states' chief law enforcement officers are a "serious threat" and that they "operate with little regard for the authority of state and federal legislators."

The Chamber has set up a front group, the United States Chamber Institute for Legal Reform (ILR), to carry its fight against the consumer protection efforts of state attorneys general. The report claimed to demonstrate "the serious threat posed by activist state attorneys general" and called for "legislative reforms that will restore the publics faith in government."

"It is time to rein in activist attorneys general," said Lisa Rickard, president of ILR. "They operate with little regard for the authority of state and federal legislators, and their contingency fee deals with private plaintiffs attorneys undermine the publics faith in government."

In response, consumer groups highlighted some of the accomplishments of state attorneys general across the country, calling them "a critical bulwark of protection against fraud and unfair and deceptive practices."

The groups which include Consumers Union, Public Citizen, USPIRG, Center for Justice & Democracy, Consumer Federation of America, USAction and Alliance for Justice said they were "troubled by the Chambers suggestion that enforcing the law, holding wrongdoers accountable, fostering consumer confidence in a complex marketplace and protecting consumers will have a negative impact on the business climate in this country."

"State attorneys general perform a vital role in protecting consumers and businesses from the unfair business practices of those corporations that seek to make a profit and get ahead by breaking the law," the groups said in a statement. "Consumer protection and law enforcement by state attorneys general are essential to a vibrant and fair economy, to the preservation of federalism, to the supervision of entire sectors of the economy and to the safeguarding of one of consumers last avenues for redress."

Cases highlighted by the consumer groups included:

Drug Pricing

In a series of cases, state attorneys general took coordinated enforcement action against multinational pharmaceutical companies that broke antitrust laws to prevent consumers access to cheaper, generic drugs. The companies unlawful conduct cost consumers and taxpayers hundreds of millions of dollars, but the harm extended far beyond mere money. The drug companies rendered patients less able to combat heart disease, cancer, anxiety and Alzheimers. The effort of the state attorneys general produced settlements that provided restitution to consumers and taxpayers, and reformed the companies business practices.

Predatory Lending

Household Finance victimized thousands of consumers across the country with predatory lending practices that targeted the most vulnerable among us. Attorneys general launched a multistate enforcement action against Household. The result was a $474 million settlement that provided restitution to victims and substantial, pro-consumer reforms of Households lending practices.

Price-Gouging

Energy companies gouged California consumers and businesses to the tune of billions of dollars during the energy crisis of 2000-01. The federal regulator that was supposed to protect ratepayers (the Federal Energy Regulatory Commission, or FERC) slept through the crisis. The California Attorney General moved to fill the enforcement void, launching an investigation of the industrys market conduct. California has filed dozens of lawsuits against generators and marketers, and the attorney general represented the state before FERC in California parties quest for $9 billion in refunds. The California Attorney Generals Energy Task Force has negotiated $3.3 billion worth of settlements that have provided about $2.6 billion in benefits to ratepayers.

Investor Fraud

The New York Attorney General has uncovered numerous fraudulent deeds and practices including illegal market timing and excessive fees by mutual fund companies, and reached financial settlements, many of them in groundbreaking cases resulting in profit disgorgements, penalties, restitution and fee reductions that put money back in investors pockets.

Settlements reached by that office include such companies as Alliance Capital Management, which agreed to a $600 million package to cover its mutual fund misdeeds; MFS, which agreed to pay $350 million; Bank of America and Fleet Boston, which agreed to pay $675 million; and Janus, which agreed to pay $225 million. Strong Capital Management agreed to pay a $175 million settlement, with the president of the company contributing $60 million and accepting a lifetime ban from the industry.

Tobacco

State attorneys general banded together to fight the tobacco companies, which for decades lied to the American public about the dangers lethal consequences of using their products. The result was an historic national settlement in1998 that required tobacco companies to pay the states $206 billion. Equally important, the Master Settlement Agreement prohibited marketing tobacco products to children and mandated other reforms of the industry practices that endangered public health.

Pollution

A coalition of nine state attorneys general recently filed a lawsuit challenging the Environmental Protection Agencys new relaxed mercury pollution standards. The suit asserts that the new rule fails to protect the public especially children from the toxic emissions from coal-fired power plants, the single largest source of uncontrolled mercury pollution. Mercury gets into the food chain and when consumed by young children and pregnant or nursing mothers can cause permanent brain and nervous system damage. Fish from waters in 45 states have been declared unsafe to eat because of the level of mercury they contain.

U.S. state and local telecommunications taxes averaged 14.17 percent in 2004, more than double the average tax on general businesses, according to a study by the Council on State Taxation. The study is designed to highlight the group's call to simplify and reduce telecommunications taxes and related paperwork.

The average state and local effective tax rate on telecommunications services of 14.17% in 2004 compared to 6.12% for general business nationwide, the study found.

"Tax laws in the states are antiquated and take money out of the pockets of every American telecommunications consumer," Stephen Kranz, tax counsel for the Council on State Taxation, said in a statement.

Maryland and Virginia lead the list of the most egregious offenders, the group reported. Virginia's 30 percent total telecom tax rate, for example, is higher than its tobacco tax rate. Maryland's 27 percent telecom tax rate landed it in the No. 2 position.

