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    BJS Wholesale Club Settles FTC Charges

    Lax Security Compromised Thousands of Credit and Debit Cards

    BJs Wholesale Club, Inc. has agreed to settle Federal Trade Commission charges that its failure to take appropriate security measures to protect the sensitive information of thousands of its customers was an unfair practice that violated federal law.

    According to the FTC, this information was used by an unauthorized person or persons to make millions of dollars of fraudulent purchases. The settlement will require BJs to implement a comprehensive information security program and obtain audits by an independent third party security professional every other year for 20 years.

    Natick, Massachusetts-based BJs operates 150 warehouse stores and 78 gas stations in 16 states in the Eastern United States. Approximately 8 million consumers are currently members, with net sales totaling about $6.6 billion in 2003.

    "Consumers must have the confidence that companies that possess their confidential information will handle it with due care and appropriately provide for its security, said Deborah Platt Majoras, Chairman of the FTC. This case demonstrates our intention to challenge companies that fail to protect adequately consumers sensitive information.

    According to the FTCs complaint, BJs uses a computer network to obtain bank authorization for credit and debit card purchases and to track inventory. For credit and debit card purchases at its stores, BJs collects information, such as name, card number, and expiration date, from the magnetic stripe on the back of the cards.

    The information is sent from the computer network in the store to BJs central datacenter computer network and from there through outside computer networks to the bank that issued the card.

    The FTC charged that BJs engaged in a number of practices which, taken together, did not provide reasonable security for sensitive customer information. Specifically, the agency alleges that BJs:

    • Failed to encrypt consumer information when it was transmitted or stored on computers in BJs stores;
    • Created unnecessary risks to the information by storing it for up to 30 days, in violation of bank security rules, even when it no longer needed the information;
    • Stored the information in files that could be accessed using commonly known default user IDs and passwords;
    • Failed to use readily available security measures to prevent unauthorized wireless connections to its networks; and
    • Failed to use measures sufficient to detect unauthorized access to the networks or to conduct security investigations.

    The FTCs complaint charges that the fraudulent purchases were made using counterfeit copies of credit and debit cards used at BJs stores, and that the counterfeit cards contained the same personal information BJs had collected from the magnetic stripes of the cards.

    After the fraud was discovered, banks cancelled and re-issued thousands of credit and debit cards, and consumers experienced inconvenience, worry, and time loss dealing with the affected cards. Since then, banks and credit unions have filed lawsuits against BJs and pursued bank procedures seeking the return of millions of dollars in fraudulent purchases and operating expenses.

    According to BJ's SEC filings, as of May 2005, the amount of outstanding claims was approximately $13 million.

    The FTC alleges that BJs failure to secure customers sensitive information was an unfair practice because it caused substantial injury that was not reasonably avoidable by consumers and not outweighed by offsetting benefits to consumers or competition. The settlement requires BJs to establish and maintain a comprehensive information security program that includes administrative, technical, and physical safeguards.

    The settlement also requires BJs to obtain an audit from a qualified, independent, third-party professional that its security program meets the standards of the order, and to comply with standard book keeping and record keeping provisions.

    BJs Wholesale Club, Inc. has agreed to settle FTC charges that its failure to take appropriate security measures was an unfair practice that violated feder...

    VW Fined $1.1 Million for Clean Air Violations

    More than 300,000 cars had defective oxygen sensors

    Volkswagen will pay $1.1 million, the largest civil penalty ever assessed, to resolve its failure to promptly notify and correct a defective oxygen sensor affecting at least 326,000 of its 1999, 2000 and 2001 Golfs, Jettas, and New Beetles. Federal officials said the action comes under an agreement filed with the U.S. District Court for the District of Columbia.

    As part of the settlement, Volkswagen completed a voluntary recall of the affected vehicles at a cost of over $26 million. Vehicles with the defect may release thousands of tons of harmful pollutants including non-methane hydrocarbons (NMHC) and carbon monoxide (CO).

    NMHC are key reactants in the production of ozone, a major contributor to cancer-causing smog. CO impairs breathing and is especially harmful to children, people with asthma, and the elderly.

    "Reliable and effective automobile pollution control systems are an important part of this nation's air pollution reduction strategy," said Thomas V. Skinner, acting assistant administrator of EPA's Office of Enforcement and Compliance Assurance. "This case demonstrates EPA's commitment to ensuring that automobile manufacturers comply with emissions regulations."

