Follow us:
  1. Home
  2. News
  3. 2005
  4. September

News in September 2005

Browse by year


Browse by month

Get trending consumer news and recalls

    By entering your email, you agree to sign up for consumer news, tips and giveaways from ConsumerAffairs. Unsubscribe at any time.

    Thank you, you have successfully subscribed to our newsletter! Enjoy reading our tips and recommendations.

    Feds Urged to Act on Ford Spark Plug Blow-Outs

    Could lead to the biggest recall ever

    A California lawyer is petitioning federal regulators to recall about 17 million Ford vehicles, including F-Series pickup trucks, because of a problem that can cause spark plugs to blow out.

    The complaint from attorney Donald Ricketts of Santa Clarita, Calif., would, if granted, lead to the biggest-ever U.S. recall ever. SUVs, pickups, Crown Victorias and Mustangs sold in the 1997-2004 model years had spark plugs that can come loose and fly through the hood, Ricketts alleges.

    Nearly 200 consumers have complained to about the problem over the last five years. In nearly every case, the Ford owners also complained to Ford, only to be told that the problem was not covered under their warranty and disclaiming any knowledge of a broader problem.

    T.J. of Wichita Falls, Texas, complained two years ago that the spark plug blew out of his 1999 Ford F-150. "It is costing me $3,000 to fix this problem. I just returned from the war overseas in Iraq and this is what I get to come home to," T.J. said.

    Ricketts' petition was filed less than three weeks after Ford recalled 3.8 million vehicles, a year's worth of sales, to fix a cruise-control switch that can overheat and cause fires. That recall, the fifth-largest ever in the United States, included the same vehicles and model years as Ricketts' petition.

    Ford said it couldn't comment on the petition.

    Nor has Ford had much to say to any of the thousands of consumers whose $30,000 trucks have been disabled when the spark plugs blew out, resulting in repair bills averaging around $3,000.

    The vehicles in question all have an aluminum cylinder head. "Many mechanics feel the head contains an insufficient number of threads to hold the plugs when under stress, so they have a greater than normal tendency to fail," said Christopher of Palmdale, Calif., whose truck blew its plug in 2002.

    "Ford is not acknowledging any problem, so there's no guidance from them on the best way to proceed with repair," Christopher said. "Some people have had heli-coils inserted, while some have had to have the entire engine replaced. Others have had a recurrence of the failure, due to lack of direction from Ford."

    A California lawyer is petitioning federal regulators to recall about 17 million Ford vehicles because of a problem that can cause spark plugs to blow out....
    Read lessRead more

    Aspirin - Good News and Bad

    It relieves pain and inflammation but can have unpleasant side effects

    There's good news and bad news about aspirin.

    First the good. Aspirin blocks chemicals called prostaglandins so it relieves pain and reduces swelling and inflammation.

    Aspirin can help your sprained ankle or prevent stokes and heart attacks if you have risk factors like high blood pressure. If you have had a heart attack or stroke, aspirin can help some folks prevent a second one.

    Aspiring helps treat fevers and a pediatric disease called Kawasakis Disease.

    The bad news: Aspirin can cause side effects like nausea, internal bleeding or liver or kidney trouble. Aspirin can cause ear ringing. It can combine with viruses and cause a deadly problem call Reyes Syndrome that can hurt your liver.

    The ugly: Aspirin allergy can cause hives, asthma, and a systemic allergic reaction called anaphylaxis which can lead to breathing trouble or even anaphylactic shock and death.

    Aspirin-sensitive people can develop the aspirin triad, which are nasal polyps, sinus problems, hives and asthma.

    Conclusions: Before you take aspirin regularly talk to your doctor.

    Aspirin - Good News and Bad | Dr. Henry Fishman on Health and Medicine...
    Read lessRead more

    Son of Sphinx - USDA Unveils Another Food Pyramid

    This One's Aimed at Kids; Critics Say It's As Ineffective as the Adult Version

    The U.S. Department of Agriculture has unveiled what it describes as a a "child-friendly" version of its widely ridiculed food pyramid, called "MyPyramid for Kids." Agriculture Secretary Mike Johanns visited an Alexandria, Va., elementary school to unveil the new graphic symbol, lesson plans for grades 1-6 and an interactive game.

    "This is a fun approach to addressing the very serious problem of childhood obesity," said Johanns. "As teachers take advantage of the lesson plans and children learn what it takes to win the game, messages about the importance of healthy eating and physical activity will take hold. We know that MyPyramid captured America's attention and our hope is that MyPyramid for Kids will inspire the same level of interest and help to improve the health of America's kids."

    But critics said the kids' version of the food pyramid is "as ineffective as the adult version," as the the nonprofit Center for Science in the Public Interest (CSPI) put it. The adult version of the pyramid was derided for being "Sphinxlike," conveying very little usable information.

    CSPI said that MyPyramid for Kids, like the adult MyPyramid, fails to convey the otherwise sensible advice found in the Dietary Guidelines for Americans, and is emblematic of an Administration that has no real commitment to improving Americans' diets.

    "My Pyramid for Kids doesn't dare to discourage children from consuming so much soda, fast food, candy, and other junk foods," said CSPI executive director Michael F. Jacobson. "Even if MyPyramid for Kids were terrific, there's no strategy to put materials in every classroom in America -- they're actually only making them available upon request. It's as if they've asked Mike Brown to design a response to the obesity epidemic."

    CSPI said that if the Administration wanted to reduce the toll of diet-related disease, it could start by aggressively promoting increased consumption of fruits, vegetables, and whole grains; removing soda and junk foods from schools; getting junk-food ads of children's television; and supporting legislation that would put calorie counts on fast-food menu boards.

    And instead of relying solely on the Internet, the government should take to the airwaves, according to CSPI.

    "When McDonald's wants to reach kids, it turns to television advertising first and foremost," said Jacobson. "If government is to improve kids' eating habits it should invest hundreds of millions of dollars on television advertising promoting healthy diets. If such a campaign made even a dent in obesity or diet-related disease, it would be a windfall for American taxpayers."

    USDA insists MyPyramid for Kids provides age-appropriate information about the 2005 Dietary Guidelines for Americans and the MyPyramid Food Guidance System released earlier this year.

    "The new MyPyramid for Kids symbol represents the recommended proportion of food from each food group and focuses on the importance of making smart food choices every day," USDA said.

    The interactive computer game, called MyPyramid Blast Off, involves a rocket that needs fuel to blast off. The game reinforces the key concepts of MyPyramid for Kids by challenging students to select a healthy variety of foods and physical activities to fuel their rockets.

    In its publicity material, USDA said the MyPyramid Food Guidance System website,, has experienced more than 800 millon hits and MyPyramid Tracker, a personalized assessment tool that provides information on diet quality, now has nearly 480,000 registered users.

    But CSPI said the Web site actually has had little impact.

    "A search via the web service shows that traffic peaked immediately after the site's launch, and plummeted quickly thereafter. On a given day, traffic at web gaming sites designed to promote junk food, such as or, far outpaces traffic at," Jacobson said.

    Son of Sphinx - USDA Unveils Another Food Pyramid...
    Read lessRead more

    Get trending consumer news and recalls

      By entering your email, you agree to sign up for consumer news, tips and giveaways from ConsumerAffairs. Unsubscribe at any time.

      Thank you, you have successfully subscribed to our newsletter! Enjoy reading our tips and recommendations.

      FDA Issues Suicide Warning on ADHD Drug

      The Food and Drug Administration (FDA) is issuing a Public Health Advisory to alert physicians of reports of suicidal thinking in children and adolescents associated with Strattera, a drug approved to treat attention deficit hyperactivity disorder (ADHD).

      FDA has also directed Eli Lilly and Company, manufacturer of Strattera, to develop a Medication Guide for patients and caregivers.

      FDA is advising health care providers and caregivers that children and adolescents being treated with Strattera should be closely monitored for clinical worsening, as well as agitation, irritability, suicidal thinking or behaviors, and unusual changes in behavior, especially during the initial few months of therapy or when the dose is changed (either increased or decreased).

      Patients and caregivers who have concerns or questions about these symptoms should contact their healthcare provider.

      The actions follow a review and analysis of 12 clinical trials conducted in children with ADHD and one trial in children with enuresis (bedwetting) that identified an increased risk of suicidal thinking for Strattera.

      There was one suicide attempt by a patient who received Strattera among the approximately 2,200 patients in the trial.

      As part of a larger evaluation of psychiatric drugs and suicidality, FDA had requested that the manufacturer conduct a review of its database and clinical trials, which included more than 2200 patients -- 1350 patients receiving Strattera (atomoxetine) and 851 receiving a placebo.

      The analysis showed that 0.4% of children treated with Strattera reported suicidal thinking compared to no cases in children treated with the placebo.

      Strattera, manufactured by Eli Lilly, has been on the market since 2002 and has been used in more than two million patients.

      FDA Issues Suicide Warning on ADHD Drug...
      Read lessRead more

      FDA Warns Paxil Users of Birth Defect Risk

      Risk of major congenital malformations in infants

      GlaxoSmithKline and the FDA are warning that a study has identified a risk of major congenital malformations in infants born to women taking Paxil and Paxil CR during the first trimester of pregnancy.

      A long-term epidemiological study suggested an increase in the risk of overall major congenital malformations for Paxil (paroxetine) and Paxil CR compared to other antidepressants.

      "Healthcare professionals are advised to carefully weigh the potential risks and benefits of using paroxetine therapy in women during pregnancy and to discuss these findings as well as treatment alternatives with their patients," the FDA said.

      Labels for Paxil and other antidepressant drugs already include the possibility that the drugs can cause birth defects.

      Last month, Norwegian researchers said Paxil is associated with a higher risk of suicide in adults. The drug, which is currently not approved for use by children, has been the subject of 16 scientific reviews, which were analyzed for the Norwegian study.

      FDA Warns Paxil Users of Birth Defect Risk...
      Read lessRead more

      That Pink Ribbon Can Be Misleading, Consumer Group Warns

      Not all companies and groups promoting breast cancer awareness are created equal

      It takes more than a pink ribbon logo to provide meaningful support to breast cancer research, a consumer group warns.

      Breast Cancer Action, a San Francisco-based grassroots education and advocacy organization, says not all companies and groups promoting breast cancer awareness are created equal. The group is encouraging consumers to be more savvy about how they give to breast cancer.

      BCA said it is concerned that many companies selling pink ribbon products mislead consumers due to their lack of transparency and accountability.

      "When companies put pink ribbons on their products, they're no longer just selling a sweater or a watch -- they're selling the expectation that buying their product is going to make a difference in the fight against breast cancer," said Barbara Brenner, executive director of Breast Cancer Action.

      "Pink ribbon marketing efforts make a significant difference in corporate bottom lines. But the 'portion of the proceeds' that goes to breast cancer is all too often miniscule in comparison."

      The group cited 3M as an example of a company that uses breast cancer awareness in its marketing campaign, but gives a relatively small amount to the cause.

      "Breast cancer is a serious disease. Every 1.9 minutes a woman hears the words, 'You have breast cancer,' and every 13 minutes a woman dies from the disease," Brenner said.

      "People care deeply about this disease and want assurance that pink ribbon products are as beneficial to women with breast cancer as they are to the companies that sell them."

      Think Before You Pink features a one-minute Flash movie on the BCA Web site, focused on pink ribbon cause-marketing. The Flash movie culminates with an opportunity to send an e-mail to companies selling pink ribbon products, asking how much money actually goes to the cause, how the funds are being raised, who gets the money, and what types of programs are being supported.

      Also online, BCA's "Parade of Pink" lists more than 50 examples of the hundreds of pink ribbon products marketed by companies including Cartier, Ford, Kodak, Quilted Northern, Ralph Lauren, Tommy Hilfiger, Yoplait and more.

      That Pink Ribbon Can Be Misleading, Consumer Group Warns...
      Read lessRead more

      Wealthy Saudi Received Liver Transplant Ahead of Other Patients

      Surgeons passed over nine patients in their own hospital who were in line for the procedure

      The California Medical Board will investigate two surgeons at St. Vincent Medical Center in Los Angeles for performing a liver transplant on a Saudi citizen, passing over the nine patients in their own hospital who were in line for the procedure.

      Hospital officials concede the transplant was inappropriate, and that hospital staff falsified documents to cover it up.

      The transplant took place in September 2003. The hospital has terminated the programs relationship with the doctors and has placed a temporary halt on liver transplants. It says it has received no explanation from the surgeons for letting the Saudi national cut in line.

      Organs are supposed to go to the sickest patients, those most likely to die without a transplant. Allowing wealthy or well-connected patients to cut into line is considered a violation of medical ethics and also of the rules established by the regional networks that manage organ availability.

      The hospital does say that the Saudi Arabian Embassy paid the hospital nearly $340,000 for the procedure and recovery care, plus undisclosed fees to the surgeons. That sum is markedly higher than what insurance plans normally pay.

      A patient at the UCLA Medical Center was reportedly next in line to receive a liver transplant at the time. The two surgeons, Dr. Richard R. Lopez Jr., the St. Vincent program's former director, and Dr. Hector C. Ramos, the former assistant director, now face a probe by the state medical board.

      Wealthy Saudi Received Liver Transplant Ahead of Other Patients...
      Read lessRead more

      Congress Ponders Katrina Bankruptcy Relief

      Exemptions would speed recovery from Katrina

      The battle over protecting Hurricane Katrina victims from the new bankruptcy reform law, which takes effect Oct. 17th, continues with new legislation introduced in the Senate.

      Louisiana Senators Mary Landrieu (D) and David Vitter (R) introduced a reconstruction bill earlier this week that includes rules designed to exclude victims of the disaster from many of the bankruptcy bill's harshest provisions.

      The exemptions include being able include expenses incurred from Katrina damage as necessary monthly expenditures, for purposes of including them in the new "means test" for bankruptcy filers.

      The bill also allows victims of Katrina to qualify for the "special circumstances" provision, which would enable them to file under Chapter 7 more easily.

      The Landrieu-Vitter bill is similar to legislation introduced on Sept. 8th by Sen. Russ Feingold (D-WI), and to the "Hurricane Katrina Bankruptcy Relief and Community Protection Act of 2005," crafted by a team of House Democrats and submitted on Sept. 8th.

      In the House, Rep. Louise Slaughter (D-NY) also introduced House Resolution (H.R.) 3662, "The Financial Safeguards for Hurricane Survivors Act," which would delay the implementation of the new bankruptcy law for two years, enabling Katrina victims to file for bankruptcy under the current rules.

      Feingold's legislation would grant bankruptcy petitioners the right to file under the terms of the old bankruptcy laws for a period of one year.

      "In the wake of what has happened, now is not the time to implement a bankruptcy overhaul that was so controversial that it could not pass Congress for seven years," Slaughter said in a press statement.

      In a statement, Feingold said, "The bankruptcy system is an important safety net for people who suffer this kind of devastation. In this country, we do not sentence people who have been through a disaster of this type to a lifetime of financial servitude."

      Efforts by House Democrats to get their bills onto the docket were blocked when House Judiciary Committee Chairman F. James Sensenbrenner announced he would not hold hearings on relief from bankruptcy for Katrina victims.