Texas, where state lawmakers are currently battling over several telecom deregulation bills, landed in third position with its 25.3 percent rate, while Nebraska's 25.2 percent rate and Missouri's 24 percent rate rounded out the top five.

"The state and local tax laws continue to impose high levels of industry specific taxation on telecommunications services," according to a summary of the study. "While some states have begun the process of reforming the state and local tax structure, much more is needed to reduce the high level of telecommunications taxation and administrative burden."

The study found a telecommunications provider filed an average of 47,921 tax returns, compared to 7,501 returns for the average general business.

The Mitsubishi Galant, Toyota Avalon and the Volvo V70 - all with side air bags - earned the top rating of 5-stars for all seating positions in the latest round of frontal and side impact crash tests conducted by the U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA).

NHTSA's consumer information program uses a one to five star rating system, with five being the highest. Star ratings reflect a vehicle's ability to protect the driver and passenger in a crash.

In this latest group of rollover testing, all newly tested passenger cars received 4-stars for rollover. NHTSA uses a five star scale, as well as a percent chance of rollover, to rate a vehicle on its likelihood of rollover in a single-vehicle crash.

The latest release concludes NHTSA's crash test and rollover ratings for passenger cars for the 2005 model year. All results, including previously tested model year 2005 vehicles, are available at the agency's web site: www.safercar.gov.

Shaded areas indicate new crash test or rollover results.

PC = Passenger Car (H=Heavy, 3500 lbs or greater; Me=Medium, 3000-3499 lbs; C=Compact, 2500-2999 lbs; L=Light, 2000-2499 lbs; Mi=Mini, 1500-1999 lbs)

w/SAB = with side air bags

ND = No data. The instruments used to record the test data malfunctioned.

¹ = if involved in a single-vehicle crash
² = Valid for Pontiac G6s produced on and after January 24, 2005

California Gov. Arnold Schwarzenegger should pull a political commercial off the air that promotes the junk food products of his campaign donors, consumer advocates said.

The Foundation for Taxpayer and Consumer Rights (FTCR) called on Schwarzenegger to return the quarter-million dollars he received from companies featured in the ad, and for the corporations to pay the market value of the advertising to the state because it is improper for the governor to use public office to sell corporate products.

The TV ad, released in May, features Schwarzenegger talking to people in a lunchroom, and places Pepsi and Arrowhead Water in prominent spots next to the governor for one-third of the ad.

Donors connected to Pepsi Co. and Arrowhead Water's parent company, Nestle, gave the governor a total of $279,800 in campaign contributions. Also recognizable on-screen are Ruffles, Sun Chips, Cheetos and a SoBe Beverage, all brands owned by Pepsi.

View the ad at www.JoinArnold.com.

The practice, known as "product placement," is increasingly common in television series and Hollywood films but is unheard of in political advertising. In fact, political ads typically avoid using logos because companies may not want to be associated with a particular candidate or issue.

"Schwarzenegger has turned the governor's office into a vending machine. It is inconceivable that Schwarzenegger didn't know that Pepsi and Arrowhead were in his commercial, or that the free air time and lucrative association with the Governor of California would benefit them. The governor should return their quarter million in campaign cash, and repay the state for misusing his office as a corporate spokesman for his political donors," said Carmen Balber, consumer advocate with FTCR.

"Every second of a political ad is important, so every second is planned. As a Hollywood actor and businessman, Governor Schwarzenegger knows that product placements are worth millions to corporate sponsors."

Pepsi gave the governor $30,000 in campaign contributions. The CEO of Nestle, the parent company of Arrowhead, gave Schwarzenegger $21,200. Another Nestle family company, Dreyer's Ice Cream, and company executives gave the governor $228,600.

In March, at the Arnold Fitness Weekend, Schwarzenegger proposed a ban on all junk food in schools.

"Governor Schwarzenegger said he wanted to remove junk food from our schools - he should be willing to pull political ads off the air that hawk junk food for his donors at California's expense," said Balber.

Schwarzenegger should disclose who the people are in the advertisement, whether they were paid, and where the ad was shot, said FTCR.

The National Highway Traffic Safety Administration (NHTSA) said the new research reinforces its existing concerns about 15-passenger vans. As a result, the agency reissued its consumer advisory for users of 15-passenger vans for the third time in the past four years.

In a new research report related to improper tire maintenance on 15-passenger vans, the NHTSA study found that 74 percent of all 15-passenger vans had significantly mis-inflated tires. By contrast, 39 percent of passenger cars were found with significant inflation problems. NHTSA research has consistently shown that improperly inflated tires can change handling characteristics, increasing the prospect of a rollover crash in 15-passenger vans.

"The vans are convenient, but drivers and passengers have to use extra caution. The risks associated with 15-passenger vans can be minimized if users take some basic safety precautions", said Jeffrey Runge, M.D, NHTSA administrator. "Routinely checking the condition of the tires, including the tire pressure, should be at the top of the list".

To reduce the risks associated with 15-passenger vans, NHTSAs safety advisory recommends that:

• drivers insist all occupants wear safety belts at all times;
• drivers are trained and experienced;
• tires are checked at least once a week, using the manufacturers recommended pressure levels; and
• no loads are placed on the roof of the vehicle.

