1. Home
  2. News
  3. 2007
  4. February

News in February 2007

Browse by year

2007

Browse by month

Get trending consumer news and recalls

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

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

    IRS Warns of Common Income Tax Scams

    Inflated Telephone Excise Tax Refunds Top the List


    Fraudulent telephone excise tax refunds top the list of income tax scams this year, according to the Internal Revenue Service.

    This year the IRS' "Dirty Dozen" highlights five new scams that IRS auditors and criminal investigators have uncovered. Topping off the list are fraudulent refunds being claimed in connection with the special Telephone Excise Tax Refund available to most taxpayers this filing season. The IRS is actively investigating instances of this scam involving tax preparers who are preparing inflated refund requests.

    Also new to the Dirty Dozen this year are abuses pertaining to Roth IRAs, the American Indian Employment Credit, domestic shell corporations and structured entities.

    "Taxpayers shouldn't let their guard down," IRS Commissioner Mark W. Everson said. "Don't get taken by scam artists making outrageous promises. If you use a tax professional, pick someone who is reputable. Taxpayers should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction."

    Involvement in tax schemes leads to problems for scam artists and taxpayers. Tax return preparers and promoters risk significant penalties, interest and possible criminal prosecution.

    The IRS urges taxpayers to avoid these common schemes:

    1. Telephone Excise Tax Refund Abuses: Early filings show some individual taxpayers have requested large and apparently improper amounts for the special telephone tax refund. In some cases, taxpayers appear to be requesting a refund of the entire amount of their phone bills, rather than just the three-percent tax on long-distance and bundled service to which they are entitled. Some tax preparers are helping their clients file apparently improper requests. The IRS is investigating potential abuses in this area and will take prompt action against taxpayers who claim improper refund amounts and against the return preparers who help them.

    2. Abusive Roth IRAs: Taxpayers should be wary of advisers who encourage them to shift under-valued property to Roth Individual Retirement Arrangements (IRAs). In one variation, a promoter has the taxpayer move under-valued common stock into a Roth IRA, circumventing the annual maximum contribution limit and allowing otherwise taxable income to go untaxed.

    3. Phishing is a technique used by identity thieves to acquire personal financial data in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards or apply for loans in their names. These Internet-based criminals pose as representatives of a financial institution or sometimes the IRS itself and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number. It is important to note the IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call 1-800-829-1040 to confirm it.

    4. Disguised Corporate Ownership: Domestic shell corporations and other entities are being formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity. Once formed, these anonymous entities can be, and are being, used to facilitate underreporting of income, non-filing of tax returns, listed transactions, money laundering, financial crimes and possibly terrorist financing. The IRS is working with state authorities to identify these entities and to bring their owners into compliance.

    5. Zero Wages: In this scam, which first appeared in the Dirty Dozen in 2006, a Form 4852 (Substitute Form W-2) or a "corrected" Form 1099 showing zero or little income is submitted with a federal tax return. The taxpayer may include a statement rebutting wages and taxes reported by the payer to the IRS. An explanation on the Form 4852 may cite statutory language behind Internal Revenue Code sections 3401 and 3121 or may include some reference to the paying company refusing to issue a corrected Form W-2 for fear of IRS retaliation.

    6. Return Preparer Fraud: Dishonest return preparers can cause many headaches for taxpayers who fall victim to their schemes. Such preparers make their money by skimming a portion of their clients' refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote filing fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer. As the old saying goes, "If it sounds too good to be true, it probably is." Remember that no matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others. During fiscal year 2006, 109 tax return preparers were convicted of tax crimes and sentenced to an average of 18 months in prison.

    7. American Indian Employment Credit: Taxpayers submit returns and claims reducing taxable income by substantial amounts citing an American Indian employment or treaty credit. Although there is an Indian Employment Credit available for businesses that employ Native Americans or their spouses, there is no provision for its use by employees. In a somewhat similar scam, unscrupulous promoters have informed Native Americans that they are not subject to federal income taxation. The promoters solicit individual Indians to file Form W-8 BEN seeking relief from all withholding of federal taxation. A recent "phishing" variation has promoters using false IRS letterheads to solicit personal financial information that they claim the IRS needs in order to process their "non-tax" status.

    8. Trust Misuse: For years unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. There are currently more than 150 active abusive trust investigations underway and 49 injunctions have been obtained against promoters since 2001. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust. 

    9. Structured Entity Credits:  Promoters of this newly identified scheme are setting up partnerships to own and sell state conservation easement credits, federal rehabilitation credits and other credits. The purported credits are the only assets owned by the partnership and once the credits are fully used, an investor receives a K-1 indicating the initial investment is a total loss, which is then deducted on the investor's individual tax return. Forming such an entity is not a viable business purpose. In other words, the investments are not valid, and the losses are not deductible.

    10. Abuse of Charitable Organizations and Deductions: The IRS continues to observe the use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income. Contributions of non-cash assets continue to be an area of abuse, especially with regard to overvaluation of contributed property. In addition, the IRS is noticing the return of private tuition payments being disguised as charitable contributions to religious organizations.

    11. Form 843 Tax Abatement: This scam rests on faulty interpretation of the Internal Revenue Code. It involves the filer requesting abatement of previously assessed tax using Form 843. Many using this scam have not previously filed tax returns and the tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses the Form 843 to list reasons for the request. Often, one of the reasons is: "Failed to properly compute and/or calculate IRC Sec 83-Property Transferred in Connection with Performance of Service."

    12. Frivolous Arguments: Promoters have been known to make the following outlandish claims: the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; wages are not income; filing a return and paying taxes are merely voluntary; and being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don't believe these or other similar claims. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

    IRS Still Watches Scams That Fall Off the List

    Five of last year's Dirty Dozen tax scams rotated off the list for 2007. While the IRS has seen a decline in the occurrence of some of these scams abusive credit counseling agencies, for example other problems, such as offshore abusive transactions continue to be an area of particular concern for the agency. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.

    IRS Warns of Common Income Tax Scams...
    Read lessRead more

    The Amphetamine Connection: How Meth is Driving the Identity Theft Pandemic

    How Meth is Driving the Identity Theft Pandemic


    How does a driver's license stolen from a St. Louis, Missouri, man end up in a cheap motel room hundreds of miles away?

    That's a question that initially baffled investigators when they found the ID in the Merriam, Kansas, flophouse.

    But it didn't take long for police to solve the mystery once they learned the motel room doubled as an identity theft laboratory -- filled with computers, scanners, printers, and dozens of stolen ID's -- and the masterminds behind the operation were methamphetamine addicts.