    Kelly A. Johnson, acting assistant attorney general for the Justice Department's Environment and Natural Resources Division, said the "penalty imposed in this case underscores auto manufacturers' obligation to promptly alert the EPA of defects in emission control devices. The Department of Justice is committed to vigorously enforce companies' responsibility to adhere to environmental laws."

    The defect occurs gradually on engine start-up in cool and damp environments when the oxygen sensor (part of the emissions control system) cracks from "thermal shock." The dashboard indicator light illuminates, telling the owner to "Check Engine."

    Volkswagen received numerous warranty claims associated with cracked oxygen sensors during the winter of 1999-2000, but did not report the defect to the EPA until June 2001. EPA had already discovered excess emissions from a randomly selected vehicle during a routine test.

    In addition to paying the civil penalty, pursuant to the consent decree lodged today, Volkswagen will also improve its emissions defect investigation and reporting system to ensure future compliance.

    The proposed consent decree is subject to a 30-day public comment period and final court approval.

    VW Fined $1.1 Million for Clean Air Violations...

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      California Gets More Crude Oil Storage Capacity Under Antitrust Agreement

      Increased storage capacity should give some stability to gas prices

      California's fragile gasoline market will be strengthened by the addition of almost one million barrels of crude oil storage capacity, California Attorney General Bill Lockyer announced. It's part of an enforcement settlement that resolves antitrust objections to Valero's $2.8 billion acquisition of Kaneb.

      "Lack of storage has been a significant contributing factor to the dysfunction that afflicts California's gasoline market and the exorbitant prices suffered by this state's drivers," said Lockyer.

      "By increasing storage capacity, this settlement will help stabilize the market in Northern California and benefit motorists by providing a buffer against supply shortages and price hikes."

      Under the agreement, Valero must construct at its Benicia refinery crude oil storage tanks with a total capacity of 900,000 barrels. To further address concerns the merger would have anti-competitive effects and harm consumers, the settlement also requires Valero to sell gasoline and petroleum terminal facilities in Martinez and Richmond currently owned by Kaneb.

      Additionally, the settlement requires Valero to agree to terminate its lease of crude oil storage tanks at the Martinez terminal, and remove the oil held in those tanks. The tanks have a combined capacity of 1 million barrels. Valero will transfer the oil now stored at Martinez to the new Benicia tanks.

      Valero must complete construction of the Benicia tanks no later than three years following its sale of the Martinez terminal and the new owner's decision to terminate the current tank lease, or May 31, 2011, whichever comes first.

      The effect of the settlement's storage provisions will be to add 900,000 barrels of capacity to the system and free up for use by third parties 1 million barrels of capacity now controlled by Valero.

      The settlement's terms are contained in a consent decree Lockyer will file today in U.S. District Court for the Northern District of California. The settlement resolves a lawsuit, also to be filed today by Lockyer, that alleges the merger would lessen competition and restrain trade in violation of federal antitrust laws known as the Clayton Act and Sherman Act.

      The Federal Trade Commission (FTC), to remove its objection to the acquisition, today announced its approval of a settlement similar to California's, but which requires only the sale of the Martinez and Richmond terminals. The court must approve the California agreement.

      Lockyer said the increased storage capacity provided by the settlement should facilitate more gasoline production, increase supply and, as a result, help control prices. As the consent decree states, "The purpose of the provisions ... is to maximize motor fuel production and to create incentives for further investment in Northern California's infrastructure for crude oil and petroleum products ..."

      The sale formally called divestiture of the Martinez and Richmond terminals must be completed within six months following the merger's effective date. If Valero fails to meet that deadline, the settlement allows Lockyer to appoint a trustee to complete the divestiture.

      Terminals receive and store gasoline and other light petroleum products, and provide facilities to redistribute the products via pipelines, sea vessels or trucks. They also receive, store and redeliver bulk quantities of crude oil.

      Additionally, they provide facilities for handling and injecting gasoline additives including ethanol. Valero and Kaneb directly compete in the Northern California terminal services market. Kaneb owns the Martinez and Richmond terminals, as well as two more in Selby and Stockton. Valero, meanwhile, operates its own terminal at its Benicia refinery.