Prior NHTSA research has shown that 15-passenger vans have a rollover risk that increases dramatically as the number of occupants increases from fewer than five to more than ten. In fact, 15-passenger vans with 10 or more occupants had a rollover rate in single vehicle crashes that is nearly three times the rate of those that were lightly loaded, with fewer than five occupants.

Nearly 80 percent of those who died in 15-passenger van rollovers nationwide between 1990 and 2003 were not buckled up. Wearing safety belts dramatically increases the chances of survival during a rollover crash. In fatal, single-vehicle rollovers involving 15-passenger vans over the past decade, 91 percent of belted occupants survived.

NHTSA said the public is responding to safety information about 15-passenger vans. Fatalities from 15-passenger van rollover van crashes have declined 35 percent since advisories began in 2001.

While Federal law prohibits the sale of 15-passenger vans for the school-related transport of high school age and younger students, no such prohibition exists for vehicles to transport college students or other passengers.

NHTSA is reissuing this advisory to specifically alert summertime users of 15-passenger vans. The agency also has prepared a flyer on 15-passenger van safety that is available on the web at www.nhtsa.dot.gov/cars/problems/studies/15PassVans/Index.htm.

Massachusetts Attorney General Tom Reilly says he has obtained an emergency court order shutting down a Westfield, Massachusetts-based contractor accused of convincing area consumers to sign contracts for major home renovations, collecting more than $200,000 in deposits and then failing to deliver.

Reilly obtained the court order from Hampden Superior Court Judge Peter Velis as part of a lawsuit against Andrew Clough and Reliable Construction, both of Westfield. The lawsuit alleges that Clough has been misleading consumers into paying thousands of dollars in deposits - ranging from $12,000 to $54,000 - for substandard or incomplete work. Homeowners also paid deposits in advance well in excess of the one-third of the total cost of the project permitted by law.

"Today we stopped this contractor from doing business in Massachusetts," Reilly said. "Now we are focused on getting as much money as possible back for these homeowners and keeping this contractor from hurting anyone else."

Reilly's lawsuit alleges that Clough and Reliable Construction violated the Massachusetts Consumer Protection Act and the Massachusetts Home Improvement Contractor Act by: executing contracts and taking payments for home improvement services and then failing to deliver the services; making false representations about how quickly they could complete their work; pressuring consumers into paying deposits in excess of one-third of the project's cost; refusing to give homeowners refunds even thought they did not finish the promised work; and failing to obtain construction permits.

According to the complaint, Clough repeatedly misled consumers into paying large deposits by promising he could complete major construction projects in a matter of weeks. Several consumers also discovered that Clough had never obtained appropriate municipal permits. To date, 16 consumers have filed complaints against Reliable Construction or Clough alleging that he failed to complete a job or did substandard work.

In one case, a Chicopee homeowner paid Clough $56,874 to build an addition estimated to cost $140,000. In September 2004, Reliable Construction removed part of the homeowner's roof, causing significant water damage to ceilings, furniture and carpeting. Soon after, a lumber company told the consumer it had placed a lien on his home because Clough had not paid a bill for materials.

In 2004, complaints about home improvement ranked second on the year-end list of complaints filed by consumers with the Massachusetts Consumer Complaint Hotline.

More trouble for Crestor, the Astra-Zeneca statin that's been the target of safety complaints. Researchers from Tufts-New England Medical Center have found that Crestor has the poorest safety profile of the most commonly used anti-cholesterol drugs, the others being Lipitor, Zocor and Pravachol.

The study, published in the latest issue of Circulation, the Journal of the American Heart Association, found the most serious reactions resulted in damage to the kidney (proteinuria/nephropathy), and muscle (rhabdomyolysis), which frequently resulted in patients requiring hospitalization.

In March, the FDA issued a public health advisory outlining the identified risks and benefits of Crestor but critics argued the agency didn't go far enough.

David Graham, a safety researcher at the FDA, had singled out the drug as deserving closer safety scrutiny during congressional hearings last fall.

The advocacy group Public Citizen has also targeted Crestor and issued a blistering denunciation of the FDA's action, calling "another example of the agencys dangerous cowardice in failing to adequately protect people in this country from uniquely dangerous prescription drugs."

But the lead author of the Tufts study said it's important not to overstate the dangers of the drug.

"It is very important to note that as a family, statins are very safe drugs that have clearly been shown to reduce the risk of heart disease," said Richard H. Karas, MD, PhD, lead author of the study.

"Although rosuvastatin (Crestor) was found to be less safe than others, it does not mean patients should immediately stop taking this medication."

"In fact, the overall risks of rosuvastatin remain low, and people taking this drug should talk to their doctor before deciding whether to continue on it or stop it," Karas emphasized.

Karas and his colleagues analyzed 145 rosuvastatin-associated adverse events reported to the U.S. Food and Drug Administration over its first year of marketing and compared the rates of such events with other statins simultaneously and during their respective first year of marketing.

The review found that with either comparison, rosuvastatin (Crestor) was significantly more likely to be associated with rhabdomyolysis, proteinuria, nephropathy or kidney failure.

"This study raises concern about the safety of this drug at the range of doses currently used in common clinical practice in the general population," said Karas. "I would advise healthcare providers to consider other statins as first-line therapy, to initiate therapy in appropriate patients at lower doses, to consider combination LDL-C lowering therapy, and to closely monitor patients for adverse events if rosuvastatin (Crestor) is used."