    "There's a close link between methamphetamine use and identity theft," says Prosecutor Vanessa Riebli, head of the Johnson County, Kansas, District Attorney's Economic Crime Unit. "ID's are traded or sold for drugs across the country, and drug users are supporting their habit with identity theft."

    And they're making good money. The husband-wife team involved in the Merriam, Kansas case netted $60,000-$100,000 in their scheme, Riebli says.

    "Identity theft is so much more profitable than other crimes," she says, adding the husband made the phony checks and the wife passed them using the fake ID's. "And if the defendants get caught, they know the penalties for identity theft are less severe than other crimes."

    Riebli charged the couple involved in this 2003 case with identity theft, but neither served much time behind bars. Thirty-seven-year-old Owen Samuel Barlow, a former computer programmer at Sprint, received a two-year sentence. His wife -- 41-year-old accountant Teresa A. Barlow -- received an 18-month sentence.

    Story continues below video

    Riebli says this case illustrates why methamphetamine addicts have turned to identity theft -- the fastest growing crime in the country -- to support their habits.

    "Why would you rob a bank when you can walk inside a bank, commit check fraud, get more money, and -- if you get caught -- receive a much less severe penalty?"

    100% Free Financing

    Owen & Theresa Barlow
    Source: Kansas Department of Corrections

    Detective Byron Pierce of the Overland Park, Kansas, Police Department has investigated scores of identity theft cases.

    And he's noticed a sharp increase in the number of methamphetamine users stealing or assuming someone else's identity to finance their addictions, which can cost hundreds of dollars a day.

    "When our officers bust meth labs, they're seeing stolen personal information like credit cards, driver's licenses, Social Security cards, checkbooks, employee ID's," says the veteran detective with the department's Financial Crime Unit.

    "There's a direct correlation between drugs and fraud. When drugs are involved, fraud is involved. When fraud is involved, drugs are involved. The two are almost synonymous. And there's no question that there's a correlation between methamphetamine use and identity theft," he said.

    What's the driving force behind this criminal phenomenon?

    "Identity theft is 100 percent free financing for their drugs," Pierce says. "When you finance your drugs with other peoples' personal information, there's no risk associated with buying any amount of drugs because it's not affecting your bottom line.

    "Identity theft is also an easy crime to commit, and if you get caught the penalties are less severe than those associated with other crimes," he adds. "The people involved in these crimes know that. Everyone talks ... there's a lot of collaboration and they'll say 'that's a good idea, let's try it.'"

    "Time to plot out a plan to get money"

    Methamphetamine addicts are also excellent candidates to commit identity theft because of the effects the drug has on their systems, medical experts say.

    A meth user, for example, can stay awake for days and do such repetitive tasks as piecing together shredded documents or testing credit card numbers to buy merchandise online.

    "These users can be up for days and that gives them time to plot out a plan to get money," says Jim Philipps with the National Association of Counties. His organization studied the criminal effects methamphetamine has on communities. "They'll come up with ways to get money ... usually by stealing mail or credit cards."

    Twin Scourges Intertwine

    Law enforcement officials say the connection between methamphetamines and identity theft has become a nationwide problem -- one that started in the West and is rapidly moving across the country.

    Consider:

    • Two Oxford, Georgia, women who ran an identity theft scheme pleaded guilty in November 2006, to possession of stolen mail. The women confessed they dealt methamphetamines and their customers paid them with stolen mail. The women would then use the financial information in the stolen mail -- including paychecks, credit cards, and bank statements -- to commit identity theft. "This case demonstrates that the twin scourges of meth and identity theft often intertwine -- multiplying their damaging effects on the public, since one crime is used to fuel the other," said United States Attorney David E. Nahmias.

    • Postal inspections in 2005 tracked down an Arizona woman -- who had eluded them for than a year -- in a Phoenix apartment. Investigators found personal information belonging to 400 potential identity theft victims, a stash of methamphetamine in the kitchen, and merchandise purchased with stolen credit cards.

    • The San Diego, California, District Attorney's Office reported that cases involving methamphetamine and identity theft jumped 35 percent from 2002-2005. Law enforcement officials in San Diego also noted that 75 percent of the suspects in local identity theft cases showed evidence of methamphetamine abuse. San Diego officials called the connection between meth and identity theft "a clear danger to both the public and business community."

    • In 2006, The National Association of Counties examined the criminal effect of methamphetamine on communities. Of the 500 sheriffs who responded to the survey, 31 percent reported an increase in identity theft-methamphetamine related crimes.

    One of the sheriffs who participated in that study is Patrick Hedges of San Luis Obispo, California.

    "Our experience with meth users is that they often steal mail," he says. "There are people who go around almost every night and look for mailboxes that have the flags up. They take the mail and if they find checks, they'll doctor them and make the checks payable to themselves. Or they'll apply for a credit card using the stolen information."

    He adds: "These meth users are usually people on the street who have to support their habit. They're the ones who lift mail, get involved in stolen checks and credit cards, or copy down someone's personal information at a restaurant or gas station. They're involved in less risky types than someone on heroin."

    "A Wave of Identity Theft

    This growing methamphetamine-identity theft problem has captured the attention of U.S. Senator Maria Cantwell, (D-Wash.).

    In 2005, Cantwell introduced a bill that asked the Justice Department to investigate the link between ID theft and methamphetamine use. The measure was referred to the Judiciary Committee, but never came up. Cantwell's office says the senator plans to reintroduce the bill this year.

    When she introduced the measure in 2005, Cantwell said: "The meth epidemic is creating a wave of identity theft."

    Her bill has the support of U.S. Senator Dianne Feinstein (D-Calif.).

    "In recent years, we've seen the number of meth labs seized and reports of identity theft shoot up," Feinstein said in 2005. "Law enforcement officials are reporting that this is not just a coincidence. These two crimes can turn people's lives upside down and threaten entire communities. It's time to take a closer look at the connection between meth use and identity theft."

    Identity Theft Capital

    One of the hotbeds of identity theft in the country -- and a state where methamphetamine is widespread -- is Arizona.

    The Federal Trade Commission in 2006 even named the Grand Canyon State the identity theft capital of the United States. The FTC reported Arizona had 156.9 identity theft victims per 100,000 people.

    U.S. Postal Inspector Bob Maes says there's a good chance the criminals who stole those victims' identities were hooked on meth.

    "In the West it seems like methamphetamine abuse runs hand-in-hand with identity theft," says Maes, who worked in Phoenix until 2004 and then transferred to Utah. "These meth addicts all know someone who will trade drugs for Social Security numbers. One meth addict will know someone who does dumpster diving, one knows someone who steals mail, and another knows someone who is into home burglaries.