      Importantly, Kaneb's terminals are the only non-refiner-owned terminals accessible to both marine imports and the Kinder Morgan (KM) pipeline system. The KM pipeline is the only common carrier system that serves the interior of Northern California, making it the sole means of economically shipping gasoline to Northern California terminals outside the Bay Area.

      California Gets More Crude Oil Storage Capacity Under Antitrust Agreement...

      T-Mobile Ranks Highest in Wireless Customer Care Performance

      For the second time in as many years, T-Mobile ranked highest among the six largest wireless service providers in creating a positive experience among customers who contact their providers for service or assistance.

      The J.D. Power and Associates 2005 Wireless Customer Care Performance Study says that with an index score of 108, T-Mobile performs particularly well across all factors, especially hold-time duration and problem resolution efficiency.

      In addition, T-Mobile customers' average hold times before waiting to speak with a service representative are 34 percent shorter than the industry average (2.27 minutes versus 3.44 minutes). Verizon Wireless, Nextel and ALLTEL also perform at or above the industry average.

      The study also found that customer service issues that are handled by a service representative, either over the phone or at a retail store, generate significantly higher customer care ratings than non-human, computer-generated interaction.

      Overall, customers who speak with a service representative over the phone average an index score of 109, well above the industry average score of 100. At the retail store level, the index score decreases to 102.

      However, those customers contacting their carrier with a problem or inquiring through an automated response system (ARS) rate their experiences significantly lower, with an index score of 85. The index score drops even further (75) for those contacts made over the Internet.

      The study shows that one of the main factors contributing to this performance disparity is the quality of response given. A service representative-either over the phone or in person-can answer customer questions and clarify answers given. This kind of flexibility is very limited in both ARS and Internet contact methods.

      "As more companies encourage customers to contact Internet and computer-based customer service programs to save operating costs, they run the risk of increasing churn [when a customer switches carriers] as the number of contacts needed to resolve a customer complaint or issue rises," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates.

      "Since future churn levels are four times as high among those who rate their wireless carrier below average in customer care, the challenge for wireless providers is to offer an easy and efficient customer care transaction experience."

      The study, in its third year, provides a detailed report card of wireless customer care provider performance based on customer experiences in three point-of-contact methods: telephone with a service representative and/or ARS; walk-in at a retail store; and online Internet connection. Within each contact method, processing issues such as problem resolution efficiency and hold-time duration are also measured.

      The study also finds several key wireless customer care patterns:

      • More than one-half (54%) of wireless users have contacted the customer service department for assistance within the past year, a slight increase from 2004 (52%).
      • Among those who contact their carriers, 71 percent do so via telephone and 26 percent through the carriers' retail stores. E-mail/Internet contacts account for only 3 percent.
      • The average initial reported hold time on calls to the customer service department is 3.44 minutes, compared to just over 9 minutes before speaking to a representative at a retail store.

      The 2005 Wireless Customer Care Performance Study is based on responses from more than 8,600 wireless users who contacted customer care within the past year.

      T-Mobile Ranks Highest in Wireless Customer Care Performance...

      Banks Levy Big Overdraft Loan Fees Without Permission, Study Finds

      Consumers Paying Up to $22 Billion Per Year in Overdraft Fees

      Over eighty percent of the nation's largest banks charge consumers high overdraft fees without their permission, according to a new study by the Consumer Federation of America. Consumers are only informed of these charges in the fine print of their account agreements, which can cause them to inadvertently overdraw their accounts when making an ATM or debit card transaction.

      "Large banks are increasingly allowing consumers to unwittingly overdraw their accounts and then hit them with hidden fees," said Jean Ann Fox, director of consumer protection for Consumer Federation of America (CFA). "A loophole in Federal rules actually permits this deceptive and abusive practice."

      While recent regulatory action by the Federal Reserve singles out smaller depository institutions that promote "courtesy" overdraft loans, the nation's largest banks have also included identical provisions in their checking accounts but do not advertise them.

      "The Federal Reserve missed an opportunity to require banks to give customers information about the true cost of overdraft loans. As a result, banks can continue to hide the cost of these products," said Eric Halperin, policy counsel at the Center for Responsible Lending. "Federal regulators must do more to protect consumers from these abusive loans."