      Sensenbrenner's rationale was that the most heavily affected victims of Katrina would be able to apply for bankruptcy and not face the difficulties of the "means test," which requires petitioners to demonstrate their inability to pay their debts.

      "For someone who is genuinely poor and down and out and doesn't have the ability to repay their debts, there is no change at all," Sensenbrenner told the Milwaukee Journal-Sentinel. "I don't know why some of my colleagues are actually encouraging people through what they're saying to file for bankruptcy, because it's a stigma that wrecks your credit record for at least eight years."

      Sensenbrenner received over $9,000 in campaign contributions from credit card companies and banks during the last election cycle, including $3,500 from MBNA and $3,000 from its new parent, Bank of America.

      Sensenbrenner has received over $90,000 in campaign contributions from the banking and credit card industries since 1989, according to Public Citizen.

      Slaughter introduced his bill on Sept.7th, before Sensenbrenner's statement on Sept. 15th. The bill is currently in the House Subcommittee for Finance and Consumer Credit, while the "Hurricane Katrina Bankruptcy Relief and Community Protection Act of 2005" is currently awaiting action by the Judiciary Committee.

      The new bankruptcy legislation was signed into law by President Bush in May 2005. Ostensibly created in order to prevent abuse and frivolous filings, the legislation has come under harsh criticism from consumer advocates, bankruptcy lawyers, and financial experts as being too punitive to consumers.

      Victims of Hurricanes Katrina and Rita will have especially difficult times applying for bankruptcy under the new laws, as the new procedures requires extensive financial documentation of one's holdings, and most individuals have lost much if not all of their documents during the storms and flooding that wrecked much of the Gulf Coast.

      Congress Ponders Katrina Bankruptcy Relief...
      Read lessRead more

      Acid Reflux Treatment Recalled After Injuries and One Death

      Boston Scientific Corp. said it is recalling Enteryx, an endoscopic product used to treat acid-reflux disease

      Boston Scientific Corp. said it is recalling Enteryx, an endoscopic product used to treat acid-reflux disease, because of what it called doctor errors that have harmed several patients and killed at least one.

      The company said is the recall is "not related to the safety and effectiveness of the Enteryx product when properly implanted." Enteryx is an injectable polymer used to fill the walls of the esophagus; it is supposed to block acid from flowing upward from the stomach.

      In 11 cases, doctors accidentally punctured the wall of the esophagus while doing the procedure, causing serious complications including one death.

      The recall was initially reported the The Wall Street Journal. It is posted on an obscure section of the company's Web site aimed at doctors.

      "This action is being initiated based on the procedural injection technique and is not related to the safety and effectiveness of the Enteryx product when properly implanted. The Company has not found any evidence of complications resulting from long-term implantation of Enteryx," the company statement said.

      Boston Scientific said it has informed the FDA of its actions and is notifying doctors and hospitals directly.

      "The company has been collecting and analyzing a growing body of data that indicates procedural injection technique is critical to achieving clinically acceptable results. There have been a limited number of injections through the wall of the esophagus that were undetected at the time of the procedure and resulted in adverse events," the company said.

      Acid Reflux Treatment Recalled After Injuries and One Death...
      Read lessRead more

      Maytag Washing Machine Recall

      September 27, 2005
      Maytag is recalling about 5,000 front-loading washing machines. If the front-load washer is operated at maximum load capacity, the spinner could malfunction and break apart, posing a safety risk to consumers.

      The recall involves white Maytag front-load washers with model number MAH9700 and a serial number from 10188468GA through 11683946GJ. The model and serial numbers are located inside the door opening and below the rubber boot.

      The units were sold at major department and appliance stores nationwide from April 2005 through May 2005 for about $1,300.

      Consumers should use care not to exceed the listed capacity of their machines, and should contact Maytag for a free in-home service call to replace the washer's control board.

      Consumer Contact: Consumers can contact Maytag at (800) 462-9267 anytime, or visit the companys Web site at

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

      Maytag Washing Machine Recall...
      Read lessRead more

      Data Breaches Bad for Business

      Companies Lose 20% of Customers Affected, Survey Finds

      September 27, 2005
      Victims of personal data security breaches are showing their displeasure by terminating relationships with the companies that maintained their data, a survey finds.

      The independent survey of nearly 10,000 adults, conducted by the Ponemon Institute, found that nearly 20 percent of respondents say they have terminated a relationship with a company after being notified of a security breach.

      "Companies lose customers when a breach occurs. Of the people we surveyed who received notifications, 19 percent said that they have ended their relationship with the company after they learned that their personal information had been compromised due to security breach," said Larry Ponemon, founder and head of the Ponemon Institute.

      "A whopping 40 percent say that they are thinking about terminating their relationship."

      The survey also found that five percent of Americans have hired lawyers upon learning that their personal information may have been compromised.

      "Five percent may not seem like much, until you realize that anywhere between 23 million and 50 million Americans have received notification of a data security breach. That means that over one million people out there are likely seeking legal counsel," said David Bender, co-head of the privacy practice at White & Case, the law firm that sponsored the study.

      "This should be particularly troubling to companies, especially in light of several putative class-action lawsuits recently filed in California against companies that experienced security breaches," Bender said.

      Bender added that while it's unclear just how any court might calculate damages for customers whose personal information has been breached, but have not suffered any clear harm, the fact that the plaintiff's bar is taking on such suits means they anticipate that courts may commiserate with customers' frustration over breaches.

      One of the top frustrations that consumers experience is that the company hasn't clearly and effectively communicated just exactly what effect the security breach will have on their personal information.

      "The survey reveals that companies need to be straightforward about what they know, as those companies who fail to communicate information in a clear, consistent and timely fashion are four times more likely to experience customer churn," said Ponemon.

      "And those businesses that deploy canned emails or form letters to communicate a data breach to victims are more than three times as likely to lose customers than those that contact victims by telephone or personalized letters or a combination of both," he said.

      Overall, 39 percent of respondents said that they felt the message conveyed by the organization about the data security breach was not honest and believable, and 52 percent said that the notice was difficult to understand.

      Among the other top findings of the survey:

      • The organizations most likely to report a breach are banks (20%), credit card companies (18%), governmental organizations (including state universities) (13%), and health care providers (9%).

      • 86% of security breaches involved the loss or theft of customer or consumer information. About 14% involved employee, student, medical and taxpayer data.

      • 58% said the breach decreased their sense of trust and confidence in the organization reporting the incident. Only 8% of respondents did not blame the organization that reported the breach. Surprisingly, 12% said the incident enhanced their sense of confidence in the organization.

      • Over 82% believed that an organization should always report a breach, even if the lost or stolen data was encrypted or there was no criminal intent.

      • 59% of respondents don't have confidence in US state or federal regulation to protect them from data security breaches.

      For more information or to obtain a copy of the "National Survey on Data Security Breach Notification," please contact Sandi Sonnenfeld, Media Relations Manager, White & Case at 212/819-8299 or via email About the Ponemon Institute, LLC Ponemon Institute is a "think tank" dedicated to advancing responsible information management practices in business and government. To achieve this objective, Ponemon Institute conducts independent research on privacy and information security, educates leaders from the private and public sectors, and verifies the privacy and data protection practices of organizations. The Institute is headquartered in Michigan. For more information, visit or contact (800) 887.3118. About White & Case White & Case LLP is a leading global law firm with nearly 1900 lawyers practicing in 38 offices in 25 countries. White & Case's Privacy Practice operates at the forefront of privacy issues and data protection laws. We advise clients on how to adopt sound privacy practices, avoid privacy risks, and protect their competitive advantage. We also represent clients in privacy-related litigation. Each year we host an annual Global Privacy symposium, write articles and publish or sponsor surveys related to complex privacy issues. Visit http://www.whitec
      Data Breaches Bad for Business...
      Read lessRead more

      Credit Card Companies Rocked By New Merchant Lawsuits

      Visa and MasterCard, along with major banks such as Capital One and Bank of America, face an accelerating legal challenge by merchants ranging from chain stores to photo shops to grocers.

      The lawsuits allege that major banks and the Visa and MasterCard associations charge excessive "interchange fees" to retailers when customers pay for goods using a Visa or MasterCard.

      Retailers have to pay the interchange fees in order to receive payments from transactions made using those cards, and the plaintiffs claim the fees are disproportionately high compared to the money they receive from the transaction.

      The costs of the interchange fees are passed on to consumers, who have to pay more for goods without realizing it. Mitch Goldstone, CEO of Irvine, CA-based 30 Minute Photos, one of the original lawsuit plaintiffs, has called it a "hidden tax" on consumers.

      Goldstone filed the first major lawsuit in June of 2005. Major grocery chains such as Kroger's and Safeway filed their own litigation in July 2005. Retail store associations, including the National Association of Chain Stores (NACS) and the National Association of Chain Drug Stores (NACDS), then filed a class-action antitrust suit this month.

      The various lawsuits now go to a Multi-District Litigation (MDL) hearing on Sept. 29th in Asheville, North Carolina. The MDL hearing will determine what form the lawsuits will take and how they will proceed.

      Goldstone told the lawsuits are "the biggest litigation since AT&T; in the late '80's."

      His crusade started when he received a notice from MasterCard that his interchange fee for frequent-flyer card usage was going up. "I sent letters, cards, and e-mails asking for them to rescind this fee. No responseI didn't anticipate being the lead plaintiff in a case this big."

      Goldstone views the lawsuit as standing up for retailers and consumers who are forced to shore up banks' profits.

      "Retailers are beholden to credit card companies. We've moved so far to an e-commerce model that if I don't accept credit cards, I'm out of business."

      Visa and MasterCard, he said, enjoy the benefits of a "noncompetitive" situation, where "a mother going out for a gallon of milk is subsidizing a wealthy customer's free flight," because they're paying the same rates for goods, even if the mother pays cash or writes a check.

      Jeff Lenard, spokesperson for NACS, concurred.

      "This is an imbalance between fees and economics," he stated. "If you look at other countries' [interchange fee] rates, they're far lower than ours. Why are they so much higher in the United States?"

      The, in both Lenard's and Goldstone's views, is to move to a "cost-based interchange" system with "no other component or profit" attached. "Ultimately," Lenard stated, "this hits our bottom line."

      Credit card companies and banks are already reaping tremendous windfalls from the interchange fees levied when drivers use credit cards to pay for gas. The Washington Post reported on Sept. 25th that banks' fees for credit card purchases of gas have risen by 64 percent since last year, generating huge profit while forcing gas station owners to eat up more of the costs of processing fees, and leaving consumers paying higher and higher prices.

      "Credit card companies are making 8 or 9 cents a gallon" off the fees, says Lenard.

      Despite gorging on interchange fees, many large financial services companies face a cloudy future. Homeowners are using home equity loans to pay down debt and buy items usually reserved for credit cards, while cardholders are paying off their debts faster and in greater amounts. MBNA has already felt the backlash of lost revenue, leading to its buyout by Bank of America.

      As one insider analyst put it in an interview with Reuters, "You've got consumers and merchants revolting. They're the two customers of this industry ... That's not good."

      Goldstone theorizes that the rush to set up credit card companies for initial public offerings (IPOs) is a way for them to "throw off liability onto the consumer." As profits drop and consumer anger grows, "you'll see a lot of them running to the exit as quickly as possible."

      Goldstone runs an online blog,, which tracks the daily updates of the lawsuit. "Since this case started," he says, "I haven't received a single negative complaint."

      Credit Card Companies Rocked By New Merchant Lawsuits...
      Read lessRead more

      US Airways, America West Complete Merger

      Bankrupt US Airways Group has formally merged with America West Airways and is operating as a single airline

      Its official: East has met West. Bankrupt US Airways Group has formally merged with America West Airways and is operating as a single airline.

      Even so, there remain some distinctions. The new combined company says consumers should continue to book directly with US Airways or America West as they did before the merger. The airlines Web sites, and, will also operate separately in the short term, as will the two airlines' reservations systems.

      But one place where the two airlines are definitely joined is on Wall Street. The new US Airways began trading Tuesday on the New York Stock Exchange under the LCC symbol. Company officials and representatives from the airlines labor groups joined US Airways Chairman, President and CEO Doug Parker at the opening bell ceremony at the New York Stock Exchange.

      "Today we start a new chapter in aviation history," said Parker.

      "The new US Airways combines our airlines proud heritage with our employees passionate commitment to provide our customers with friendly service and low fares. This is a great day for the employees of America West and US Airways as well as for the people in the hundreds of communities we serve."

      Company officials say the benefits of the merger include:

      • Single-branded product offering everyday, simple low fares and a network of choices for travel to more than 225 destinations worldwide, including Europe, the Caribbean, Mexico, Canada, and, in the near future, Hawaii

      • Extensive Dividend Miles frequent flyer program with the ability to earn and redeem miles for travel in destinations throughout the globe.

      • First class cabins on both domestic and international flights, with advance seating assignments and in-flight amenities that include audio and video entertainment selections.

      • Hourly US Airways Shuttle service between Boston, New York and Washington.

      While the merged airline will operate under the US Airways name, America West and US Airways will maintain separate operating certificates for approximately two to three years. Once FAA approvals have been granted, the two airlines operating certificates will be combined onto one.

      America West Airlines initiated service in 1983 with three aircraft and 280 employees. America West grew rapidly, and by 1990, was the first airline formed since industry deregulation to achieve major-airline status. America West served 94 destinations across the U.S., Mexico, Canada and Costa Rica with more than 900 daily departures.

      US Airways began operations in 1939 as All American Aviation. Its history includes mergers with North Carolinas Piedmont Airlines, Californias PSA Airlines, and now Arizonas America West Airlines. Prior to the merger, US Airways operated approximately 3,300 daily flights to 183 communities in the U.S., Europe, Canada, Mexico and the Caribbean.

      It declared bankruptcy twice in recent years as stiff competition from low fare carriers created turbulence within the airline industry.

      US Airways, America West Complete Merger...
      Read lessRead more

      Merchants Sue Credit Card Issuers Seeking Lower Fees

      Claiming that unnecessarily high credit card transaction fees discriminate against small merchants and cost American families an average of $232 per year, a coalition of convenience stores, drug stores and community grocers has filed a class action suit against major banks and credit card associations.

      The antitrust, class-action lawsuit charges that Visa, MasterCard, Bank of America, Citibank, Bank One, Chase Manhattan Bank, J.P. Morgan, Chase, Fleet Bank, Capital One, and other banks are engaging in collusive practices by setting credit card interchange fees at "supracompetitive" levels.

      The suit's plaintiffs -- the National Association of Convenience Stores (NACS), the National Association of Chain Drug Stores (NACDS), the National Community Pharmacists Association (NCPA) and the National Cooperative Grocers Association (NCGA) -- represent hundreds of thousands of drug stores, convenience stores and food stores across the United States that accept Visa and MasterCard as a form of payment.

      So-called "interchange fees" are the largest component of credit card fees and have a significant impact on American consumers, who are affected by U.S. interchange rates that are among the highest in the world.

      Interchange rates cost the average American household approximately $232 a year in 2004, the lawsuit charges.

      When consumers purchase goods or services with a credit card, the payment is processed through the merchant's bank and the bank that issued the consumer the credit card. The issuing bank charges the merchant's bank a fee to process the transaction. The merchant's bank then adds its own fee for processing the transaction, and passes on both of these fees -- collectively known as interchange -- to the merchant.