The most recent round of government crash tests once again demonstrates the value of side airbags. Two new GM cars -- the Buick LaCrosse and the Saturn Ion -- received only average scores. The Mitsubishi Galant, Toyota Avalon and Volvo V70, all equipped with side air bags, received top scores.

The Suzuki Verona received the lowest rating in driver-side frontal crash tests among passenger cars for the 2005 model year, according to the National Highway Traffic Safety Administration.

The Verona was the only vehicle tested to receive three stars in the frontal test, which estimates a 21 percent to 35 percent chance of serious injury.

For frontal tests, five stars means there is a 10 percent or less chance of serious injury and four stars estimates an 11 to 20 percent chance of serious injury. NHTSA conducts the front-impact test at 35 mph.

American Suzuki Motor Corp. pointed out in a statement that the company places a priority on building and selling safe vehicles, and that all its products comply with or go beyond federal safety standards.

In side-impact tests, the four-door Chevrolet Cobalt received two out of five stars in driver's side-impact tests while two other GM vehicles -- the four-door versions of the Buick LaCrosse and the Saturn Ion -- got three out of five stars.

The Mitsubishi Galant, Toyota Avalon and Volvo V70, all equipped with side air bags, received top scores for all seating positions, according to the National Highway Traffic Safety Administration. The new batch of tests, which consider a vehicle's ability to protect the driver and passenger in a crash, revealed high marks for an assortment of passenger cars.

Sixteen of the 19 vehicles tested by NHTSA received the top score -- five stars -- for driver-side frontal crash tests. In frontal tests for passengers, 14 of the 19 vehicles tested received the top mark.

The high grades follow a critical report issued last month by the Government Accountability Office, which said the crash test program is at a crossroads and needs to change to remain relevant. It said many vehicles typically receive high scores even though they may not perform well in a real-world crash.

Over the last four years, police say as many as 500,000 accounts at 10 banks may have been compromised.

Police in Hackensack, N.J., are investigating the employee theft ring, which reportedly affects bank customers from New Jersey, Florida, Georgia, Maryland, North Carolina, South Carolina and Pennsylvania. Ten arrests have been made so far, including several bank employees.

In an unrelated case, a laptop containing the names and Social Security numbers of about 16,500 current and former employees of MCI was stolen in Colorado Springs last month.

MCI said the computer was stolen from a financial analyst's car while it was parked in the analyst's home. There's no indication the data has been used in any kind of identity theft operation, the company said. Employees whose data was stolen have been notified.

Investigators also say there's no indication the purloined bank records have been used in any kind of identity theft scheme.

Other banks whose customers may have been targeted include Commerce Bancorp and PNC.

Bank of America says it has notified 60,000 customers so far that their records may have been stolen. Wachovia has notified 48,000 customers and says it will provide them with one year of free credit monitoring.

Among those arrested was Orazio Lembo, 35. He allegedly provided the bank workers with names and Social Security numbers of consumers sought by debt collectors. The bank employees would then supply the customers' current address and bank account information to Lembo, who would sell it to a client list of more than 40 collection agencies and law firms.

Wisconsin Attorney General Peg Lautenschlager has filed a lawsuit against First American Funding Company, LLC, a mortgage lender based in Columbus, Wisconsin, for violations of the state no-call laws.

"Wisconsin citizens support our no-call law in overwhelming numbers, and have a right to expect telemarketers to obey the law and not bother them at home, in accordance with this right," Lautenschlager said. "Those who ignore Wisconsin laws that protect consumers, including very high profile laws such as 'no call,' can expect to be prosecuted."

The lawsuit, which was filed in Racine County Circuit Court, charges First American Funding Company with:

• Making unsolicited calls to Wisconsin residents without registering as a telemarketer;
• Making at least nine unsolicited calls to Wisconsin residents on the no-call list;
• Misrepresenting the nature of its solicitation calls.

The complaint seeks to enjoin First American Funding Company from further violations of Wisconsin law and to recover civil forfeitures of $100 for each past violation.

The lawsuit was commenced by Lautenschlager's Office of Consumer Protection with investigative assistance from the Department of Agriculture, Trade and Consumer Protection.

The settlement requires Gallagher to pay back $27 million to clients, including Illinois businesses and policyholders, who were subjected to Gallaghers steering policy.

The steering policy urged Gallaghers brokers to direct their clients to pre-selected insurance carriers in order to achieve targeted levels of business with those carriers. The pre-selected carriers would in turn reward Gallagher with lucrative bonuses, called contingent commissions, for delivering the high-volume insurance business to them.

Gallagher never notified its clients that its policy of placing business with favored carriers to obtain millions of dollars in contingent commission profits potentially conflicted with its professed goal of recommending to each client the insurance policy that was in the clients best interests.

The settlement prohibits Gallagher from engaging in any further contingent commission arrangements. It further makes critical reforms to other business practices. Under the agreement, the Illinois Division of Insurance will verify Gallaghers compliance with these new business practice reforms.

Our comprehensive investigation revealed Gallagher sought and obtained huge payments from insurers in return for steering them enough business to meet secret threshold targets, Illinois Attorney General Lisa Madigan said.

Gallagher never should have accepted these payments without fully and clearly disclosing that these targets and payments created a potential conflict of interest between Gallagher and its clients. This settlement will guard against future conflicts of interest and help to return integrity to this industry.

