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    Pennsylvania Sues Hearing Aid Dealers

    Companies refused to make refunds

    Pennsylvania Attorney General Tom Corbett has filed a civil lawsuit against two hearing aid businesses and their operators accused of refusing to return thousands of dollars to mostly older consumers who were sold hearing aids that were defective, did not fit properly and failed to provide the hearing benefits that were promised during the in-home sales presentations.

    The lawsuit seeks nearly $125,000 in refunds and fines, plus an order barring the defendants from operating in the state until that amount is paid. The suit follows an investigation into complaints from consumers located in a half dozen Pennsylvania counties.

    Corbett identified the defendants as:

    • Joseph G. Pannette, 470 Treasure Lake, Dubois, Clearfield County, individually, and doing business as Bennett Hearing Aid Company and Advanced Hearing Associates Inc.

    • Ricky A. Pape, 1628 Treasure Lake, Dubois, Clearfield County, individually, and doing business as Bennett Hearing Aid Company and Advanced Hearing Associates Inc.,

    • Bennett Hearing Aid Company Inc., located at 1400 Northway Road, Williamsport, Lycoming County, and 1024 Washington Blvd., Williamsport, Lycoming County.

    • Advanced Hearing Associates Inc., 459 River Ave., Williamsport, Lycoming County, and a registered address of 101 North Main Street, DuBois, Clearfield County.

    Pannette and Pape operated the two businesses and are both licensed hearing aid fitters.

    The suit accuses the defendants of violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law, and Hearing Aid Sales Registration Law.

    "Our lawsuit will show that the defendants were in the business of defrauding older Pennsylvanians out of thousands of dollars for hearing aid devices that did not improve their hearing or their quality of life as promised," Corbett said. "Even more egregious, is the defendants' conscious decision to completely dismiss consumers' repeated requests for refunds that the hearing aid law states they are entitled to receive."

    Bureau of Consumer Protection agents investigated complaints from 18 consumers who claimed that they entered into contracts with the defendants through 2005, for the purchase of one or more hearing aids. Consumers paid the defendants between $750 and $5,600 in deposits or full payments for their hearing aids.

    During the sales presentation, prospective buyers were told that the hearing aids came with a 30-day return policy if they were not satisfied with the products.

    The defendants also offered a two-year no-fee guarantee against product defects. If a consumer expressed dissatisfaction and requested a refund within the 30-day time period, the defendants typically offered to adjust, repair or replace the devices.

    According to the lawsuit, many consumers were unhappy with the hearing aids despite numerous adjustments or repairs. Others who were promised repaired or replacement hearing aids have yet to receive the products, months, even years later.

    Those who filed complaints claimed that they failed to receive any or all of the restitution that they were promised or entitled to receive under state law, despite repeated calls to the defendants.

    Investigators said the defendants used a number of stalling tactics and made numerous excuses to avoid or delay paying refunds to consumers.

    In some cases, the defendants extended the time period to return the products even though consumers complained that the devices didn't work properly or generated excessive noise, including a squealing sound.

    In other cases, the defendants claimed that the devices needed adjustments or repairs to work properly.

    One Lycoming County consumer was told that his hearing aids may have to be adjusted seven times before they would work properly. After months of adjustments, the consumer said his ability to hear grew worse with each adjustment.

    The suit states that in some cases the defendants returned only a portion of consumers' refunds despite promises that they would get their money back within 30 days. In addition, the suit includes consumers who the Commonwealth claims were falsely told that they were ineligible for refunds.

    In a separate count of the complaint, the defendants are also accused of charging excessive "cancellation fees" in violation of the Hearing Aid Sales Registration Law.

    According to the Hearing Aid Sales Registration Law, if a consumer returns the hearing aid, the seller is prohibited from charging fees that are more than 10 percent of the purchase price or $150, whichever is less.

    Several consumers claimed that they were required to sign a "disclosure agreement" that listed these alleged illegal fees for each hearing aid purchased. The fees were then deducted from their refund checks.

    "Our investigation found that some consumers who returned the hearing aids were illegally charged fees ranging from $250 to $500 above what the law allows," Corbett said. "In reality, the majority of consumers would have no way of knowing what the legal fees should be. Most rely on a seller's honesty to charge the legal amount. In this case, the defendants violated that trust and deceived consumers in their 'disclosure agreement' about the fees that they were obligated to pay."

    "Hearing aids are expensive for any consumer, but especially for retired or older adults living on tight budgets," Corbett said. "To aggressively overcharge and then deny these consumers refunds that they're guaranteed to receive under law is unfair and unconscionable."

    The complaint asks the court to require the defendants to:

    • Pay more than $50,000 in restitution to 18 consumers who filed complaints with the Bureau of Consumer Protection, plus pay full restitution to consumers who come forward with proof of similar harm.

    • Pay civil penalties of $74,000, plus additional penalties of $1,000 per violation or $3,000 for each violation involving a consumer age 60 or older who files a complaint with the Office of Attorney General.

    • Forfeit their right to conduct business in the Commonwealth until restitution and civil penalties are paid.

    • Pay the Commonwealth's investigation costs.

    The suit also asks the court to appoint a receiver if necessary to determine and collect the defendants' assets to satisfy the order.

    The suit accuses the defendants of violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law, and Hearing Aid Sales Registration Law....
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    Beware the Pitfalls of Creative Mortgages

    Or, How I Might Lose My Home

    This is a story about how easy it is to get into serious trouble ... even when you know better. Last year, I sold my mobile home in California and headed east to North Carolina, where the housing prices were so much lower. My dream was to not die without ever owning a real home. I was single, 51, and really wanted my own home - self-employed or not.

    I had gotten some information from a family friend (ironically a mortgage broker) who told me about "Stated Income" or "Low-Doc" loans, and that I could qualify for one easily because of my good credit score.

    I drove across country, cats in tow, and stayed in a hotel for 7 weeks looking for my "Dream Home." And, when I found it, even though it wasn't in my price range, I knew I would do anything I could to get it. I was vulnerable, emotional and became a victim.

    Actually, that is not quite accurate - I made myself a victim.

    Being self-employed, (actually at the time, I was on disability from hand surgery), the only loan I could qualify for was a Stated Income Loan. That's where you just tell them what you make, and it is not verified except through two years od tax records and your FICO score.

    I fudged my anticipated income and qualified for a stated-income variable-rate interest-only loan. In just three weeks, I had moved into my new home and was busy making the changes it needed. I didn't watch my budget, nor did I pursue building my business as I was so obsessed with my Dream Home.

    Interest Rises, Income Falls

    Then, six months later, when the interest rate changed, my payment went up. But I still had some disability money, so I didn't think about it - I just knew work would come. It didn't.

    I did some writing, but my usual business sank like the Titanic. I started sending out resumes. Nothing happened - no calls, no form letter rejections. Just the sound of dead air. Then, the interest rates went up again - and so did my payments.

    When my disability ran out, I applied for unemployment, which held me over until March or May of this year, I can't remember. Still, no work came in. Oh, I'd do some carpet binding here and there, but it just didn't cover the bills.

    I didn't just sit on my fanny. I got out and showed my samples, sent out cards, got some local publicity, and even put out road signs. For a few weeks, it generated a bit of work, but nothing like I made back home in California.

    Then, my hands began to hurt to the point where I was declared permanently disabled (Carpal Tunnel Syndrome) and started applying for Social Security in July. To pay my mortgage, I broke the cardinal rule of credit card debt - I started taking out cash advances, until I had maxed out my cards.

    I applied for more, and of course, being a "homeowner" got them - then I maxed them out as well. I took my over-limit line of credit from my bank and used that to pay bills, and then I cashed in the Roth IRA I had just started. This paid my bills through August. I was so poor, I had to apply for food stamps and Medicaid.

    I got emergency food stamps, and thank God I did, or I would have lost 20 pounds between then and now and I only weigh 110 to begin with. It's very humiliating and humbling to put yourself into that situation. But I did what I had to do to survive the effects of my lie.

    Then I ran out of money. I couldn't even afford my cat's chemotherapy medicine, and had to borrow from a neighbor the money to pay for it. This minute, I sit here with $3 to my name.

    I became so depressed, I was nearly hospitalized two months ago - about three different times - and I have no one to blame but myself. I lied about my income, thinking I'd make it easily here.

    I am ashamed about it, but have learned a hard lesson. I maxed my paid-off credit cards and ruined my hard-won excellent FICO score - taking it from the mid 700's to the mid-to low-600s. That is devastating - it took me 7 years to build that up after an old bankruptcy. Yes, from credit cards.

    Enough Blame to Go Around

    But I also have to lay some of the blame at the feet of these lenders - I was not told how quickly my loan could adjust, or what the cap was. I was too obsessed with getting this home, I did not do for myself what I do for everyone else - I did not follow my own advice and am paying the price.

    Stupidly, I:

    • Did not shop lenders (I felt I wasn't in a position to).

    • Did not tell the truth about my income.

    • Took the first loan they offered me.

    • Didn't read the fine print.

    • Did not fix a budget and stick to it.

    • Bought way too much house.

    • Ignored my business and employment opportunities far too long.

    Stated Income Loans area the proverbial two-edged swords and should be considered predatory. The story they tell you is that they allow you to get into "more house" at a lower rate - and they do. What they don't tell you, especially to first-time homeowners that don't know the jargon is that you will pay the price eventually.

    If you don't put down 20% you have to pay Private Mortgage Insurance, or take out a second. I didn't have 20%, so now I have a second mortgage, too - that has risen from $135 per month to $201.47 per month. I used to live on what my mortgage payment is now.

    Today, I had to ask friends for money to catch up my payments or lose it all. They have come through, and I know I am blessed by their generosity. But how humbling is it when they consider you one of the brightest, most resourceful and talented people they know, and you are on food stamps and can't pay your bills?

    A Renter Next Time

    I can tell you, in my next life, if I cannot qualify for a fixed rate mortgage, I'll go back to renting. It's just not worth the scare you get every six months when the rates change. And I haven't even talked about what happens when your adjustable period runs out - I don't want to know.

    Sadly, I am at the point where I had to get honest that I messed up by lying and put my house on the market. Normally, with the improvements I've made, I could have asked close to $269,900. Now, because I'm backed up against the foreclosure wall, I have to drop my price $20k in order to sell it before foreclosure. It breaks my heart, but I am pragmatic - much better to walk away with less money in your pocket than with NO money in your pocket.

    As a consumer advocate, I am embarrassed that I failed to follow all the research I had done - my heart led and my brain stayed behind.

    I hope you learn from my mistake - there are predatory lenders out there who prey on first-time buyers, seniors and single women. Too bad they aren't made to wear signs.

    A story about how easy it is to get into serious trouble even when you know better. There are predatory lenders out there who prey on first-time buyers, se...
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    Wal-Mart Pushing Extended Warranties on Electronics

    Warranties Return Big Profits but Little Value to Consumers

    Wal-Mart is expanding its offering of extended warranties on electronics items, including the computer laptops, large-screen TVs and digital cameras it recently introduced to its stores.

    Extended warranties have long been a cash cow for electronics retailers like Circuit City and Best Buy, who earn profit margins of 40% to 80% on them.

    Computer retailers and direct marketers like Dell and Gateway have recently begun pushing consumers into buying expensive extended warranties by shortening the standard warranty to as little as 90 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.

    But the extended warranties are hardly a best buy for consumers, who usually find the warranties either duplicate the manufacturer's warranty and are thus an unnecessary expense or don't provide extra protection when customers need it. has received more than 3,000 consumer complaints about extended warranties in the last year.

    In fact, according to the Consumers Union, the reason extended warranties are so profitable is precisely because they're not worth much to the consumer.

    "Many of these (products) are established, mature technologies; They usually don't break down," Lauren Hackett, a spokeswoman for Consumer Reports, told The Wall Street Journal. "And if they do, we find that it is generally within the manufacturer's warranty."

    Wal-Mart expanded its inventory of higher-priced electronics goods recently, hoping to make up for reduced sales on its lower-priced goods. The falling sales were attributed to lower-income consumers having less spending money because of higher gas prices, health care costs and other factors.