      "The credit card interchange system serves as a hidden tax, both on merchants and consumers, and raises the costs of all products regardless of the form of tender," said Hank Armour, CEO of the National Association of Convenience Stores.

      "These credit card interchange fees have rapidly increased over the past several years, despite efforts by individual convenience stores to control these costs or make the competitive market work," Armour said.

      Interchange fees are meant to cover the cost of processing a credit card transaction and the risk taken by the issuing bank that the credit will not be repaid. However, the plaintiffs say that both fraud costs and the cost of processing are steadily decreasing, while U.S. interchange rates continue to increase.

      Interchange fees are substantially higher in the United States than almost any other industrialized country. Other countries have taken action to address the market problem created by these monopolies. Recent changes in Australia and countries in Europe, for example, have decreased rates from about 0.95 percent to about 0.55 percent.

      "Credit card interchange fees are the third-largest expense for many chain drug stores after rent and the cost of labor," said Craig Fuller, CEO of the National Association of Chain Drug Stores. "These costs have skyrocketed over the past years even though the costs of credit card transactions for the banks have fallen."

      The suit's plaintiffs added they would seek damages and injunctive relief to stop the alleged anticompetitive practices of banks and credit card companies.

      "We are not seeking some form of temporary relief; we are looking for long-term reform of the credit card interchange fee system," said John Rector, General Counsel of the National Community Pharmacists Association.

      "The current system discriminates against small, independent businesspersons, and there is no basis for that discrimination. We ultimately seek a competitive and fair interchange fee system.

      The suit was filed in the U.S. District Court for the Eastern District of New York on Friday by Robins, Kaplan, Miller & Ciresi LLP.

      Merchants Sue Credit Card Issuers Seeking Lower Fees...
      Read lessRead more

      New Jersey Adopts Tough Identity Theft Laws

      New Jersey Acting Gov. Richard Codey has signed a sweeping set of anti-identity theft laws that permit consumers to freeze their credit and require companies to shred documents with Social Security numbers. The package also allows consumers to file identity theft reports at their local police station.

      At a news conference with supporters of the legislation, Codey said identity theft is "becoming a serious threat to one's good name." According to the Federal Trade Commission, 218,000 New Jerseyans fell victim in 2004 to identity theft, which can range from fraudulently obtaining credit card numbers to falsely assuming another person's identity to obtain a mortgage or other credit.

      Previously, it was unclear which New Jersey law enforcement agency held jurisdiction in suspected cases of identity theft because the crime crossed municipal and state lines.

      Because of jurisdictional issues and the difficulty of recouping any identity theft losses -- victims typically spend 600 hours and thousands of dollars doing so, Codey said -- many consumers simply accepted the loss rather than fight it.

      In addition to the legal reporting, the Identity Theft Prevention Act also:

      • Allows residents to place and lift the credit freeze using a personal identification number;

      • Increases reporting requirements by companies in the event of stolen, lost or compromised personall data;

      • Limits the use of Social Security numbers for identification purposes and curtail public display of the identifiers;

      • Requires businesses to shred personal documents as soon as they are no longer needed.

      "This will be a hallmark for other states," said Marilyn Askin, president of the New Jersey chapter of the American Association of Retired Persons. "Companies will be held accountable for protecting the privacy of their customers."

      New Jersey Adopts Tough Identity Theft Laws...
      Read lessRead more

      Texas Warns Businesses To Stop Price Gouging

      Complaints Pour In As Rita Bears Down

      As Hurricane Rita approached, Texas Attorney General Greg Abbott issued a stern warning to all Texas businesses engaged in the sale of bottled water, gasoline, food, lodging, building materials, rental vehicles and other essential goods and services.

      "I have instructed my investigators and attorneys to take quick legal action if we find businesses deliberately gouging consumers in advance of this storm and in its aftermath," said Attorney General Abbott. "We will aggressively urge the courts to impose harsh penalties against anyone who would profit off the backs of those already suffering."

      The Attorney Generals Office has received complaints, including allegations of rental car companies charging up to $137 per day for mid-size cars and grocers charging $35 for a 12-pack of bottled water. These complaints are under investigation.

      Hurricane Rita accelerated to Category 5 status Wednesday afternoon in the Gulf, with sustained winds of 165 mph. The massive storm is expected to make landfall along the Gulf Coast late Friday or early Saturday.

      With the mandatory evacuation of all coastal counties ordered by authorities Wednesday and others along the Gulf Coast fleeing in advance of this storm, Attorney General Abbotts teams of field investigators will be closely monitoring unseemly business practices and consumer complaints about price-gouging.

      Businesses that gouge could face civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, which encompasses price-gouging during a declared disaster such as this one.

      Consumers who experience what they believe to be price-gouging for essential goods or services should call the Attorney Generals complaint hotline at (800) 252-8011 or file complaints online at the Attorney Generals Web site:

      "I have instructed my investigators and attorneys to take quick legal action if we find businesses deliberately gouging consumers in advance of this storm ...
      Read lessRead more

      Nursing Home 101: Being an Effective Advocate

      Mom or Dad Never Needed You More

      Many adult "kids" with parents needing residential care think that, once they find a facility that doesn't make them reach for the silver bullet, the job's done. Think again.

      Getting into a quality substitute for home is just the beginning. Once Mom or Dad checks in, you'll assume a new role: elder advocate. Many older people aren't terribly assertive about getting their due, whether it's dietary changes, extra therapy or a seat on that field trip bus. And when it's a matter of both health and happiness, someone needs to be pushing for the full package.

      Of course, residential facilities are often understaffed and residents can be needy. As a consumer, you've got federal (and sometimes state) law on your side to insist that Mom or Dad get the quality of care they deserve. The Code of Federal Regulations (CFR) and your state law contain many protections.

      Here are a few eye-openers from the Code of Federal Regulations:

      Care Plan Each nursing home resident is entitled to a personalized "care plan," based on their needs. Such a plan must offer services that allow a person to maintain her highest practicable physical, mental and psychosocial wellbeing. This means that, for example, if Dad wants to sleep until 10:00 am instead of rising at the official 6:00 am call, he is allowed to do so. On a practical note, some families hire a part-time aide or appear themselves to ensure that a request is honored.

      Visiting Hours "Family members can only visit during visiting hours." Not so! 42 CFR 483.10(j) allows immediate family the right to visit at any time. And it may be to your advantage to visit during off-hours, to see what things are like when visitors aren't expected.

      Who Decides "The care-taking staff determines the level of care Mom or Dad will receive." Not so! In reality, the mandatory care plan drives the level of care and type of services a resident should get. Federal law requires that a facility do a full assessment of a resident's condition within 14 days of admission, and at least every 12 months after that. A care plan should include measurable objectives and timetables.

      Making Progress You may hear that if Mom or Dad isn't making progress, the home need not offer therapy. Assuming that the resident needs "skilled nursing services" or "skilled rehabilitation services," a facility is charged with trying to maintain his condition. Any facility needs to make sure that a person's ability to carry out activities of daily living doesn't deteriorate. The only exception: if the person's clinical condition makes deterioration unavoidable.

      Feeding Tubes They can be used only if absolutely necessary, not if a resident eats slowly or needs extra help cutting or eating food. The facility must provide whatever help a resident needs to eat normally.

      Wandering Relatives In the bad old days, staff sometimes tied residents into chairs or administered calming drugs to prevent wandering, especially among Alzheimer's patients. Now, nursing homes cannot use convenience or discipline as an excuse for restraining residents. The only legitimate purpose for restraint is to treat a person's medical symptoms.

      One Doctor Fits All "Mom must use the physician assigned to the facility." Not so! In reality, the "free choice" legal requirements include the right to choose one's own personal attending physician.

      Financial Matters

      Guarantor "You must sign admission forms as a guarantor or responsible party." Not so! There is no such requirement. 42 CFR 483.12(d) prohibits a facility from forcing a third party to be a guarantor for the tab. You are only obliged to apply Mom or Dad's funds to the bill, not your own.

      Custodial Care "Since your relative needs custodial care only, Medicare won't reimburse the home." Not so! In reality, Medicare can pay for up to 100 days, provided a resident either is a) hospitalized for at least 3 nights, or b) needs skilled nursing or skilled rehabilitation. (As of this year, days 21-100 have a daily co-payment of $114.) Even if the facility nixes the need for skilled nursing care, a resident can appeal.

      Non-Medicare Beds "Once Dad is no longer eligible for Medicare reimbursement, we can transfer him to a non-Medicare-certified bed." No! A "Medicare certified" bed can be used for patients paying privately or through Medicaid, and a resident asked to move against his will can refuse.

      Fixed Fees "Extra charges are set by the facility, and are not negotiable. You have to pay extra for services like bath soap, denture cleaner or hospital gowns." Wrong! A facility's admission agreement should include covered and exempt or "private pay" charges, which are laid out in federal law. See 42 CFR 483.10 ("Resident rights") for details.

      Bed Holds Say your parent/relative leaves the nursing home for a hospital stay and the facility claims that his "bed hold" has expired when you try to have him readmitted. Although Medicaid and Medicare won't pay for "bed holds" in many states, private payment is allowed. And even if a "bed hold" expires, a facility must readmit a resident eligible for Medicaid reimbursement from the hospital if that facility has an available bed.

      These are just a few of the misconceptions about nursing home and assisted living facility obligations.

      Savvy consumers are aware that about 80% of nursing home residents enter from a hospital and hospitals are legally required to provide a discharge plan to any patient needing or requesting one. Your physician can also request one. Often, a well-thought-out discharge plan will set the stage for more focused, organized nursing home care.

      More Info

      For more information, see:, which compares nursing homes within a given geographical area;

      • AARP's checklist on what to look for in a nursing home, available at

      • The Legal Information Institute at Cornell University Law School, an excellent resource for federal and local law. See


      The author is an attorney in Fairfax County, Virginia

      Nursing Home 101: Being an Effective Advocate...
      Read lessRead more

      Bottled Water Linked To Cavities' Comeback

      Drinking bottled water has become fashionable, even among teenagers who have started passing up sugary soft drinks for swigs of spring water. Nutritionists generally applaud the trend, but a new study suggests bottled water consumers are giving up pounds for cavities.

      British researchers attending the World Dental Congress in Montreal warn that there isn' t enough fluoride in bottled water to protect against tooth decay. After analyzing 25 brands of bottled water, they found fluoride levels to be, in some cases, only half of what' s found in tap water.

      Until municipal water companies began adding fluoride to water supplies in the 1960s, children usually had a mouthful of cavities by the time they reached adolescence. But that trend soon began to change, and dentists celebrated fluoride as one of the century' s greatest health achievements.

      But now that trend seems to be running in reverse. One Canadian dentist told the Congress that in the last decade, cavities in children are up, approaching pre-1960s levels.

      It's not the first time that dentists have raised concerns about bottled water. Five years ago a study in Cleveland found 95 percent of the bottled water tested had fluoride levels that fell short of state guidelines. While some bottled water contains fluoride, bottlers are not required to specify the amount, making it impossible for parents to tell if their children are receiving an adequate supply.

      Bottled Water Linked To Cavities' Comeback...
      Read lessRead more

      Katrina Victims Challenge Insurance Denials

      NOLA Flooding Caused by Human Neglect of Levees, One Suit Argues

      In the wake of Hurricane Katrina, a major storm is brewing over the denial of many homeowners' insurance claims. Battered by consumer attorneys on one side, major insurers are watching their credit ratings being downgraded because of what's likely to be the largest insured loss in U.S. history.

      Insurance adjusters are out in force, using rented SUVs and wading boots and working 16-hour days. But the verdicts they deliver are often not much more welcome than Katrina herself was.

      Adjusters are denying many homeowners' claims, saying the damage was caused by flooding, an "Act of God" that is not covered by homeowners policies. Many homeowners are outraged and several prominent lawyers are right behind the adjusters.

      Dean Barras of Marrero, La., said State Farm denied coverage on much of the damage to his home, claiming that the "chimney was not built properly." In a complaint to, Barras complained that much of the damage occurred during the two weeks his home was exposed to the elements, without electricity or air conditioning.

      Among the damage State Farm refused to cover was: a double-pane window with water in it, warped door frames, wooden musical instruments ruined by humidity, furniture and cabinetry swollen by humidity, roof damage from wind-driven debris, a batting cage with a tree on top of it and a houseful of appliances damaged by an apparent electrical surge.

      "Imagine your entire house a steam bath with blown-open doors and exposed to the elements for two weeks," Barras said. "I paid insurance premiums for 9 yrs. faithfully on this dwelling. Thanks for your ears -- I'm tired."

      Dickie Scruggs

      Enter Richard "Dickie" Scruggs, a Mississippi lawyer who has won billions in suits against tobacco and asbestos companies. He is suing several major insurance companies, including State Farm, Allstate and Nationwide. Scruggs said that although most of the hurricane damage was caused by "a combination of wind and storm surge," insurance adjusters are claiming that the losses are due solely to flooding, which is not covered by homeowners insurance.

      Scruggs said he expects to file "tens of thousands of lawsuits" for homeowners along the Gulf Coast. Rather than a class-action suit, he said, the suits would be consolidated into "common issue" legal actions in which juries will render verdicts, and in which insurance companies could be ordered to pay the amount required under each individual policy. Scruggs is the brother-in-law of Sen. Trent Lott, R-Miss.

      Mississippi Attorney General Jim Hood has also sued property insurers, trying to force them to pay for more of the damage.

      Louisiana Suit Blames the Levees

      In Louisiana, plaintiff attorneys with the McKernan Law Firm have filed suit on behalf of homeowners in the Greater New Orleans area claiming that the high water in Orleans and Jefferson Parishes was caused by a man-made neglect of levees protecting the area and wind damage rather than rising water caused by natural elements, normally exempted under the "Act of God" clause.

      The lawyers argued that it was breeches in the levees, not a storm surge, that caused most of the damage in the New Orleans area. Water did not come over the levee but flooded the areas in question only after the breeches occurred, their lawsuits will argue.

      Insurers Respond

      The insurance industry is adamant that the losses are caused by flooding, which is not covered by the typical homeowner casualty policy.

      "The flood loss exclusion in homeowner policies is clearly worded, has existed for decades and has withstood previous legal and political challenges," said Ernie Csiszar, president and CEO of the Property Casualty Insurers Association of America. "We're outraged by this attempt to retroactively rewrite policies so that every risk will be covered, regardless of the cost to millions of American consumers."

      Flood losses have been covered separately by the National Flood Insurance Program since 1968, Csiszar said. Many lenders require home buyers in risky areas to purchase this federally guaranteed protection in order to qualify for mortgages. However, it is not mandatory for all homeowners.

      Csiszar said private insurers have historically excluded flood damage from most standard homeowner's policies because of the potential for catastrophic, widespread, and repeated losses.

      Insurers Downgraded

      Standard & Poor's has placed major U.S. insurers including State Farm, Allstate, Allmerica and United Fire Group on its CreditWatch list because of their "exposure to the catastrophic and unparalleled losses stemming from Hurricane Katrina."

      International companies placed on the list are: Ace Group, Lloyd's, Oil Casualty, Montpelier Re, PXRE and Swiss Re.