      CFA's study, "Overdrawn: Consumers Face Hidden Overdraft Charges From Nation's Largest Banks," documents that the nation's biggest banks charge fees for discretionary overdrafts without consumer consent and that the overdraft fees charged by these banks exceed industry averages. CFA surveyed large banks controlling over half of all assets held in consumer deposit accounts.

      The fees at the banks CFA surveyed average $28.57, five percent higher than average overdraft fees at two hundred bank accounts surveyed by BankRate.com in May 2005.

      Banks that offer this discretionary "courtesy" overdraft coverage in their account agreement disclosures also state they are not bound to pay transactions that overdraw depositors' accounts. If consumers who receive "courtesy" overdraft loans do not repay the overdraft quickly enough, many banks tack on an additional sustained overdraft surcharge.

      Penalty fees for insufficient funds checks and overdrafts are a huge and growing burden for accountholders. Consumers pay at least $10 billion per year and as much as $22.7 billion just for overdraft loans, according to estimates by the Center for Responsible Lending. These estimates are based on reports by industry analysts and publicly disclosed checking account service fee revenue.

      "These days, consumers are having a much harder time managing their bank accounts to avoid unwanted overdraft fees," said Fox.

      Increasing overdraft fees are the result of changes in the marketplace and in federal law and the broader use of overdraft fees for transactions other than those involving paper checks, including ATM withdrawals and debt card purchases. Money moves out of consumers' bank accounts faster than ever due to electronic processing allowed under the Federal "Check 21" act, while deposits can be held up for days before consumers are allowed access to their funds.

      Big banks permit consumers to overdraw their accounts without warning them on more types of transactions. Many larger banks are also increasing the chances that consumers will overdraw their accounts by processing the largest checks ahead of smaller checks, whether or not they bank received the larger checks first. This can cause a larger number of smaller transactions to bounce for consumers with low account balances and increase fee revenue for banks.

      The new generation of overdraft loans are more expensive than traditional overdraft protection, which requires that consumers agree ahead of time to pay for an overdraft from a linked savings accounts, credit card or revolving line of credit.

      CFA's study found that most of the largest banks offered these contractual overdraft protection policies and these options would be cheaper for consumers than "courtesy" overdraft.

      "Big banks should encourage consumers to use lower cost services that are already available. Responsible overdraft protection involves a guarantee that overdrafts will be paid, reasonable fees that are clearly disclosed and affordable repayment terms," Fox stated.

      Banks Levy Big Overdraft Loan Fees Without Permission, Study Finds...

      Northwest Airlines Pushes Up Fares

      Other airlines following Northwest's lead

      After an early June attempt to establish fare hikes sputtered, some U.S. airlines have matched the latest, fairly significant fare increases announced by Northwest Airlines, suggesting the fare hikes will stick this time.

      Northwest says it is increasing the fare on nearly every one-way business class ticket by $50. It also replaced one-night minimum stays on many fares with the requirement of an additional night.

      Northwest's fare increase is, in part, a take-back from the discounts most airlines adopted after Delta changed its travel rules in January. At the time, Delta implemented a fare cap on business travel of $499 each way. In another take-back, Northwest has upped some ticket prices by $5 to $10. The affected fares are the ones reduced earlier this year when the airline said it would match all fares offered by low-cost carriers.

      In explaining the move, Northwest executives say the airline needs to raise revenue, and that increasing ticket prices on the most popular fares is the best way to do that. They say adopting Delta's $499 price cap has not resulted in the sale of more tickets.

      Northwest's rule change could also end up costing business travelers more. Now they have to spend at least two nights, or else pay a much higher fare.

      Northwest Airlines Pushes Up Fares...

      Feds Say Hands-Free Cell Phone Use Ineffective

      Cell Phone Use Contributes to Crashes

      Government researchers at the National Highway Traffic Safety Administration have concluded that using a cell phone while driving is a major cause of traffic accidents, and that hands-free devices have little safety benefit.

      Regulators from NHTSA and researchers from the Virginia Tech Transportation Institute watched 100 drivers for a year. They report that cell phone use precipitated many crashes and near misses.

      The research group used cameras and sensors to track activities inside a vehicle, recording crashes, near crashes and evasive maneuvers.