    "The issue is not the ID, it's the date of birth, Social Security, or identification number on that ID," he adds. "That's what they want. And when you talk to these meth users, they'll know the going rate for a checkbook or a credit card."

    Detective Pierce with the Overland Park Police Department says a good ID in Kansas has a street value of $100-$500.

    But some ID's go for much more.

    "I've learned through interviews with people I've arrested that these guys love checkbooks with Ph.D, CEO, or doctor on the checks. The ID's of a Ph.D. or doctor is much higher and worth a lot more on the street."

    Pierce and other law enforcement officials say methamphetamine users will stop at nothing to get someone's ID and other personal information.

    "What we're finding is these meth users are committing burglaries themselves and looking for personal data and information they can turn into something usable," Pierce says.

    But there are other unsuspecting ways methamphetamine users can obtain your personal information to support their drug habits:

    • A clerk at a bank, retail store, or dry cleaner can write down your personal information or credit card number. "We've had cases where a clerk at a convenience store wrote down information from checks and then turned around and sold that information," says Postal Inspector Maes.

    • A waiter or waitress can scan your credit card -- or write down the numbers -- and sell the information. "When you give your credit card to waiter you don't know what happens to it," says Sheriff Hedges of San Luis Obispo.

    • Files can be stolen from your investment company. "Many times this happens by an insider who works for a financial institution and is a drug addict," Maes says.

    • Employees of painting or cleaning companies -- working after the businesses close -- can steal client information. "They can steal a few files and no one will know they're missing until the information is compromised," Maes says.

    Consumers are also "asking for trouble" if they leave birth certificates, checkbooks, saving accounts information, Social Security cards, and other personal information in an unlocked car or home, Maes says.

    The Underground Market

    If your identity is stolen, law enforcement officials say, you're likely to be victimized again -- in many cases by another methamphetamine user.

    "There's an underground market where your information is traded and bartered all over streets and maybe all over the country," says detective Pierce. "Remember, this is 100 percent free financing for these methamphetamine users. The drugs are free when they buy them and they're free when they sell them."

    Prosecutor Riebli of Johnson County, Kansas, agrees.

    "If you've had your identity compromised, it can happen again and again," she says. "There's nothing to prevent these individuals from trading ID's for their drugs."

    That means your stolen identity could wind up in some cheap motel room and be used to finance another meth-head's addiction.

    The Amphetamine Connection: How Meth is Driving the Identity Theft Pandemic...
    Read lessRead more

    Get trending consumer news and recalls

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

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

      Four Types of Identity Theft


      Law enforcement officials say there are four types of identity theft:

      Financial ID Theft: This involves the theft and misuse of someone's name and Social Security number (SSN). The identity thief may apply for telephone service, credit cards or loans, buy merchandise, or lease cars or apartments using that stolen information;

      Criminal ID Theft: Criminals involved in this scheme give an identity theft victim's information instead of their own when stopped by law enforcement. When an arrest warrant is issued, it's in the name of the identity theft victim;

      Identity Cloning: This happens when criminals use an identity-theft victim's information to establish a new life. Those involved in this crime include illegal aliens and those avoiding warrants;

      Business or Commercial Identity Theft: This happens when identity thieves obtain credit cards or checking accounts in the name of a business. The business finds out when unhappy suppliers send collection notices or their business rating score is affected.

      An Addict's Glossary

      Law enforcement officials say identity thieves and methamphetamine users have their own language. Here are a few examples:

      Cranksters -- Meth users;

      Tweaker -- A methamphetamine abuser who probably has not slept in 3-15 days and is irritable and paranoid. According to Narconon Southern California, an inpatient drug and alcohol education and rehabilitation service, tweakers are considered the most dangerous type of meth abuser to medical personnel and law enforcement officers;

      Lurping -- A meth addict searching for anything he or she can sell or trade. It's also used to mean stealing anything that is not nailed down;

      Boogling -- This term means stealing mail in Utah. It can also mean stealing your credit card number by diving into dumpsters, looking over your shoulder, taking your mail and using camera phones to take a picture of your credit card;

      Car Clout -- Car burglary or theft from a vehicle.

      Components of Identity Theft

      Detective Byron Pierce of the Overland Park, Kansas, Police Department, says there are three components involved in identity theft.

      They are:

      Collectors: These are the people solely responsible for collecting stolen information. These people may break into your car, or they might be a trusted employee inside a finance institution, a medical office, or anyone who has access to personal data;

      Converter: This is the person with the technology expertise. He or she has the computers, scanners and digital cameras used to make the fraudulent I.D. or checks;

      Passers: This person is often indigent or desperate for money. Collectors or converters will dress-up these individuals and send them out to buy merchandise, get credit cards, cash checks or open other accounts with the phony ID's.

      "Ninety-percent of time, the person we arrest is the passer," Pierce says. "And that's the person who is usually standing on the corner, peddling drugs. He's the lowest person on the totem pole -- all he gets is paid. And when he is arrested, he's simply replaced. It doesn't affect the overall operation."

      Next: What Can You Do?

      The Amphetamine Connection: How Meth is Driving the Identity Theft Pandemic...
      Read lessRead more

      Data Thieves Hit Stop & Shop

      Card Readers Tampered With, PIN Numbers Stolen

      Quincy, Massachusetts-based Stop & Shop Supermarkets reports that several of its stores have been hit by thieves who tampered with checkout-lane card reade..

      FDA Widens Peanut Butter Warning

      First Lawsuit Filed Against ConAgra; Many More expected

      The U.S. Food and Drug Administration, in a broader warning, says that all Peter Pan peanut butter purchased since May 2006 should be discarded.

      The agency had earlier said that certain batches of Peter Pan and Wal-Mart's Great Value brand peanut butter -- those with a product code on the lid beginning with 2111 -- might contain salmonella.

      Meanwhile, in Sylvester, Georgia, government and company investigators are swarming over the ConAgra Foods plant, trying to determine how salmonella got into batches of the peanut butter, admidst rapidly increasing reports of consumer illness and at least one lawsuit against ConAgra.

      The plant has been shut down since Wednesday, when the Food and Drug Administration (FDA) warned that Peter Pan brand peanut butter and some batches of Wal-Mart's Great Value house brand were linked to a salmonella outbreak that has sickened at least 300 people nationwide since August.

      The number of those sickened is likely much higher than the official estimate as many cases are never diagnosed, as consumers -- like Glenda of Richland, Washington -- simply suffer through the illness on their own.

      "I know for sure that three jars that I have eaten from have the correct serial numbers on them," Glenda said in a complaint to ConsumerAffairs.com, "I have been to the emergency room 3 times with severe cramping, vomiting and diarrhea since August and have had many other bouts that are undocumented since that time as well, plus persistent fatigue and aching eyes and wrists."