      Fitch Ratings also put five North American insurers on its Rating Watch Negative list. The affected companies include: The Allstate Corporation, Horace Mann Educators Corp., Montpelier Re Holdings Ltd., PXRE Group Ltd., and State Farm Mutual Automobile Insurance Co.

      Fitch said it believes that Hurricane Katrina will represent the largest insured loss in U.S. history, surpassing the Sept. 11, 2001 terrorist attack and Hurricane Andrew in 1992.

      Katrina Victims Challenge Insurance Denials...
      Read lessRead more

      Illinois Sues Chicago Auto Auction

      Accuses company of deceiving consumers through advertisements and sales tactics that falsely describe the quality of the cars

      Illinois Attorney General Lisa Madigan has sued a suburban Chicago auto auction company and its president, manager and two customer service managers for allegedly deceiving consumers through advertisements and sales tactics that falsely describe the quality of the cars being auctioned and the price of the cars.

      Madigans lawsuit, filed in Cook County Circuit Court, names as defendants City Auto, Inc., doing business as City Auto Auction of Chicago, Inc., Yousef Abdeh, company president, Adnan Abdeh, manager, and customer service managers Waleed Shakir and Khal Shakir.

      The defendants are charged with numerous violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.

      Madigan alleges in her lawsuit that three of the defendants Adnan Abdeh, Waleed Shakir and Khal Shakir have engaged in such actions previously and enlisted Yousef Abdeh, Adnans father, as the companys president to circumvent previous court orders prohibiting them from participating in the auto auction business.

      City Auto Auction sells junk cars but its only after a bid has been placed and a down payment has been made that the consumer finds out the true value of these automobiles, Madigan said. We allege that these repeat offenders knew what they were doing and intentionally lured consumers into their auto auction scam.

      City Auto Auction opened for business in November 2003, and holds auto auctions every Wednesday evening and Saturday afternoon on its lot, located at 400 E. 147 th St., in Harvey. Madigans Consumer Protection Division has received 39 complaints against City Auto Auction from consumers in Cook, DuPage, Kankakee and Will Counties as well as out-of-state consumers from LaPorte, Indiana, and Milwaukee and Dodgeville, Wisconsin.

      According to consumer complaints, City Auto Auction did not allow consumers to perform a complete inspection of the vehicles prior to the auction. The consumers were given only an hour before the auction started to visually inspect vehicles. In most cases, consumers reported that the cars were locked during this inspection period, prohibiting the consumers from checking inside the car or under the hood. The defendants actively concealed numerous defects on vehicles sold to consumers, Madigans lawsuit states.

      One complaint filed with Madigans office alleges the consumer bought a car from City Auto Auction and drove it home from the auction. When the consumer rolled down the cars window to pay for a toll, the window crashed down in the door and shattered. The consumer then saw that a wooden wedge had been inserted to hold the window up. Another consumer reported to Madigans office that after he bought a car, he found that the drivers door had been welded shut.

      Madigans lawsuit alleges that City Auto Auction misrepresented the price of their cars in their print and broadcast advertisements, including a 30-minute infomercial broadcast on CLTV, by comparing the price of their cars to prices listed in the Kelley Blue Book. City Auto Auction allegedly falsely claimed their prices are lower than the prices listed in the Blue Book without making an accurate comparison.

      While City Auto Auction allegedly implies in its advertisements and fliers that consumers will pay what they bid, the consumers actually have to pay a higher amount than the bid because City Auto Auction adds an auction fee and buyers premium. The auction fee is an additional $99 and the buyers premium is a sliding scale percentage, ranging from 10 percent to more than 24 percent.

      In numerous complaints received by Madigans office, consumers state that they believed they had purchased a vehicle for a certain price but, upon remitting the balance in full, discovered from the defendants that they owed more money. However, the consumers were already locked into their purchases because the defendants required a 25 percent non-refundable cash deposit immediately following each winning bid.

      In addition, some consumers have paid such deposits and then ultimately have received vehicles that were different from the ones that they purchased.

      Finally, City Auto Auction allegedly sold vehicle service contracts to consumers without disclosing the mileage of the vehicles.

      In one case reported to Madigans office, a consumer purchased a vehicle service contract from the defendants, but the contract was of no value whatsoever because the mileage on the vehicle exceeded the contracts limits. Madigans lawsuit also alleges that City Auto Auction deceptively sold vehicle service contracts to consumers even though the cars were sold AS IS, effectively disclaiming the warranty.

      Madigan alleges in the lawsuit that Adnan Abdeh, Waleed Shakir and Khal Shakir all have been the subject of previous lawsuits filed by the Illinois Attorney Generals office for allegations of unlawful acts in the auto auction business. Adnan Abdeh was named in a lawsuit filed in 2000 against the Illinois State Public Auto Auction. In that case, the court entered an order against Abdeh prohibiting him from continuing certain business practices found to be unlawful under the Consumer Fraud Act.

      In 1994, Waleed Shakir and Khal Shakir were named in a lawsuit against Sibley Auto Sales. The court entered a final order and consent decree in that case, prohibiting Waleed and Khal from participating in any retail motor vehicle sales or lease business.

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

      Finally, Madigans lawsuit asks the court to order the defendants to pay restitution to consumers.

      Illinois Attorney General Lisa Madigan has sued a suburban Chicago auto auction company for allegedly deceiving consumers through advertisements and sales ...
      Read lessRead more

      Healthy Diet Cuts Pancreatic Cancer Risk

      California researchers have concluded that a diet filled with fruits and vegetables is an effective weapon in keeping pancreatic cancer at bay

      California researchers have concluded that a diet filled with fruits and vegetables is an effective weapon in keeping pancreatic cancer at bay. The findings by a team from the University of California at San Francisco showed the fruit and vegetable-rich diet cut the risk of pancreatic cancer in half.

      According to the study, the more servings of fruits and vegetables, the better than chances of avoiding the cancer. Eating two servings a day, for example, was not effective. Eating five servings or more was associated with the 50 percent reduction in cancer risk.

      Not all vegetable are equal, according to the researchers. Onions, garlic, beans, yellow vegetables and dark leafy vegetables provide the most protection. Tomatoes and lighter colored vegetables are less effective, according to the study.

      If you had to choose between fruits and vegetables, the researchers say you would get more cancer protection from vegetables. Of the fruits, citrus seemed to be most effective.

      The researchers said the findings are important because pancreatic cancer is hard to diagnose and treat. They say a healthy diet can make pancreatic cancer even rarer to start with.

      Healthy Diet Cuts Pancreatic Cancer Risk...
      Read lessRead more

      Pennsylvania Fines Hearing Aid Company $190,000

      Marketing Specialists Inc. held in contempt of court

      A Pennsylvania hearing aid company has been ordered to stop conducting business in the state, fined $190,000 and ordered to pay nearly $31,000 in consumer restitution, Attorney General Tom Corbett announced.

      Clearfield County Judge Paul E. Cherry found Mark E. Jones and his business M.E. Jones Hearing Instruments, of Dubois, and Joseph G. Pannette and his business Marketing Specialists Inc., of the same address, in contempt for violating the court's July 2001 order.

      Pannette is a hearing aid fitter and business manager of M.E. Jones Hearing Instruments. He is also the president and sole owner of Marketing Specialists Inc., which managed customer accounts for M.E. Jones Hearing Instruments and manufactured the hearing aids that were sold to consumers.

      Corbett said in July 2001, the Clearfield Court of Common Pleas entered a Preliminary Injunction Order against the three defendants prohibiting them from violating Pennsylvania's Hearing Aid Sales Registration Law and Unfair Trade Practices and Consumer Protection Law.

      The court ruled that the defendants violated its order by failing to comply with the 30-day money back guarantee required by the Hearing Aid Sales Registration Law and the three-day right to cancel provision under the Consumer Protection Law.

      The Petition for Contempt was filed in November 2003 after the Attorney General's Office received new complaints claiming that the defendants continued to illegally deny consumers their refunds or honor their requests to cancel the sales contracts.

      Many consumers said the defendants falsely told them that they were not eligible for a refund. Others claimed that they were forced to wait months to get their money back. The consumers said that they paid the defendant between $1,200 and $2,000 for a single hearing aid device that either did not fit properly or failed to improve their ability to hear.

      During the contempt hearing, the daughter of a 98-year-old Bedford County man said that her father paid the defendants $4,000 for two hearing aids that never worked properly. Despite the defendants' repeated claims that they would correct the problems, the devices failed to improve the consumer's hearing as promised and he was denied a refund. The daughter said her father's inability to hear not only made him feel alienated, but created a safety issue because she could no longer communicate with him over the telephone.

      "This case was particularly egregious because the victims were mostly older Pennsylvanians who were defrauded out of significant sums of money as they tried to improve their quality of life," Corbett said.

      "The court's prior order put the defendants on notice that they were barred from engaging in illegal business practices and they chose to ignore the ruling," said Corbett. "It's appropriate that the defendants face stiff penalties and the ultimate consequence which is forever forfeiting their right to conduct business in this field in the Commonwealth."

      Under the court order, the defendants are required to:

      • Pay nearly $31,000 to consumers who filed complaints with the Bureau of Consumer Protection.

      • Pay a $190,000 maximum civil penalty.

      • Permanently forfeit their right to continue doing business in the Commonwealth.

      A Pennsylvania hearing aid company has been ordered to stop conducting business in the state, fined $190,000 and ordered to pay nearly $31,000 in consumer ...
      Read lessRead more

      Katrina Victims Face Insurance Delays, Denials

      Mississippi Files Sues to Void Certain Exclusions

      Katrina survivors are reporting difficulty in obtaining copies of their insurance policies in the wake of the disaster and some are finding that insurance companies are refusing to pay claims, pointing to exclusions against water damage.

      The Foundation for Taxpayer and Consumer Rights (FTCR) wants insurance companies to put copies of generic policies on the Web so consumers can get an idea of what is covered. And Mississippi Attorney General Jim Hood is suing insurers who are refusing to pay for certain types of damage.

      Many Katrina survivors who do not yet have copies of their policy are being told by insurers that they will be denied most or all of their claim on the basis of a flood exclusion. Far too many of these survivors, FTCR fears, will take the insurer's assessment as an indisputable truth and turn to FEMA for taxpayer assistance that is dramatically less valuable than insurance coverage.

      FTCR, which is tracking insurance complaints from homeowners and businesses, reports that many policyholders are being told they will have to wait two weeks before a new copy of policies lost during the storm is sent.

      In response, the group is calling on insurance companies to place generic insurance policy forms -- along with specific hurricane coverage and flood exclusions -- on the Internet, so Katrina survivors who don't have a copy of their policy can immediately obtain important information about their insurance coverage.

      While noting that each individual's policy may have different coverage levels and endorsements, the group said that insurers could easily place the standard policy forms detailing windstorm and hurricane coverage online and that this would begin to clarify for policyholders what may or may not be covered and help expedite the claim process.

      "With the massive relief effort by charities and government underway and the postal system up and running, it's hard to believe that insurers cannot get copies of policies to customers immediately," said FTCR's Executive Director Douglas Heller.

      "But if the insurers cannot get policies to survivors expeditiously, then the generic policy forms with the key language describing what is covered under the hurricane or windstorm endorsements should at least be put online. People know that they had some kind of hurricane coverage, but without a policy it is hard to figure out what's covered," Heller added.

      Without a copy of the policy, or at least a generic policy form that provides an indication of what is and is not covered, policyholders will face delays in beginning the claim process and might be forced to turn to FEMA for assistance when, under their policy, insurance coverage is due, said FTCR.

      The consumer group has been chastising insurers for these quick denials, arguing that residents in Louisiana, Mississippi and Alabama who purchased insurance with hurricane or wind coverage should be covered, whether wind or water that did the damage, because the obvious and initiating cause of all the damage was Hurricane Katrina.

      The group recommends that people refuse to settle their claims until they have a copy of their policy and have reviewed it and their insurer's offer with an independent expert.

      "Most disaster survivors expect that their insurer will treat them fairly and they instinctively trust their company. But too often insurers have failed their policyholders in the wake of a disaster and people are forced to fight for a fair settlement. The first step in ensuring a fair claims process is ensuring that survivors know what is covered," said Heller.

      In Mississippi, Attorney General Hood said his office has filed a civil action against the insurance industry seeking to declare void and unenforceable certain provisions contained in property casualty insurance policies issued to Mississippi Gulf Coast residents excluding coverage from damage caused by Hurricane Katrina.

      All that the people have left is hope and Im not going to allow an insurance company to wrongfully take that hope away. Although some insurance companies are trying to do the right thing, I wont allow the others to take advantage of people hurt by Hurricane Katrina, Hood said.

      The Complaint asks the court to declare that certain insurance contract provisions are void and unenforceable as they are contrary to public policy, are unconscionable, and are ambiguous.

      The provisions at issue attempt to exclude from coverage loss or damage caused directly or indirectly by water, whether or not driven by wind. The complaint states that these provisions should be strictly construed against the insurance companies who drafted the insurance policies and their exclusions.

      The complaint also states that the issuance of such insurance policies violates the Mississippi Consumer Protection Act.

      The complaint asks the court, among other things, to enter a Temporary Restraining Order to immediately stop insurance companies from asking property owners to sign documents stating that their loss was caused by flood or water as opposed to wind, and to stop using water exclusions to deny or reduce coverage for hurricane damage or loss.

      The Court is also being asked to enter a preliminary and permanent injunction with regard to these same matters.

      Im hopeful that next week we will be able to stop unscrupulous insurance adjusters from requiring people to sign away their rights to flood damage claims in exchange for a significantly smaller amount which will be used for immediate living expenses. I want to encourage the people to continue to fight and Ill do everything I can to make sure that insurance companies pay what they owe. Hood said.

      Katrina Victims Face Insurance Delays...
      Read lessRead more

      GM Offers OnStar Diagnostic Service by Email

      Your Car Will Tell You How It's Feeling

      If your car carries the General Motors OnStar satellite-based communications system, the worlds largest automaker knows where you and probably how fast you are driving. Now the automaker is pitching OnStar as a service that allows your car to tell you how it's doing.

      GM is already capable of performing diagnostic checks on vehicles by remote control, when owners ask for them. Now, U.S. customers who sign up for OnStar Vehicle Diagnostics will have a battery of tests done automatically and will get an e-mail generated by their own vehicle roughly every 30 days.

      The information will include feedback on a car's engine, transmission, anti-lock brakes, air bags and other vital vehicle systems. The emails will also include reminders of when a vehicle is due for an oil change or when customers actually have to visit their dealership for scheduled maintenance.

      The OnStar global positioning device and technology is built into almost every GM vehicle produced since the 2004 model year.

      The automaker attempted to turn the tracking system into a profit center promoting it as a safety feature that included automatic alerting of emergency services when air bags are deployed, the ability to assist authorities in locating stolen vehicles, and remote unlocking of doors when keys are left inside.

      While not a flop, the emergency services options option was not a raging success either.

      OnStar is offered free of charge to GM's retail car buyers the first year but costs $199 a year after that. GM says about 65 percent of its customers opt to keep the service.

      GM executives hope the diagnostic service boosts customer appreciation of OnStar increasing the retention rate after the initial year.

      GM plans to soon offer OnStar as standard equipment in all its vehicles.