    Last week, Wal-Mart began selling two-year product warranties on TVs and computers priced higher than $300 in most of its stores. The warranties cost $28.88 to $98.99, and cover maintenance and repairs after the manufacturers' warranties expire.

    Wal-Mart's warranties are being sold in partnership with warranty-provider N.E.W. Customer Service Cos.

    Wal-Mart Pushing Extended Warranties on Electronics...
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      Survey Sees Trouble Ahead for Many 2006 Model Cars, SUVs

      European automakers did not have even one entry on CR's list of models with the best-predicted reliability ratings

      Consumer Reports' latest annual reliability survey predicts widely disparate records for some Asian automakers including Nissan and Hyundai. The survey also finds continued troubles for European and domestic automakers with some 2006 vehicles.

      For the second year in a row, European automakers did not have even one entry on CR's list of models with the best-predicted reliability ratings.

      Four models from Nissan -- the Quest, Armada, Titan and the Infiniti QX56 -- are on Consumer Reports' list of 2006 models with the worst predicted reliability. But the new Infiniti M35 and M45 are among the most reliable models.

      Other Nissan models, such as the Murano and Sentra, have above-average predicted reliability. Historically, Nissan and Infiniti have done well in CR reliability surveys; many vehicles from the automaker have had above-average reliability over the years.

      CR predicts that reliability for 2006 models from Hyundai is likely to be spotty. For example, the Hyundai Tucson is predicted to have poor reliability while the Santa Fe and Elantra are predicted to have average reliability. Reliability for the new-for-2006 Sonata remains unknown.

      "The message to consumers is clear: You can't gauge reliability based only on a nameplate. Some automakers do have a better track record but individual models -- especially newer ones -- can have problems," said David Champion, senior director of Consumer Reports' Auto Test Center in Connecticut. "New-car buyers should always check our reliability rating for the model they're buying."

      Champion noted that the difference between models with the best and worst predicted reliability in the survey is striking. For example, among large SUVs, the least reliable model, Infiniti's QX56, is likely to have about eight times as many problems as the most reliable model, the Toyota Land Cruiser.

      Findings are based on Consumer Reports' 2005 survey of subscribers to both its magazine and web site, This year, the survey reached a milestone as CR gathered reliability information on more than one million vehicles in total-the most ever received.

      The survey was conducted in the spring of 2005 and covered 1998 to 2005 models. The total number of vehicles included is up from 810,000 in 2004 and 675,000 in 2003.

      Among the other findings in New Car Preview 2006:

      • Of the 31 cars that earned Consumer Reports top rating for predicted reliability, 29 were Japanese and two were domestic models. There are no European models on that list. Of the 29 vehicles from Japanese manufacturers, about half -- 15 -- are from Toyota and its Lexus division and eight are from Honda. The two domestic models making the list are the previous generation Chevrolet Monte Carlo (redesigned for 2006) and the new-for-2005 Mercury Mariner.

      • Of the 48 cars that are on Consumer Reports list of vehicles predicted to have the worst reliability, 22 carry domestic nameplates, 20 are European, four are from Japan, and two are from South Korea. The Japanese models are all from Nissan and its Infiniti division, specifically, Nissan's Quest, Armada, and Titan, and the Infiniti QX56. The two South Korean models on the list are the Hyundai Tucson and the Kia Sportage.

      • CR's list of sedans with the worst predicted reliability includes some of Europe's most expensive nameplates such as the Audi A8, BMW 7 Series, and the Mercedes-Benz S-Class. Other sedans making the list of "Least Reliable" cars include the Jaguar S-Type, Mercedes-Benz E-Class, Saab 9-3, and the V8- powered BMW 5 Series. The rest of the bottom-rated small cars and sedans were from domestic manufacturers and included the Chevrolet Cobalt, the V8-powered Chrysler 300 and the Lincoln LS.

      • Despite their complex mechanical drivetrains, hybrids from both domestic and Japanese manufacturers continue to have above-average reliability. Those hybrids include the Honda Accord and Civic Hybrids, the Toyota Prius, and the Lexus RX400h -- all of which received top scores. The Ford Escape Hybrid had above-average reliability.

      Toyota, along with its Lexus division, makes more than half of the sedans and small cars that earned Consumer Reports highest reliability rating. All the others that earned this rating were also Japanese, including the Honda Accord and previous-generation Civic; the 2006 Infiniti M35/45; and nonturbo models of the Subaru Impreza.

      SUVs from Asian manufacturers were the most reliable overall, with a few notable exceptions. Large SUVs with the worst reliability were the Infiniti QX56, Nissan Armada, Hummer H2, and Lincoln Navigator, in that order.

      Two small SUVs from South Korea, the Hyundai Tucson and Kia Sportage, also rate among the worst. European brands anchored the least reliable list in midsized SUVs.

      Unreliable models include the V8 BMW X5, Land Rover Range Rover, Land Rover LR3, Porsche Cayenne, Volkswagen Touareg, and Volvo XC90. Notable exceptions were the BMW X3 and the six- cylinder X5, which improved to average.

      American SUVs continue to produce mixed results. While the Mercury Mariner was the best of the domestic group of SUVs, the Ford Explorer, Mercury Mountaineer, and Jeep Grand Cherokee were among the least reliable.

      With the exception of the Chevrolet Tahoe and Suburban; the GMC Yukon and Yukon XL; and the Cadillac Escalade, large American SUVs have subpar reliability.

      Among minivans, the Chrysler Town & Country and Dodge Grand Caravan dropped to below average in reliability. The Toyota Sienna is the only minivan that rates better than average. GM's minivans-the Buick Terraza, Chevrolet Uplander, Pontiac Montana SV6, and Saturn Relay-joined the Nissan Quest at the bottom of CR's list.

      Looking at pickups, the Toyota Tundra and the new Honda Ridgeline earned the top ratings. The redesigned 2005 Toyota Tacoma V6 rated just average, but the four-cylinder Tacoma was above average. The Nissan Titan dropped from average and is now on the worst list. The Ford F-150 continued to score below average.

      Survey Sees Trouble Ahead for Many 2006 Model Cars, SUVs...
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      State Farm's Wrecked Car Owners Feeling Slighted

      Company and State Attorneys General Brokered a Cozy Deal

      Motorists across the country are getting some surprising letters from State Farm Insurance and their state attorney general's office. The letters inform them that their car is a total wreck.

      About 32,000 letters have gone out this month to policyholders, telling them that State Farm had declared their vehicle a total wreck before they bought it, thinking -- in many cases -- that they were getting a great deal on a late-model car or truck in exceptionally good condition.

      After declaring the vehicles totaled, State Farm then resold them as junk, but without getting the salvage title required by law. A salvage title is intended to warn buyers that a vehicle has been rebuilt after a major accident and that it may be unsafe.

      That's what happened to Missouri motorist Sarah Smith, whose experience was profiled in a St. Louis Post-Dispatch story by Michael D. Sorkin.

      "I'm getting a great vehicle," she thought. It was a used black Jeep Grand Cherokee that the salesman had described as a trade-in on a new model. The car looked solid and, most importantly for Smith, appeared safe to drive with her baby, now 18 months old.

      But then Smith opened a letter signed by Missouri Attorney General Jay Nixon, disclosing that her Jeep had in fact been wrecked before she bought it.

      Nixon has set up a database on his Web site, identifying about 265 previously damaged vehicles that were improperly titled in Missouri and that are covered by a settlement with State Farm and 49 states.

      The information includes the vehicle identification number (VIN), make, model and year of each of the vehicles. Nixon and 48 other state attorneys general reached an agreement with State Farm earlier this year over the companys failure to make certain the vehicles were properly titled.

      State Farm is paying $40 million to the consumers who currently own the vehicles. The final amounts received by consumers will depend on the current value of their vehicle and how many consumers elect to participate in the payment program.

      Nixon said the settlement does not preclude those consumers from rejecting the State Farm offer and seeking their own legal recourse, nor does it affect the legal rights of previous owners of the vehicles.

      The letters say State Farm will pay a sum to each vehicle owner who signs a settlement offer agreeing not to sue the insurer. The amounts range from $400 to $20,000 and are based on the current value of the vehicles.

      Smith hasn't driven her Jeep since the letter arrived Sept. 17, Sorkin reported. She said she was horrified and outraged that State Farm had seemingly put her family at risk. She had the same thoughts about the attorneys general, who brokered the deal with State Farm in private.

      Smith called State Farm to ask what kind of damage her car had sustained and was floored when the company said it wouldn't release any information about her car's damage, saying it had to protect the "privacy" of the car's previous owner.

      Smith asked State Farm to pay the cost of having her car inspected. It refused.

      "We feel the compensation we're offering should cover that," State Farm spokesman Phil Supple told the Post-Dispatch.

      State Farm's letter offers Smith $2,700. She can't accept even if she wanted to, she said. That would leave her with a car she is afraid to drive and $11,000 she still owes in car payments. For now, she's driving a relative's car - and paying off that car loan along with her own.

      "They're trying to pay me pennies on the dollar, and they're not even talking about safety," Smith said.

      Nixon has said that he had no part in crafting the agreement between State Farm and 49 state attorneys general, which was primarily brokered by an assistant to Attorney General Tom Miller of Iowa. Miller's office has defended the settlement because consumers won't have to sue.

      In an interview with the Post-Dispatch, Nixon said he plans to write a follow-up letter to each of the 265 Missourians. He said he will "clarify that they have a choice" not to sign. Not signing, Nixon added, means consumers have other "legitimate legal options to get adequate and appropriate compensation for this now obvious problem."

      "It is important for these folks to understand that this (settlement) is an option," Nixon added, "and they should be careful because it can and will limit their compensation." State Farm is giving consumers until Nov. 18 to sign the settlement. The insurer says those who sign will get checks early in January.

      In Illinois, where State Farm is headquartered, a spokeswoman for Attorney General Lisa Madigan said, "We believe the settlement will benefit consumers." Spokeswoman Melissa Merz added: "We urge them to consider it and consult with a private attorney."

      Consumer groups are upset over how long State Farm and the attorneys general have taken to notify motorists that they are driving cars the insurer had sold as total wrecks. State Farm has said it told the Iowa attorney general's office nearly two years ago - in November 2003.

      Only current owners are included in the reimbursements. Anyone who bought the vehicles, had trouble with them and resold or junked them is not eligible for the settlement, according to the company.

      In their statement in January, the attorneys general praised State Farm for coming forward and acknowledging it had been reselling rebuilt vehicles. The officials also praised the company for agreeing to pay the vehicle owners.

      State Farm agreed to pay the attorneys general a total of $1 million for the time they spent on the case. The attorneys general agreed not to take any legal action against State Farm. The matter never went to court.

      State Farm says its offer of compensation is "fair and reasonable." In its settlement offer, State Farm acknowledges reselling total wrecks from 1997 through 2002. Although selling wrecks without salvage titles violates the law in all states but one, the letter to vehicle owners avoids saying that State Farm did anything wrong.

      Perhaps most telling, the letters sent to owners of the wrecked vehicles caution them not to resell their vehicles without telling new owners about the damage, warning: "Any attempt to resell such a vehicle without disclosing this information could be a violation of law."

      Although selling wrecks without salvage titles violates the law in all states but one, the letter to vehicle owners avoids saying that State Farm did anyth...
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      Senator Proposes Hybrid Quota

      October 25, 2005
      Connecticut Senator Joseph Lieberman thinks 10 percent of all the new cars sold in the U.S. ought to be hybrids within two years, no matter how much they cost and says he will introduce a bill that would the make the hybrid quota the law, in part to reduce global warming.

      Lieberman told a global climate change conference at Yale University that after a century of debate, evidence of manmade global warming is overwhelming.

      "If the leadership of the United States does not come to grips with the fact that we need a new energy policy then we are not only putting this nations security, economy and public health at risk, but the worlds as well," Lieberman told the conference.

      Lieberman predicts that plug-in hybrids could use alcohol-enhanced fuel to achieve up to 500 miles per gallon and contribute to the reduction in hydrocarbon pollution.

      The batteries in hybrid plug-ins can be charged when the engine is off. A growing number of hybrid owners are experimenting with plug-ins in an effort to radically increase mileage.