      "My husband has also had several minor bouts of stomach cramping and vomiting," Glenda said.

      Deborah of Salem, N.C., had a similar experience.

      "I purchased the Peter Pan Peanut Butter with the product code 2111 which has just been recalled. After consuming a peanut butter and banana sandwich I became very ill with stomach cramps, diarrhea and vomiting," she said. "I thought it was just a stomach virus thinking that there was nothing in a peanut butter and banana sandwich that could make me sick."

      "It was lucky for me that I because sick on Friday night and was sick through the weekend but did not miss any work. It just left me weak and not feeling well for about a week," she said.

      But while young, healthy adults may be able to fight off the illness on their own, the very young and the very old are much more susceptible to complications.

      "My mother-in-law is almost 90 ... She ate some Peter Pan peanut butter (and) a few days later she stared saying she could't breathe. They took her to the hospital, did all kinds of blood tests ... then we find out about salmonella," said Kenneth of Bosque Farms, N.M.

      First Lawsuit

      The first of what's likely to be a rash of lawsuits was filed against ConAgra in U.S. District Court in Kansas City, Mo., Friday by Susanna and Brian Cox of St. Joseph, Mo.

      The lawsuit says Susanna Cox and the couple's two children began developing gastrointestinal illnesses in October after eating Great Value peanut butter, made by ConAgra.

      What To Watch For

      The affected jars of Peter Pan and Great Value peanut butter have a product code located on the lid of the jar that begins with the number "2111." Both the Peter Pan and Great Value brands are manufactured in a single facility in Georgia by ConAgra. Great Value peanut butter made by other manufacturers is not affected.

      If consumers have any of this Peter Pan or Great Value brand peanut butter in their home that has been purchased since May 2006, they should discard it.

      Symptoms of foodborne illness caused by Salmonella include fever, diarrhea and abdominal cramps. In persons with poor underlying health or weakened immune systems, Salmonella can invade the bloodstream and cause life-threatening infections.

      Individuals who have recently eaten Peter Pan and Great Value brand peanut butter beginning with product code 2111 and have experienced any of these symptoms should contact their doctor or health care provider immediately. Any such illnesses should be reported to state or local health authorities.


      fda, Peanut Butter-Borne Illness Increase...
      Read lessRead more

      Reports of Peanut Butter-Borne Illness Increase

      First Lawsuit Filed Against ConAgra; Many More expected

      In Sylvester, Georgia, government and company investigators are swarming over the ConAgra Foods plant, trying to determine how salmonella got into batches of the peanut butter, admidst rapidly increasing reports of consumer illness and at least one lawsuit against ConAgra.

      The plant has been shut down since Wednesday, when the Food and Drug Administration (FDA) warned that Peter Pan brand peanut butter and some batches of Wal-Mart's Great Value house brand were linked to a salmonella outbreak that has sickened at least 300 people nationwide since August.

      The number of those sickened is likely much higher than the official estimate as many cases are never diagnosed, as consumers -- like Glenda of Richland, Washington -- simply suffer through the illness on their own.

      "I know for sure that three jars that I have eaten from have the correct serial numbers on them," Glenda said in a complaint to ConsumerAffairs.com, "I have been to the emergency room 3 times with severe cramping, vomiting and diarrhea since August and have had many other bouts that are undocumented since that time as well, plus persistent fatigue and aching eyes and wrists."

      "My husband has also had several minor bouts of stomach cramping and vomiting," Glenda said.

      Deborah of Salem, N.C., had a similar experience.

      "I purchased the Peter Pan Peanut Butter with the product code 2111 which has just been recalled. After consuming a peanut butter and banana sandwich I became very ill with stomach cramps, diarrhea and vomiting," she said. "I thought it was just a stomach virus thinking that there was nothing in a peanut butter and banana sandwich that could make me sick."

      "It was lucky for me that I because sick on Friday night and was sick through the weekend but did not miss any work. It just left me weak and not feeling well for about a week," she said.

      But while young, healthy adults may be able to fight off the illness on their own, the very young and the very old are much more susceptible to complications.

      "My mother-in-law is almost 90 ... She ate some Peter Pan peanut butter (and) a few days later she stared saying she could't breathe. They took her to the hospital, did all kinds of blood tests ... then we find out about salmonella," said Kenneth of Bosque Farms, N.M.

      First Lawsuit

      The first of what's likely to be a rash of lawsuits was filed against ConAgra in U.S. District Court in Kansas City, Mo., Friday by Susanna and Brian Cox of St. Joseph, Mo.

      The lawsuit says Susanna Cox and the couple's two children began developing gastrointestinal illnesses in October after eating Great Value peanut butter, made by ConAgra.

      What To Watch For

      The affected jars of Peter Pan and Great Value peanut butter have a product code located on the lid of the jar that begins with the number "2111." Both the Peter Pan and Great Value brands are manufactured in a single facility in Georgia by ConAgra. Great Value peanut butter made by other manufacturers is not affected.

      If consumers have any of this Peter Pan or Great Value brand peanut butter in their home that has been purchased since May 2006, they should discard it.

      Symptoms of foodborne illness caused by Salmonella include fever, diarrhea and abdominal cramps. In persons with poor underlying health or weakened immune systems, Salmonella can invade the bloodstream and cause life-threatening infections.

      Individuals who have recently eaten Peter Pan and Great Value brand peanut butter beginning with product code 2111 and have experienced any of these symptoms should contact their doctor or health care provider immediately. Any such illnesses should be reported to state or local health authorities.


      Reports of Peanut Butter-Borne Illness Increase...
      Read lessRead more

      Does Pollution Play a Role in Obesity?

      Researcher Says Endocrine Disrupters Need More Study


      Obesity is generally discussed in terms of caloric intake -- how much a person eats -- and energy output -- how much a person exercises.

      But according to a University of Missouri-Columbia scientist, environmental chemicals found in everyday plastics and pesticides also may influence obesity.

      Frederick vom Saal, professor of biological sciences in MU's College of Arts and Science, has found that when fetuses are exposed to these chemicals, the way their genes function may be altered to make them more prone to obesity and disease.

      "Certain environmental substances called endocrine-disrupting chemicals can change the functioning of a fetus's genes, altering a baby's metabolic system and predisposing him or her to obesity. This individual could eat the same thing and exercise the same amount as someone with a normal metabolic system, but he or she would become obese, while the other person remained thin," vom Saal said. "This is a serious problem because obesity puts people at risk for other problems, including cancer, diabetes, cardiovascular disease and hypertension," he added.