      GM Offers OnStar Diagnostic Service by Email...
      Read lessRead more

      Insurance Executives Indicted for Bid Rigging, Fraud

      A New York grand jury has indicted eight former executives of the nation's leading insurance brokerage firm for their alleged roles in a massive bid rigging scheme that defrauded clients of millions of dollars.

      The former managers of Marsh Inc., a subsidiary of Marsh and McLennan, Inc., are accused of colluding with executives at leading insurance companies to arrange noncompetitive bids and conveying these bids to Marsh clients under false pretenses, New York Attorney General Eliot Spitzer and State Insurance Superintendent Howard Mills said.

      The indictments come after 17 individuals at five companies, including eight former Marsh employees, previously pleaded guilty to criminal charges in the ongoing insurance industry investigation that began a year ago.

      "These indictments are part of a continuing effort to hold individuals accountable for bid rigging and other illegal activities that defrauded insurance clients," Spitzer said.

      Today's indictment charges that from November 1998 to September 2004, the defendants colluded with executives at American International Group "AIG", Zurich American Insurance Company "Zurich", ACE USA "ACE", Liberty International Insurance Company "Liberty" and other companies to rig the market for excess casualty insurance.

      According to the indictment, defendants and other Marsh employees told their excess casualty clients that they obtained bids for their business from insurance companies in an open and competitive bidding process.

      In fact, defendants had rigged the process in the following ways: First, before any bids were submitted, the defendants determined which insurance company would win the business. Second, they set a "target" for the winner to submit as its bid. Third, they obtained losing bids, which they called "B quotes," from other participating insurance companies.

      By misleading customers into believing that the customers' interests came first, the conspirators fraudulently obtained millions of dollars in commissions and fees for Marsh and millions of dollars in premiums for the insurance companies. The victim companies ranged from high technology firms to a fruit cannery to a cosmetics manufacturer.

      Marsh itself faces no criminal sanctions. After the filing of a civil lawsuit in 2004, the company settled a civil case in January with the Attorney General, agreeing to replace top management, apologize for "unlawful" and "shameful" business practices, agreed not to accept contingent commissions, adopted additional reforms aimed at improving transparency and service for insurance customers and set up an $850 million restitution fund for policyholders.

      Agreements have not yet been reached with ACE, AIG, Zurich or Liberty.

      The indictment charges the following individuals with Scheme to Defraud in the First Degree, an E Felony; Combination in Restraint of Trade and Competition, an E felony; and various counts of Grand Larceny in the First, Second and Third Degrees, respectively B, C and D felonies:

      • William Gilman, Executive Marketing Director and Managing Director;
      • Joseph Peiser, Head of Global Broking Excess Casualty and Managing Director;
      • Edward J. McNenney, Global Placement Director and Managing Director;
      • Greg J. Doherty, ACE Local Broking Coordinator Team Leader and Senior Vice President;
      and • Thomas T. Green, Jr., Senior Vice President.

      The indictment charges the following individuals with Scheme to Defraud in the First Degree; Combination in Restraint of Trade and Competition; and various counts of Grand Larceny in the Second Degree:

      • Kathleen M. Drake, Local Broking Coordinator Team Leader and Managing Director;
      • William L. McBurnie, Coverage and Carrier Specialist and Senior Vice President;
      • Edward J. Keane, Jr., Assistant Vice President.

      If convicted of the top count with which they are charged, Grand Larceny in the First Degree, defendants Gilman, Peiser, McNenney, Doherty and Green face a minimum of one to three years and up to twenty-five years in state prison. The top count for the remaining defendants, Grand Larceny in the Second Degree, carries a maximum term of 15 years.

      In addition to the Marsh settlement, agreements have been reached with the Aon Corporation and Willis North America which will respectively result in restitution to policyholders of $190 million and $50 million along with reforms adopted by Marsh. Other areas of the investigations focus include so-called finite insurance and insurance industry accounting irregularities.

      Insurance Executives Indicted for Bid Rigging, Fraud...
      Read lessRead more

      No Bankruptcy Relief for Katrina Victims

      Rep. Sensenbrenner, Who Voted Against Hurricane Relief, Refuses to Hold Hearings

      Survivors of Hurricane Katrina who were hoping to avoid the weight of the new bankruptcy law may be out of luck. Representative F. James Sensenbrenner (R-WI), chairman of the House Judiciary Committee, has indicated he will not hold a hearing on waiving the law for purposes of disaster relief.

      "If someone in Katrina is down and out, and has no possibility of being able to repay 40 percent or more of their debts, then the new bankruptcy law doesn't apply," Sensenbrenner said.

      The new bankruptcy laws take effect Oct.17.

      Thirty one Congressional Democrats had voiced support for waiving the more onerous provisions of the new law for Katrina victims "to insure that we do not compound a natural disaster with a man made financial disaster," according to a joint statement.

      Sensenbrenner was one of 11 Republicans who voted against a massive relief package for Katrina victims.

      His other legislative accomplishments include the "REAL ID" act, which mandates that state-issued drivers' licenses meet new federal requirements. It's been derided as a waste of states' money and an extra level of bureaucracy for local motor vehicle agencies, as well as a major target for identity thieves.

      The new bankruptcy laws require passing a "means test" to verify if the petitioner can pay their debts via other means or not. Nathalie Martin, resident scholar at the American Bankruptcy Institute (ABI), said this will require "lots more in the way of paperwork, including providing pay stubs and invoices," much of which is no longer accessible postg-Katrina.

      "Employees lost their paperwork records. Whole companies lost their paperwork. The technology requirements needed to maintain these records are simply not available to these people," Martin told

      The Consumer Federation of America voiced similar concerns in a press release supporting relief from the bankruptcy legislation.

      "These new requirements, coupled with strict deadlines for production upon the penalty of an automatic dismissal are difficult for the most organized person to meet, never mind someone who has had his or her home destroyed by Katrina," said the statement.

      Martin noted that bankruptcy filings often increase after natural disasters such as hurricanes and floods.

      "Many people will still qualify to file for Chapter 7," which allows an individual bankruptcy petitioner to liquidate their debts. "It may take one to three years before we really start seeing the effects of the new law."

      In a poll conducted by ABI, 80% of its members said the law should be waived for up to two years to provide relief for Katrina victims, Martin said.

      Katrina survivors are already starting to run up huge debts on their credit cards as they struggle to find new jobs, new homes, and new lives. Although many banks and credit card companies have offered leniency on payments and loans in the short term, the long-term effects of their displacement and loss of finances may put them hopelessly in debt.

      The new bankruptcy legislation has been criticized by consumer-rights advocates and finance experts for turning the bankruptcy courts into "collection agencies" for credit card companies such as MBNA.

      In addition to requiring extensive paperwork and mandated credit counseling for bankruptcy petitioners, the law also limits the protections of homeowners who have refinanced their homes, and broadens the definition of "nondischargeable" debts to include monies owed to "governmental units."

      This could conceivably mean that Katrina survivors who received emergency loans from the Federal Emergency Management Agency (FEMA) might be liable to pay it back, even if they file for bankruptcy.

      Nathalie Martin believes that even with these onerous new restrictions in place, banks and creditors will be sympathetic to victims of the disaster. "A bank is going to see that if you had a mortgage with them, they won't get paid."

      Martin has authored a new book, "The New Bankruptcy Code and You," which explains the new laws in depth and offers advice to those considering filing for bankruptcy.

      "ABI and other organizations like it are here to help the evacuees start over," she said. But she acknowledged that passing any kind of reform or repeal of the bankruptcy laws in the current administration was going to be an "uphill battle."

      No Bankruptcy Relief for Katrina Victims...
      Read lessRead more

      EPA Fuel Economy Ratings Have Shortfalls Of Up To 50 Percent

      Window Stickers Vastly Overstate MPG,Consumer ReportsStudy Finds

      Fuel economy tests conducted by Consumer Reports show that government figures posted on new-car window stickers can have shortfalls of up to 50 percent, according to an investigation published in the October issue of Consumer Reports magazine.

      Hybrid cars and the diesel version of one small SUV are among the worst offenders, costing consumers hundreds of dollars more in fuel per year than they were led to believe.

      In a study of 303 cars and trucks, model-years 2000 to 2006, Consumer Reports found that shortfalls in miles per gallon (mpg) occurred in 90 percent of the vehicles tested. The largest discrepancies involved city driving, with some models falling short of claimed mpg by 35 to 50 percent (see table).

      Ironically, hybrids, whose selling point is fuel thriftiness, had some of the biggest disparities with fuel economy, averaging 19 mpg below Environmental Protection Agency (EPA) city ratings. On average, our highway mpg more closely reflected the EPA rating. Still, hybrids won three of the best five spots for overall mpg in the magazine's testing.

      "Current EPA figures are definitely misleading and ultimately expensive for consumers," said David Champion, Senior Director of Consumer Reports' Auto Test Center. The magazine attributes the problem to the use of the EPA's outdated testing procedures, dating back to the 1973 oil embargo, which don't account for the increased drive time spent in dense traffic and faster highway speeds on today's roads.

      The EPA also allows car manufacturers to use for testing purposes hand-built prototype vehicles and the most favorable test conditions for maximum fuel economy, yielding results that are nearly impossible for consumers to achieve.

      By contrast, Consumer Reports buys new cars and trucks anonymously from dealerships and uses special test equipment to accurately gauge real-world fuel economy using public roads and the test track on its 327-acre test facility in East Haddam, Connecticut.

      "Just one in ten of the vehicles we tested achieved fuel economies as good as or better than EPA estimates," Champion said. For consumers, the news means that their vehicles typically cost hundreds more per year to operate than they were led to believe. Put another way, when gas in August hit $2.37 per gallon, the mpg shortchange effectively boosted the price for some motorists to $3.13 per gallon.

      Assuming 12,000 miles per year of driving over five years and no further increases in gas prices, Consumer Reports figures show it will cost Dodge Ram 1500 pickup truck owners $2,558 more in fuel than the EPA estimates, $1,742 more for Mercury Grand Marquis owners and $1,316 more for Nissan Quest owners.


      Here are some of the test results reported by Consumer Reports.

      SMALL SUV - Jeep Liberty Diesel Ltd. (4WD)
      EPA CITY MPG: 22
      CR CITY MPG: 11
      EPA SHORTFALL: 50 percent

      HYBRID - Honda Civic Sedan
      EPA CITY MPG: 48
      CR CITY MPG: 26
      EPA SHORTFALL: 46 percent

      LARGE SEDAN - Chrysler 300C
      EPA CITY MPG: 17
      CR CITY MPG: 10
      EPA SHORTFALL: 41 percent

      MIDSIZED SUV - Chevrolet TrailBlazer EXT LT (4WD)
      EPA CITY MPG: 15
      CR CITY MPG: 9
      EPA SHORTFALL: 40 percent

      MINIVAN - Honda Odyssey EX
      EPA CITY MPG: 20
      CR CITY MPG: 12
      EPA SHORTFALL: 40 percent

      LUXURY SEDAN - BMW 745Li
      EPA CITY MPG: 18
      CR CITY MPG: 11
      EPA SHORTFALL: 39 percent

      PICKUP - Dodge Ram 1500 SLT (crew cab, 4WD)
      EPA CITY MPG: 13
      CR CITY MPG: 8
      EPA SHORTFALL: 38 percent

      FAMILY SEDAN - Oldsmobile Alero GL
      EPA CITY MPG: 21
      CR CITY MPG: 13
      EPA SHORTFALL: 38 percent

      LARGE SUV - Dodge Durango Limited (4WD)
      EPA CITY MPG: 13
      CR CITY MPG: 8
      EPA SHORTFALL: 38 percent

      SMALL SEDAN - Ford Focus ZX4 SES
      EPA CITY MPG: 26
      CR CITY MPG: 17
      EPA SHORTFALL: 35 percent

      EPA Fuel Economy Ratings Have Shortfalls Of Up To 50 Percent...
      Read lessRead more

      Subprime Mortgage Pricing Varies Greatly Among U.S. Cities

      Many of the cities in the Gulf Coast affected by Hurricane Katrina have among the highest levels of subprime lending

      Homeowners in the southwestern or southeastern states are much more likely to refinance with higher interest rate subprime loans than those who live in the Pacific or New England regions, according to a study by the Consumer Federation of America.

      Many of the cities in the Gulf Coast affected by Hurricane Katrina have among the highest levels of subprime lending.

      The variation in prevalence of high cost mortgages by geography raises concerns about whether this type of lending is priced solely on risk factors, or whether some lenders take advantage of the lack of competition in certain localities to price mortgages as high as they can said Allen Fishbein, Director of Credit and Housing Policy at Consumer Federation of America (CFA).

      The loan data for this report were obtained from lenders from reports they are required to submit under the Federal Home Mortgage Disclosure Act (HMDA).

      The 2004 HMDA data is due out later this month and is expected to show notable pricing disparities in the mortgage market among African American and Hispanic borrowers compared with other borrower groups.

      The CFA analysis found the prevalence of higher subprime lending among certain minority groups but also provides the first comprehensive look at subprime lending patterns for metropolitan areas and regions across the country.

      Among the studys key findings:

      • The share of refinance lending that is subprime varies from 10.5% in the Pacific states to 27.4% in the Southwest states nearly a three fold difference. In 2004, these loans generally carried an interest rate of 8% or higher for consumers.

      • Regional variation was even higher for the most expensive segments of subprime loans (loans with interest rates generally above 10%). Homeowners in the Southwest were more than four times more likely to receive these highest cost subprime loans than homeowners in the Pacific states (2.3% vs. 10.3%).

      • Even larger subprime variation was found between metropolitan statistical areas (MSAs). In the five MSAs with the smallest share of subprime refinance lending, fewer than 3% of borrowers received subprime loans. In contrast, in the five MSAs that the lowest share of prime refinances lending; nearly forty percent of refinance mortgages in these markets are subprime.

      • Highest subprime MSAs are concentrated in the Southeast and Southwest regions. Of the 30 MSAs with the highest share of subprime refinance loans (about 10 percent of the 317 MSAs studies, 80% are in the Southeast (Carolinas through Mississippi through Kentucky) or the Southwest (Louisiana, Arkansas, Texas and New Mexico).

      A complete listing of subprime lending rates for over 300 metropolitan areas is available in the report, titled Subprime Cities: Patterns of Geographic Disparity in Subprime Lending.

      The CFA research helps to provide a local context to the national release of data by the federal government. The conventional home refinance loan data examined represents almost 19% of the 2003 total volume of these loans. CFA examined over 2.5 million conventional refinance mortgages reported by over 26 lenders and their 160 affiliates in 317 Metropolitan Statistical Areas including at least one MSA in each state.

      The release of the CFA research underscores the value and utility of HMDA data as a tool for identifying geographies with unusually high levels of subprime lending. Federal and state regulators, consumer and community organizations, and lenders as well should monitor lender loan patterns to determine which ones vary from local and regional norms.

      CFAs findings raise important public policy concerns. The subprime refinance market provides high cost loans mostly to borrowers not served by the mainstream prime markets and is fertile ground for abusive lending practices known as predatory lending. High foreclosure rates in the subprime market are evidence that many borrowers are entering into loans they cannot afford.