      The study showed such events and maneuvers were often preceded by the driver being distracted by the use of a cell phone or other electronic device. There were nearly 700 incidents involving such wireless devices, the study found.

      The study was published as Connecticut enacted a new law banning handheld cell-phone use by drivers. New York, New Jersey, the District of Columbia, and Chicago have approved similar measures.

      The new federal research also adds to what experts say is a growing body of evidence that suggests hands-free cell phones will not deliver the safety benefits consumers, automakers and legislators hoped for.

      Feds Say Hands-Free Cell Phone Use Ineffective...

      Cell Phones May Harm Sperm Cells, British Study Finds

      The Price of Mobility: Decreased Motility

      Men who carry their cell phone in a hip pocket or in a belt holster could be putting their sperm quality at risk, a British study finds.

      "Storage of mobile phones close to the testes had a significant negative impact on sperm concentration and the percentage of motile sperm," according to a report published by the U.K's Royal Society. "These trends suggest that recent concerns over long-term exposure to the electromagnetic irradiation emitted by mobile phones should be taken more seriously."

      The study was conducted under the auspices of the University of Western Australia and based on samples collected from 52 heterosexual men. The samples were assessed using World Health Organization guidelines.

      The study found that those men who carried a cell phone in their hip pocket or on their belt had lower sperm motility and a lower sperm concentration than men who carry a mobile phone elsewhere on the body.

      Cell Phones May Harm Sperm Cells, British Study Finds...

      Mintek Recalls Portable DVD Player Batteries

      June 8, 2005
      Mintek is recalling about 116,000 portable DVD player battery packs. The battery can overheat and explode while recharging, posing a burn and fire hazard to consumers.

      Mintek has received 10 reports of incidents, including nine cases of the battery pack overheating and/or catching fire and one report of the battery pack overheating and bursting.

      The recall involves battery packs used with the Mintek portable DVD players with a 7 (diagonal) screen and model number DVD-1710. Mintek DVD-1710 is printed on the top and bottom of the unit. The DVD player is silver and grey colored and the battery pack is silver with a nameplate on the bottom that is marked RB-LiP01 or RB-LiP02.

      The players were sold at electronic and department stores nationwide, including Best Buy, from September 2002 through January 2005 for between $200 and $300.

      Consumers should stop using and stop recharging the battery pack immediately and contact Mintek Digital for a free replacement battery. Consumers can continue to use the DVD player, with the AC power adapter and not the battery pack, until they receive a replacement battery pack.

      Consumer Contact: Contact Mintek Digital toll-free at (866) 709-9500 anytime or visit the companys Web site at www.mintekdigital.com. Consumers also can contact the company by mail at Mintek Digital Inc, 4915 E. Hunter Ave., Anaheim, CA 92807

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

      Mintek Recalls Portable DVD Player Batteries...

      WV Sues "Labor Law Poster Service"

      While state and federal laws require that the posters be displayed in the workplace, they may be obtained free of charge

      West Virginia Attorney General Darrell McGraw has sued Mandatory Poster Agency, Inc., a Michigan corporation. The poster company called itself "The West Virginia Labor Law Poster Service" and sent a written solicitation to employers in West Virginia offering posters regarding workplace safety and employee rights.

      While state and federal laws require that the posters be displayed in the workplace, they may be obtained free of charge by contacting the West Virginia Division of Labor. The poster company charged $59.50 for a set of posters and $5.75 for shipping and handling.

      Some employers believed that the poster company was a governmental entity. The poster company also held itself out as having a physical business location in South Charleston, West Virginia but, in reality, the address was just a post office box.

      In 2001, Attorney General McGraw investigated the same individuals operating under the business name of West Virginia Mandatory Poster Agency. That investigation culminated in a signed agreement. In the agreement, Mandatory Poster Agency, Inc. promised to clarify that the posters may be obtained free of charge from appropriate governmental agencies and that its business was not a government agency.

      Recently this company sent out solicitations that were similar to those that prompted the 2001 investigation by the Attorney General. The business name of the poster company, however, was changed from the West Virginia Mandatory Poster Agency to the West Virginia Labor Law Poster Service.

      Nevertheless, the defendant did not clearly and conspicuously disclose in its 2005 solicitations that the posters may be obtained free of charge from the appropriate governmental agency and that, in fact, it was not a government agency. The Attorney Generals Office received complaints from West Virginia citizens that the solicitation appeared to be from a governmental organization.

