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    Pet Food Importer Blames Its Chinese Supplier

    ChemNutra "Appalled" at Menu Foods' Delay in Issuing Recall

    By Lisa Wade McCormick

    April 16, 2007
    The United States company that imported the tainted wheat gluten -- ChemNutra of Las Vegas, Nevada -- says it was victimized by its Chinese supplier, XuZhou Anying Biologic Technology Development Co. Ltd.

    In a letter posted on the company's Web site, CEO Steve Miller also said he is "appalled" that Menu Foods took so long to recall the contaminated pet food.

    "The possibility that any animal fell ill or died because of an ingredient we may have supplied to Menu Foods saddens us and also angers us because it means that ChemNutra has been victimized as well, by our own supplier," Miller wrote, adding his company will no longer do business with XuZhou Anying.

    "We are concerned that we may have been the victim of deliberate and mercenary contamination for the purpose of making the wheat gluten we purchased appear to have a higher protein content than it did, because melamine causes a false high result on protein tests," Miller said.

    Miller was referring to allegations that the melamine could have intentionally been added to the wheat gluten -- a theory raised earlier this month by the director of the FDA's Center for Veterinary Medicine.

    "Somebody may have added melamine to the wheat gluten in order to increase what appears to be the protein level," the FDA's Stephen Sundlof said. "Wheat gluten is a high-protein substance and by trying to artificially inflate the protein level, it could command a higher price. But that's just one theory at this point."

    Miller said his company had never heard of melamine before this recall.

    "We had no idea that melamine was an issue until being notified by the FDA on March 29," he wrote on the company's Web site. "It's simply not a chemical even on the radar screen for food ingredient suppliers."

    Miller also said his company is "distressed" with Menu Foods' handling of the pet food recall.

    "We are appalled and distressed that Menu Foods took so long to recall its products, although it clearly suspected there was a problem for weeks prior to the first recall," he wrote. "And it wasn't until eight days before they issued their first recall that Menu Foods told us that wheat gluten was one of many ingredients it was investigating."

    Questions Raised about ChemNutra

    Questions, however, have surfaced in recent weeks about ChemNutra and its ties to China. The Canadian investigative newspaper, Canada Free Press, describes the company's Chinese headquarters as a "rundown warehouse in rural China."

    That warehouse, the paper adds, is located within 50 miles of XuZhou Anying, the company blamed for supplying the tainted wheat gluten.

    The Las Vegas Review Journal says ChemNutra's Las Vegas office -- at Durango and Charleston Streets -- is "very small ... without even a sign on the door."

    ChemNutra touts its ties to China, stating it "imports high-quality nutritional and pharmaceutical chemicals from China to the US. We purchase our inventory from quality-assured manufacturers in China; most of whom we have strong relationships over the past twelve years."

    The company's president, Sally Miller, also has strong ties to China.

    ChemNutra's Web site states she has "more than 12 years experience in China as QA Manager and Purchasing Manager ... and was responsible for purchasing large quantities of nutritional and food ingredients in China for export worldwide."

    The Web site also states Sally Miller has an MBA -- and an Engineering degree -- in Food Engineering, but doesn't state where she earned those degrees. Canada Free Press learned she "earned an MBA from City University in Seattle, as well as (an) Engineering degree in Food Chemical Engineering at Hanzhou Institute of Commerce in Hanzhou, China."

    Puerto Rico Outbreak

    The pet food crisis -- blamed for the deaths and illnesses of thousands of dogs and cats in the United States -- has spread to Puerto Rico.

    Two dogs on that Caribbean island died of kidney failure last week after eating melamine-tainted Ol'Roy dog biscuits, according to Puerto Rico's Veterinary Medical Association.

    The dogs -- both three-year-old miniature schnauzers -- are the first pets in Puerto Rico to die from the contaminated pet food products, said Dr. Victor Callazo, president Puerto Rico's Veterinary Medical Association. His association ran tests that confirmed the wheat gluten in the dog biscuits contained melamine, a chemical commonly used in plastics.