      Using lab mice, vom Saal has studied the effects of endocrine-disrupting chemicals, including bisphenol-A, which recently made news in San Francisco, where controversy has ensued over an ordinance that seeks to ban its use in children's products.

      In a recent study, vom Saal found that endocrine-disrupting chemicals cause mice to be born at very low birth weights and then gain abnormally large amounts of weight in a short period of time, more than doubling their body weight in just seven days.

      He followed the mice as they got older and found that these mice were obese throughout their lives. He said studies of low-birth-weight children have shown a similar overcompensation after birth, resulting in lifelong obesity.

      "The babies are born with a low body weight and a metabolic system that's been programmed for starvation. This is called a thrifty phenotype,' a system designed to maximize the use of all food taken into the body. The problem comes when the baby isn't born into a world of starvation, but into a world of fast food restaurants and fatty foods," vom Saal said.

      More research must be done to determine which chemicals cause this effect. According to vom Saal, there are approximately 55,000 manmade chemicals in the world, and 1,000 of those might fall into the category of endocrine disrupting.

      These chemicals are found in common products, from plastic bottles and containers to pesticides and electronics.

      "You inherit genes, but how those genes develop during your very early life also plays an important role in your propensity for obesity and disease. People who have abnormal metabolic systems have to live extremely different lifestyles in order to not be obese because their systems are malfunctioning," vom Saal said. "We need to figure out what we can do to understand and prevent this."



      Does Pollution Play a Role in Obesity?...
      Read lessRead more

      Bush Expected to Name Industry Lobbyist to Head Consumer Safety Agency

      Many Senators, Representatives With Oversight Responsibility Claim to Neither Know Nor Care

      By Joseph S. Enoch
      ConsumerAffairs.com Congressional Correspondent

      February 16, 2007

      Baroody
      Insiders say that Michael Baroody, chief lobbyist for the National Association of Manufacturers (NAM), a powerful trade group that opposes aggressive product safety regulation, is President Bush's choice to head the Consumer Product Safety Commission (CPSC).

      The CPSC is currently powerless to enact new rules or levy fines because it has had only two commissioners since Chairman Hal Stratton, another Bush appointee, abruptly resigned six months ago to become a lobbyist.

      Bush is expected to make his appointment during the long President's Day weekend, while Congress is out of town.

      The White House refuses to comment. Spokesmen there have not returned seven phone calls from ConsumerAffairs.com over the last week and Republicans and Democrats on Capitol Hill have had no official word on whether an appointment is pending.

      But David Baker, a lawyer who represents companies before the CPSC, said he has heard from a number of "private Republican lobbyists" that the appointment "is likely to be a recess appointment."

      Under a recess appointment the nominee can take his or her place at the commission for one year without Congressional approval.

      Hacks and Flacks

      The recess appointment authority is intended to fill vacancies in agencies during an emergency while Congress is in recess. Presidents have used it in the past as a way to ensconce controversial, often spectacularly unqualified political insiders who would be unlikely to win Congressional approval.

      "There's no need for him to recess appoint," Michael Teague, spokesman for Sen. Mark Pryor (D-Ark.) said. "If he recess appoints someone, it must be because the person has some sort of dark cloud hanging over them."

      The Senate Commerce Committee advanced legislation sponsored by Pryor Tuesday to restore authority to the commission. The measure, which now goes to the full Senate, would allow commissioners to continue routine business despite a vacancy on the commission.

      "I think it would be a very negative symbol for the Bush administration to circumvent the normal means of appointment," said Baker, who said he is a Republican.

      Rachel Weintraub, director of Product Safety and senior counsel at the Consumer Federation of America, said she cannot comment on potential nominees but said, "Any chairman of the CPSC cannot be biased toward any market."

      "Every second of a consumer's day, you're surrounded by products that this commission has jurisdiction over," Weintraub told the San Francisco Chronicle. "When this commission can't do its job properly, consumers can potentially feel this impact in a devastating way."

      Because of Baroody's Republican ties and history of opposing strong safety regulation, his appointment is unlikely to be popular with the Democratic-controlled Congress.

      Interim Measures

      If Bush does not nominate a replacement soon, Pryor, chairman of the Senate Subcommittee on Consumer Affairs, Insurance and Automotive Safety, has proposed legislation that will reauthorize the two commissioners' powers for another six months while Bush makes up his mind or simply continues to ignore the commission.

      "My measure ensures product safety is not put at risk because this administration doesn't make it a priority," Pryor, whose subcommittee has jurisdiction over the CPSC, said.

      This is the third time Bush has left the CPSC without a quorum. In the CPSC's 35-year history, the only other time the commission has gone so long without a quorum was during the adminstration of Bush's father, George H.W. Bush.

      "This shows that this is not a major priority for the Bush Administration," said Rep. Jan Schakowsky (D-Ill.) who is vice chair of the Subcommittee on Commerce, Trade and Consumer Protection, the House subcommittee that has jurisdiction over the CPSC. "(This is) the only organization charged to protect consumers from dangers in the marketplace."

      Don't Know, Don't Care?
      Sen. Olympia Snowe (R-Maine)
      Sen. John Sununu (R-N.H.)
      Rep. Ed Whitfield (R-Ky.)
      Rep. Sue Myrick (R-N.C.)
      Republicans who sit on the Senate or House subcommittees with CPSC jurisdiction either did not know the CPSC had been without a quorum for seven months, or refused to talk about it.

      "The lack of quorum? I'm sorry, I don't know," Sen. Olympia Snowe (R-Maine), who sits on the subcommittee with CPSC jurisdiction, said. "There hasn't been an appointment? That's unfortunate. How long has that appointment been delayed?"

      Rep. Ed Whitfield (R-Ky.) said he is planning to discuss the topic with some of his staff members but said, "I have not followed that issue very clearly."

      Sen. John Sununu (R-N.H.) did not return three phone calls from ConsumerAffairs.com while Rep. Sue Myrick (R-N.C.) would not step off the House floor to be interviewed. Both also serve on committees with oversight responsibility.

      Bush Expected to Name Industry Lobbyist to Head Consumer Safety Agency...
      Read lessRead more

      Prius Stalls in Snow; Owners Steamed

      Aging Priuses are bringing with them many problems

      Toyota is fond of describing the Prius hybrid as the car of the future and many Prius owners are as forgiving of problems with their little cars as newly-minted grandparents are of their offsprings' foibles.

      That may be changing however. Aging Priuses are bringing with them problems many owners are finding hard to forgive.

      Richard has a 2001 Prius in Palm Desert, California, that now has 103,000 miles on it.

      "The car has died on the freeway four times," he told us. "The second time the dealer had the car for 53 days waiting for parts."