      Lieberman told the conference that he plans to introduce legislation soon to establish a federal mandate requiring 10 percent of new cars to be hybrid electric plug-in or alternative fuel vehicles by 2007.

      By 2014 Lieberman would require 50 percent of the new cars sold in America to be hybrid electric or based on some other gasoline-saving technology.

      Lieberman and Sen. John McCain, a Republican from Arizona introduced a similar bill last year but it was defeated 60-38.

      Senator Proposes Hybrid Quota: Connecticut Senator Joseph Lieberman thinks 10 percent of all the new cars sold in the U.S. ought to be hybrids within two y...
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      Promoters of "Inflatable Motorcycle Vests" Sentenced

      They allegedly defrauded investors of more than $5 million

      The promoters of a supposedly inflatable motorcycle vest have been sentenced on 30 felony counts of securities fraud and grand theft, as well as five counts of tax evasion, California Attorney General Bill Lockyer announced.

      John Duhamell and Toni Duhamell were formally sentenced in San Bernardino County Superior Court. The Duhamells were prosecuted by the Attorney Generals Special Crimes Unit resulting from an investigation conducted by the Inland Empire Financial Crimes Task Force.

      After they entered guilty pleas on all counts, a San Bernardino Superior Court judge sentenced John Duhamell to seven years in state prison and Toni Duhamell to four years and four months in state prison. In addition, the Duhamells were ordered to repay their more than 200 victims $5.6 million in restitution, and they were also ordered to pay $816,718 each to the Franchise Tax Board on the tax evasion charges.

      The Attorney General filed a criminal complaint in September, 2005 alleging that the Duhamells stole more than $5 million from investors over the course of three years on the pretense of financing a product known as the AirVest - a vest worn by motorcyclists that is designed to automatically inflate when they are thrown from their bikes.

      The Duhamells falsely told potential investors that Harley-Davidson, Inc. had invested heavily in the company. John Duhamell also falsely told potential investors that he was the independently wealthy son of billionaire Kirk Kerkorian.

      These false representations led more than 200 victims to believe their investment was secure due to the backing of Harley-Davidson and Kerkorian. Although the Duhamells victims hail from across the globe, the majority of the defrauded investors are from San Bernardino County.

      Instead of putting the money into the company, the Duhamells used the investors' cash to live an extravagant lifestyle that included trips to Europe as well as the purchase of luxury homes and automobiles.

      Promoters of Inflatable Motorcycle Vests Sentenced...
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      Royal Prestige Resolved Complaints ... Or Did It?

      Consumers not so happy with the "resolutions"

      The Hy Cite Corp. says it resolved the 27 consumer complaints sent the company in 2001.

      "We took care of every consumer," company president Erik Johnson said in a recent interview. "We exchanged products, we showed them how to use the cookware, and we did whatever was necessary to make them happy."

      Or did it?

      We've learned some consumers aren't satisfied with the resolution the company offered.

      Consumers like Cuauhtmoc O. of Los Angeles. He bought $1400 worth of Royal Prestige cookware, but cancelled his order before the products arrived.

      He never received the cookware and believed the matter was settled.

      But then it showed up on my credit report a few years later as an unpaid debt, he says. When I bought my house, the escrow company withdrew $1425 from my deposit and wrote a check to Royal Prestige.

      Cuauhtemoc says Royal Prestige contacted him shortly after he filed a complaint with

      They said they cant refund my money, but they sent me a 22-piece set of cookware. They made me sign a letter stating that I was now satisfied and consider my complaint resolved.

      I signed the letter because I felt like I didnt have choice, he says. At least this way, Id get something back. But I have to be honest, Im not satisfied. If I didnt want the pans in the first place, why would I want them now? I would have preferred to have my money back.

      So would Sarah B. of Madison, Wisconsin, who says a Royal Prestige salesman bilked her out of $500 for an electric skillet.

      Hy Cite gave her a three-piece set of cookware to resolve her complaint.

      I thought it would be great, Sarah says. But everything sticks to the pans. Im not satisfied. I think a better resolution would have been to refund my money.

      Veronica W. of Waterford, Wisconsin says the company resolved her dispute over a free cruise offer.

      But she refused to discuss the details of that resolution, saying They have given me a large portion of my money back. I have signed a waiver to not exploit them from the date of the agreement. And I am unable to disclose any other information.

      Hy Cites president confirmed his company had consumers sign a confidential agreement stating their complaints were now resolved and they wouldnt disclose any further information.

      We also asked them to stop putting negative things about us on the Internet.

      They said they cant refund my money, but they sent me a 22-piece set of cookware. They made me sign a letter stating that I was now satisfied and consider...
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      Plum Organics Recalls Baby Food Due To Bacteria

      Contamination may cause botulism

      Plum Organics announced today that it is recalling one batch of its baby food because the products may be tainted with a bacteria that causes botulism.

      The Emeryville, California, company voluntarily pulled off the market all its Apple & Carrot Baby Food in Portable Pouches with the best by date of May 21, 2010 and universal product code (UPC) of #890180001221.

      The company sold the baby food nationwide at Toys-R-Us and Babies-R-Us stores.

      "The product did not meet the FDA guidelines for proper acidity level," Dr. Paul Gerhardt, a Food Science Ph.D. and member of the Plum Organics action team, said in a statement released today. "Though the risk of illness from this one batch is minimal, Plum Organics is taking the extraordinary step of recalling all Apple & Carrot Baby Food Pouches with 'Best by date May 21, 2010.'"

      The company's founder, Gigi Lee Chang, blamed the problem on a mixing error during production.

      "I wanted to let you know that, today, Plum Organics voluntarily recalled a small portion of our Apple & Carrot Baby Food in Portable Pouches after a routine test determined the formulation was incorrect," Chang wrote in a statement on the company's Web site. "Plum Organics immediately investigated the matter and confirmed that a mixing error was to blame which resulted in an improper blend of carrots and apples, which caused the baby food to be improperly blended."

      "Please accept my deepest apologies for this inconvenience," Chang added.

      Plum Organics said it has not received any reports of illnesses linked to the recalled baby food.

      "We conducted extensive testing of samples of every Plum Organic product manufactured before and after this batch and all samples were found to be within the standard guidelines," Chang said.

      Plum Organics called the recall a "precaution" and said it took this action because of the possible risk of botulism, a serious and sometimes life-threatening condition. Symptoms of botulism poisoning include general weakness, dizziness, double-vision, and trouble speaking or swallowing. People with those problems should immediately contact their doctor.

      Consumers should not to use the recalled products because of the possible health risks, the company said.

      Customers can the returned the recalled baby food for a full refund at any Toys-R-Us or Babies R Us store.

      For more information, contact Plum Organics at 888-974-3555 or email the company at

      Plum Organics announced today that it is recalling one batch of its baby food because the products may be tainted with a bacteria that causes botulism....
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      "Spam Charges" Hit Thousands of Credit Cards

      Consumers around the country are abuzz over a rash of incidents involving unauthorized charges to Visa and MasterCard accounts within the last thirty days, many appearing on statements for cards that haven't been used in months.

      Cardholders have been flooding online forums with news of a $24.99 charge from a company called "Digital Age Cyprus" appearing on their account statements. Other mysterious charges include "Trouble Bubble LLC" and "Burdett Inc.", at $7.95 or $9.95.

      Such charges are often referred to as "spam charges," based on the idea that the sheer number of charges, even in small amounts, can generate a profit for fraudsters and hackers. The amounts are small enough that many cardholders will pay them without thinking about it.

      Criminal rings will often use names of legal businesses that don't accept credit card transactions as a front, and set up a fake 1-800 phone number in case customers call to verify or dispute the charges.

      Brian Morris, a computer and networking consultant, first became aware of the scam when he noticed a charge for Digital Age Cyprus on his MBNA MasterCard on Sept. 28th.

      "I keep a very close watch on my credit card activity and knew that I did not authorize that charge," said Morris, "so I used Google to find the forum on where many others reported of being hit with this charge."

      Morris believes victims of the fraud are at a disadvantage because of the lack of coverage the incidents are receiving in major media outlets.

      Victims of the fraud have flooded bulletin boards and blogs with news of each incident, advice, and suggestions. Information regarding the source of the spam charges is still unclear, but speculation centers around a connection to the CardSystems data breach in June 2005.

      Forty million cardholders' accounts were exposed to identity thieves, and of those cardholders, 263,000 actually had their information stolen.

      Although it would seem like common sense for card companies to notify cardholders in the event of a crisis such as the CardSystems breach, a federal judge disagreed, ruling that it was the responsibility of the issuing bank to offer warnings. The ruling came as a setback to a class action lawsuit filed against Visa, MasterCard, and CardSystems for the potential damage from the theft.

      Many of the affected cardholders expressed displeasure at how their banks have handled -- or not handled -- the incidents.

      Cybersecurity expert Bruce Schneier recently penned a column for Wired magazine taking financial services companies to task for not shouldering the burden in cases of fraud or identity theft.

      "Making financial institutions responsible for losses due to phishing and identity theft is the only way to deal with the problem. And not just the direct financial losses -- they need to make it less painful to resolve identity theft issues, enabling people to truly clear their names and credit histories," he wrote.

      What You Can Do

      If you've found your credit card bill contains these mysterious transactions, or others like them, the following steps can help minimize the damage:

      Contact your bank immediately: Let them know you are a victim of fraud, and tell the bank to cancel the card and issue you another one. Keeping the card active, even if the charges are reversed, still leaves you open to more fraudulent transactions in the future.

      Update your information with the credit bureaus: Make sure to send letters in writing to each of the three major bureaus if you have fraudulent charges on a card, or choose to cancel it. Otherwise, you may end up paying for bills that aren't yours, or having your credit score sink because of unpaid bills you never charged in the first place.

      Be smart when shopping online: Don't save your credit card information on any Web site. Don't offer any more information than what is absolutely required for a purchase. Avoid using a debit card to make online transactions, as credit cards have liability limits of $50 for unauthorized charges, whereas debit card fraud can potentially drain your checking account.

      Such charges are often referred to as "spam charges," based on the idea that the sheer number of charges, even in small amounts, can generate a profit for...
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      CardSystems Sells Out After Massive Data Breach

      The bumbling saga of credit-card processing company CardSystems has ended. The Arizona-based company is being purchased by Pay By Touch, a payment processor that specializes in biometric verification of purchases, such as fingerprint reading at checkout counters.

      CardSystems' assets were put on the chopping block after it admitted responsibility for allowing the accounts of 40 million Visa and MasterCard holders to be exposed to a ring of hackers.

      The company had been holding the users' data for "research purposes," in violation of agreements it had struck with the credit card associations and their affiliated banks.

      Pay By Touch specializes in using fingerprint readouts as "data points" for verifying a customer's identity. The "data points" link the customer's fingerprint to an "e-wallet" which connects to their checking account, as well as to any available information about "loyalty card" memberships the customer may have.

      Theoretically, this could lead to a reduced possibility of credit card fraud and identity theft, but it also leads to an increase of information collected by stores, which they can use for targeted marketing.

      Pay By Touch already has an in-house credit card payment system, but the company wanted access to CardSystems' files on 120,000 merchants that used CardSystems to process credit card transactions.

      CardSystems had originally been eyed for purchase by CyberSource, a California-based rival payment-processing company. The New York Times reported that talks between the companies broke down for undisclosed reasons. According to the Red Herring online business journal, CyberSource simply got outbid by Pay By Touch.

      Pay By Touch recently secured $130 million in financing for its next round of investments in biometric identification.

      Visa had agreed to extend its deadline for terminating business with CardSystems from October 2005 until January 21st, 2006, in order for CyberSource to complete its purchase. That deal will now be transferred to Pay By Touch.

      The CardSystems data breach is the single largest case of its kind in history -- the culmination of a year full of data losses, misplaced tapes, database hacks, and scams. The breach has prompted state and federal officials to push for stronger laws regarding identity theft protection, disclosure of company data breaches, and consumer protection.

      The breach also prompted a class action lawsuit against CardSystems, Visa, and MasterCard for failing to protect cardholders' information.