    Dr. Callazo said the tainted dog biscuits were purchased at Amigo, a supermarket chain owned by the Bentonville, Arkansas-based Wal-Mart Stores.

    The Food and Drug Administration has confirmed 16 deaths from the tainted pet food, but other organizations say the real number is in the thousands.

    Recall Announced One Month Ago

    It was one month ago that Menu Foods of Canada announced its massive recall of pet food, one of the largest in history. Nearly 100 brands of pet food and treats -- and more than 60 million containers -- are included in the recall.

    The FDA says the pet food and products were made with melamine-tainted wheat gluten imported from China.

    Outraged Pet Owners

    Meanwhile, ConsumerAffairs.com continues to hear from grieving and worried pet owners. Many wonder why Iams has not recalled its dry food.

    They're pet owners like Judith E. of Hamilton, MA.

    "My perfectly healthy Cairn terrier died of acute renal failure due to poisoning," she says. "She was always by my side and ate only Iams dry dog food. There are several complaints about this food. We want this food recalled ASAP."

    A California pet owner also blames her dog's recent death on Iams dry food.

    "My dog was 15, but was very active and spunky," says Angela of Alamo, California. "He was fed Iams dry dog food and became very ill, very quickly. I did not feed him the wet dog food, but he still was lethargic, lost weight rapidly, was vomiting, urinating in the house, and could not walkby the time I got him to the vet he had sores in his mouth and was in acute renal failure."

    Angela says she had to put her beloved dog to sleep.

    "It was horrible. I am still so upset and confused and saddened by his loss. I don't understand what happenedthis renal failure took him by surprise and was so devastating. He could not even lift his head when he was being taken to the vet."

    P&G Pet Care, the manufacturer of Iams, says on its Web site that none of its dry pet foods are included in the recall. The company also said all the dry and wet pet foods it continues to sell do not contain wheat gluten from any supplier.

    Menu Foods Not Responding To Calls

    Another pet owner says Menu Foods has not responded to the repeated messages she's left about her dog's death. Jerri L. of Goodyear, Arizona, told ConsumerAffairs.com that she's called the company's pet food recall hotline five times since March.

    But no one has returned any of her messages.

    "I understand that they may be swamped with calls, but after all the messages I've left, I would hope that someone would call," she says. "As of this date (April 16, 2007), I haven't heard a word from anyone. I'm extremely disappointed in their handling of this situation."

    Jerri says her 13-year-old Sheltie, Sandy Boy, became ill and suddenly died after eating Nutra Max, one of the foods included in the recall. Sandy Boy, she says, was in perfect health before she fed him that brand of wet food.

    "And then boom, suddenly he was gone," Jerri says, adding Sandy Boy died last Memorial Day, but had symptoms that mirror those in dogs and cats who have become sick or died after eating Menu's tainted food. "Three days after he started eating that food, he was in complete kidney failure. We had to make the difficult choice to put him down."

    She adds: "It kind of makes me sick to think that I killed my dog. I could barely live with the decision to put him down and now to think that I may have killed him inadvertently."

    Jerri is convinced Menu Foods knew its products were contaminated months before its March 16, 2007, recall.

    "I know how large corporations work and how they hide problems with products until they're forced to go public," she says. "I want the truth. I think they knew about this thing a long time before it was made public. It's too coincidental that my dog passed away from the same symptoms that dogs are having now. We had just switched dog foods and none of my other dogs (that didn't eat Nutra Max) got sick."

    Jerri is also outraged that Menu Food's hasn't responded to her repeated calls.

    "One lady hung up on me when I questioned her about why I was not getting any calls back.

    "Menu Foods needs to train its people how to handle calls like this," she adds. "These are from people with sick pets or people who've lost a pet. I'm just heartsick over this whole thing."

    Menu Foods spokeswoman Sarah Tuite says the company has hired an outside firm to respond pet owners calls. The company's hotline, she says, has received more than 300,000 calls since it announced its massive recall.

    "We're asking people to be patient," Tuite told us earlier this month. "We've engaged a third-party that will be calling everyone back."