      "This business is masquerading as a governmental organization in order to sell posters for outrageous amounts," said Attorney General McGraw. "This deception is particularly problematic because the posters are free from legitimate governmental agencies."

      The lawsuit, filed in Kanawha County, seeks injunctive relief, restitution for those affected, civil penalties, costs, and attorneys fees.

      Anyone purchasing a poster from the West Virginia Labor Law Poster Service is encouraged to call Attorney General McGraws consumer protection hotline at 800-368-8808 or 304-558-8986.

      WV Sues 'Labor Law Poster Service'...

      AT&T Settles Minnesota Suit

      The agreement settles the state's claim that AT&T erroneously billed some 25,939 Minnesota citizens

      The state of Minnesota and AT&T have reached an agreement that resolves the consumer protection lawsuit filed against the long distance carrier.

      The agreement settles the state's claim that AT&T erroneously billed some 25,939 Minnesota citizens in 2004 for services never ordered or provided. Under the terms of the settlement, AT&T has refunded or credited Minnesotans who were wrongly billed and has agreed to provide 300-minute long distance calling cards to Minnesotans adversely affected by its erroneous billing and to make a $200,000 payment to the State.

      The State's final settlement with AT&T specifically includes the following:

      • AT&T agreed to credit and refund all Minnesotans incorrectly assessed calling plan charges and to stop marketing to callers who had been billed in error. Over 25,000 Minnesotans have received credits to date for a total of $308,000. • In addition, the 25,000-plus Minnesotans who received credits are also eligible for a 300-minute calling card. Eligible citizens will receive a letter in the mail detailing how to submit an application for a calling card. The consumer calling card restitution has a retail value of up to $780,000. • AT&T will make a $200,000 payment to the State of Minnesota.

      The state's lawsuit was the result of an investigation that revealed that over 25,000 Minnesotans were erroneously billed on their local phone bill for long distance calling plan charges by AT&T beginning in January 2004.

      When the company started assessing a $3.95 monthly charge to its long distance "Basic Rate Plan" customers, AT&T billed not only customers on its "Basic Rate Plan" for the $3.95 and other associated fees, but also an additional 25,939 Minnesotans who did not order services from AT&T or who had other AT&T calling plans.

      In addition, when those citizens called AT&T to inquire about the charges, rather than helping consumers, AT&T placed Minnesotans on hold for extensive periods of time, transferred them to customer service representatives who tried to "hard sell" AT&T services, and, in some cases, the company told consumers they would had to sign up for an AT&T calling plan to get their money back or charges credited.

      A letter is being sent to those Minnesotans who were incorrectly billed by AT&T, directing those citizens how to receive their calling card. Eligible consumers will simply have to check a box on a claim form, fill in the claim number found on the letter, sign and mail the form back to the Minnesota Attorney General's Office by August 15, 2005, or send an email to the Office at phonecard.settlement@state.mn.us. The email must include the customer's name, address, the reason for requesting the calling card, and the claim number on the letter.

      The state of Minnesota and AT&T have reached an agreement that resolves the consumer protection lawsuit filed against the long distance carrier....

      Fake Money Orders Circulated In Arkansas

      While the U.S. Treasury has taken steps to make it harder to counterfeit American currency, it's still apparently easy to make up fake money orders

      While the U.S. Treasury has taken steps to make it harder to counterfeit American currency, it's still apparently easy to make up fake money orders. Arkansas Attorney General Mike Beebe reports his office has noted reports of a surge in schemes involving sophisticated counterfeiting of money orders.

      As happens more and more these days, the fleecing of victims often begins in an e-mail in-box. Several Russellville, Arkansas, residents and banks have recently found that what they thought were authentic Unites States postal money orders were, in fact, counterfeit.

      Russellville police have recovered counterfeit money orders totaling $20,000 -- money that, for the most part, had been sent overseas as part of the scam.

      According to the F.B.I. and postal inspectors, international forgers - mostly in Nigeria, but also in other parts of West Africa and Eastern Europe - appear to have turned new attention to money orders. In many cases, unwitting victims, often contacted by an e-mail message or in an online chat room, are tricked into accepting the bogus money orders as payment for items they are selling, or into cashing the orders in return for a fee.