This settlement sets forth Madigans findings that Gallagher, the worlds fourth-largest provider of insurance brokerage services, operated under an undisclosed and unwaived potential conflict of interest by seeking to maximize contingent commission dollars by directing business to pre-selected insurers.

Madigan praised Gallaghers full cooperation in the investigation and settlement process.

To its credit, Gallagher recognized the need to quickly cooperate and provide my office with all the information we requested in our investigation. Its Chief Executive Officer, Patrick Gallagher, personally participated in settlement discussions, which facilitated a prompt and fair resolution to this situation.

With major corporations slashing or withdrawing health care benefits from salary packages, cutting pension benefits and practicing blatant age discrimination when searching for employees, it's a tough time to be an employee, even if you're healthy. For those who have suffered injuries or become disabled, the consequences can be catastrophic.

The exploding costs of health care create financial chaos for those unfortunate enough to become disabled. Sadly, even those who try to insure themselves against disability are often denied the protection they have paid for.

At its most basic, disability insurance is coverage intended to provide 45 to 60 percent of gross income to workers who lose their wages due to a debilitating injury or illness. Disability insurance should, in theory, allow consumers to recoup enough of their wages to pay for their living expenses while they are disabled.

Unfortunately, it's often not that easy. Buying a policy can be difficult, as underwriters often demand extensive documentation of one's well-being. In general, only the healthiest need apply and, no surprise, pre-existing conditions are not covered.

There are differing forms of disability coverage, ranging from total disability, or "own-occupation" coverage, to "gainful occupation" coverage (being able to work but suffering limitations). The buyer can, in the words of DisabilityIncome.com, "expect to pay between 1-3% of your annual income in disability premium. There are many ways to increase or decrease the premium of a DI policy, and 1-3% is a generalization."

Difficult as it is, finding a disability plan can prove to be a lot easier than actually collecting long- or short-term disability benefits when illness or injury strikes. Insurers may demand exhaustive documentation, repeatedly "lose" that documentation and generally place as many roadblocks as possible in front of an already exhausted and financially desperate policyholder.

Vicki of Centralia, Washington, was on long-term disability (LTD) from Aetna for some time when she suddenly found her payments cut off for no reason.

"Aetna was paying the full 60% of my disability income, but then they just stopped, they said I was no longer disabled. However, they never contacted me or my doctor about it, THEY decided this long distance!"

Vicki contacted Aetna repeatedly and lost almost all of her material possessions in the meantime, as she could not work and couldn't afford her medical bills without Aetna's coverage.

"Finally, Aetna sent me to their own doctor, who got very mad at them, stating that not only was I still very sick (and on the verge of being hospitalized) but Aetna was making it worse by pulling the financial rug out from under me! They finally did reinstate me, and started paying me again, but it was too late. I had lost my house and down payment, belongings, and car. I was able to find another place to live but had to pay a huge fee to get into the house."

Vicki was forced to move hundreds of miles from her friends and family just to find an affordable place to live, and now lives in constant "fear and depression", barely able to eke out a living or pay her bills.

Carolyn of Concord, North Carolina, bought a disability policy from Unum. Not long after, she was diagnosed with multiple sclerosis.

"I was told I was a liar and knew all along I had this," she said in a complaint to ConsumerAffairs.com. "Now the medical bills are adding up and I am about to lose my home of 16 years. I want them to settle this now or explain to my children why they no longer can live in the only home they have ever lived in!"

Insurers' Sweaty Palms

The insurance industry's greatest fear appears to be that too many of its policyholders will become disabled and stay that way. To guard against that, they make it difficult to successfully claim disability and even harder to remain on the disability rolls. Many insurers demand frequent reassessments of the person's condition. Often they will simply stop paying and start the entire process from scratch.

Paige W., of Oxford, Wisconsin, was a regular advocate of purchasing and maintaining long-term disability in her job as a human resources manager. When she suffered a fall at work and endured several years of pain and unsuccessful medical treatments, her doctor finally recommended her for LTD from Hartford Life and Accident Insurance Company.

"After receiving the paperwork from [my doctor], they accepted the claim and paid 6 months of LTD. After that it was one reason after another to deny my claim," Paige said. "Not one thing had changed medically for me, but Hartford would say 'You have not provided sufficient proof of loss, or 'You have not provided suitable objective evidence of your condition', all those word games they play."

Paige eventually litigated to receive Social Security Disability, but still has to face serious legal bills as well as caring for her children and fighting to get the disability she believes Hartford owes her.

"I know that Hartford 'banks' on the plan that people will give up or die. Well, I can't. I have two small children who need me and they don't deserve all this either."

According to DisabilityInsuranceProtection.com's Frequently Asked Questions (FAQ) page, "[I]f you are currently in good health, you should have no difficulty qualifying for a policy. However, if your health declines or if you experience a disability, you may no longer be insurable (if you are still insurable, it will certainly be at a higher premium)."

This is often referred to as "adverse selection." As one insurance agent puts it, "Only the sick people want the coverage, which makes it expensive, which drives out the healthy people who think it's just not worth it." In other words, healthy customers will be paying large sums of money to be covered in case they are injuredbut once they ARE injured, all bets are off.

Such was the fate of Nadaleen B., of Painesville Township, OH, who was the victim of a terrible car accident in December 2004.