    Tuite also denied Jerri's suggestion that Menu Foods knew its products were tainted months ago.

    "We are completely confident the problem is related to an ingredient (wheat gluten) that was introduced by a new supplier ... and we've stopped using that supplier."

    More about the Pet Food Recall ...

    Pet Food Importer Blames Its Chinese Supplier...

    CDC Reports Progress on Foodborne Illness Stalled in 2006

    Progress against two major pathogens has stalled

    It will come as no surprise that food safety has slipped. New data released by the Centers for Disease Control show that the progress against two major foodborne pathogens -- E. coli O157:H7 and Salmonella -- has stalled.

    After ten years the rates of illness from these pathogens remains close to the original baseline data from 1996-98. There were major reductions in the late 1990s but little progress since 2001.

    The bad news about foodborne illness coincides with Bush Administration policies that have given little time, attention or resources to combating food poisoning, according to the Consumer Federation of America.

    The USDA, it says, is pursuing a program to reduce inspection in one-third of the nation's meat and poultry plants and acknowledges that over 200 plants have not had daily inspections as required by law. The Administration has reduced funding for the Food and Drug Administration's food safety efforts for years.

    CDC's data reflect what CFA calls "the lack of commitment at the highest levels of government to reducing foodborne illness." Food poisoning claims 5,000 lives every year and causes 325,000 hospitalizations.

    CDC also reported that illnesses associated with three major pathogens increased in 2006 over the preceding year. The rates for food poisoning from E. coli O157:H7, Salmonella and Listeria were higher in 2006 than in 2005. While the increase was not large, these increases are further evidence that the U.S. is no longer making substantial progress in efforts to control foodborne illness.

    In fact, CFA claims, "we are slowly losing the war." For the second year in a row the Listeria food poisoning rate increased. The rate in 2006 is slightly higher than it was in 2000.

    The U.S. government continues to compare illnesses from the most recent year with 1996-98, a time when there had been few government efforts to control food related disease. "For a few years we made inroads reducing illness but the progress has ended," the group states. "We're going backwards."

    The cause may well be because the FDA does not have sufficient financial or legal resources and the USDA continues to claim successes it cannot document.

    "Neither agency is sending a strong message to the public or to the food industry that they have to clean up their act. The result is more illnesses and deaths," said CFA.

    The Listeriosis rate rose for the second straight year and the U.S. again failed to meet the National Health Objective of reducing the rate of illness from this pathogen to 2.5 by 2005. The CDC again failed to report accurately the 2005 goal, listing the date as 2010.

    Listeria is the most lethal of foodborne pathogens. While it causes few cases of illness each year, 20% of those stricken die. The estimated number of deaths is 499, second only to the total deaths from E. coli O157:H7, a more commonly occurring illness.

    CDC Reports Progress on Foodborne Illness Stalled in 2006...

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      Hispanic Women Three Times More Likely to Develop Advanced Breast Cancer

      Study Finds Hispanic Women Also Diagnosed at an Earlier Age

      A joint study by researchers at the University of Colorado Health Sciences Center (UCD) and Kaiser Permanente Colorado (KPC), finds that Hispanic women are almost three times more likely to be diagnosed with advanced breast cancer than non-Hispanic women.

      The study will be published in the May 15 issue of Cancer, the medical journal of the American Cancer Society.

      The differences were observed even after the researchers adjusted for factors such as socioeconomic status, the length of time that the women had been enrolled in the managed health care system, and regular checkups.

      The study, conducted between 1995 and 2004, included 139 Hispanic women and 2,118 non-Hispanic breast cancer patients. They were all interviewed in Colorado, where they lived.

      The researchers observed that the Hispanic patients were diagnosed with more advanced and more aggressive breast cancer. Hispanics were nearly three times more likely to be diagnosed with stage IV disease and twice as likely to have larger tumors, characteristics that result in poorer prognosis. In addition, more Hispanic patients had tumors that lack receptors for the hormone estrogen (ER-negative) which makes the disease more difficult to treat.