      It is the latest twist in a long series of Internet schemes that use bogus financial instruments to bilk unsuspecting victims out of merchandise and cash.

      "Technological advances in printing have led to convincing forgeries of legitimate money orders," Beebe stated, adding that ordinary consumers can easily be fooled.

      Whether using e-mail, online auctions, or the telephone, the scammer expresses an interest in purchasing merchandise and then offers to send a money order through the mail. In a typical swindle, a seller is sent a counterfeit postal money order in excess of the cost of the item being ordered. The seller is then asked to keep the cost of the purchase and ship back the balance in cash, along with the merchandise.

      When the victim cashes or deposits the postal money order, he learns the truth: the money order is a fake and he has been scammed. If the money has been deposited, the victim's account is debited for the full amount. At the very least, the victim loses the merchandise already shipped.

      Beebe says U. S. Postal money orders have many security features to help verify their legitimacy. To check that a money order is authentic, hold it up to the light and look for Ben Franklin images repeated on the left side (top to bottom) and a dark security line running (top to bottom) to the right of the Franklin watermarks, with the tiny letters "USPS" facing backward and forward. If either of these security features is not present, the postal money order is not legitimate.

      Also, the consumer should know that denominations appear in two locations. U.S. Postal money orders are printed on crisp, textured, paper stock and carry a maximum value of $1,000. The maximum value for international postal money orders is $700. Beebe warned consumers to be especially careful when doing business with unknown individuals and to check with his office or the Postal Service when in doubt.

      While the U.S. Treasury has taken steps to make it harder to counterfeit American currency, it's still apparently easy to make up fake money orders....

      Northwest Airlines Seeks Replacement Flight Attendants

      The move is seen as leverage as bargaining talks open

      Struggling legacy airlines like United and US Airways have successfully wrung contract concessions from their employee unions this year. Northwest Airlines is next, and appears to be taking no chances. It's advertising for replacement flight attendants, just in case the contract talks stall.

      In a posting on Monster.com, Northwest is advertising for candidates to enroll in a paid training program for flight attendant certification. Candidates are urged to apply by June 12.

      "Individuals who successfully complete Flight Attendant training may be offered employment in the event of a labor dispute or strike," the posting says.

      The recruitment drive follows last month's move by Northwest to recall all remaining furloughed flight attendants by the end of July. The Professional Flight Attendants Association says it was notified of the company's plan in late May, and said it expects "a contentious summer of labor negotiations."

      The union says the company has caused attrition in the flight attendant ranks by raising fear that the company will attempt to freeze current pension benefits. At the time, union president Guy Meek charged the company's "propagandizing efforts" were needlessly scaring flight attendants into early retirement.

      Union officials say the latest Northwest recruitment effort appears to be another campaign of intimidation, just as the two sides are preparing to sit down at the negotiating table. The airline is beginning labor talks with three of its union, seeking over $1 billion a year in labor cost reductions.

      Northwest, meanwhile, says the unions are the ones engaging in sabre-rattling.

      "Northwest is aware of significant strike planning activity underway at several of its unions," the airline said. "If one of its unions chooses to strike the carrier or engage in job actions with the intent of causing disruption at some point in the future, Northwest must be prepared to protect its operations," the statement said.

      Northwest Airlines Seeks Replacement Flight Attendants...

      Jagdmann Obtains First Virginia Do Not Call Law Judgment

      A Newport News, Va., firm has been ordered to pay $196,000 for violating the federal Do Not Call law

      A Newport News, Va., firm has been ordered to pay $196,000 for violating the federal Do Not Call law. Virginia Attorney General Judith Jagdmann said it was the first time Virginia has prosecuted a company under the federal statute.

      In the lawsuit, former Attorney General Jerry Kilgore, who has since quit to run for governor, charged Real Time International, Inc., with breaking both state and federal telemarketing laws by calling Virginians whose numbers were on the National Do Not Call Registry. The Commonwealth obtained a judgment in federal court that enjoined future violations by the firm and awarded damages for consumers.

      "This Office cracked down on a top Virginia target under the Do Not Call law,: said Attorney General Jagdmann. "We have brought its illegal activities to a halt and sent a serious message to telemarketers who flout the law."