      The lawsuit encountered a setback in September 2005, when a federal judge ruled that it was not the responsibility of credit card companies to notify customers of data breaches.

      CardSystems' assets were put on the chopping block after it admitted responsibility for allowing the accounts of 40 million Visa and MasterCard holders to...
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      More than Half of U.S. Consumers See a Hybrid in their Future

      Most are driven by the price of gas rather than environmental concerns

      More than half of Americans say they are considering the purchase of a hybrid for their next vehicle. Most are driven by the price of gas rather than environmental concerns.

      Recently, J.D. Power estimated that hybrids would account for only 4 percent of total vehicle sales by the end of the decade. But according to the polling firm TechnoMetrica, 55 percent of Americans are considering buying a hybrid, with the most likely buyers being those with incomes above $75,000 (68 percent).

      Some 57 percent of respondents are attracted to hybrids for their fuel efficiency, compared to only 23 percent for their environmental friendliness, according to an account of the study in Investor's Business Daily.

      Over half of those surveyed said that dependence on foreign oil is the number one threat to the economy. More than 70 percent favored government incentives like tax rebates and energy credits to spur hybrid purchases.

      Americans surveyed had a generally dim view of U.S. automakers' efforts. Viewed most favorably for their hybrid plans were Toyota, with 41 percent of respondents, and Honda, with 40 percent.

      Ford's hybrid efforts got the nod of only 14 percent, GM's only 13 percent and Chrysler was last at 8 percent.

      Sales of the Toyota Prius hybrid grew 90 percent in September.

      More than Half of U.S. Consumers See a Hybrid in their Future...
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      Massachusetts Stops Internet Weapon Sales

      The State of Massachusetts says it has barred three out-of-state online weapons sellers from shipping illegal weapons to Massachusetts consumers and levied thousands of dollars in fines and civil penalties against the companies.

      The court orders, granted by Suffolk Superior Court Judge Frank M. Gaziano, stem from several suits Attorney General Tom Reilly filed last summer as part of an ongoing effort to combat the sale of illegal products to Massachusetts citizens over the Internet.

      The online retailers named in these judgments are C & M Enterprises of Fort Gaines, GA; of Killeen, TX; and Martial Arts Gear, Inc. of Lafayette, LA.

      The three defendants named in these court orders are among seven sued by Reilly following an undercover sting into Internet weapons sellers accused of selling and shipping stun guns, switch-blade knives, swords, nunchaku (a/k/a numchucks), throwing stars, sling shots and dirk knives to an undercover investigator in violation of state law banning the sale of such items.

      Soon after the initial lawsuits were filed, four of the companies agreed to orders with the state banning all future sales of illegal weapons into Massachusetts, and paid $5,000 each in penalties. Those companies include Talley Security Products of Flagstaff, AZ, Lifestyle Fascinations of Lakewood, NJ, of Dunlap,TN, and Discount Martial Arts Supply of Winnetka, CA.

      In addition to permanently banning sales in Massachusetts, the court orders require these online retailers to place postings on their websites stating that they do not ship weapons into Massachusetts. They must also incorporate software that blocks orders to Massachusetts addresses.

      The orders also require the online retailers to pay penalties to the Commonwealth for their illegal sales into Massachusetts. C & M Enterprises and must pay penalties of $35,000 each, and Martial Arts Gear, Inc. must pay $30,000.

      Under Massachusetts law, the sale or possession of various weapons, such as switch blade knives, dirk knives, sling shots, throwing stars, numchucks, sword canes, and black jacks, is illegal. There is a separate statute that prohibits the sale or possession of electrical weapons, including stun guns. Anyone with questions about whether or not weapons they have are prohibited by Massachusetts law should check with their local police department.

      These cases are part of an overall initiative by Reilly's Office targeting the sale of illegal or age-prohibited products in Massachusetts, such as alcohol, cigarettes, ammunition and fireworks.

      Massachusetts barred three out-of-state online weapons sellers from shipping illegal weapons to Massachusetts consumers and levied fines and civil penaltie...
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      Fish is Brain Food

      Eating fish is good for the brain and can slow age related mental decline by 3 to 4 years

      Eating fish is good for the brain and can slow age related mental decline by 3 to 4 years. That's according to an article published in the Archives of Neurology.

      Researchers studied 3,700 Chicago residents who were 65 and older. The Windy City residents took some simple tests of mental acuity three times in 6 years. The also filled out a questionnaire about the food they ate.

      Folks who ate one fish meal a week had a 10% slower annual decline in thinking. Folks who ate 2 fish meals a week had a 13% slower decline.

      Researchers didn't measure the subjects' blood levels for healthy omega-3 fatty acids, the kind you get from fish so they couldn't prove why fish helped.

      While pregnant and nursing women and kids should limit fish with high mercury levels, this study and a number of other show that fish is good for the heart and brain.

      Fish is Brain Food, Dr. Henry Fishman on Health and Medicine...
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      New Bankruptcy Law Tightens Rules, Adds Paperwork

      It's Now Much Tougher to Get a Fresh Start

      If you're a consumer in financial trouble, your theme song might be "I Got Plenty of Nothin'" from Gershwin's Porgy & Bess. But if you think you've got plenty of nothing now, the new "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" could shrink even that.

      Effective October 17th, the Act is a coup for banks, credit card issuers and stores -- otherwise known as "unsecured" creditors (those owed money that isn't backed by an asset, such as a car or home.) It overhauls laws last modified in 1978, tightening requirements for filers and for bankruptcy lawyers who handle their cases.

      A major goal: to shift filers from Chapter 7 ("straight") bankruptcy, in which consumer debt is typically liquidated, to Chapter 13 ("reorganization") bankruptcy, which requires that you repay secured and much unsecured debt within five years. No "clean start" in this case.

      Here are some of the major changes under the new law:

      The "Means Test" This is a new wrinkle that challenges the assumption that a debtor is filing in good faith. Now the burden is on you to show that your use of bankruptcy relief isn't "abusive." The means test calculates your monthly income minus certain allowable expenses. Each state uses its "median income" as a guide. If the balance left is more than about $100 a month, the filing is considered abusive, unless you can show "special circumstances." If you flunk the "means test," it's Chapter 13 for you.

      Stringent expense allowances Guidelines for allowable expenses are set by the IRS and are stingy. For example, the food allowance is around $200 per month and housing allowance about $800. Too bad if your actual costs are much higher.

      Residency requirements There are both federal and state bankruptcy laws and some state laws are more favorable than others. For example, both Florida and Texas have generous "homestead allowances," which permit debtors to shield assets under the umbrella of homeownership. But the new law aims to discourage "shopping around" for the best deal, so you can't file in a more favorable state unless you've lived there for at least two years.

      Mandatory credit counseling You must take an approved credit counseling course within 180 days (six months) of filing a petition. This isn't free -- average cost is estimated at $75.00.

      More paperwork In the new "get tough" environment, consumers will have to provide a lot more documentation to show that bankruptcy is warranted. The American Bankruptcy Institute lists some of the proof debtors must provide: a list of secured and unsecured creditors; documentation of credit counseling; monthly income and expenses; assets and liabilities; most recent tax return and any earlier returns that were not filed; pay stubs and photo ID.

      Heftier legal fees The burden on bankruptcy lawyers is at least doubled under the new statute. Besides merely gathering the facts from a client, an attorney must now "certify" that a client's numbers are accurate. If they aren't, both lawyer and client could face sanctions. So, in effect, your lawyer must do more fact-checking and investigation to assure that both your information and his/her own certification are above-board. This takes time, which translates into money. Many lawyers are getting out of bankruptcy practice, not wanting to put their careers on the line for filing cases that don't pay very well anyway.

      Filing fee changes Charges vary from state to state, but in general, you'll pay more for filing under Chapter 7 and slightly less under Chapter 13.

      Valuation increases The law provides that "collateral," which includes your furniture, clothes, autos and electronics, be assessed at a higher value than under the previous law. The new benchmark: replacement value. Chances are, by the time you add up the total value of your possessions using this formula, it will be pretty high.

      You'll wait longer to file again If your situation requires another bankruptcy filing, you'll wait longer to do so. The new law provides that, under Chapter 7, eight years must elapse before you can re-file. If you go for Chapter 13 after a Chapter 7, you must wait four years. Going from one Chapter 13 to another, two years must elapse.

      No loading up on last minute luxuries The new law requires that any luxury items purchased within 60 days of filing for bankruptcy be repaid in full. Likewise for cash advances and services worth more than $500.

      Beware those student loans Under the old law, you couldn't get rid of student loans backed by the government or a non-profit. This protection has been extended to private lenders as well.

      Scant Comfort

      Despite all this bad news, there are a few pluses. Your house, retirement plans and college savings are exempt, and you can continue to fund the last two (a laughable notion for someone filing in the first place.)

      If an unsecured creditor (say, MasterCard) refuses to accept your repayment offer, the court can reduce your principal debt by up to 20%. This is to encourage creditors to cooperate with credit counseling agencies, which often mediate settlements between debtor and creditor.

      For those owed child support, this obligation jumps ahead of any other unsecured claim except administrative or legal fees. Also, there are special provisions for a few groups: military personnel on active duty, low-income veterans and people with severe medical disabilities.

      So if you're hoping to change your theme song to "For the Love of Money," take note of these changes and get expert advice before you discover that financial "freedom" costs more than you bargained for.

      For more information:

      American Bankruptcy Institute

      U.S. Department of Justice Trustee Program, which provides comprehensive information on the new Act as well as a state-by-state list of bankruptcy attorneys.


      Joan E. Lisante is an attorney in Fairfax County, Va.

      New Bankruptcy Law Tightens Rules, Adds Paperwork...
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      "Cramming" Hits Consumers When They Least Expect It

      Consumers complain about mysterious, unauthorized charges appearing on their telephone bills

      "Cramming" used to be what you did the night before a big test. Now the word has a more sinister meaning like placing unauthorized charges on your telephone bill.

      "I have a phone bill that says Voicemail Monthly fee $12.95. I want to know what that is for and if it's not suppose to be on there, I want it off my phone bill," said Deborah of Johnson City, Tennessee, one of hundreds of consumers who have written to to complain about mysterious, unauthorized charges appearing on their telephone bills.

      "I got my phone bill and ILD charged me $30.88 for some kind of internet service that I never authorized," said Christie, of Connel, Washington. "When I called them, I was kept on hold for over 30 minutes and have not been able to dispute these charges."

      Of all the cramming complaints received at, nearly 800 are about ILD TeleServices, whose name and telephone number appear next to the unauthorized charge on their phone bills -- and the number of complaints is steadily rising, with 80 filed in just the last three months.

      ILD TeleServices claims that it is merely a billing "clearinghouse," meaning it is collecting the money on behalf of other companies some legitimate and some, perhaps, not who deliver their services through your local phone company.

      If it all sounds confusing, you can blame the Telecommunications Act of 1996. That piece of landmark (others might suggest a different adjective) legislation changed the telecommunications landscape not entirely for the better, at least not for consumers. Fortunately, there are some little-publicized provisions that give consumers an effective way to fight back.

      In deregulating the local telephone markets, the new law required big telephone companies like SBC Communications and Verizon to lease their lines to smaller companies and to bill their customers on behalf of companies providing such deregulated services as pay phones, collect calls and long-distance calls from public places, like hotels, hospitals, airports and prisons.

      The purpose was to open local phone markets to competition and create more services at less cost to the consumer. But an unintended consequence has been an outbreak of profiteering by companies eager to fleece captive or unsuspected consumers.

      Many of the new entrants are companies that attempt to bill unsuspecting consumers for things they never asked for -- like voice mail -- hoping they will not look that closely at their monthly phone bill and just pay it.

      Other shameless profiteers are the hotels, hospitals, universities and prisons that add outrageously expensive charges for the use of their telephone equipment.

      With so many layers in the billing process, the system has been open to abuse from the start. The company placing the charge does not bill the consumer directly. Instead, the charge is billed by a "clearinghouse," like ILD, which in turn contracts with your local phone company to place the charge on your bill.

      The local telephone company makes nothing but a small administrative fee and has little choice in the matter; it is required to provide billing for these supposedly "competitive" entities.