According to her husband, Nadaleen's doctor diagnosed her with several bulging cervical discs in her spine, causing her frequent headaches and limiting her mobility. Nadaleen received both LTD and short-term disability (STD) coverage from MetLife, but "We had only received 2 checks from them, and then they stopped paying benefits."

Nadaleen's husband contacted her caseworker repeatedly, to no avail. After repeated faxes, phone calls, and emails to her caseworker, supervisors, and further up the chain, Nadaleen's coverage was still denied, and with bills mounting in their household, she had to consider returning to work against her doctor's recommendation.

"Nadaleen is still in lot of pain. We depend on 2 incomes to meet our mortgage, car payment, utility bills, and groceries. We only have my income at the moment and are being stretched to the limit financially and emotionally," her husband said.

Planning for the Unplanned

If disability insurance doesn't fulfill its promise of providing income for the injured or disabled while they recuperate and rebuild their lives, what are the best options for consumers?

You might consider long-term care insurance as opposed to disability. Long-term care insurance covers the needs of the disabled and the elderly alike. The U.S. Government Accountability Office estimates that 40 percent of the 13 million people receiving long-term care services are between the ages of 18 and 64.

As opposed to providing income replacement for the disabled or injured, long-term care insurance pays for the basic daily living services an individual needs when physically and mentally impaired. Of course, it pays nothing to replace your salary but given the uncertainty of collecting disability payments, this may not be a serious drawback.

With the consumer protections stipulated by the Health Insurance Portability and Accountability Act (HIPAA), long-term care purchasers can deduct the expenses from their income tax returns as they would auto or medical insurance. However, long-term health care insurance is not a "cure-all" any more than disability insurance, and may be subject to as many stipulations.

In the view of one insurance industry member, disability insurance best serves the self-employed or workers who stand to lose a great deal from injury or a disabling condition.

"There is a self-employed guy who is a machinist and he needs his hands to weld and such to run his machinery business. Disability insurance might be very useful for him if he got into some sort of accident, like slipping in the snow or something, and badly damages his hand," said one industry insider. "The machinist might have long term care insurance, but it would not be able to use it in this instance since he only lost the use of his hand and does not need to be in a nursing home."

Whether the options are disability, long-term care, or both, only the informed consumer stands a chance of purchasing the plan that's best for them. The following are basic tactics to keep in mind when looking for the right insurance coverage:

• Shop smart, look around. Look at price and option comparisons from as many insurance companies as you can. Use the price and reliability indexes from rating companies like Standard and Poor's or Moody's. (Keep in mind that these companies, like credit bureaus, use differing criteria to make their judgments, so don't go with any single company's recommendation.)

• Figure out how much coverage you need. Be realistic; if you become permanently disabled, your standard of living will inevitably decline. The trick is to make that decline manageable. Find out what level of coverage your employer provides, then decide if you need more. If you are self-employed or an independent contractor, see if you qualify for a group plan through a professional or trade association.

• Ask questions, read the policy. Your life and health are more important to you than to anyone else. When dealing with an agent, ask all the questions you feel need to be answered. Make sure the agent gives you plenty of options. Get plenty of quotes from good companies. Then, read the policies. Yes, they're boring and hard to read but only what is actually written in the policy means anything; your agent's words and earnest assurances are dust in the wind; verbal promises mean nothing.

• Do the math. Talk to your tax advisor or financial planner to determine what you can afford and what you think you will need to get by if you become disabled. Long-term and disability insurance providers offer estimates based on age, income, medical history, and investment records, so your entire financial portfolio will come into play when determining the best option for your care.

• Think decades, not years. You may be paying on a policy for 20 or more years so be sure to factor inflation into the benefit package you choose.

• Buy from major, AAA-rated insurers. This is no time to look for a spunky underdog. You want to buy from a company that will still be in business when you need to file a claim.

For More Information

Purchasing long-term or disability insurance is a comprehensive and complex process, one which cannot be easily addressed in a single article. There are numerous resources available to consumers interested in choosing the right long-term coverage option, including:

• The Insurance Information Institute Contains thorough breakdowns of every type of insurance you can purchase, as well as tools to compare prices, find insurance agents, and defining insurance terms.

• America's Health Insurance Plans Though this site is slanted towards the insurer's viewpoint, its "Consumer Information" section provides valuable guides to each major insurance category.

• The U.S. Administration on Aging An office of the government's Department of Health and Human Services, AOA provides a wide range of information and resources for older Americans, particularly relating to insurance of all sorts.

• ConsumerAffairs.com's Insurance Section You've heard your agent's sales pitch. ConsumerAffairs.com gives you the rest of the story -- the real experiences of consumers, told in their own words.

The Illinois General Assembly has passed legislation that requires all companies and organizations, regardless of where they are based, to notify Illinois residents in the event of a security breach. The measure is modeled on a California law and follows the theft of more than 100,000 names from ChoicePoint earlier this year.

Gov. Rod Blagojevich proposed the legislation days after public disclosure of a massive security failure in October involving Georgia-based ChoicePoint, which resulted in the theft of personal information, including social security numbers, of approximately 145,000 people in all 50 United States including roughly 5,000 in Illinois.