      "The car is extremely hard on tires. Just can't keep them balanced. The heat inverter has gone out twice. The service representative said these cars just don't do well in the desert. The gas tank has been replaced. Also the steering column. The main computer has been replaced as well as a smaller one," Richard told ConsumerAffairs.com.

      Worst of all?

      "The mileage has not been what they (Toyota) advertised," he wrote. "I only use this car to drive short trips around town because I just can't trust it on the freeway."

      Trust is becoming an illusive quality for a growing number of Prius owners forced to deal with snowy weather and slippery or unstable road conditions.

      A Northern Virginia Prius owner first reported the hybrid's traction problem.

      "When my car is on any kind of slick surface that causes one of the front wheels to slip, all power to the drive system is stopped," Christopher wrote from Reston, Virginia.

      Now two other Prius owners have confirmed the traction problem, despite Toyota's denials.

      Alex told us from Blowing Rock, North Carolina that the "electric and gasoline drive systems totally shut down if front wheel or wheels lose traction. I'm in total agreement with (Christopher's) comments," he wrote.

      "The Prius is totally unsafe in any situation in which the front wheels lose traction which then causes the engine to completely shut down," Alex told us.

      Alex said that "the shutdown occurs on any loosely packed (gravel or loose dirt at an intersection) or slippery (ice or packed snow)surface."

      "Toyota attempts to spin this into a safety feature is total hype," Alex told us.

      A Toyota spokesperson had previously explained to ConsumerAffairs.com that the condition Alex and others experienced was a result of the traction control system in the Toyota attempting to provide vehicle stability.

      Toyota spokesman Bill Kwon agreed that the traction control system in the Prius could impact performance in snowy conditions but insisted that was not a safety problem.

      "Prius has TRAC (traction control) as standard equipment," he said. "The purpose of traction control is to help prevent wheel spin and minimize slippage of the drive wheels by applying brakes and/or reducing engine power."

      Alex is not buying any of the Toyota explanation.

      "This is a most serious flaw in the design of the car and needs to be corrected, sooner rather than later. I'm positive you will find that this concern is shared by many Prius owners who have encountered the identical situation," he wrote.

      Serge in Goode, Virginia is another Prius owner who has encountered that identical situation.

      "I have a Prius and I consider the car dangerous in all conditions because of this power stoppage when the wheel senses any slippage," Serge told us.

      "For instance," he continued, "It will do the same thing while driving up a graveled driveway or attempting to gain highway speed while in an acceleration lane and driving across a sand or gravel patch. The pedal goes dead and you could get severely hurt by losing acceleration."

      "Toyota's statement is ridiculous and I think it is only a matter of time until they are sued and forced to do something about this serious problem," he wrote.

      Finally, Anthony in Salinas, California wrote that he has encountered difficulty keeping his Prius aimed in the proper direction on wet roads.

      "In driving rain I suddenly lost all control and all power in my Prius, the auto drifted into a left skid, turning 180 degrees on the highway then completing a 360 spin on the opposing traffic shoulder about 200 feet from the start. Has this loss of directional control and braking been reported"?

      While Anthony's problem did not occur in the snow, clearly seems to be a problem with the traction system in his Prius suggesting a more sophisticated traction control system might stabilize the little hybrid before it spins out of control.

      Prius Stalls in Snow; Owners Steamed...
      Read lessRead more

      Texas Sues Sprint Nextel

      Charges Company is Using Deceptive Billing Practices

      Texas Attorney General Greg Abbott has taken legal action to stop Sprint Nextel Corp. from using what he claims are deceptively worded wireless telephone fees.

      According to the attorney general's lawsuit, Sprint Spectrum, a subsidiary of Sprint Nextel, violated the Texas Deceptive Trade Practices Act by implying that an additional fee on customers' bills was a state-imposed tax. Abbott also charged Sprint Nextel with violating a 2004 court order prohibiting the company from deceptive billing practices.

      "Sprint Nextel has defrauded its customers and violated a court order, blatantly disregarding the laws of the State of Texas," Abbott said. "Texans will not tolerate Sprint Nextel's unlawful business practices. Once again, the Office of Attorney General is taking decisive legal action to crack down on Sprint Nextel's false, misleading, and deceptive acts."

      In January, Sprint Nextel began charging Texas customers a 1 percent fee, claiming it was necessary to reimburse the company for a state-imposed tax.

      Sprint Nextel describes this fee as a "Texas Margin Fee Reimbursement," wording which the Attorney General's lawsuit alleges is deceptive because the tax does not become effective until Jan. 1, 2008, and has not been set at a 1 percent rate.

      The attorney general also charged Sprint Nextel with violating a court-approved agreement prohibiting Sprint from implying that their discretionary fees are required by the government.

      The agreement stems from a 2004 investigation into Sprint's deceptive billing practices. Under the court order, the company is required to clearly separate government-mandated charges from those imposed at Sprint Nextel's discretion.

      The lawsuit, which requests temporary and permanent injunctions against Sprint Nextel, asks the court to stop the deceptive billings and to compel the company to reimburse all customers who paid this fee. The petition also seeks civil penalties of $20,000 per violation under the Texas Deceptive Trade Practices Act.

      Texas Sues Sprint Nextel...
      Read lessRead more

      Legislation Would Create New Food Safety Agency

      The Safe Food Act also would modernize the 100-year old food safety laws

      Sen. Richard Durbin (D-IL) and Rep. Rosa DeLauro (D-CT) have introduced legislation to put all food safety responsibilities under a single new Food Safety Administrator.

      The Safe Food Act also would modernize the 100-year old food safety laws, and give the new chief a unified budget. The legislation is supported by the nonprofit food safety and nutrition watchdog group, the Center for Science in the Public Interest (CSPI).

      The government's finite food safety resources are not equitably split between the U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA), and the Bush Administration's 2008 budget proposal makes matters worse, according to CSPI.

      USDA regulates 20 percent of the nation's food supply, and the Administration proposes giving the department $270 million in new money for food safety and security. FDA regulates 80 percent of the food supply, including fresh vegetables like spinach and lettuce, but it will get only $10.6 million in new food safety money, despite being underfunded already.

      "The Bush food safety budget defies logic," said Caroline Smith DeWaal, director of food safety at CSPI. "While the budget clearly recognizes the need for more funding for food safety, money is being directed at animal health problems and meat and poultry at the expense of preventing outbreaks from fresh produce."

      The Safe Food Act would create a Food Safety Administration, similar to the Environmental Protection Agency, that would take responsibility for food safety and labeling from USDA and FDA.

      The bill would also establish a comprehensive program to protect public health and bolster consumer confidence in the safety of the food supply. Currently, food safety monitoring, inspection, and labeling functions are spread across 12 federal agencies.