      The HMDA analysis suggests that disparities in the pricing of mortgages exist among borrower groups and also vary quite a bit by geography. Just as with disparities between borrower groups, variation in pricing of mortgages by geography levels may be a function of legitimate price determinants. Yet given the size of the variation between localities and regions, banking regulators and other enforcement officials should not assume that these differences can be explained solely as a function of risk-based pricing.

      Patrick Woodall, CFAs Senior Researcher, said: Consumers have every right to expect that the mortgage funds they borrow from lenders are priced fairly, based on legitimate risk-factors, and not merely on opportunistic factors or lack of borrower knowledge and financial sophistication.

      Subprime Mortgage Pricing Varies Greatly Among U.S. Cities...
      Read lessRead more

      Computer Vendors Charge More For Less Service

      The next time you buy a personal computer, read the fine print very carefully. The warranty may not be as long as you think, and you may have to pay for coverage that used to be free.

      Major computer vendors such as Gateway and Dell have been reducing standard warranty coverage to as little as 90 days, and exhorting consumers to purchase pricey extended warranty programs.

      This might lead to savings in the long-term, as replacement parts can often cost far more than the money you'll spend on an extended warranty. But it could also mean you're spending money for protection you may not need after the first three to six months of owning your PC.

      A Dell Dimension 5100 desktop, for example, can cost you as little as $799 with special online offers and discounts applied. But purchasing any coverage beyond the standard 1-year warranty can tack on an extra $80 to $330, not counting any additional peripherals or accessories you might buy.

      The Gateway NX250X laptop's online price is $949 after the $50 rebate, with a "Notebook Value Service Plan" of 90 days. However, the purchase comes with the "Value Plus" 2-year extended warranty protection already selected, which adds an extra $109 to the purchase price.

      This is becoming standard operating procedure for many Gateway products purchased online -- the default package includes an extra-cost extended warranty plan.

      Extended warranty sales are big business for Dell and Gateway these days. The November 2004 issue of Warranty Week reported that Dell's revenue from extended warranty sales was actually overtaking its spending on warranty claims, and Gateway increased its warranty revenue to $33 million while decreasing its warranty costs to $15 million.

      Not every major PC manufacturer is cutting corners on its warranty protection. Hewlett-Packard continues to offer the standard one-year warranty for all its products, and MPC (formerly MicronPC) offers a three-year-warranty as well as dedicated in-house technical support.

      Of course, purchasing that extended warranty is no guarantee you'll actually receive decent replacement parts for your defective machine, or reliable tech support to help you fix your problem. regularly receives hundreds of complaints from users who are frustrated with rebates they didn't get, tech support that doesn't help, and extended warranties that don't cover their computer malfunctions.

      Take the case of Miriam from Alameda, Clifornia, who purchased a new Dell in January 2005, and has been wrestling with constant glitches and unreliable assistance ever since:

      "I've been on the telephone for inordinate amounts of time, sent and received over 32 emails, had new memory, a new fan, new hard drive, new power supply and new memory installed by [a Dell contractor]," she said.

      "I paid for an extended warranty and I am getting nothing in return."

      Becky from Martinsburg, WV purchased a Dell Inspiron laptop for her son at $677, including a rebate of $150 and a three-year-extended warranty of $50 per year.

      Once her son received the laptop, she didn't get the rebate claim form or any documentation for a warranty beyond the standard 90-day limited version.

      "I have spent hours on the phone today trying to reach some sort of satisfaction on this and have been told that I can not get the rebate," she says. "I can add the warranty for the cost of $150. Obviously the sales rep misled me or had the info wrong himself, but the sales manager basically told me there was nothing they could do. I am out $150 due to this deception."

      Computer Vendors Charge More For Less Service...
      Read lessRead more

      Canon Named in Class Action Suit

      Company Ignored Defect in Digital Cameras, Suit Charges

      A class action suit charges that Canon Inc. has sold digital cameras with a serious defect that renders the camera inoperable. The so-called "e18" error occurs when the lens sticks and will not move in or out.

      "We have reviewed numerous complaints from consumers who gotten the brush-off from Canon," said attorney Richard Doherty of Horwitz, Horwitz & Associates, a Chicago law firm.

      "Canon has refused to stand behind the cameras, and offers consumers who paid approximately $400 for what they thought was a high-quality digital camera the option of a repair costing at least $150 or the opportunity to purchase a refurbished, used camera for $175," Doherty said.

      One disgruntled consumer, Bruce of Farmingville NY, was taking photos in Australia when his the lens locked up on one of his Canon Powershot cameras. "I called up Canon at $2 per minute and they said there was nothing they could do while I was away and I should but disposables instead (1440 pictures?). I told the man he was crazy," he said in a complaint to

      "I received back an email and letter stating that they opened the camera up, found some sticky substance inside and they were voiding the warranty. They said it waould cost me $195.75 to fix the camera," Bruce said.

      The class action suit was filed in the United States District Court for the Southern District of New York. It was assigned to Judge Miriam Goldman Cedarbaum, who presided over Martha Stewart's trial and sentenced her to five months in prison and five months of home detention on charges of lying to federal investigators.

      Canon Named in Class Action Suit...
      Read lessRead more

      Chicago Nursing Home, Doctor Charged with Abuse

      Charges Follow Death of Patient Afflicted with Bedsores

      A Cook County, Illinois, Grand Jury has returned indictments against a nursing home doctor and the Cook County nursing home facility where he worked on charges related to the death of a patient in their care.

      Attorney General Lisa Madigan said the indictments charge Forest Park, L.L.C., and Care Centers, Inc., doing business as The Pavillion of Forest Park nursing home, and Jason Garti, M.D., former medical director and wound care doctor at Pavillion, with multiple charges of Gross Neglect of a Long Term Care Facility Resident.

      Forest Park, L.L.C., and Care Centers, Inc., were indicted as the licensee and owner of Pavillion, respectively.

      The charges are the result of an investigation by the Illinois State Police Medicaid Fraud Control Unit. The investigation began after emergency room personnel at Loyola Medical Center contacted the Department of Public Health.

      According to the indictments, on September 11, 2002, a resident at Pavillion was transported by ambulance to the emergency room at Loyola Hospital, where it was discovered the patient had a large area of decubitus ulcers commonly known as bedsores.

      The indictments charge Garti with two counts of Gross Neglect of a Long Term Care Facility Resident, a Class 4 felony, punishable by one to three years in the Illinois Department of Corrections (IDOC).

      The two entities, Forest Park L.L.C., and Care Centers, Inc., were each charged with multiple counts of Gross Neglect of a Long Term Care Facility Resident. If convicted, the charges may result in the closure of the nursing home.

      Chicago Nursing Home, Doctor Charged with Abuse...
      Read lessRead more

      Brinkmann, Charmglow Gas Grills Recalled

      The Brinkmann Corporation is recalling about 130,000 Brinkmann-brand and Charmglow-brand gas grills manufactured by Brinkmann. The regulators on these gas grills, the component that controls the amount of gas released to the burner, could leak gas when attached to certain liquid propane tanks. This poses a risk of fire and burn injuries.

      The Brinkmann Corporation has received two reports of a small flame reportedly due to gas leaking at or near the propane cylinder. No injuries or property damage have been reported.

      The recall involves Brinkmann-brand and Charmglow-brand gas grills. The regulator is attached to the side of the grills. Only grills that have regulators with the name 'GDA' are affected by this recall. The grills have three to six burners and the name 'Brinkmann' or 'Charmglow' on the lid.

      The grills were sold at home centers, sporting goods and hardware stores nationwide from January 2005 through September 2005 for between $150 and $900.

      Consumers with grills that have the 'GDA' regulator should contact Brinkmann to receive a free repair kit or replacement hose regulator assembly.

      Consumer Contact: Call Brinkmann toll-free at (800) 675-5301 between 8:30 a.m. and 5 p.m. CT Monday through Friday. Consumers also can log on to the company's Web site at to request a repair kit.

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

      Brinkmann, Charmglow Gas Grills Recalled...
      Read lessRead more

      MBNofA: Bank of America Adopts MBNA's Tactics

      Bank of America's Credit Card Operation Looks More Like MBNA Everyday

      Since buying credit card giant MBNA in June 2005, Charlotte, NC-based financial titan Bank of America has adopted some of its former prey's most prized tactics -- spiking interest rates, charging late fees even when your balance is paid, and customer "service" that leaves cardholders feeling worse than when they called.

      The tactic circles around offering a credit card (like their Visa Platinum) at a 0% interest rate, and encouraging customers to transfer balances from other cards to their new Bank of America card.

      Once that new balance is transferred, however, the card balance proceeds to accrue daily interest and late charges, until the balance hits its limit. Thereafter, the balance APR changes to an intolerable rate, anywhere from 17.99% to 31.99%.

      That's what happened to Kelly of Longview, Texas. She accepted a "zero percent" balance transfer offer. "Once the balance was transferred I was dinged with a daily interest rate which caused the card to go over balance and then they changed the interest rate to 31%," Kelly said in a complaint to

      If you look carefully at the fine print, you can see that Bank of America's seemingly generous offer of zero percent interest isn't all that generous after all. For example, read this list of fees:

      Late Payment Fees: $19 for total balances less than $100, $29 for total balances $100 to $1,000, $39 for total balances great than $1,000. Over the Credit Limit Fee: $35.

      So you could have a paid account with no balance, or never use the card at all, and get hit with a $19 fee.

      Also, take note of their payment terms:

      During the introductory period, if we do not receive at least the Minimum Payment Due during any billing cycle, you exceed your Credit Limit or you close your account, any introductory rate on Purchases and Balance Transfers will terminate and will be adjusted to the Standard Rates.

      Given that mandatory minimum payments on credit balances are doubling, that's a lot of money to fork over in a very short time.

      And if Bank of America's billing cycles are anything like their banking deposit cycles, it's no wonder so many customers are getting zapped with late fees.

      Beth from Sterling, VA explains how Bank of America's holds on her deposited pay caused her to lose money for no reason:

      Their policy was to "hold" any deposit over $500 (my paychecks were running just around $600 at that point) 3-5 days to wait on it to "clear" before it technically "posted" to the official statement. This should not have applied to direct deposit paychecks, which should come across as an immediate electronic transfer of funds into the account. When I would visit the ATM after my paycheck was sheduled to go in, it would show the funds as "available."

      I would assume the funds were there and was budgeting my bills around when my deposits were due to go in; my employer put checks in at Midnight every other Thursday, so I would pay bills Friday. When I would write a check to pay bills, however, they would instead draw from my "statement," which held the deposit. Hence, the checks I was writing would be applied to my account 2-3 days before my deposits were showing as posting. They would take advantage of the above issue to apply "overdraft fees" on my bill checks before clearing the paycheck deposit that went in the day or more before! That's $25-$30 per bill!

      A Poisonous Pedigree

      Wilmington, Delaware-based credit card provider MBNA was the source of great consumer angst, thanks to such now-familiar tactics as exorbitant interest and fees upon fees, not to mention interest on fees.

      Many cardholders decided they'd had enough, and began paying down their cards and closing their accounts in record numbers. The loss of revenue to MBNA was enough to torpedo quarterly profits by 94%. Soon afterward, Bank of America swept in and bought snatched MBNA in its beak.

      The acquisition of MBNA's valuable credit card resources made Bank of America a serious challenger to Citibank and J.P. Morgan Chase, the top dogs in the financial and banking industry.

      But it may be that Bank of America has also acquired many of its acquisition's bad habits, possibly hindering its efforts to improve its reputation in the consumer banking sector.

      Since buying credit card giant MBNA in June 2005, Charlotte, NC-based financial titan Bank of America has adopted some of its former prey's most prized tac...
      Read lessRead more

      REAL ID A Gold Mine for Identity Thieves, Critics Charge

      Enacted with little fanfare in May 2005, the REAL ID Act doesn't become fully effective until 2008 but it is already causing consternation among state officials, who say it will be a major financial and resource drain at a time when many states are already short of funds.

      Its backers say the measure toughens standards for getting a driver's license and thus provides protection against illegal immigrants and terrorists. Privacy advocates say the law's establishment of a national database of American drivers' information makes it a gold standard for identity thieves.

      Authored by Rep. James Sensenbrenner (R-WI), the REAL ID act slipped through Congress as part of a spending bill authorizing money for the military forces in Iraq and relief from the tsunami of 2004.

      "Giving state drivers licenses to anyone, regardless of whether they are here legally or illegally, is an open invitation for terrorists and criminals to exploit. States will now have to require proof of lawful presence in the U.S. before issuing drivers licenses, he said in a statement after the May 5 vote.

      Sensenbrenner's other recent legislative activity includes voting against the emergency Hurricane Katrina relief bill in the House. He said the $52 billion measure "lacks accountability."

      REAL ID mandates uniform federal standards for drivers' licenses, including what type of information can be included on a license, and what documentation must be provided to apply for or renew licenses in your state.

      However, the legislation is an "unfunded mandate," meaning that states will have to come up with the money to implement the new directives on their own. This has led privacy advocates and consumer groups to warn that cash-strapped state governments may have to cut corners and use cheap measures to ensure the card readers are in place.

      The REAL ID act will create a unified database of driver information to share between states, "which will create an enormous repository of identification documents that will be an identity thief's dream," according to a recent article in DMNews. "A DMV clerk in another state may provide copies of your documents to an identity thief who works overseas," the article warned.

      Many states have already seen their motor vehicle agencies come under attack from identity thieves and scam artists. Several employees of the Virginia Department of Motor Vehicles were arrested and charged with fraud for selling drivers' licenses to illegal immigrants in July of 2005.

      Another vulnerability created by the REAL ID act comes from the usage of "common machine-readable technology" for verifying drivers' identities. The leading candidate for the new technology is the RFID (Radio Frequency Identifier) tag, to be embedded in drivers' licenses.

      Technology pundits and privacy organizations alike have derided the usage of RFID tagging for important documents or identification as a violation of personal privacy, and an invitation to steal one's information.

      A Government Accountability Office (GAO) report from May 2005 on the use of RFID tags in other government agencies noted that "Without effective security controls, data on the tag can be read by any compliant reader; data transmitted through the air can be intercepted and read by unauthorized devices; and data stored in the databases can be accessed by unauthorized users."

      Internet security expert Bruce Schneier commented on the government's desire to use RFID tagging in October 2004 when discussing the REAL ID law.

      "The administration is deliberately choosing a less secure technology without justification. If there were a good reason to choose that technology, then it might make sense. But there isn't," Schneier said in an article on his Web site.

      Privacy advocates are also alarmed by the REAL ID prohibition against using P.O. Boxes. This could cause people who may not have a permanent residence to be ineligible to get a drivers' license,or endanger victims of domestic abuse or previous identity theft who have stopped giving out their primary addresses.

      In the words of law professor Anita Ramastry: "There needs to be a procedure to ensure these persons' safety and welfare. The REAL ID Act has none."

      Critics say the reality of REAL ID will be even longer lines at your state's motor vehicle agency, higher state and local taxes to cover the costs of implementing the program (estimated at $80 to $100 million), and a rash of new identity theft incidents.

      REAL ID A Gold Mine for Identity Thieves, Critics Charge...
      Read lessRead more

      Analyst Sees $100 Per Barrel Oil By 2007

      Motorists stunned by $3 per gallon gasoline in the wake of Hurricane Katrina don't have much to look forward to

      Motorists stunned by $3 per gallon gasoline in the wake of Hurricane Katrina don't have much to look forward to, according to a Canadian oil industry analyst.