"When a consumers personal information falls into the wrong hands, it can lead to devastating outcomes," said Gov. Blagojevich. "This legislation will help prevent thieves from gaining access to personal information and will help consumers react quickly to protect their credit when identity thieves succeed. I applaud the General Assembly for passing this legislation, so that Illinoisans are no longer left in the dark when their personal information is at risk."

Too often these days, it seems that security breaches of personal information are the rule rather than the exception. Consumers need the power to fight back, Attorney General Madigan said.

The most effective way to prevent the destructive effects of identity theft is to act quickly to regain control of your personal and financial information, but this can be accomplished only if the consumer is quickly notified when the security of this information has been compromised. This legislation is a clear victory for consumers.

The Personal Information Protection Act requires that any entity that collects and maintains personal consumer information must notify all affected Illinois customers in the event of a security breach. Personal information is defined as a Social Security number, a drivers license number, bank or credit card number and pin codes in combination an individuals first name or first initial and last name.

The bill requires that notifications be made without unreasonable delay. The provisions of the Personal Information Protection Act would be enforced by the Office of the Attorney General through the Illinois Consumer Fraud Act. Current Illinois law does not require companies to notify consumers when their private information may have been hacked into or exposed to unauthorized sources.

The stronger requirement will provide dual benefits: making sure that those whose personal information has been stolen are quickly notified; and motivating organizations to improve their security systems to better protect personal information.

The number of reported identity theft cases in Illinois rose 49 percent in the past year, from 7,474 reported identity theft victims in 2003 to 11,138 reported victims in 2004. A 2004 FBI Cybercrime study found that only 20% of companies report computer hackings to the police and half do not report them to anyone.

Identity theft and consumer fraud are rapidly growing problems, costing Americans nearly $550 million last year, up from $430 million in 2003, according to the Federal Trade Commission. The FTC received 635,000 consumer complaints in 2004 about identity theft and consumer fraud.

After the ChoicePoint breach in late February, the company initially notified only residents of California who might have been affected because of a California state law requiring the company to do so. However, in response to a letter initiated by Madigan and signed by 38 other state attorneys general, ChoicePoint agreed to notify more than 140,000 consumers nationwide whose personal and financial information might have been compromised, including those in Illinois.

In addition to the legislation, the Governor and the Attorney General reminded consumers of practical steps they can take to protect their personal information from thieves:

(1) never provide any personal information in response to an unsolicited request;
(2) review your account statements regularly to ensure that your transactions are in order;
(3) check your credit report to make sure no new credit accounts have been opened in your name;
(4) do not use information that can be used to steal your identity (birthdays, names, social security numbers, account numbers) as passwords or account numbers; (5) limit the amount of personal information you divulge over the phone or to web-sites.

The New York Senate and Assembly are considering legislation to protect vulnerable homeowners from "foreclosure rescue" scams. Seniors and low-income homeowners have been defrauded out of their homes by a growing array of companies and individuals that prey on homeowners facing foreclosure.

Posing as "foreclosure rescuers," unscrupulous individuals and deed transfer companies target seniors and lower income homeowners on the brink of foreclosure. Typically, they promise to bail homeowners out of foreclosure by paying off the arrears on the outstanding mortgage. Homeowners end up signing over the deed to their home to the company, and are told they may rent their home until they are able to buy it back.

The purchaser, however, has no intention of leasing the property back to the homeowner. Instead, the purchaser evicts the homeowner within months after the transaction and walks away with equity the homeowner had built up - -- sometimes as much as hundreds of thousands of dollars.

New York homeowners who lost their homes to deed theft and community groups testified at a hearing on legislation introduced by state Assembly Banks Committee Chair Catherine Nolan that would prohibit deed transfer scams. State Senator Hugh T. Farley, chair of the Senate Banks Committee, recently introduced a parallel bill in the Senate.

"Unfortunately, we have seen a growing number of these 'deed theft' scams in New York and throughout the country," said. Farley.

"AARP commends Senator Farley and Assemblywoman Nolan for their leadership in proposing legislation to stamp out deed theft scams," said Muriel True, AARP member and Regional Advocacy Coordinator for AARP New York. "Any form of predatory lending must be stopped especially when targeted at older persons and other vulnerable homeowners in New York State."

"Deed theft is becoming a serious epidemic in New York -- the number of calls we receive from people who have lost their homes in these scams has risen dramatically in the last two years. Low and middle income homeowners who are targeted lose all of their equity and are evicted from their homes, while unscrupulous speculators who are completely unregulated by the state are stealing millions," said Josh Zinner, Director of the Foreclosure Prevention Project at South Brooklyn Legal Services.

Deed theft is also perpetrated on homeowners when they go to close on a refinancing mortgage. Buried in the thick pile of papers signed at closing are documents that authorize transfer of the deed to a third party. In these instances, the homeowner does not even know she has ceded the deed to another party until considerably after the fact.

"My husband and I were tricked into signing documents when we were refinancing our mortgage to save our house from foreclosure. My house was stolen through deed theft and my family almost ended up in a shelter because of this," said Michell Fayez Olabi, a mother of six who, with her husband, is fighting to get her home back in the Rosedale section of Queens. "Deed theft is a crime and it destroys families. My family is still suffering. The dream that we had for our home was taken away by these crooks."