      Moreover, the Hispanic patients were diagnosed at an earlier age, with an average age of 56 at the time of first diagnosis, compared to 61 for non-Hispanic patients.

      The study compared demographic characteristics of the patients to determine if having health insurance affects differences in the presentation of the disease.

      The authors of the study concluded that "the persistent findingsof advanced state, larger tumor size ... and fewer cases with estrogen receptors may suggest that true biological differences exist in breast cancer by ethnicity."

      Previous research has shown that the incidence of breast cancer varies according to race and ethnicity.

      About 203,500 women will be diagnosed with breast cancer in the United States this year. Surgery and chemotherapy are standard treatment options for most forms of breast cancer. Early detection is vital to increase the chances of survival, thus the American Cancer Society recommends that women 40 and older get a mammogram every year.

      Hispanic Women Three Times More Likely to Develop Advanced Breast Cancer...

      Listerine Recalls Kids Mouth Rinse

      McNeil-PPC, Inc. is recalling all lots of its Glacier Mint and Bubble Blast flavors of Listerine Agent Cool Blue. The company said it discovered that the preservative system is not adequate against certain microorganisms.

      The recall affects all bottles of "Agent Cool Blue Plaque-Detecting Rinse," an estimated 4 million, from both retailers and consumers.

      An assessment concluded that the risk of illness in healthy individuals following use of this product is very low, the company said. However, there could be a significant health risk to individuals with weakened or suppressed immune systems. To date, there have been no reports of adverse health events.

      The recall affects all existing bottles of AGENT COOL BLUE Plaque-Detecting Rinse. Consumers should discontinue using and properly discard the product, and may obtain a full refund through calling the Company's toll free consumer line 1-888-222-0249 and mailing in the back label, including the UPC code. Additional information can be found at the product website -- www.agentcoolblue.com.

      Consumers can readily distinguish this product by the cartoon character on the front of the bottle, the company said. No other Listerine products are affected.

      "We have voluntarily initiated this recall ... because our primary concern is that consumers have complete confidence in the safety and effectiveness of our products," said Paul Sturman, President, Consumer Healthcare North America, McNeil-PPC, Inc.

      The mouth rinse has been sold to consumers through supermarkets, drug stores, mass merchants and other retail outlets, and is sold to dental professionals' offices nationwide. The company is contacting dental professionals and retailers directly as part of its recall notification process.

      Listerine Recalls Kids Mouth Rinse: The company said it discovered that the preservative system is not adequate against certain microorganisms....

      Pet Owners Organize to Put Congress on a Short Leash

      Nationwide Series of Memorial Marches for Dead Pets

      The facts are simple. In March Canadian pet food manufacturer Menu Foods announced that a contaminated ingredient in some of its dog and cat food made the products potentially lethal to their intended customers. A recall of several brands began.

      But the consequences of this incident are far from simple. For thousands of pet owners, they're intensely personal. Because of that contamination, and the lag time before the tainted products were removed from shore shelves, a beloved member of the family is dead or seriously injured.

      "We lost our three-year-old cat, Timber on Nov 17, 2006 due to liver failure," said Jen Hoeflein, of Bastrop, Texas. "He was consuming Hill Country Fare's canned cat food on a regular basis. He rapidly became ill and in horror, our family watched him slip into a near-death stage. As soon as the vet's office opened the next morning, he was put to sleep to end his suffering."

      Hoeflein responded by forming a group called Pets Need a Voice Too, or PNV2. She says she was determined that the tragedy that befell her family would go no further. She led efforts to organize a nationwide memorial march for April 28, to memorialize pets who died and to call attention to what she sees as an outrageous situation.

      "It's a complete outrage that Timber's suffering was mirrored all over the country, different animals, different families with the outcome the same. And still, the tainted food sat on the store shelves. In fact, some of it is still there. That's simply appalling," she told ConsumerAffairs.com.

      Hoeflein describes her group, PNV2, as being in its infant stage, but representing a collective group of average citizens directly affected by the tainted pet food event either through the loss of a beloved pet, the illness of a pet or the overall concern for the quality of products purchased with a blinding degree of faith by consumers. But make no mistake, she intends to bring about some changes.