      In the case of ILD, the company says it executes hundreds of thousands of bills each month for a wide variety of companies, and that only a tiny fraction of the charges produce complaints. Company officials say they work with complaining consumers to resolve disputes, and that if one of its clients produces a large number of complaints, it is dropped.

      Your Service Cant Be Terminated

      Consumers writing to have expressed the concern that their local telephone service would be cut off if they refused to pay an unauthorized third-party charge. It cant be.

      "The Federal Communications Commissions, through the Truth-In-Billing Act, requires telephone companies to clearly show on their bills which charges are 'miscellaneous,' and to cooperate with consumers who dispute them," said Kurt DeSoto, a communications attorney with Wiley, Rein & Fielding, a powerhouse Washington, D.C., firm that includes at least one former FCC commissioner among its partners.

      Failure to pay a disputed "miscellaneous" change on a phone bill cannot, under the Truth In Billing Act, be grounds for termination of service, as long as all other legitimate charges are paid. The first step a consumer should take is to call the local telephone business office and speak to a customer service representative.

      "Verizon has a first call resolution policy for our customers who call us with a cramming issue," Ells Edwards, a spokesman for Verizon, told "If the customer tells us that the charge is unauthorized, Verizon will remove it from their bill, no questions asked."

      Edwards says the only exception is if the disputed charge is for a phone call charged by another carrier. In those cases he says Verizon requests the customer first contact the third-party carrier to dispute the charge. If the customer fails to get satisfaction, at that point Verizon will eliminate the charge.

      Preventing Cramming In The First Place

      Consumers can take action to block miscellaneous, third party charges of any kind from appearing on their telephone bills.

      "For Verizon customers, its as simple as calling the business office and asking a customer service representative to place a block of third party billing on their account," Edwards said. Once a block is in place, Edwards said the only charges appearing on a consumers phone bill should be for local and long distance telephone services.

      How do consumers become targets of cramming scams in the first place? The Federal Trade Commission says it can happen when someone uses your phone to call an 800 number.

      "With the right technology, companies can get your phone number when you call them, using a process similar to caller ID. Once they have your number, an unscrupulous company can cram charges onto your phone bill," the FTC said in a release.

      "What's more, since this technology can automatically bill the phone number that is called from, other people using your phone can cause charges to be billed to your phone."

      The agency also says consumers should carefully read the fine print before they fill out contest forms, especially if they ask for your phone number. Likewise, read the fine print before you place a call in response to a sweepstakes promotion.

      Also, avoid placing calls to costly 900 numbers. The FTC says consumers should consider a 900 number block; it stops calls from going through to 900 number services. Blocks also are available for international, long distance, and local toll calls.

      Never accept collect calls. If you have a friend of family member who will be traveling, get them a prepaid calling card.

      Its highly unlikely Congress will revisit the Telecommunications Act of 1996 to fix the loopholes that have caused consumers so much grief. Instead, it appears consumers have to educate themselves about their rights and never hesitate to exercise them against those who would manipulate the system for fraud.

      Cramming Hits Consumers When They Least Expect It...
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      HP, Compaq Notebook Computer Batteries Recalled

      October 14, 2005
      Hewlett-Packard is recalling about 135,000 HP and Compaq Notebook Computer Battery Packs. An internal short can cause the battery cells to overheat and melt or char the plastic case, posing a burn and fire hazard.

      HP has received 16 reports of batteries overheating, including four in the U.S. No injuries have been reported. Four cases of minor property damage were reported, including one in the U.S.

      The recalled lithium ion rechargeable battery packs are used with various HP and Compaq notebook computers (see list below). The recalled battery packs are a subset of those manufactured March 2004 through September 2004, and will have a bar code label starting with GC, IA, L0 or L1.

      Hewlett-Packard and Compaq Notebook Models that may contain a recalled battery pack:

      HP PavilionHP CompaqCompaq PresarioCompaq Evo

      The computers were sold by national and regional computer and electronics stores, online stores, and from March 2004 through May 2005 for between $1,000 and $3,000. The battery packs also were sold separately for between $100 and $130.

      Consumers should stop using the recalled batteries immediately and contact HP to arrange for a free replacement battery by visiting the Battery Replacement program Web site or by calling HP. After removing the recalled battery for their notebook computer, consumers should plug in the AC adapter to power the notebook until a replacement battery arrives.

      Consumer Contact: For additional information, visit the HP Battery Replacement program Web site at or contact HP at (888) 404-7398 between 7 a.m. and 7 p.m. CT Monday through Friday.

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

      HP, Compaq Notebook Computer Batteries Recalled...
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      Doctors, Patients Rush to Stockpile Tamiflu

      Fear of Avian Flu Sparks Run on Antiviral Medications

      Tamiflu is surpassing oil as the world's most sought-after substance. The prescription drug made by Roche is one of the few drugs currently in production that is known to help fight viral flu-type infections.

      Governments worldwide are stockpiling Tamiflu as they brace for the annual flu season and the prospect that the virus responsible for avian flu mutates and jumps to humans. Roche has reported that demand for the drug has jumped sevenfold in the past two months.

      Drug stores in the U.S. filled almost 87,000 prescriptions for Tamiflu during the eight weeks ended Oct. 7, up from about 13,000 a year earlier, according to data released today by market researcher Verispan LLC.

      Patients take Tamiflu within a day or two of getting flu symptoms to reduce the severity and spread of the virus and to help reduce the chance of getting influenza.

      In many cases, patients who know about the drug are asking their physicians for prescriptions now, hoping to have a stockpile on hand if a pandemic breaks out. Most physicians seem willing to write the prescriptions.

      Swiss-based Roche says it is working with other manufacturers to begin producing massive quantities of the drug. It is made from an acid produced from the Chinese star anise plant, which is in limited supply because it is grown in only four provinces in China and is harvested between March and May.

      However, Roche says that is has recently developed a way to make the acid, called Shikimic acid, without the plant.

      The World Health Organization last year recommended governments stockpile the Tamiflu capsule or Relenza, an inhalable antiviral drug made by GlaxoSmithKline.

      Doctors, Patients Rush to Stockpile Tamiflu...
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      Bank of America Loses Customer Data Again

      For the third time this year, Bank of America has lost confidential customer information. This time it's a laptop containing information about "Visa Buxx" users, missing since August 29. "Visa Buxx" is a prepaid debit card with adjustable spending limits, designed for teenagers.

      Users of the "Buxx" card were notified by Bank of America that their names, credit card numbers, and other banking information may have been compromised. Bank of America was discontinuing the "Visa Buxx" program at the time of the theft.

      The laptop was first stolen from a third-party "service provider" on August 29th, according to Bank of America spokesperson Diane Wagner. The bank was first notified of the theft on Sept. 9th, and sent warnings out to affected customers on the 23rd.

      Wagner could not be reached for comment.

      In previous interviews, she had declined to identify the number of users affected by the theft, whether the theft occurred in the United States, or who the "service provider" was.

      The story was first reported by the San Francisco Chronicle.

      Bank of America previously lost data tapes containing records of 145,000 cardholders, most of whom were government or military clients. It was also hit by a scam in which bank employees conspired to steal and later sell 60,000 customer records to collection agencies.

      For the third time this year, Bank of America has lost confidential customer information. This time it's a laptop containing information about "Visa Buxx"...
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      Pediatricians Revise SIDS Prevention Recommendations

      To reduce the risk of Sudden Infant Death Syndrome (SIDS), Pediatricians are warning parents against letting infants sleep on their sides or backs and cautioning parents not to share a bed with their infant. In a recommendation that surprised some, the academy also endorsed the use of pacifiers.

      Despite major decreases in the incidence of SIDS over the past decade, the syndrome is still responsible for more infant deaths beyond the newborn period in the United States than any other cause of death during infancy.

      In an updated policy statement, the AAP said it no longer recognizes side sleeping as a reasonable alternative to sleeping while fully supine (lying on back).

      Studies have found that the side sleep position is unstable and increases the chances of the infant rolling onto his or her stomach. Every caregiver should use the back sleep position during every sleep period, the academy said.

      Bed Sharing

      Bed sharing is not recommended during sleep. Infants may be brought into bed for nursing or comforting, but should be returned to their own crib or bassinet when the parent is ready to return to sleep.

      However, there is growing evidence that room sharing (with the infant sleeping in a crib in the parent's bedroom) is associated with a reduced risk of SIDS. The AAP therefore recommends a separate but proximate sleeping environment.

      Research now indicates an association between pacifier use and a reduced risk of SIDS, which is why the revised statement recommends the use of pacifiers at nap time and bedtime throughout the first year of life.

      The evidence that pacifier use inhibits breastfeeding or causes later dental complications is not compelling enough to discredit the recommendation.

      However, it is recommended that pacifier introduction for breastfed infants be delayed until one month of age to ensure that breastfeeding is firmly established. In addition, if the infant refuses the pacifier, it should not be forced.

      There is a slight increased risk of ear infections associated with pacifier use, but the incidence of ear infection is generally lower in the first year of life, especially the first six months, when the risk of SIDS is the highest.

      The following have been consistently identified as risk factors for SIDS:
      • prone (lying on stomach) sleep position,
      • sleeping on a soft surface,
      • maternal smoking during pregnancy,
      • overheating,
      • late or no prenatal care,
      • young maternal age,
      • preterm birth and/or low birth weight and
      • male gender.

      Consistently higher rates of SIDS are found in black and American Indian/Alaska Native children -- two to three times the national average.

      The policy recommendations include:

      • Back to sleep: Infants should be placed for sleep in a supine (wholly on back position) for every sleep.

      • Use a firm sleep surface: A firm crib mattress, covered by a sheet, is the recommended sleeping surface.

      • Keep soft objects and loose bedding out of the crib: Pillows, quilts, comforters, sheepskins, stuffed toys and other soft objects should be kept out of an infant's sleeping environment.

      • Do not smoke during pregnancy: Also avoiding an infant's exposure to second-hand smoke is advisable for numerous reasons in addition to SIDS risk.

      • A separate but proximate sleeping environment is recommended such as a separate crib in the parent's bedroom. Bed sharing during sleep is not recommended.

      • Consider offering a pacifier at nap time and bedtime: The pacifier should be used when placing infant down for sleep and not be reinserted once the infant falls asleep.

      • Avoid overheating: The infant should be lightly clothed for sleep, and the bedroom temperature should be kept comfortable for a lightly clothed adult.

      • Avoid commercial devices marketed to reduce the risk of SIDS: Although various devices have been developed to maintain sleep position or reduce the risk of rebreathing, none have been tested sufficiently to show efficacy or safety.

      • Do not use home monitors as a strategy to reduce the risk of SIDS: There is no evidence that use of such home monitors decreases the risk of SIDS.

      • Avoid development of positional plagiocephaly (flat back of head): Encourage "tummy time."

      • Avoid having the infant spend excessive time in car-seat carriers and "bouncers." Place the infant to sleep with the head to one side for a week and then changing to the other.

      • Assure that others caring for the infant (child care provider, relative, friend, babysitter) are aware of these recommendations.
      Pediatricians Revise SIDS Prevention Recommendations...
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      Blockbuster Abandons Customer Data on NYC Street

      When video rental giant Blockbuster closed one of its stores on Lexington Avenue in New York City, it left a parting gift for enterprising identity thieves and scam artists -- boxes and boxes of customer membership applications, containing valuable personal information, all sitting on the sidewalk in plain sight.

      Several boxes of membership applications were found sitting outside the store, all intact, and containing personal data ranging from customer names and dates of birth to credit card numbers and Social Security numbers, the Daily News reported.

      Anyone who found thiedata could use it to wreak havoc in the customers' lives, from applying for credit in their name, to draining their bank accounts, to selling their addresses to collection agencies or data brokers. The Daily News called it a "fraud gold mine."

      Reporter Tracy Connor collected as many files as she could and alerted the store manager that there were still documents outside.

      "He didn't seem too interested," she recalled. "He got really belligerent and slammed the door in my face."

      The Daily News staff is in the process of destroying all the documents they collected from the store site, Connor said.