The bills would require written disclosure to homeowners regarding the terms of the title transfer, and provide a right to cancel the deal for five days after signing the contract. They would prohibit making false statements regarding the home's value, the foreclosure process, and any contract terms. The legislation also would establish civil and criminal penalties for violating the law.

A Swedish study finds that users of digital phones in rural areas may be at greater risk of brain cancer. Its authors say the link is troubling, although they acknowledge that the amount of data is small and wider research is needed to amplify the findings.

The researchers said that incidence of brain tumors in rural areas of Sweden was much higher among users of GSM cell phones than among rural residents who were not cell phone users. The rate was also higher than among GSM users in urban areas.

The chance of developing a malignant brain tumor was roughly eight times higher for cell phone users in the Swedish countryside than in urban areas. The risk of developing any brain tumor was four times higher for country dwellers using mobile phones for five years or more, compared with those who did not use the devices.

The study suggests that mobile handsets in rural areas deliver a higher dose of electromagnetic radiation because they have to transmit a stronger signal to distant transmission towers, whereas towers are closer together in urban areas, resulting in phones transmitting a weaker signal.

The study was conducted by Lennart Hardell, a professor of oncology at university hospital in Orebro, Sweden. It was published on today in a British journal, Occupational and Environmental Medicine.

Researchers looked at more than 1,400 adults aged 20 to 80 who had been diagnosed with a malignant or benign brain tumor between 1997 and 2000. The brain cancer patients were compared with a similar number of healthy adults living in the same area. Each group was asked to recall their daily use of mobile and cordless phones.

"Clearly our results support the notion that exposure may differ between geographical areas," Hardell said. "But there is no information on the exact difference between geographical areas."

According to the study, nearly 75,000 children on average were seen in emergency departments for trampoline injuries each year during 2001 and 2002. This represents a marked jump from the early- to mid-1990s, when a similar study showed an average of almost half the number of injuries each year. Most of the injuries, 91 percent, occurred at home.

"Parents so far have not gotten the message that trampolines should not be used in the home environment. They should be used in very structured, well-monitored environments, with proper supervision. Frankly, that supervision probably doesn't and can't happen at home," says James G. Linakis, MD, PhD, a pediatric emergency physician at Hasbro Children's Hospital and an associate professor of emergency medicine and pediatrics at Brown Medical School.

Children's Hospital and the Rhode Island Hospital Injury Prevention Center, reviewed a sample of U.S. hospitals from the National Electronic Injury Surveillance System for 2001 and 2002. They compared the data to a previous study that examined trampoline injuries from 1990 to 1995. At that time, there were an average 41,600 emergency department visits for trampoline injuries per year, compared with 74,696 emergency visits each year during 2001 and 2002.

Also, researchers found that injuries serious enough to require hospitalization increased dramatically -- jumping from 1,400 annually in the first study to 2,128 annually in the current study. In both studies, fractures or dislocations remained the predominant reason for hospitalization. However, by 2002, emergency rooms were seeing an increase in lacerations, or cuts, in children who needed to be hospitalized.

"Trampolines, particularly trampolines at home, are an increasingly major source of injuries to children," Linakis says. "It's still a significant problem, and the problem is growing compared to the early '90s."

The Food and Drug Administration (FDA) is warning consumers about the sale of counterfeit versions of Lipitor, Viagra, and an unapproved product promoted as "generic Evista" to U.S. consumers at pharmacies in Mexican border towns.

Consumers who have any of these counterfeit products should not use them and should contact their healthcare provider immediately.

Counterfeit versions of Lipitor (a cholesterol-lowering drug), Viagra (a treatment for erectile dysfunction), and Evista (a treatment and prevention medication for osteoporosis in postmenopausal women) can pose significant risks to consumers.

Counterfeit Lipitor that contains no active ingredient or not enough active ingredient could present a long-term risk for the various complications of high cholesterol, such as heart disease. The counterfeit product purchased in Mexico was associated with several reports of high cholesterol in consumers who had used the product.

Counterfeit Viagra that contains little or no active ingredient would be less effective than a legitimate product or altogether ineffective.

Women who take the substandard generic Evista product that contains no active ingredient may be at risk for developing osteoporosis or for having their osteoporosis progress.

The "generic Evista" was analyzed by FDA in coordination with the National Association of Boards of Pharmacy and was found to contain no active ingredient. The counterfeit Lipitor and counterfeit Viagra were analyzed by Pfizer, Inc. and were also found to contain no active ingredient.

The "generic Evista" product was purchased from Agua Prieta, Sonora, Mexico and is labeled as "Raloxifeno, fenilox, 50 tabletas, 60mg", made or distributed by Litio and labeled as manufactured in Monterrey, Nuevo Leon, Mexico. The label has red triangles across the top and bottom. (See the website noted below for photographs of the products.)

Counterfeit Lipitor and Viagra were purchased in the Mexican border towns of Juarez, Los Algodones, Nogales, and Tijuana. The counterfeit Lipitor and counterfeit Viagra products were labeled only in English, whereas legitimate Mexican pharmaceuticals are usually labeled in Spanish. In addition, the counterfeit Lipitor was provided in round white plastic bottles; however authentic Lipitor in Mexico is sold only in boxes of blister packs.

FDA warns that prescription drugs purchased in foreign countries are not regulated by the FDA and do not carry the same FDA assurances of safety, effectiveness, and manufacturing quality as drugs purchased within the United States.