      "I think Americans have forgotten how powerful their individual voices are when it comes to protecting their families and in many American households, pets are considered members of their families," Hoeflein said. "This event has created a passion-driven response, an outcry for accountability and the demand for the meeting of product quality standards."

      After her pet's death, Hoeflein said she began working the Internet, networking with others who had similar experiences. As people began sharing their frustration and pain, suggestions of a day of tribute began to surface, she says.

      "It just snowballed after that. I made a modest free website that soon became overwhelmed with traffic as word of the Memorial March spread," Hoeflein said. "We made the investment to purchase a website simply because people were coming to us for information and updates on what quickly had become a large movement on the part of citizens in response to the their personal losses."

      The April 28 march will take place in Boston; Reno, Nevada; San Diego; Orange County, California; Uniontown, Pennsylvania; Portland, Maine; and Jacksonville, Oregon, with efforts pending in dozens of other cities.

      "The March is a direct response from people all over the country and Canada who felt an overwhelming need to speak in outrage over the lack of safety standards in regard to pet food and the corporate negligence in allowing the food to remain on the shelves prior to the recall," Hoeflein said.

      The March is just the first step in what Hoeflein and other pet owners and activists hope will be a campaign to ensure protection of pets. The long-range objective is a network of committed pet owners who will keep pressure on lawmakers and government agencies to make sure tainted ingredients never again make their way into the food supply.

      "We want people to understand, we are simply giving a voice to sadness and pain, to frustration and outrage," Hoeflein said. "People need that and our pets deserve that. Hopefully, that voice will result in better days for pets and owners alike."

      Thousands of Deaths

      ConsumerAffairs.com has talked to scores of grieving pet owners and received hundreds of written complaints. The Web site Petconnection.com, says it's received 4,069 reports of deceased pets in the wake of the recall. Of that number, 2,099 are cats and 1,970 are dogs.

      The Web site also says it's received 12,663 reports of illnesses linked to the recalled pet food, which the FDA says is contaminated with melamine-tainted wheat gluten.

      "These are self-reported numbers, and should be in no way be considered confirmed or 'official,'" the Web site states. "But if even a fraction can be confirmed, they show deaths far exceeding the FDA's count of 16 pets, most of whom died in a manufacturers feeding trial."

      Last week, Sen. Dick Durbin (D-Ill.) chaired a special Senate hearing about the pet food recall debacle, hearing mostly from FDA representatives and pet food lobbyists, while the FDA warned that some recalled pet food may

      still be on store shelves and warned retailers and pet owners to be careful.

      "Many cats, dogs and other pets, considered members of the family, are now suffering as a result of a deeply flawed pet food inspection system," Durbin said during Thursday's hearing. "The FDA's response to this situation has been wholly inadequate -- we need to establish standardized inspections, impose penalties on companies who delay reporting health problems and increase communication between the FDA and the state inspectors so that we can catch problems more quickly. These sound like basic steps but the FDA has failed to put them in place."

      Durbin's remarks highlighted the many flaws in the pet food industry's patchwork inspection system, which is not all that different from the haphazard, industry-dominated, system that supposedly protects humans.

      FDA Inspections

      To begin with, the FDA has only inspected about 30 percent of all pet food plants since 2004, said Stephen Sundlof, director of the agency's Center for Veterinary Medicine. He said many of those visits occurred after recalls had been put in place or during the Mad Cow scare.

      The FDA had never inspected the Menu Foods facility in Emporia, Kan., where many of the recalled products were made, until after the company reported a problem.

      Eric Nelson, president of the American Association of Feed Control Officers (AAFCO), said few inspections are required because the industry, with help from the AAFCO, regulates itself well.

      After the lengthy hearing, Senator Durbin told ConsumerAffairs.com he is working on legislation that will address these problems, but he did not specify the scope of his pending legislation.

      Industry Response

      In related news, The Pet Food Institute (PFI), which represents pet food manufacturers, announced Thursday the formation of the National Pet Food Commission to strengthen industry procedures and safeguards.