      The manager formerly in charge of the store blamed New York City's Sanitation Department for not picking up the boxes, but failed to account for why the data wasn't shredded or destroyed prior to disposal.

      The closed store's phone line was disconnected as of Tuesday, Oct. 11th, and no forwarding message or contact information was provided. Blockbuster media relations spokesperson Randy Hargrove stated that the assistant store manager in charge of the data was "terminated."

      In an interview with, Hargrove called the data's sloppy disposal an "unfortunate and isolated incident."

      Blockbuster has taken several steps to ensure its customers records are kept private, including physically securing records under "lock and key" and discontinuing the practice of asking for applicants' Social Security numbers in late 2003, said Hargrove. The spokesman also claimed that new member applications were only retained for 90 days.

      When asked how it was that many of the applications from the Lexington store -- presumably received in the last 90 days or so -- contained customers' Social Security numbers, Hargrove said that "the store may have been using old or incorrect applications."

      "We're looking into that," he said.

      Proper disposal of customer data is essential to ensure the records are not stolen or sold by identity thieves and scammers. The abandonment of customer data by the Credit Bureau of Topeka and the Experian Credit Bureau provided a frightening look at how easily individual data records can exposed to misuse if they are not properly disposed of.

      When video rental giant Blockbuster closed one of its stores on Lexington Avenue in New York City, it left a parting gift for enterprising identity thieves...
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      Best Treatment for Acne? Take Your Pick

      Lotions, pills, antibiotics, drying agents -- what works best for teen-age acne? The envelope please.

      According to an article published in Lancet, it's pick your poison. Believe it or not, they all work about the same.

      Doctors studied about 650 teenagers with facial acne. They divided them into five equal groups. Each group received a different treatment.

      The treatments included two different types of Tetracycline, an oral antibiotic, or three different topical treatments -- benzylperoxide, a drying agent, and an antimicrobial called Clearasil, a combo cream with benzyl peroxide and erythromycin mixed, or a regimen of erythromycin cream in the morning and benzyl peroxide in the evening.

      In summary, just about any combination you can imagine and you know what? After about 18 weeks, each of the groups had about 50 percent of the teenagers get better, especially in the first few weeks.

      While the studies did not look at acne on the body or severe acne, the conclusion seems clear: If you have acne, talk to a dermatologist about your potion, all of which will work about the same.

      Best Treatment for Acne? Take Your Pick...
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      Errors Common In Cancer Diagnosis

      Its hard enough battling cancer, but a new report in the medical journal Cancer maintains that doctors make diagnosis errors in more than one in ten cases of the disease. The report says in many of these cases, the error resulted in patient harm.

      Researchers at the University of Pittsburgh say, until now, not much has been written or studied on cancer misdiagnosis. In particular, doctors have not had a good grasp of how common the problem is and what impact it has had on patient health.

      When the research team looked at diagnosis mistakes among cancer patients at four hospitals, they found the frequency of errors ranged from 1.79 percent to 9.42 percent for gynecological cases and from 4.87 percent to 11.8 percent for other cases. They found that some errors were significantly linked to particular hospitals but did not name them.

      The report said nearly half the mistakes were caused by misinterpreting test results, while the rest were mostly attributable to poor sampling of tissue.

      The researchers said they found a significant number of the errors nearly half had traumatic consequences for the patient. Harm from the errors ranged from putting the patient through unnecessary tests, to losing a limb, to death.

      The authors of the study say they compiled the research in an effort to help those who want to standardize cancer diagnostic and treatment methods.

      Its hard enough battling cancer, but a new report in the medical journal Cancer maintains that doctors make diagnosis errors in more than one in ten cases ...
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      U.S. Fears Devastating "Bird Flu" Pandemic

      The U.S. Government is concerned about a possible pandemic flu outbreak

      The U.S. Government is concerned about a possible pandemic flu outbreak and has drafted a report declaring that the country is completely unprepared for a devastating impact, according to a report in the New York Times, which said it has obtained a copy of the unreleased Bush Administration draft.

      Specifically, the report cites concerns about Avian, or so called bird flu, which has surfaced in parts of Asia. Bird flu was first identified in South Korea in December 2003. The most recent cases were found in Romania on Saturday.

      Bird flu is an infection caused by avian (bird) influenza viruses, according to the U.S. Centers For Disease Control and Prevention. These flu viruses occur naturally among birds, though wild birds usually do not get sick from them. However, bird flu is very contagious among birds and can make some domesticated birds, including chickens, ducks, and turkeys, very sick and often kills them.

      Humans normally dont get sick from bird flu, though there have been a few cases of human illness since 1997, according to the CDC. A total of 65 people in Asia have died from bird flu since 2003.

      The draft Bush Administration report expresses the worry that if the virus mutates and jumps to the human population in Asia, it could quickly spread to the United States because of international travel. If that happens, the report warns of what could be the worst disaster in the nations history.

      According to the Times report, the document suggests hospitals would be overwhelmed, riots would sweep vaccination clinics and more than a million Americans could die.

      The plan, which has been years in the making and may be released in the coming weeks, makes no specific mention of government of military responses, according to the newspaper. It mentions the use of quarantines and travel restrictions, but acknowledges they would likely be ineffective in stopping a pandemic.

      Serious Business

      A flu pandemic is a global outbreak of disease that occurs when a new influenza A virus appears or emerges in the human population, causes serious illness, and then spreads easily from person to person worldwide. Pandemics are different from seasonal outbreaks or epidemics of influenza.

      Seasonal outbreaks are caused by subtypes of influenza viruses that are already in existence among people, whereas pandemic outbreaks are caused by new subtypes or by subtypes that have never circulated among people or that have not circulated among people for a long time. Past influenza pandemics have led to high levels of illness, death, social disruption, and economic loss.

      Currently, the CDC assesses the risk of a bird flu pandemic as low, pointing out that the strain of virus found in Asia has not been found in the United States. However, the agency says it is working with domestic and international health agencies to develop and refine techniques to identify new viruses develop antiviral stockpiles.

      U.S. Fears Devastating ...
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      St. Louis Researchers Find Cell Phone Radiation Doesn't Promote Cancer

      Motorola-funded study finds cell phone radiation doesn't activate the stress response in mice

      Weighing in on the debate about whether cell phones have adverse health effects, researchers at Washington University School of Medicine in St. Louis have found in a study funded by Motorola that the electromagnetic radiation produced by cell phones does not activate the stress response in mouse, hamster or human cells growing in cultures.

      The stress response is a cellular protection mechanism set into motion by various adverse stimuli, including heat shock, heavy metals, and inflammation. High levels of the stress response in cells are thought to result in changes associated with malignancy.

      "We performed highly sensitive, extremely well-controlled tests on living cells irradiated with energy like that from mobile phones, but at levels 5 to 10 times higher than those set for the devices by regulatory agencies," says Andrei Laszlo, Ph.D., associate professor of radiation oncology and a researcher at the Siteman Cancer Center at Barnes-Jewish Hospital and Washington University School of Medicine.

      "We see no indication that factors involved in the stress response increase their activity as a result of such exposures," Laszlo said.

      Prior research into the effect of cell phones on the stress response has been fraught with contradictory results, which in part may be due to less-than-ideal experimental conditions. For example, in the past it has been difficult to prevent temperature changes caused by microwave exposure.

      Because heating of tissues has been shown unlikely to be a component of the effect of cell phone radiation on biological systems, Laszlo and his group sought to reduce as far as possible any heating of the cells in culture during the study. Using sensitive equipment that continuously monitored and adjusted temperature, they were able to keep temperature variations to plus or minus 0.3 degrees centigrade.

      The researchers tuned their room-sized irradiator to emit cell phone frequency microwaves for both FDMA (frequency domain multiple accessused for cell phone analog signals) and CDMA (code domain multiple accessused for digital signals) modulation at power outputs standard for mobile phones. The large size of the irradiator enabled them to expose a large number of living cells so that sufficient material could be collected for highly accurate measurements.

      "We were able to combine very good physics with very good biology as a consequence of the expertise of our research team," Laszlo says.

      To test whether the cell's stress response was activated by irradiation, the group looked for activation of a protein called heat shock factor (HSF). The activation of HSF is a necessary first step in the cascade of events that induce the stress response.

      Under both short-term exposures (5-60 minutes) and long-term exposures (1-7 days), all tests on the cells in culture showed that HSF was not activated by microwave radiation of either type, indicating the stress response was not initiated.

      "We've done extensive studies on the effect of cell phone radiation in our research group in the past as well," Laszlo says. "Dr. Joseph Roti Roti and his colleagues have examined the potential for DNA damage and cellular transformation, and the effect of microwave radiation on animals has been studied also. Now we've conducted this study of the molecular mechanisms of the stress response."

      "In every case we've looked at, our group saw no biological effects of cell phone radiation that could cause cancer."

      St. Louis Researchers Find Cell Phone Radiation Doesn't Promote Cancer...
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      Bank of America Tells Customers to "Keep the Change"

      Higher Debit Charges to Merchants May Offset Savings

      At a time when the rate of personal money saving has reached record lows, how does a bank convince its customers to put money aside? In Bank of America's case, it tells them to "keep the change."

      The Charlotte, NC-based financial giant's new "Keep the Change" program enables Bank of America's debit card holders to automatically deduct a small portion of a purchase into a linked savings account.

      Under the terms of the program, if a shopper pays $3.25 for an item, the total cost of the item is rounded up to the nearest whole dollar -- $4.00 in this case - and the 75-cent difference is automatically transferred to their savings account at the end of the day.

      Bank of America said it will match 100 percent of each transfer for the first three months, and will contribute five percent a year thereafter.

      The new system is being touted as a way for customers to save money in a simple fashion. Bank of America executive Diane Morais calls it "an electronic change jar. People can now turn those everyday purchases for groceries, gas and meals into a simple way to save."

      It also encourages customers to use their debit card.

      Banks earn a fee for every use of a debit or credit card in a transaction. These fees, called "point of sale fees" (POS) range from 25 cents to $2 per transaction. The cost of processing the transaction is borne by the retailer, who may in turn charge the customer more for goods they purchase.

      Mitch Goldstone, owner of online photo store 30 Minute Photo and an advocate of lower fees for card transactions, calls the new program "an underhanded scheme."

      "This is going to lead to higher charges and more costs that will be on the backs of consumers and merchants," he said.

      Goldstone said that a substantial number of debit card transactions, no matter their size, are processed as credit card transactions, which have even higher fees and end up costing consumers more in the long run.

      Goldstone is one of several plaintiffs in a series of lawsuits against Visa, MasterCard, and several major banks, including Bank of America, that are out to reduce or remove the "interchange fee" from credit card transactions.

      Ed Mierzwinski, consumer advocate and program director for the U.S. Public Interest Research Group (PIRG), expressed similar sentiments about the new program.

      "The savings are diminished compared to how much more the bank will make in these transactions. They are trying to increase the use of debit cards to increase their profits," Mierzwinski said.

      The new system is being touted as a way for customers to save money in a simple fashion. Bank of America executive Diane Morais calls it "an electronic cha...
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      Credit Cards "Treacherous" For Consumers

      More Americans are carrying increasingly large credit card balances

      More Americans are carrying increasingly large credit card balances, and a leading consumer journal says it's become much harder to get out of the jaws of credit card debt.

      An investigation by Consumer Reports, appearing in the November 2005 issue of the magazine, says "cozy relationships" among lawmakers, federal regulators, and credit card issuers have made credit cards "more treacherous" for consumers.

      The investigation reveals that credit card issuers have imposed interest rates in excess of 30 percent on consumers whose only offense might be a late payment to another creditor. The report also exposes other practices by issuers of credit cards that pose hazards for consumers, including:

      • Battered card holders with fees and penalties that now often hit $39.
      • Reduced grace periods when new purchases are free of interest.
      • Lobbied successfully to weaken protections for cardholders.
      • Increased fees for tardiness and for going over the credit limit.
      • Reduced minimum payments, thereby increasing the debt.

      Unfortunately for consumers, there have been no limits on interest rates for years, so a temptingly low 1.9 percent APR can morph into double-digit territory at the whim of the credit card company. Or worse, it can climb beyond 30 percent when a consumer does nothing more than sign up for a new credit card, inquire about a car loan, or make a single late payment to any creditor.