      Jeffrey Rubin, chief economists for the Imperial Bank of Commerce has issued a report that predicts oil prices will continue to rocket higher, until they reach $100 a barrel by late 2007.

      The reason? Hurricane Katrina's damage to Gulf of Mexico oil rigs is a complication, Rubin writes, but he also points to the problems that had pushed oil prices over $60 a barrel long before Katrina's appearance: Consumption is rising worldwide, especially in China and India. A growing global economy will demand oil faster than producers can pump it.

      "The gap between supply and demand grows as much as 3 million barrels a day by 2008. Global oil needs are almost 84 million barrels a day now," Rubin said in his report.

      While oil prices have dropped sharply from their post-Katrina high of nearly $71 a barrel, Rubin says renewed upward pressure in inevitable.

      His report suggests the price of oil next year could average $84 a barrel, with the average rising to $93 a barrel in 2007. With oil prices at that level, the price of gasoline in the U.S. would be well over $3 a gallon.

      Leading Importers

      Rubin's predictions carry more than a little weight. Canada is, after all, the United States' leading source of imported crude oil, according to the U.S. Department of Energy. In June, the latest month for which figures are available, the U.S. imported 1.705 million barrels per day from Canada followed by: Mexico (1.616 million barrels per day), Saudi Arabia (1.598 million barrels per day), Venezuela (1.292 million barrels per day), and Nigeria (1.012 million barrels per day).

      The rest of the top ten sources, in order, were Iraq (0.608 million barrels per day), Angola (0.397 million barrels per day), Algeria (0.292 million barrels per day), Ecuador (0.288 million barrels per day), and United Kingdom (0.269 million barrels per day).

      Total crude oil imports averaged 10.753 million barrels per day in June, which is an increase of 0.587 million barrels per day from May. The top five exporting countries accounted for 67 percent of United States crude oil imports in June and the top ten sources accounted for approximately 84 percent of all U.S. crude oil imports.

      Meanwhile, Americans aren't the only ones angered by the oil price spike. India's Finance Minister, Shri. P. Chidambaram, charges the spurt in world oil prices is totally unjustified.

      After meeting with his British counterpart, Chidambaram said the oil producing nations are exploiting high growth rates in India and China to impoverish developing countries and that wealth is being transferred from developing countries to the oil producing nations.

      Analyst Sees $100 Per Barrel Oil By 2007...
      Read lessRead more

      Home Depot Charmglow Gas Grills

      Nexgrill Industries is recalling about 86,000 Charmglow gas grills sold at Home Depot. The hose connecting the propane tank with the manifold can run up too close to the firebox. The heat from the firebox can damage the hose, causing it to leak gas. The release of gas creates a fire risk that could cause injury and property damage.

      Nexgrill has received five reports of fires involving hoses leaking gas and more than 45 additional reports of incidents involving possible gas leaks.

      The recalled Charmglow Gas Grills have a model number of 720-0036-HD-05, which can be found on the back of the grill. The stainless steel grill is designed to be used with propane gas. The name of the grill is located at the left corner of the exterior of the main burner lid. A temperature gauge is located at the center of the main burner lid.

      The grills were sold at Home Depot stores nationwide from November 2004 through June 2005 for about $350.

      Consumers should stop using the gas grill and contact Nexgrill Customer Service to receive a free, self-installation repair kit.

      Consumer Contact: Call Nexgrill toll-free at (888) 568-9888 between 9 a.m. and 5 p.m. PT Monday through Friday, or log on to the companys Web site at

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

      Home Depot Charmglow Gas Grills...
      Read lessRead more

      Fix It or Nix It: Appliance Repair Tips

      Many consumers simply give up on appliance repairs and replace the faulty item

      If you've found it frustrating trying to get a product professionally repaired, you're not alone. Consumer Reports' October 2005 issue has the results of the latest "fix it or nix it" survey, which show that the process is full of roadblocks that have made a hefty number of readers simply give up.

      Drawing on the experiences of 2,300 subscribers, Consumer Reports found that readers repaired 16 percent fewer products, including a number of big-ticket items, than in 1997.

      Although repair costs have remained relatively stable since 2000, prices for comparable new products in almost every category analyzed have fallen, sometimes by hundreds of dollars, which helps explain why more products are being tossed. Consumer Reports' survey also found that nearly half the respondents either didn't seek repairs or quit along the way.

      Consumer Reports' expert advice for products that need professional repair is to toss any for which you paid less than $150, and to nix any repair that costs more than half the price of a new product. It doesn't make economic sense to repair off-warranty toasters, countertop microwave ovens, cordless phones, CD players, VCRs, inkjet printers, and conventional TV sets under 30 inches. Many such products aren't even serviceable.

      Although junking nearly new products can make economic sense, it makes no environmental sense. Consumer Reports experts suggest you check whether your community has a program to recycle or refurbish old products. For a roundup of groups that accept old or broken products, visit

      When deciding whether to repair or replace, consider the case for both. A new product offers more bang for fewer bucks; inexpensive imports give consumers more for their money. New products could also offer higher energy efficiency, which could add up to substantial long-term savings.

      Other reasons readers gave for replacing rather than repairing: a craving for newness, expensive repairs, and getting repairs was inconvenient. If you do buy new, refuse an extended warranty unless the item is pricey, fragile, or hard to fix.

      On the other hand, repairs make the most sense for expensive products that have recently come off warranty. If you're thinking about a repair, take the following steps to ease the process:

      • Be sure that the product is really broken. The trouble may be a loose plug, improper wiring, a tripped circuit breaker, or a bad surge-protector outlet.

      • Go by the book. Most instruction manuals have a troubleshooting section, and some manufacturers' Web sites also provide help.

      • Search for help online. Some useful sites include, and

      • Contact the manufacturer. About 10 percent of readers who complained about a problem got an offer to fix or replace an out- of-warranty product free of charge.

      • Consider factory or authorized service, but don't dismiss independents. Readers were equally satisfied with the quality of their work.

      You can delay having to make any decision about repairs by taking on preventive maintenance. Consumer Reports has advice for its subscribers at for keeping old products behaving like new. Among the appliances in the list are: printers, clothes dryers, washing machines, dishwashers, microwave ovens, electric and gas ranges, and CD and DVD players.

      Consumer Reports also includes a chart with year-by-year advice, based on survey data and the expertise of its market analysts and engineering experts, on when to fix or toss 15 types of electronic equipment, appliances, and mowers.

      In addition, the magazine reveals what's on the horizon for a wide range of products to aid in your keep-or-toss decision, and offers a chart indicating the percentage of five-year-old products that have ever been repaired or had a serious problem, along with a sampling of brands that have been more- and less- reliable over the past few years.


      When deciding whether to repair or replace, consider the case for both. A new product offers more bang for fewer bucks; inexpensive imports give consumers ...
      Read lessRead more

      Ford Recalls 4 Million Trucks to Fix Fire Risk

      After years of turning a deaf ear to reports of fires in unattended F-150s and other trucks and SUVs, Ford Motor Co. is finally recalling nearly 4 million of the vehicles to replace a faulty speed control deactivation switch that may cause underhood fires.

      The estimated 3.8 million Ford vehicles affected by the recall are from the 1994-2002 model years and include the Ford F-150 pickup as well as the Ford Expedition, Lincoln Navigator and Ford Bronco SUVs.

      It's the fourth largest recall in Ford's history.

      The brake fluid in the recalled vehicles may leak through the speed control deactivation switch into the speed control system electrical components, potentially corroding them and leading to fires, the company said.

      Ford said it will install a fused wiring harness between the switch and the speed control mechanism of the affected vehicles to act as a circuit breaker.

      In January, Ford recalled about 792,000 pickup trucks and SUVs for a similar problem involving the speed control switch. That recall included 2000 model-year F-150 pickup trucks, Expedition and Navigator SUVs and 2001 model-year F-Series Supercrew pickup trucks equipped with cruise control.

      The government began the defect investigation in March involving F-150 pickups from the 1995 to 1999 and 2001 to 2002 model years and Ford Expeditions and Lincoln Navigators from the 1997 to 1999 and 2001 to 2002 model years.

      NHTSA has received more than 550 complaints of engine fires from the cruise control switch in the Ford models.

      Ford Recalls 4 Million Trucks to Fix Fire Risk...
      Read lessRead more

      Congress May Modify Bankruptcy "Reform" that Penalizes Katrina Victims

      An Unnatural Disaster -- Congress -- Makes a Natural Disaster Even Worse

      When Congress returns this week, several members of the House will introduce legislation to shield victims of Hurricane Katrina from the new bankruptcy law that takes effect on October 17th.

      The measure would "prevent new bankruptcy provisions from having adverse and unintended consequences for the hundreds of thousands now facing financial catastrophe by providing needed flexibility for victims of natural disasters in bankruptcy proceedings," Reps. Sheila Jackson Lee (D-TX), John Conyers Jr. (D-MI), Mel Watt (D-NC), and Jerrold Nadler (D-NY) said in a statement.

      "Our common sense bill will insure that we do not compound a natural disaster with a man made financial disaster. We hope to obtain bipartisan support for expedited consideration of this critical legislation, they said.

      The insurance analyst group Risk Management Solutions has estimated financial and economic losses from Katrina at over $100 billion. Hundreds of thousands of families are homeless and destitute as a result of the storm along the Gulf Coast.

      It's estimated that more than half of New Orleans area homeowners did not have flood insurance and thus will not be covered for water damage to their homes, although they will be eligible for grants and low-interest loans administered by the Federal Emergency Management Agency (FEMA). But grant money is limited and the loan program is not without its problems.

      After previous disasters, homeowners have complained that the loan application process was lengthy and bureaucratic.

      Payouts from the National Flood Insurance Program can also be disappointing. A class-action suit was filed against FEMA and other agencies and private insurers in June 2005 by victims of Hurricane Isabel, charging that insurance payouts were inadequate.

      Under the new bankruptcy legislation, homeowners' exemptions from liability are much more limited than in the past. As we previously reported, many homeowners who have refinanced their homes will be shocked to find that under the new bankruptcy act, they are liable for the full value of their home if it is destroyed.

      The bankruptcy "reform" law restricts home equity protection to $125,000, if the buyer bought the house within four years of filing for bankruptcy.

      In addition, the new bankruptcy law forces consumers to pay much more to file documents and retain lawyers to prove their claims, pushing a bankruptcy filing out of the reach of many cash-strapped Americans.

      War on the Poor

      "Consumers who have already lost everything may now find they literally do not have enough money to go broke," said President James R. Hood. "Every voter who is not a multi-millionaire should make it a solemn duty to vote against any Senator or Representative who did not vigorously oppose the shameful MBNA enrichment bill."

      "This session of Congress will be remembered as officially ending the War on Poverty by replacing it with the War on the Poor," Hood said.

      All four sponsors of the bankruptcy relief legislation voted against the original "Bankruptcy Reform and Consumer Protection Act" when it was introduced for vote in the House in April 2005. The bill passed the House 302-126, and was passed by the Senate rubber-stamped it shortly thereafter. President Bush signed the bill into law on April 20th.

      Besides opposing the bankruptcy "reform" legislation, Rep. Watt has also targeted predatory lending for reform.

      Along with Reps. Brad Miller (D-NC) and Barney Frank (D-MA), Watt sponsored HR 1182, the "Prohibit Predatory Lending Act," which bars lenders from advocating loans buyers may not be able to afford without explicitly outlining the costs of the loan. It also prohibits "mandatory arbitration and other nonjudicial procedures."

      The bill is currently awaiting action by the House Subcommittee for Finance and Consumer Credit.

      Suspending Bankruptcy Reform for Katrina Relief...
      Read lessRead more

      States Probe Gas Price Jumps

      Attorneys General from more than 30 states are investigating the underlying cause for sudden and dramatic increases in gasoline prices

      Attorneys General from more than 30 states are investigating the underlying cause for sudden and dramatic increases in gasoline prices across the country.

      The multi-state probe will focus on the factors that generated the rapid escalation in gasoline prices in days following Hurricane Katrina.

      "Hurricane Katrina was an event totally outside human control," Pennsylvania Attorney General Tom Corbett said. "We want to determine if storm-related factors were the only things responsible for this sudden and dramatic jump of prices at the gas pump."

      California Attorney General Bill Lockyer announced he will subpoena records from refiners and probe the pricing practices of gas station owners in his state.

      Hurricane Katrina has broken families, devastated communities and destroyed lives, said Lockyer. Its during times such as this that its most important we pull together, act with one heart, and rebuild with a sense of community. To unjustly profit from tragedy is unconscionable. I hope this investigation does not find that such greed has afflicted oil companies and gas station operators in California.

      In Florida, Attorney General Charlie Crist has sent teams of investigators and sworn law enforcement personnel from his office to locations throughout the state to look into complaints of price gouging on the price of gasoline.

      Crist said investigators will be looking to determine whether the rapid rise of gas prices meets the legal definition of gouging, and vowed to prosecute any violations of the law.

      As of 1:00 p.m. Friday, the Attorney General's toll-free consumer hotline had received 1,050 complaints about skyrocketing gas prices in the days since Hurricane Katrina ravaged the Gulf Coast.

      "When we hear of 75- to 90-cent price spikes within two days, or reports that surcharges are being tacked onto consumers' fuel costs, then it is our duty to investigate," said Crist. "Floridians understood that damage from Hurricane Katrina would lead to some disruptions in fuel supply and some cost increases, but these spikes lead to legitimate questions that must be answered. Gouging will not be tolerated."

      Alabamas AG, Troy King, said What we have seen in the last few days is a crisis unfolding throughout America and particularly in the Southeast -- on top of the terrible natural disaster of Hurricane Katrina -- with gas prices rocketing to such a degree as to create serious allegations of price gouging."

      Other Attorneys General and I are committed to getting clear and understandable answers about why gas prices have risen so rapidly and dramatically, and if the law is being violated, we will take action," said King.

      Gas prices have spiraled to more than $3.00 per gallon across much of the country since Hurricane Katrina smashed into the Gulf Coast earlier this week.

      States Probe Gas Price Jumps...
      Read lessRead more

      New Orleans Phones, Cell Networks Still Down

      New Orleans remains shut off from the outside world

      New Orleans remains shut off from the outside world, with virtually no phone service and repair crews not yet allowed to enter the flooded, battered city.

      The various telephone companies have been unable to estimate when service might resume, since they have not yet been able to physically inspect the damage to their equipment.

      The landline network has been out in most of the New Orleans area since the storm hit and most cell towers failed during the first few hours. Emergency generators kept some facilities up but they soon ran out of fuel or became water-logged.

      The situation has not been much better for police, fire and other emergency workers. Although most of their base stations remained operational, with virtually no electricity in the city, workers have not been able to recharge the batteries on their hand-held units, rendering them useless.

      It's not only New Orleans that's affected. Long-distance service for much of the Gulf Coast and Florida Panhandle is routed through giant switches in New Orleans. Many of those switches shut down because of water damage, interrupting calls that would normally pass through them.

      Cingular Wireless said its network is operating on a "limited basis" in the New Orleans area, although service has been almost fully restored in Baton Rouge and parts of Alabama. Cingular is rolling out its own mobile cell sites, as well as bringing in back-up generators and additional fuel, a spokesman said.