      The commission includes nationally-recognized veterinarians, toxicologists, state and federal regulators and nutritionists, and will have two main goals:

      • To investigate the cause of the current pet food recall;

      • To recommend steps the industry and government should take to build on safety and quality standards already in place.

      The commission will report its findings and offer recommendations to the industry and regulators at the end of its investigation. PFI President Duane Ekedahl said the commission will "augment the FDA's work and make recommendations so that consumers continue to be confident in the food they feed their pets."

      "The people who make pet food are pet lovers and owners themselves. They understand the concerns consumers have about pet food products and feel a special responsibility to address this issue," he said.

      Dr. Angele Thompson -- an expert in nutritional biochemistry and a member of the American Academy of Veterinary Nutrition -- will chair the commission.

      "It is imperative that we study this problem from all sides and apply lessons learned to further build on industry procedures and safeguards," she said.

      In other news, the Association of Veterinary Laboratory Diagnosticians--in consultation with the FDA--is trying to compile specific data on the number of cats and dogs that have died after eating the melamine-tainted wheat gluten.

      The AAVLD Veterinary Analytical Toxicology Committee launched a survey on April 6, to gather data on cases that meet certain criteria for possible pet food-induced nephrotoxicosis.

      These cases should meet two of the following criteria:

      (1) known exposure to one of the recalled pet foods,
      (2) histologic lesions consistent with crystal-induced tubular nephrosis (pictures are posted on the AAVLD Web site),
      (3) urinalysis with crystals (also posted on the site), and
      (4) chemical confirmation of the presence of melamine or other marker chemicals in pet food, tissues, or urine.

      The organization is asking AAVLD laboratories, along with other laboratories and private practitioners who wish to participate, to report incidents in the United States and Canada, using the survey tool on its Web site: www.aavld.org. Nonmembers can enter case data via the public area by clicking on News and then on AAVLD Pet Food Toxicity Survey.

      The data will be available to the FDA for its investigations.

      More about the Pet Food Recall ...

      Pet Owners Organize to Put Congress on a Short Leash...

      FDA Warns of Contaminated Olives

      Risk of botulism in certain imported olives

      The U.S. Food and Drug Administration (FDA) is alerting consumers to possible serious health risks from eating olives that may be contaminated with a deadly bacterium, Clostridium botulinum. C. botulinum can cause botulism, a potentially fatal illness.

      The olives are made by Charlie Brown di Rutigliano & Figli S.r.l, of Bari, Italy and are being recalled by the manufacturer. No illnesses have been reported so far.

      The olives should not be eaten alone or in other foods, even if they do not appear to be spoiled. Consumers should discard these products or return them to the point of purchase. If in doubt, consumers should contact the retailer and inquire whether its olives are part of the recall.

      The olives are sold under the following brands: Borrelli, Bonta di Puglia, Cento, Corrado's, Dal Raccolto, Flora, Roland and Vantia, and have codes that start with the letter "G" and are followed by 3 or 4 digits. All sizes of cans, glass jars and pouches of Cerignola, Nocerella and Castelvetrano type olives are affected.

      Symptoms of botulism include general weakness, dizziness, double vision, trouble with speaking or swallowing, difficulty in breathing, weakness of other muscles, abdominal distension and constipation. People experiencing these symptoms should seek immediate medical attention. Consumers may also report illnesses associated with consumption of these olives to the nearest FDA district offices.

      Charlie Brown di Rutigliano & Figli S.r.l, initiated a recall of these olives on March 27, 2007. The recalled olives had been distributed to wholesalers, who have marketed them nationally to restaurants and retail stores. FDA concluded that additional warnings are needed because, to date, the company has not contacted importers with specific instructions on the recall.

      In addition to re-emphasizing its warning to consumers, FDA is making the following requests:

      • Importers of these olives should discontinue distribution, isolate held stocks and notify customers to take similar actions to prevent the products from reaching consumers. Importers should contact their local FDA office for assistance in implementing the recall.