      "It makes no sense to have one agency regulate chickens and another regulate eggs, or to have one agency regulate cows and another to regulate milk," said CSPI food safety staff attorney Ken Kelly. "When one cabinet secretary is responsible for pepperoni pizza and another is responsible for cheese pizza, you know something's wrong."

      The Safe Food Act would consolidate the activities of various federal agencies responsible for the nation's food supply including USDA's Food Safety and Inspection Service and Animal and Plant Health Inspection Service; the FDA's Center for Food Safety and Applied Nutrition; and the Commerce Department's National Marine Fisheries Service.

      The bill also includes a traceback provision, gives the new agency recall authority, and requires more frequent inspections to help prevent future E. coli outbreaks.

      The Government Accountability Office (GAO) recently designated food safety as one of the high risk federal government programs. Agriculture, including all food production, is about 13 percent of the gross domestic product, and the largest industry in the U.S., according to GAO.

      Unsafe food poses a significant burden on consumers. The Centers for Disease Control and Prevention estimates that 76 million people suffer from foodborne illness each year, resulting in 325,000 hospitalizations and 5,000 deaths.

      Children and the elderly are most likely to experience severe cases of illness and death from foodborne pathogens. Outbreaks, like the one that occurred last fall from tainted spinach, can easily exceed $100 million in damages to both victims and the industry.



      Legislation Would Create New Food Safety Agency...
      Read lessRead more

      Payback: State Farm Writes Off Mississippi


      Paraphrasing Richard Nixon, Mississippi won't have State Farm Insurance to kick around anymore.

      Stinging from defeat in a Hurricane Katrina damage claim in Biloxi, the company says it will no longer insure homeowners and businesses in the state, where it is the largest single insurer with a 30 percent market share. Allstate pulled out of Mississippi's six coastal counties last year.

      "It is no longer prudent for us to take on additional risk in a legal and business environment that is becoming more unpredictable," said Senior Vice President Bob Trippel, in a statement.

      State Farm is among a number of insurance companies hit with staggering claims in the wake of Katrina and other storms that have pounded the Gulf Coast in recent years.

      While Allstate and some other carriers have cut back on coverage in storm-prone coastal areas, none until now has blacklisted an entire state.

      The decision is expected to have significant impact on consumers. Currently State Farm holds 30 percent of the homeowner policies in the state. Other companies currently serving Mississippi will have to fill the gap.

      State Farm has had a number of setbacks in Mississippi since Hurricane Katrina ravaged the state in 2005.

      In January, a proposed $50 million class action settlement between the company and Mississippi homeowners was derailed by the judge hearing the case. U.S. District Judge L.T. Senter said the proposed settlement did not adequately spell out how payments would be determined and which homeowners would get them.

      Also last month Gulf Coast property owners who lost nearly everything during Hurricane Katrina won a victory in court when a U.S. District Judge sided with them, ordering State Farm to pay $223,292 in damages the company had initially rejected.

      Mississippi Attorney General Jim Hood had also filed suit against State Farm but dropped his state court suit when State Farm agreed to the tentative class action settlement. Hood had predicted the class action settlement would cost State Farm as much as $500 million.

      Hood has also been pursuing a criminal investigation of State Farm, which he said he would drop when the class-action settlement is finalized.

      After learning of State Farm's announcement, Hood said the company was trying to back off its commitment to remain in the state, which he said was part of the lawsuit settlement.

      "The whole reason for reaching the settlement with them was to keep them here," Hood said.

      Homeowners in Mississippi's coastal counties who can't find a private insurer can turn to the state's wind-insurance pool, where rates are as much as 90 percent higher than commercial insurance.

      Stinging from defeat in a Hurricane Katrina damage claim in Biloxi, the company says it will no longer insure homeowners and businesses in the state with a...
      Read lessRead more

      TJX Customers: What To Do

      To protect against identity theft, consumers who have shopped at the TJX Stores, including Marshalls, TJ Maxx, Home Goods, AJ Wright, and used their credit or debit card, or a check, to pay for goods purchased, may wish to take the following cautionary steps:

      1. Call one of the three major credit bureaus and place a one-call fraud alert on your credit report:

      • Equifax: Call (800) 525-6285, and write: P.O. Box 740241, Atlanta, GA 30374-0241.
      • Experian: Call (888) 397-3742, and write: P.O. Box 9532, Allen, TX 75013.
      • TransUnion: Call (800) 680-7289, and write: Fraud Victim Assistance Division, P.O. Box 6790 Fullerton, CA 92834-6790.

      You only need to call one of the three credit bureaus; the one you contact is required by law to contact the other two credit bureaus. This one-call fraud alert will remain in your credit file for at least 90 days. The fraud alert requires creditors to contact you before opening any new accounts or increasing credit limits on your existing accounts. When you place a fraud alert on your credit report, all three credit bureaus are required to send you a credit report free of charge.

      2. Order a copy of your credit report, and look for unauthorized activity. Look carefully for unexplained activity on your credit report.

      3. If there is unexplained activity on your credit report, you may want to place an extended fraud alert on your credit report. If after reviewing your credit report you believe there is unexplained activity, you may want to place an extended fraud alert on your credit report. In order to do this, you need to file a police report with your local police department, keep a copy for yourself, and provide a copy to one of the three major credit bureaus. Then an extended fraud alert can be placed on your credit file for a 7-year period.

      This will mean that any time a user of your credit report (for instance, a credit card company or lender) checks your credit report, it will be notified that you do not authorize any new credit cards, any increase in credit limits, the issuance of a new card on an existing account, or other increases in credit, unless the user takes extra precautions to ensure that it is giving the additional credit to you (and not to an identity thief).

      4. Contact the fraud departments of your credit card issuers or bank. You may want to contact the fraud department of the credit card company or bank that you used when you made purchases at the TJX stores. These financial institutions can monitor your account for suspicious activity. You may also wish to cancel these accounts; you can discuss this option with your credit card company or bank.

      Additionally, TJX has established a toll free customer help line. Callers from the United States may reach the help line at (866) 484-6978. TJX has also posted information on its web site at www.tjx.com.

      Source: Massachusetts Attorney General

      To protect against identity theft, consumers who have shopped and used their credit or debit card, or a check, to pay for goods purchased, may wish to take...
      Read lessRead more

      Salmonella Found in "Wild Kitty" Cat Food

      The Food and Drug Administration (FDA) is warning consumers not to purchase or use Wild Kitty Cat Food due to the presence of Salmonella, a pathogen.

      The FDA said that during routine monitoring activities, it collected and analyzed a sample of frozen raw Wild Kitty Cat Food and detected Salmonella in the product.