      "Consumers are sometimes offered a 0 percent introductory rate, but they may not realize that it only applies to transferred balances," says Marlys Harris, finance editor at Consumer Reports. "Then they pile up purchases which accrue interest at, say, 18 percent a year."

      Even consumers among the 45 percent of cardholders who pay balances in full each month are not off the hook either. As interest rates rise, issuers of credit cards are seeking ways to eke out income from them by charging additional fees for services or penalties for dormancy -- in other words, a few for not using the card.

      Unfortunately, there is little help for consumers. About 45 percent of credit card issuers force customers to submit disputes to arbitration. Regulators aren't likely to be of much help either. The majority of credit card issuers are overseen by a government agency funded by the industry.

      What to Do

      For now, the report says, the greatest power that consumers have is their own hands. In addition to supporting consumer-friendly issuers, Consumer Reports suggests the following:

      • Choose carefully. Start by reading the table of the 10 most consumer-friendly credit cards in the November 2005 issue of Consumer Reports.
      • Examine the offers. Scan the Schumer box, named for Sen. Charles Schumer, D-NY, who sponsored a law mandating disclosure of all rates in a type size that consumers can read.
      • Negotiate better terms. If the credit card imposes a late fee or a rate hike, ask for a waiver.
      • Pay on time. Mail payments as soon as the bill arrives.
      • Complain. Register a complaint with your state attorney general.

      Credit Cards Treacherous For Consumers...
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      Hard to Escape from Negative Option Marketing

      Simple Escapes Morphs into Vertrue

      Many a consumer has been perplexed by a charge on their bank or credit cards for something called "Simple Escapes." Usually it is for a small amount, but the consumers profess to have no recollection of ever hearing of it - much less agreeing to purchase it.

      The company behind Simple Escapes, the subject of consistent complaints to consumer Web sites and government agencies over a number of years, is Vertrue, based in Stamford, Connecticut. Until late 2004, it was known as MemberWorks.

      Vertrue is what is known as a member services marketing company. Similar to a buying club, it enrolls consumers in its membership programs that provide discounts on travel, health services, clothing and other consumer products and services.

      The company was founded in 1989 by a Gary Johnson, who launched his business career while still an engineering student at Harvard Business School in 1981. According to a company press release, Johnson helped start CUC International, a membership services business, in 1983. Johnson was the recipient of the Ernst & Young Entrepreneur Of The Year Award for Southwest Connecticut/New York Hudson Valley in 1999.

      By that time, MemberWorks had become a successful, fast-growing marketing firm with over $200 million in annual revenue. It was also about that time that MemberWorks began to run afoul of consumer authorities for its marketing practices. Specifically, its telemarketing practices.

      Minnesota Objects

      In June 1999 Minnesota Attorney General Mike Hatch sued US Bank, charging it had sold its customers' private financial information to MemberWorks for $4 million, plus a commission on sales to those customers. The state reached a settlement, under which the bank paid $3 million and agreed to stop sharing customers' financial information to marketers of non-financial products, to give customers notice and an opportunity to "opt out" of the sale of their financial information to market financial products, and to provide certain refunds to customers charged by telemarketers who bought their account numbers.

      Hatch also sued MemberWorks, charging it used a deceptive and misleading telemarketing sales pitch to solicit these consumers to join a variety of membership clubs allegedly offering discounts on health products, entertainment and travel.

      The resulting settlement required the company to change its telemarketing sales scripts, to provide advance notice of any upcoming membership renewal charges, and to give double refunds to consumers whom the company failed to tape-record accepting the membership. The company paid $75,000 in costs but admitted no liability.

      In the Minnesota case, consumers were found to be at a distinct disadvantage. When engaging a telemarketer, they had no idea that the person on the other end of the line - thanks to the deal with US Bank - already had access to their credit card or bank account information. As a result, many consumers were billed for services they say they did not intend to buy.

      New York Is Next

      In September 2000 MemberWorks reached agreement with the State of New York, settling charges of telemarketing abuses in connection with its sales of lifestyle club memberships which offered consumers alleged savings on a variety of products and services involving entertainment, shopping, home improvement, and health care.

      The settlement, according to New York Attorney General Eliott Spitzer, arose from his office's continuing investigation of banks and credit card issuers that violated their cardholders' privacy rights by selling their personal account information to telemarketers in return for a substantial commission.

      In conjunction with the New York settlement, MemberWorks announced it would implement "industry leading marketing practices" in New York.

      "The agreement with the New York Attorney General's office was not based upon any specifically identified consumer complaints, but rather the general concern that some consumers may be confused by disclosures made while marketing the programs," the company said in a release.


      In February 2001 MemberWorks reached a settlement with the Nebraska Attorney General's Office over its marketing practices. Again, MemberWorks, in a press release, attributed the problem to confused consumers, and pledged to make its policies clearer. It also announced it was implementing its "industry leading marketing practices" nationwide.

      "MemberWorks has agreed to put specific disclosure language within its telemarketing call scripts, clarifying to consumers when charges will occur and will also notify consumers by mail prior to placing a membership renewal charge on a consumer's account," the company said in a press release.

      California & the Negative Option

      Three months later, MemberWorks settled similar consumer complaints with the State of California. This time, MemberWorks and its marketing partner Sears were called to account for the manner in which MemberWorks club memberships were sold. California Attorney General Bill Lockyear found that consumers were confused when they were enrolled in the clubs as part of their transaction at a Sears store.

      "Specifically, the complaint alleges that consumers were not informed that defendants had the ability to charge their credit cards without the consumers providing their credit card numbers or ever signing anything," the Attorney General's Office said.

      "After purportedly agreeing to a trial period, consumers received a membership packet in the mail, which disclosed the negative option feature and the other terms of membership in tiny 6 to 7 point type."

      The so-called "negative option" is a provision in which consumers are charged for something unless they take some type of action to inform the company they do not want it. By no means limited to MemberWorks, the negative option is a growing tool used by marketers that often catches consumers unaware.

      While not admitting liability in the case, MemberWorks paid the State of California $1.5 million in civil penalties and costs while Sears was fined $500,000.

      Why Stop Now?

      Despite the litigation with Minnesota, New York, Nebraska and California, MemberWorks was a company on the fast track. In June 2001 it reported annual revenue of $474.7 million, up 44% from the previous year. Its membership base was up 14% to nearly eight million.

      In late 2002 MemberWorks announced a major marketing agreement with America Online, the once dominate Internet Service Provider, at that point struggling amidst the dot-com implosion. The agreement gave MemberWorks the opportunity to market its membership clubs to millions of AOL subscribers.

      "Under the agreement, MemberWorks will market nine of its membership programs across the AOL service, providing AOL members access to merchandise offers and savings on a comprehensive mix of top-tier, brand-name benefits. A wide variety of promotional offers designed especially for AOL members will be made available across the entire AOL service," MemberWords said in a press release.

      ClickZ News, an online marketing trade publication, reported that the deal called for MemberWorks to pay AOL $1 million in December 2002 and at least $3 million the following year. The report noted that it was MemberWorks' second major deal that month. Two weeks earlier it had signed a deal with Victoria's Secret to market to its customers.

      It wasn't long before began to get complaints, like this one from Dwight, of Salem, West Virginia, received in February 2003:

      I received my bank statement and it had a debit charge of $134.95 on it from "Simple Escapes." I had never heard of them. When I called the 1-888 number they told me that I had ordered this by a "Pop-Up" on AOL. I said I had never done that and besides how did they get my checking account number to which they replied "through AOL."

      Florida Cries Fraud

      In October 2003, following a three year investigation, Florida Attorney General Charlie Crist sued MemberWorks for violations of state consumer protection laws. The company objected, saying the complaint was based on past policies that had been rectified since the litigation of 2000 and 2001.

      "The company believes that the allegations of the complaint are unfounded and the company intends to vigorously defend its interests in this matter," MemberWorks said in a statement.

      Crist disagreed. His complaint alleged that MemberWorks violated Florida's Unfair and Deceptive Trade Practices Act by engaging in "various deceptive practices," including:
      • charging consumers credit card accounts without authorization, a practice referred to as cramming;
      • offering free gifts without disclosing financial requirements;
      • resisting consumer requests to cancel memberships or to obtain refunds; and
      • other abusive telemarketing practices.

      "Charging customers for products without their knowledge is fraud," said Crist. "These citizens were unknowingly victimized and deserve to be reimbursed."

      Noting that the company reported annual revenue of $400 million, the Florida Attorney General's Office said its investigation estimated that 50 percent of all sales were reported as "unauthorized," an astounding figure and a charge the company hotly denied.

      A year later, MemberWorks settled the Florida case by paying $950,000 and agreeing to double refunds to Florida consumers charged for MemberWorks clubs without proof they consented to the charge. However, it was made under protest, as the company made clear it expressly denied the charges.

      Today, Vertrue markets a number of membership products in partnership with some of the nation's best known retailers and Web sites, including and AOL. It staunchly defends its business practices, insisting it is abiding by all consumer protection laws. Yet, the consumer complaints haven't stopped. In fact, they are not substantially different from those consumers have leveled in earlier years.

      "My daughter was on last January. According to Simple Escapes she signed up for their service on a pop-up window in She claims she did not sign up for anything," said Matt, of Three Rivers, Michigan.

      "I am being billed for something called Simple Escapes that I never signed up for and I can't find anyway for this to stop happening," said Johnnie, of Toms River, New Jersey.

      "I just received my credit card statement and found a charge for $9.95 from Simple Escapes. I have no idea what this is, nor have I ever used any service like this. I looked this up on the internet and found this site here with all the other complaints. I can't believe this," said Allison, of Pleasant Hill, California.

      The above three complaints were received at since June 30, 2005. says that at its insistence, MemberWorks has made its charges more obvious to consumers coming from's Web site.

      In January of this year, we received a complaint from Michelle, of Reston, Virginia, who, with the help of Wachovia Bank, was able to receive a full refund after being charged for two Vertrue memberships she says she never enrolled in. In a follow-up interview with, Michelle said she believes the company got her credit card information when she purchased an item from a TV shopping channel in November 2004.

      "The following month a telemarketer called me and offered a $50 gift card at Target. He said I just had to listen to some of his offers, and that even if I declined all of them I would still get the gift card," she said.

      Michelle said she clearly declined all the offers but the following month she received her debit card statement with a $19.95 charge to Simple Escapes. She called Wachovia Bank, and a customer service representative conferenced her on a call to Simple Escapes.

      "They said that I had verbally agreed to enroll in the programs, but when I ask them to play the tape of the conversation, they couldn't do it. They ended up refunding the money," Michelle said.

      Fair Credit Billing Act

      Michelle, who said she never did receive the promised $50 Target gift card, was apparently able to extricate herself from the programs by demanding a "proof of purchase."

      The Fair Credit Billing Act requires banks and credit card companies to allow consumers to dispute a charge by demanding a proof of purchase. If a company cannot provide the bank or credit card company with proof that the product or service was actually ordered by the consumer, the bank or credit card company does not have to charge the consumer's account.

      Consumers who find themselves enrolled in Simple Escapes or any other membership program against their will should demand a proof of purchase from their credit card company, who will then be obliged to demand it from the marketing company. Sending this terse letter should also result in a speedy cancellation.

      How do you avoid getting signed up for something like Simple Escapes in the first place? Consumer experts suggest the following:

      • never talk to telemarketers;
      • avoid "free" or "trial" offers of anything;
      • don't fill out online surveys; and
      • carefully read the privacy policies of any e-commerce Web sites you patronize.

      If any Web site says it may share your financial information with third parties, it's a definite red flag.

      Similar to a buying club, it enrolls consumers in its membership programs that provide discounts on travel, health services, clothing and other consumer pr...
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      SUV Era May Be Ending

      Consumers Shunning New and Used SUVs, Trade In Value Drops

      The era of $3 gas is displacing the era of the SUV. Consumers are lining up to try to unload their big SUVs for fuel efficient vehicles. Trouble is no one is buying, at least not now.