      Sprint said it has 100 engineers on site in Baton Rouge, where it is concentrating its recovery efforts. The company is preparing to roll out mobile cell sites in an effort to boost cellular capacity in areas where the wireless infrastructure is knocked out.

      Few Options

      Hurricane Katrina demonstrates how few communications options most consumers have in the wake of a major disaster.

      After a major storm, earthquake or fire, the landline network is often knocked out of service by damage to wires and cables. Extreme flooding can destroy network switching equipment and knock out emergency generators.

      The cell phone network is even more vulnerable, as each tower must have electricity to operate. Most towers have very little back-up capacity and generators or batteries often fail after just a few hours.

      Even when towers remain active, citizens can't recharge their battery-powered phones without electricity.

      There are some options, such as satellite phones. But they are expensive, usually over $1,000, and are also limited by the battery life of the phone.

      As many New Orleans residents have learned, cellular text messaging can be a last-ditch means of communicating; it requires less power than talking and does not require a constant connection. Also, those able to find a working Internet connection have been able to communicate via email and bulletin boards.


      Some users of Sprint Nextel push-to-talk phones were surprised to find they could get through to others on their push-to-talk list, even in areas where the network was down. That's because the push-to-talk phones connect directly to each other, bypassing the network, although they have a range of just a few miles and battery life is still a problem.

      New Orleans remains shut off from the outside world, with virtually no phone service and repair crews not yet allowed to enter the flooded, battered city. ...
      Read lessRead more

      Harley-Davidson 16-inch BMX Bicycles Recalled

      September 2, 2005
      World Wide Cycle Supply Inc. is recalling about 25,000 Harley-Davidson 16-inch BMX bicycles. The fork that holds the front wheel can separate at the weld, causing the rider to fall and suffer injuries.

      World Wide Cycle Supply Inc. has received 15 reports of fork welds breaking on these bicycles. There have been reports of six riders suffering injuries including injuries to the face, hands and mouth such as bruises, lacerations and lost teeth.

      The bicycle has a yellow and red painted flame pattern with a yellow fork and a sticker containing the words Harley-Davidson on the fork leg. Only bicycles with the following serial numbers are being recalled:

      • 02F0026155 through 02F0032454
      • 03A0007772 through 03A0013271
      • 03A0018849 through 03A0027348
      • 03B0004011 through 03B0007460
      • 03C0019597 through 03C0023496
      • 03D0006431 through 03D0008030
      • 03E0022835 through 03E0023134
      • 03F0027500 through 03F0031059
      • 03F0037194 through 03F0040493
      • 03F0026276 through 03F0033275
      • 03F0040194 through 03F0045493

      The serial number can be found on the bottom bracket shell, which is located underneath the pedals and can be viewed by turning the bicycle upside down.

      The bikes were sold at Toys R Us stores nationwide from July 2002 through June 2005 for about $80.

      Consumers should stop riding the bicycle immediately and return it to a Toys R Us store for store credit in the amount of the purchase price.

      Consumer Contact: Call World Wide Cycle Supply at (800) 944-9951 between 8:30 a.m. and 5 p.m. ET Monday through Friday, or visit the Toys R Us Web site at These bicycles were sold through a licensing arrangement with Harley-Davidson and were not manufactured by Harley-Davidson. Consumers should not contact Harley-Davidson.

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

      Harley-Davidson 16-inch BMX Bicycles Recalled...
      Read lessRead more

      IBM Says Gangs Now Behind Most Spam

      IBM says hackers today aren't just playing around -- they're after your money

      In the early days of the Internet, geeky hackers competed to see who could create the most diabolical computer viruses. The motivation was a twisted kind of bragging rights. But a study released by IBM says hackers today have a different motivation -- profit.

      In its Global Business Security Index, the computer giant says email continues to grow as a security menace, with messages often disguised as communications from legitimate entities that seek to pry personal and financial information from the unsuspecting. Believed to be largely driven by criminal gangs, phishing was tied to 35.7 million emails in the first half of 2005.

      The experts also noted an increase in spear phishing, highly targeted and coordinated attacks at a specific organization or individual designed to extract critical data. Also, more and more electronic messages contain viruses that can harm computer or network operations.

      The overall volume of viruses has exploded. In January of 2004, one in every 129 emails contained a virus; by June of this year, infections had spread to one in every 28 emails.

      The first half of 2005 saw more than 237 million security attacks overall, more than 20 percent of which were aimed at government computers. The United States was overwhelmingly the target location for attacks (12 million), followed distantly by New Zealand (1.2 million) and China (1 million).

      Surprisingly, spam, unsolicited and unwanted email, provided a bright spot in the study. The ratio of spam to legitimate email continuously decreased over the course of the last six months, from 83 percent in January to 67 percent in June 2005.

      "IBM advises its clients to rapidly adopt a holistic, enterprise-wide approach to security and risk management," said John Lutz, general manager of IBMs Financial Services Sector.

      IBM Says Gangs Now Behind Most Spam...
      Read lessRead more

      Katrina Loss Put at More Than $100 Billion

      "2005 Great New Orleans Flood" Most Damaging in U.S. History

      The insurance industry is putting damages from Hurricane Katrina and subsequent flooding in New Orleans at more than $100 billion. The estimate comes from Risk Management Solutions, a leading insurance industry analyst.

      The company said the losses are the result of two separate catastrophic events: first, the landfall of Hurricane Katrina in southeast Louisiana and coastal Mississippi on Aug. 29 causing extensive wind and coastal surge damage; and second, the Great New Orleans Flood which has resulted from failure of the levee systems that are supposed to protect the city.

      At least 50 percent of total economic loss is expected to come from flooding in New Orleans, in addition to hurricane losses from wind and coastal surge, infrastructure damage, and indirect economic impacts.

      The company said that what it calls the "2005 Great New Orleans Flood" has developed into the most damaging flood in U.S. history. It estimates that at least 150,000 properties have been flooded, surpassing the previous U.S. record from flooding and levee failures on the Lower Mississippi river in 1927, which inundated 137,000 properties.

      "The economic and insurance consequences of the 2005 Great New Orleans Flood will depend highly on how quickly authorities can respond to the event," said Laurie Johnson, vice president of technical marketing at RMS.

      She noted that the longer it takes to drain the water, the more damage will be done by the warm, polluted water now infiltrating wooden residential buildings and other structures.

      Although hurricanes of category 4 or 5 strength are well-understood to occur in this region of the country, the levee system in New Orleans was designed only to protect against a category 3 strength storm. Also, Johnson said, shortcomings in preparedness are exacerbating the situation.

      RMS said the nearest analogy to the New Orleans flood a 1953 flood in the Netherlands, also caused by a major wind-driven storm surge that overwhelmed poorly-maintained defenses protecting land below sea level. That flood led to more than 1,800 deaths and the inundation of 47,000 properties. It took six months to pump out all the water from the flood bowl.

      The insurance industry is putting damages from Hurricane Katrina and subsequent flooding in New Orleans at more than $100 billion. The estimate comes from ...
      Read lessRead more

      Homeowners Insurance May Cover Additional Living Expenses for Katrina Victims Forced from Their Homes

      Residents forced from their homes by Hurricane Katrina should remember that they may well have insurance coverage under their homeowners insurance policies that will help pay for food and housing and other essentials of daily life.

      Such coverage is called "additional living expense" (ALE), according to the American Insurance Association.

      "Hurricane Katrina evacuees may either be in hotels, in evacuation shelters, or staying with friends or relatives, and may be uncertain as to whether their home is uninhabitable," said Janet Bachman, AIA vice president.

      "These policyholders should call their insurance company to inform them that they have been required to leave their residence and the area due to Hurricane Katrina, and to get advice on how their ALE coverage can assist with additional living expenses if either they were required to evacuate or if their home is uninhabitable due to windstorm or flood damage."

      Homeowners insurance policies specify the amount of ALE coverage available. Generally, ALE pays for the difference between what it cost the family before the loss for housing and food and what it costs post-loss. As an example, before the loss a homeowner may have had a mortgage payment and utility bills (phone, electricity, etc.), and average monthly costs for groceries could be $500.

      Post-loss, the homeowner/family is staying in a motel or rents an apartment and eats many meals in restaurants. The insurer will pay for the difference between the cost of all these items pre-loss (minus non-continuing expenses such as utilities) and the cost of these things post-loss. Policyholders should keep all receipts for lodging and meals to make the claims process easier.

      Some insurers will provide ALE funds immediately upon being notified of a loss; others may reimburse policyholders at a later date. It is important for policyholders to contact their insurer or insurance agent for more information about this coverage.

      No ALE Under Flood Insurance

      It is important to note that ALE coverage is available only when the insured property is uninhabitable because of a loss covered under the homeowners policy. Federal flood insurance policies do not include ALE coverage, so this assistance will not be available when damage to a home occurred from flooding or storm surge.

      The amount of coverage for ALE differs from insurance company to company and depends on the specific homeowners policy. Many policies provide coverage equal to about 20 percent of the amount of insurance on the home. For example, if the dwelling coverage is $500,000, ALE coverage would be $100,000.

      "ALE coverage provides an important lifeline to policyholders whose lives are devastated by disasters like Hurricane Katrina," continued Bachman. "In many cases ALE coverage can help families leave shelters and move to better housing and hopefully improve the dire situation in even the slightest way."

      Homeowners Insurance May Cover Additional Living Expenses for Katrina Victims Forced from Their Homes...
      Read lessRead more

      ZabaSearch Makes Defamation Easy

      The makers of the infamous ZabaSearch public search engine have decided to boldly go where millions have gone before -- into the realm of blogs.

      As of Sept. 1, if a user searches for a particular name using the engine, they will find a link to the "ZabaBlog" underneath their target's listing. From there, they can post comments about this person as if it were an individual Web site or blog.

      This sounds like a Web-enabled version of scrawling someone's name and phone number in a bathroom stall. It opens the door to sophomoric gossip, slander and calumny from ex-coworkers, ex-spouses, ex-lovers, and so on.

      As a writer with puts it, "[E]nabling users to write and post blogs about other individuals is so junior-high. 'Hey, folks! We'll give you the ability to pass notes about Clarice and her weird hair follicle problem; plus, you can even look up her address and phone number and prank call her. You'll just be the coolest.'"

      Not to mention that this is a publicly accessible search engine. If a potential employer is scrolling through your records and sees things like "Alvin is a loudmouthed braggart who disrupts the workplace constantly," they'll definitely think twice before tapping you for a job, no matter if the comments are true or not.

      Now, whether or not Alvin is a loudmouthed so-and-so is not the point. The point is that this service isn't part of ZabaSearch's paid background check. It's right there on the site for anyone to access, free of charge.

      This could open the service to charges of libel and harassment, depending on the nature of the content. It's one thing to post personal opinions on a Web site or blog, even one of a public nature. It's another to post personal opinions on a public records database.

      David Lazarus of the San Francisco Chronicle commented that "the Los Angeles company is blazing a trail into new territory by complementing its free-of-charge aggregating of personal data with an opportunity for others to comment on people who aren't public figures."

      You can attempt to get your information removed from ZabaSearch, but as has previously reported, getting your records removed is a time-consuming process that can leave you vulnerable to identity theft.

      If you see your profile filled with derogatory comments and insults, remember that blogs enjoy the First Amendment's protection of speech, and the best defense is a good offense. Post some true, non-defamatory comments of your own and make sure readers know that what's being said about you may be false or inaccurate.

      Remember, while ZabaSearch may be able to shield itself from libel charges, you can go after the person who vilifies you -- and you can subpoena ZabaSearch's records to find out who that person is, if necessary. You'll need an aggressive, experienced litigator who knows libel law, not someone who normally does real estate closing.

      ZabaSearch was founded by businessman Nicholas Matzorkis and lawyer Robert Zakari in February of 2005. The founders have worked together on several Internet business ventures, including ZabaSearch's predecessor PeopleData, and U.S.

      Both are notable for their connection to the Heaven's Gate cult, whose members committed mass suicide in 1997. Matzorkis employed many members of the cult at his Web design firm, and Zakari represented one of the survivors while he tried to gain the rights of the estate and make a movie about the cult's demise.

      ZabaSearch Makes Defamation Easy...
      Read lessRead more

      Free Credit Reports Available Nationwide Starting Sept. 1

      Beginning today, all consumers living in the U.S. have the right to order a free copy of their credit report thanks to a new federal law, known as the Fair and Accurate Credit Transactions Act (FACTA), adopted by Congress in 2003.

      Over the last year, the free credit report has been made available gradually to consumers in different regions of the country. Beginning September 1, consumers in states along the east coast will become eligible and the program will be up and running nationwide.

      Free credit reports are becoming available to consumers during a year in which news about data security breaches involving sensitive information like Social Security numbers has made big headlines.

      Over 50 million consumers have been put at heightened risk of identity theft because sensitive information maintained about them by companies, universities, or government agencies has been lost or stolen as a result of lax security practices.

      "All the data security scandals this year have underscored how important it is for consumers to monitor their credit reports regularly to detect possible identity theft," said Susanna Montezemolo, policy analyst with Consumers Union's Financial Privacy Now campaign. "This new law makes it easier for consumers to keep an eye out for fraud and to make sure their reports offer a fair picture of their credit history.

      Consumers in the west, south, and Midwest already have the right to one free credit report annually from each of the nationwide credit bureaus (Equifax, Experian, and Trans Union).

      On September 1, so will consumers in Connecticut, Delaware, Maryland, Massachusetts, Maine, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, the District of Columbia, Puerto Rico and all U.S. territories.

      The new law enables consumers to request their free credit reports through a central web site, toll-free telephone line, or by mail and gives them the option of making a single request to get copies of their report from all three major credit bureaus. Consumers can order their credit reports by clicking on, calling 877-322-8228, or filling out the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

      "Consumers should be sure to order their free credit reports through the centralized channels created by the new law or they may end up getting duped into paying for extra services," said Montezemolo. "If consumers run into trouble getting their reports at no charge or have other problems, they should call the FTC's toll-free number -- 1-877-FTC-HELP -- for assistance."

      Having good credit can mean the difference between paying a high or a low interest rate for a loan or whether consumers are offered insurance, jobs, or housing. To help consumers take advantage of this new law, Consumers Union, the non-profit publisher of Consumer Reports has published "Your Credit Matters," an online guide with detailed advice on how to order a free credit report, review it for accuracy, and correct mistakes if you find them. The guide is available at:

      In "Your Credit Matters," Consumers Union offers tips to consumers on how to review their credit reports since they often contain inaccuracies. For example, consumers should look to make sure that their name, address, Social Security number and all other personal information are correct.

      They should make sure that there are no accounts, debts, bankruptcies or court judgments on their report that don't belong to them. And they should make sure that payment histories and balances are correct and that any errors they have reported have been fixed.

      In addition to highlighting other credit report information to review, the guide offers helpful tips and information about correcting errors, including new rights available to consumers who find mistakes and contact information for each credit bureau to report disputes.

      The guide also offers advice about what consumers should do if they discover they've become a victim of identity theft. And it provides useful information on obtaining and understanding credit scores, and how consumers can monitor their own credit.

      Free Credit Reports Available Nationwide Starting Sept. 1...
      Read lessRead more