      Cats and other pets consuming this food may become infected with Salmonella. People can also become infected with Salmonella if they handle or ingest the cat food, touch pets that consumed the food, or touch any surfaces that came into contact with the food or pets.

      The specific products covered by this warning are Wild Kitty Raw All Natural, Frozen Cat Food Chicken with Clam Recipe, Net Wt. 3.5 oz (100g) and 1 lb in plastic containers. Some of these containers may be uncoded.

      Salmonella can cause serious illnesses in small children, frail or elderly people, and people and pets with weakened immune systems. Other people and pets may suffer short-term symptoms, such as high fever, severe headache, vomiting, nausea, abdominal pain, and diarrhea. Long term complications can include arthritis.

      The Wild Kitty Cat Food is sold nationwide to retail stores and through distributors and internet sales, nationwide.

      Consumers who have purchased this product should not feed it to their pets, but should instead dispose of it in a safe manner (e.g., in a securely covered trash receptacle).

      Anyone who is experiencing the symptoms of Salmonella infection after having handled the product should seek medical attention, and report use of the product and illness to FDA's Office of Emergency Operations. In addition, people who have concerns that they may have Salmonella should contact their medical doctors and the local health departments. People who have concerns whether their pet has Salmonella should contact their veterinarian.

      People may risk bacterial infection not only by handling their cat, but by contact with the pet food, food bowl, cat box and surfaces exposed to these items, so it is important that they thoroughly wash their hands with hot water and soap.

      Since young children, elderly people, and people and animals with weakened immune systems are particularly at risk from exposure, they should avoid handling all the items listed above and surfaces exposed to these items.



      Salmonella, Wild Kitty, Cat Food...
      Read lessRead more

      Bank of America Offering Credit Cards to Undocumented Immigrants

      No credit history or Social Security number needed

      Bank of America has begun quietly offering credit cards to customers in the Los Angeles are who don't have a Social Security number, The Wall Street Journalreports. Such persons are usually undocumented immigrants.

      The newspaper said that Bank of America, the country's second-largest bank, is offering credit cards to consumers who have had an account at the bank for three months or more, even if they do not have a credit history or Social Security number.

      It's the latest indication that American financial institutions are serious about doing business with the millions of undocumented immigrants who until recently have had no access to such routine services as checking accounts, credit cards, home mortgages and personal loans.

      The newspaper said that Bank of America tested the program at five branches in Los Angeles last year and has now expanded it to 51 additonal branches in Los Angeles County, thought to have the largest concentration of undocumented workers and illegal immigrants in the U.S.

      It said the bank hopes to roll the program out nationally later this year.

      The credit cards won't be cheap. They carry a high interest rate, typically about 21 percent, and an annual fee, but they do offer a way for non-citizens to build a credit history so that they can purchase cars, homes and other big ticket items on credit.

      There is nothing illegal about the practice, Bank of America said. But critics say a major bank should not be helping people who violate immigration laws.

      "They are clearly crossing the line; they are actually aiding and abetting people who broke the law," said a spokesman for the Federation for American Immigration Reform.

      To review applicants, Bank of America is using a procedure called "judgmental lending," pioneered by MBNA Corp., the credit card giant acquired by the Charlotte-based Bank of America last year. Instead of using credit reports, bank employees make subjective judgments based on their personal observation of the customer.

      Bank of America Offering Credit Cards to Undocumented Immigrants...
      Read lessRead more

      Veterans Administration Loses Data on 1.8 Million


      The VA is notifying 1.8 million veteran patients and doctors that a hard drive containing their personal information has been missing from an Alabama veterans' hospital.

      The missing hard drive contains personally identifying information on 535,000 veterans, and billing information for 1.3 million doctors.

      The hard drive was discovered missing on Jan. 22 but, as usual in such cases, the public was not alerted.

      VA officials first said the drive contained information on 48,000 veteran patients but now concede the actual number is nearly 40 times more than what was originally reported.

      The information included Social Security numbers for the patients, and names in several instances, as well as Medicare billing codes for the doctors.

      At the time of the original notification, the VA said that the drive belonged to an unidentified "mid-level" employee. The drive allegedly lacked encryption.

      The VA originally said it suspected theft in the disappearance, and began a criminal investigation with the help of the FBI. As usual, the VA claimed it had seen "no evidence" that the data was misused.

      The agency plans to offer a year of free credit monitoring to any affected individual, though it did not disclose who it was partnering with to offer the service.

      Congress Incensed

      Alabama's Congressional and state representatives were incensed at the data breach and the lag time between the discovery and the notification. Rep. Artur Davis (D-Birmingham) chastised the VA when the breach was originally disclosed for its repeated failures to protect information.

      "[The VA] should be held to a better standard than the private sector, not a lesser standard," Davis said at the time. "This is a continuous problem of veterans who go into the VA."

      Dubious Distinction

      The continuing problems at the Veterans' Administration have given it the dubious honor of being synonymous with the phrase "data breach," an accolade formerly held by data broker ChoicePoint after it sold personal information to a ring of Nigerian criminals.

      The VA's reputation was tarnished after a laptop containing records on 26.5 million veterans was stolen from the home of an analyst in Maryland in May 2006.

      The laptop was eventually recovered after an anonymous tip led to the arrest of two Maryland teenagers and a juvenile connected with the theft.

      In the course of the inquiry into that laptop's theft, the VA was found to have kept the theft secret for nearly a month before disclosing it to the affected veterans.

      The unidentified analyst was dismissed from his position for the breach, a move he contested on grounds that VA employees had been given permission to take data home with them on numerous occasions.

      The VA had also covered up two smaller data breaches in the twelve-month period preceding the laptop theft.

      The last VA breach prompted numerous hearings before Congress, and a series of legislative efforts is underway to improve data security and codify disclosure requirements nationwide. Critics charge that many of the bills are too friendly to industry and government agencies, and offer too many exemptions to be of any use.

      Serious Danger

      Despite the VA's claims that it had seen no evidence the missing data was misused, the threat is very real for affected victims of a data breach.

      Smart hackers will often mix and match stolen data from different people, creating new "synthetic identities" that can be used to get new credit accounts. Because the thieves are using existing information, rather than making up fake identities, the fraud is much harder to detect.

      Missing medical information is particularly dangerous, as the data can be used for "medical identity theft," where the culprit gets expensive medical procedures and leaves the bill for the unknowing victim to pay.

      Medical fraud is much harder to prove than typical credit or bank fraud, and can leave victims with ruined credit and thousands of dollars in debt.

      Veterans Administration Loses Data on 1.8 Million...
      Read lessRead more