      The resale value of used SUVs has dropped ten percent and dealers are offering as much as 30 percent less than blue book value for proposed trades. The sales of new SUVs are off as well, tumbling 50 percent in September.

      The Big Three summer sales extravaganza had already driven down the resale value of most used vehicles while the gas price run-up is hitting large SUV very hard.

      As a telling sign of the times the Toyota Prius Hybrid outsold every large SUV on the market except the Chevy Tahoe in September.

      AutoPacific, a California consumer research firm found that 28 percent of SUV owners said they will shift to another type of vehicle for their next purchase. Forty-four percent for the people responding said they would switch to small cars.

      Low trade-in values will mean higher car payments. A fuel efficient hybrid can turn out to be more expensive to operate even in an environment of rising gasoline price if one pays too much for it.

      Many SUV drivers are not alone in their desire to unload their vehicle. Ford, the second-largest US automaker, is offering rebates of as much as $3,000 on its sports-utility vehicles as the company seeks to revive sales.

      The shift in consumer preferences presents a huge marketing challenge for GM, which is still counting on large SUVs to help spark a turnaround for the company.

      Both Ford and GM rely on SUVs to make up for money-losing passenger car operations. The two automakers are already dealing with losses in North American automotive operations caused in part by years of sliding market share.

      For the most part, that market share has shifted to Asia and Japan where Toyota and Honda or the leaders in hybrid technology and production.

      Ford is preparing a major financial restructuring that is likely to be announced later this month and includes several plant closings and thousands of job cuts.

      GM is negotiating with the United Auto Workers in an effort to cut health-care costs.

      SUV Era May Be Ending...
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      Pure Farms Chicken Sausage, Beef Wieners Recalled

      October 4, 2005
      New Packing Co, Inc., a Chicago, firm, is voluntarily recalling approximately 1,076 pounds of chicken sausage products and beef wieners that may be contaminated with Listeria monocytogenes, the U.S. Department of Agriculture's Food Safety and Inspection Service announced.

      The products subject to recall are:

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS SMOKED CHICKEN ANDOULLE SAUSAGE." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS CHICKEN BRATWURST." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS CHICKEN BREAKFAST LINKS." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS CHICKEN ITALIAN SAUSAGE." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS CHICKEN POLISH SAUSAGE." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 12 ounce packages of "PURE FARMS ALL NATURAL COOKED SKINLESS UNCURED CHICKEN WIENER." Each package bears the establishment number "P-21280" inside the USDA seal of inspection and the sell by date "11.07.05."

      • 16 ounce packages of "PURE FARMS ALL NATURAL COOKED UNCURED BEEF WIENER." Each package bears the establishment number "EST. 21280" inside the USDA seal of inspection and the sell by date "11.05.05."

      The chicken sausage products and beef wieners were packaged on September 22 and were distributed to retail establishments in California, Florida, Illinois, Maine, Massachusetts, New Jersey, New York and Washington. All cases bear the lot code &quot265."

      The problem was discovered through FSIS microbiological sampling. FSIS has received no reports of illnesses associated with consumption of the product.

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

      Chicken Sausage, Beef Wieners Recalled...
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      Texas Shuts Down Debt Elimination Scheme Targeting Hurricane Evacuees

      Texas has shut down a planned seminar scheduled last Saturday at an Austin hotel that promised hurricane victims and others the complete elimination of debt in exchange for a $5,000 up-front deposit.

      The company, through a Web site known as, required the wiring of the one-time deposit to initiate the process that would allow the consumer to become debt-free by December. Those interested were to have been given details at the Austin seminar, which was never held.

      This is an example of the kind of outlandish fraud targeting hurricane victims and others in debt that I am eager to pursue in court, said Texas Attorney General Greg Abbott. Those unfortunate Texans who are beset with indebtedness due to recent disasters have legitimate channels in place that can help them. These bogus operators have nothing to offer but more misfortune and heartache. and operators David J. West, Roxana Suadi West and Carlos M. Suadi were ordered by a Travis County District Court to immediately cease a planned seminar scheduled for Saturday.

      The operators canceled the event and fled the scene when they were informed by hotel security that the Attorney General had filed this action. The temporary restraining order will remain in effect until Oct. 12, when a temporary injunction hearing is set.

      The operation, using the corporate name Pydia, Inc., promised the elimination of debt by December with the help of an unidentified national bank specializing in debt forgiveness. The defendants claimed the scheme was possible because the bank would profit from the venture through fractional banking or debt forgiveness banking practices.

      However, to become enrolled, consumers would be required to wire a one-time $5,000 fee to an account in the name of Del Sur International Holdings, which the Attorney Generals investigators traced to Panama. referred to the deposit as a placeholder, giving the consumer an opportunity to retain his or her place in line to ensure debt erasure by the bank. The bank would then use the deposit to defray the costs of the entire process of eliminating debt.

      Once the cumulative debt of applicants reached $100 million, then the bank would begin making loans to pay off individual debts. Once a consumer paid off his debt, the loan would be forgiven.

      The defendants supposedly hatched the plan in late September, using various media to publicize a toll-free number to the Bank Opportunity Information Line and urging consumers to call the number and attend the free open seminars.

      The defendants ramped up their campaign via radio commercials in southern states after hurricanes Katrina and Rita. The Attorney General sent a warning to the states of Louisiana and Tennessee about the company and its practices.

      The lawsuit seeks restitution to consumers who paid this deposit via wire transfer, as well as civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, attorneys fees and investigative costs.

      Texas Shuts Down Debt Elimination Scheme Targeting Hurricane Evacuees...
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      Florida Accuses Island Food Stores of Gas Price Gouging

      Says company improperly raised prices after Katrina

      Florida Attorney General Charlie Crist has filed the states second lawsuit over price gouging from Hurricane Katrina, accusing a Tallahassee gas station of unconscionably raising its gasoline prices 72 cents per gallon during the state of emergency.

      Crists complaint alleges that Island Food Stores, Ltd., the Jacksonville-based fuel retailer that owns the Tallahassee station, improperly raised its prices even though the increases were not forced by market conditions at the time.

      Island Food Stores owns and supplies BP/Amoco fuel to the station at 3436 Thomasville Road in Tallahassee. Island sets prices at its stations pumps.

      Because of the stations convenient location adjacent to a major interstate leading to and from the hurricane-impacted area, both Hurricane Katrina victims fleeing the storm and emergency personnel trying to reach the affected areas were potential victims of the gouged prices.

      Shortly following Katrinas devastation, the Attorney Generals Office received more than 1800 complaints about the skyrocketing prices of fuel. These complaints prompted Attorney General Crist to launch a statewide investigation, sending teams of investigators and sworn law enforcement personnel to locations throughout Florida to determine whether the rapid rise in gas prices met the legal definition of gouging.

      While responding to complaints in Tallahassee, investigators noticed the Island stores exceptionally high prices and discovered that the station allegedly had hiked prices more than 70 cents per gallon for regular unleaded gasoline over a three-day period.

      "Hurricane Katrina was one of the worst natural disasters our country has ever faced. People fled for their lives, many of them seeking refuge in Florida," said Crist.

      "In addition, Florida served as a staging area for relief efforts going out toward the afflicted area. While I am proud of our state for providing a haven to those in need and sending help where required, it infuriates me that price gougers would target victims under such desperate circumstances. We will not let this stand."

      Between August 31 and September 1, the price of regular unleaded gas sold at the Island station increased a total of 62 cents per gallon, even though the station had received no delivery of regular unleaded gas and encountered no increase in total costs. Midgrade gasoline increased 72 cents per gallon between August 31 and September 2, with no delivery or increase in cost to the station.

      The stations profit margins tripled for regular unleaded gas from August 30 to September 1, and more than doubled for premium gas and tripled for midgrade gas from August 30 to September 2.

      Island is charged with violating Florida's price gouging statute, which carries a maximum fine of $1,000 for each occurrence up to a total of $25,000 for multiple violations committed in a single 24-hour period.

      Additionally, the business is charged with violating Florida's Unfair and Deceptive Trade Practices Act, which carries a penalty of $10,000 or $15,000 for any victims over the age of 60.

      As of today, the Attorney General's Office had received close to 4,000 complaints about skyrocketing gas prices through its toll-free consumer hotline (1-866-9-NO-SCAM, or 1-866-966-7226) and email correspondence.

      On September 9, Attorney General Crist filed a lawsuit against a Swifty Stars retail gas station in Tallahassee, with allegations similar to those against Island Food Stores. As part of his ongoing investigation into the rising price of gasoline, Crist has also subpoenaed four gasoline distributors seeking records of their deliveries into Florida. Those companies are Colonial Oil Industries, Murphy Oil USA, Motiva Enterprises (a subsidiary of Royal Dutch Shell) and Tate Oil Company.

      During the record-setting 2004 hurricane season, the Attorney General's price gouging hotline received 8,911 complaints. After receiving those complaints, the office initiated 58 formal investigations and filed 13 price gouging lawsuits against hotels, generator businesses, tree removal companies and other businesses. To date, the Attorney General's Office has recovered approximately $725,000 in restitution for Florida consumers.

      Florida Accuses Island Food Stores of Gas Price Gouging...
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      New Jersey Charges Stations, Oil Companies with Gas Price Gouging

      New Jersey has filed lawsuits against oil companies and independent gas-station operators for price violations during the Hurricane Katrina crisis

      New Jersey has filed lawsuits against oil companies and independent gas-station operators for price violations during the Hurricane Katrina crisis.

      Companies that prey on hard-working families through fraudulent practices should feel the full force of the law, said Acting Governor Richard J. Codey. Katrina was a devastating hurricane not a financial windfall for the shameless.

      Oil companies Hess, Motiva Shell, Sunoco and various independent gas-station operators are charged with violating the State Motor Fuels Act and Consumer Fraud Act through their pricing practices.

      The violations found at both company-owned and -operated and independently-owned gas stations include multiple price changes occurring during a 24-hour period. Fueled by motorists inquiries and Governor Codeys direction, the State Office of Weights and Measures, as well as county and municipal inspectors, increased station inspections and monitored the sharp increase in gasoline prices in the days before the Labor Day weekend and Hurricane Katrinas landfall.

      The States four lawsuits, filed in State Superior Court in Mercer County, charge that the defendants violated New Jerseys laws by:

      • revising gas prices at the pump more than once every 24 hours;

      • failing to display signs for motor fuel prices;

      • failing to maintain books and records;

      • failing to provide access to books and records;

      • engaging in Unconscionable Commercial Practices; and

      • violating advertising regulations.

      We're going after these oil companies and gas station owners to the fullest extent of the law, Attorney General Peter C. Harvey said. Consumers are at the mercy of gasoline suppliers and retailers, because most people need gas to drive to work and run essential errands on a daily basis. We will not allow businesses to exploit natural disasters such as Hurricane Katrina by inflating prices at the pump in violation of New Jersey's laws.

      The independent station owners named in the lawsuits sell Citgo, Hess, Shell and Sunoco brand gasoline.

      Also under the direction of Governor Codey, state, county and municipal Weights and Measures inspectors have been proactively monitoring operations at gas stations, as well as investigating complaints filed by motorists, Consumer Affairs Director Kimberly Ricketts noted.

      Investigators from the State Office of Consumer Protection also are working with Office of Weights and Measures inspectors. I want to commend the motorists who contacted their local office or the State Office of Weights and Measures and filed complaints, Director Ricketts said. Their attention to multiple prices increases occurring during a single day, of roadside price signs not matching the price set on the pump and other violations led inspectors to problem locations.

      Consumers want to know why gas prices skyrocketed overnight as Hurricane Katrina made landfall but then only slowly inched downward as oil prices fell several dollars a barrel in the following days, Ricketts added. There seems to be a speed aberration that even Einstein would have difficulty understanding.

      Violations of the Motor Fuels Act carry a $50 to $200 penalty. Violations of the Consumer Fraud Act, which include unconscionable commercial practices and false or misleading advertising, carry a penalty of up to $10,000 for a first offense and up to $20,000 for subsequent offenses. Deputy Attorneys General Brian Brennan and Jeffrey Koziar are representing the State in these matters.

      New Jersey Charges Stations, Oil Companies with Gas Price Gouging...
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