      The federal Do Not Call law, which went into effect on October 1, 2003, prohibits telemarketers from making telephone solicitation calls to residents who register their numbers on a National Do Not Call Registry maintained by the Federal Trade Commission. Residents may also register cellular phones on the list.

      Until recently, Real Time marketed vacation packages to residents of central and southeastern Virginia. Between October 2003 and October 2004, sixty-six Virginians reported Do Not Call violations by the firm, including twenty-two repeat violations. Twenty-seven residents reported that Real Times callers failed to identify themselves, and sixteen reported that the callers made calls after earlier requests not to do so.

      Under the lawsuit, the Court awarded injunctive relief to prevent future violations of federal and state telemarketing laws, as well as over $196,000 in monetary damages for willful violations of the law.

      Virginians can register their home and cell phone numbers on the National Do Not Call Registry and can file Do Not Call complaints online at www.donotcall.gov or by calling 1-888-382-1222 (TTY 1-866-290-4236) from the number they want to register. Telemarketers have thirty-one days to comply after a resident has registered.

      Virginia state law prohibits telemarketers from calling Virginia residents who have registered their telephone numbers on the registry and gives Virginia residents a private right of action if they are on the list and receive such calls.

      Jagdmann Obtains First Virginia Do Not Call Law Judgment...

      Arizona Sues Alleged Foreclosure Scam Operators

      Company allegedly misled homeowners into signing over their homes to avoid foreclosure

      Arizona Attorney General Terry Goddard has filed suit against Virtual Realty Company, charging it misled homeowners into signing over their homes to avoid foreclosure. Company sales representatives led homeowners to believe that they could help save their homes, but in fact the transactions were structured so that homeowners would transfer title or sell the home to a business associate of Virtual Realty, the suit charges.

      "This case represents the worst in our community," Goddard said. "This company's end game was to get the house. They took advantage of homeowners desperate to save their homes from foreclosure, and deceived them into turning over their homes. In order for homeowners to keep their homes, they had to pay an outrageous sum, and many lost their homes because of VRF's deceptive sales tactics."

      According to court documents filed in Maricopa County Superior Court, beginning in 2003 Virtual Realty Funding Company began advertising through newspaper classified ads, the Internet and direct mail that the company could assist homeowners who were behind in their mortgage payments from losing their homes.

      Court documents allege that VRF targeted Spanish-speaking communities, and applied high-pressure tactics to convince homeowners to sign densely worded legal documents the homeowners often did not understand.

      In some cases the VRF representative refused to allow the homeowner to read the documents before signing, making the homeowner dependant on the VRF representative's explanation.

      The VRF representatives did not tell homeowners they were deeding their homes to the company, and if the homeowner failed to meet any requirement of the agreement, the home could be sold. The homeowners believed the company would help keep their homes and their possessions.

      The Sale/Repurchase Agreement required the homeowner to rent his/her home back from VRF for a monthly rental equal to the monthly mortgage payment plus an additional amount. In the case of one homeowner, the monthly mortgage payment was $613 and the additional amount was $157, making a monthly rental payment of $770.

      In addition to the rental payment, the homeowners were also required to make a deposit payment. In return for "helping" the homeowners keep their homes, VRF agreed to transfer title back to the homeowner through a warranty deed if the homeowner met specific conditions.

      These included the payment of all rent on time and, prior to a specified date, payment to VRF for bringing the mortgage current, unspecified escrow fees and a "funding fee," which was at times as high as $4,000.

      The Attorney General's Office is asking the Maricopa County Superior Court to:

      • Prohibit VRF and its owners from violating the Arizona Consumer Fraud Act, the Arizona Debt Management Companies Act and the Arizona Mortgage Brokers and Mortgage Bankers Act.
      • Require the defendants to return to all the victims any money or property acquired through deceptive practices.
      • Impose a penalty of up to $10,000 for each violation of the Arizona Consumer Fraud Act.
      • Require the defendants to reimburse the Attorney General and the Arizona Superintendent of Banks for costs of the investigation and reasonable attorneys' fees.

      The suit names Virtual Realty Company, Virtual Realty Funding Company, and their owner Kenneth D. Perkins. The company's Tucson agent, James Busche, was also named in the lawsuit.

      Arizona Attorney General Terry Goddard has filed suit against Virtual Realty Company, charging it misled homeowners into signing over their homes to avoid ...