      • Food manufacturers who have repacked the olives for sale under different names or who have used them in the production of other food should contact their local FDA office.

      • Restaurants, delicatessens, and other food service providers should discontinue using the olives, dispose of their opened containers and contact their suppliers for instructions on what to do with unopened containers.

      Consumers with questions may contact Charlie Brown Company at 011-039-080-7839073 (an international toll call) or charliebrownbari@yahoo.com.

      FDA Warns of Contaminated Olives...

      Bankruptcy Laws Contributing to Foreclosure Epidemic

      Consumer Groups Press Congress to Amend Bankruptcy Code

      Bankruptcy law changes are needed if hundreds of thousands of American families struggling with abusive subprime mortgages are going to escape foreclosure and the loss of up to $164 billion in home-based wealth, according to a joint call for Congressional action issued by the National Association of Consumer Bankruptcy Attorneys (NACBA), the Consumer Federation of America (CFA) and the Center for Responsible Lending (CRL).

      The three consumer groups warned that -- while primarily low-income subprime mortgage borrowers face often insurmountable bankruptcy hurdles to hold onto their homes -- high-income individuals in bankruptcy court get preferential treatment when they seek to save second and third homes.

      "The only chance many of these (subprime) borrowers have is through declaring bankruptcy," the groups said. "The problem is that as currently enacted, the Bankruptcy Code favors home mortgage lenders over virtually all other secured and unsecured creditors."

      The amendment disfavoring protection of the debtor's principal residence was added at a time -- 1978 -- when home mortgages were nearly all fixed-interest rate instruments with low loan-to-value ratios and were rarely themselves the source of a family's financial distress. As a result, bankruptcy law singled out the home mortgage loan as the major debt for which the bankruptcy court is powerless to provide relief, they said. "Since that time, the mortgage market has shifted considerably. Subprime lending practices of the last six years, which have relied on property appreciation, and in many cases appraisal fraud, have left many borrowers with mortgages larger than the value of their homes. If the borrowers cannot restructure these debts, then they cannot get back on their feet financially."

      Philadelphia bankruptcy attorney and NACBA President Henry Sommer said help is urgently needed for hundreds of thousands of American families at risk of losing their homes due to abusive home loans.

      "For most of these families, bankruptcy is the only viable option to save their home, and this option will be available only if the Bankruptcy Code is revised to eliminate or limit the provisions that exclude home loans from bankruptcy protection," Sommer said. "This current exclusion is contrary to sound policy, and operates to disadvantage low-wealth and middle-income borrowers as compared to debtors with the wealth to own more than one home."

      Allen Fishbein, director of housing and credit policy of the Consumer Federation of America, said two million or more homeowners face foreclosure over the next few years, with many of these resulting from negligent and reckless lending practices by mortgage originators.

      "A sizable number of borrowers find themselves in this situation because their mortgages are larger than the current value of their homes. Modifying the bankruptcy laws to permit the write down of certain toxic mortgages would provide a critical life-line for these at-risk families to hang on to their homes. We urge the Congress to act," Fishbein said.

      Foreclosure Epidemic

      "The purpose of bankruptcy is to give troubled families a chance for a fresh start," said Eric Stein, chief operating officer of Self-Help and senior vice president of the Center for Responsible Lending.

      "Today we have an epidemic of homeowners who are in serious financial trouble, and whose houses are worth less than the balance due on their loans because of the irresponsible lending practices of subprime lenders," he said. "To make matters worse, bankruptcy laws will actually prevent these families from recovering. Subprime loans have pushed millions of households under water; unless Congress makes some common-sense changes, our current laws will ensure that they drown."

      As 2006 drew to a close, 2.2 million households in the subprime market had either lost their homes to foreclosure or held subprime mortgages that likely will fail over the next several years absent intervention, the groups said.

      These foreclosures will cost these families their homes, along with up to $164 billion in lost wealth. For increasing numbers of borrowers, foreclosure is the only option available. Lehman Brothers has estimated that 30 percent of subprime loans originated in 2006 will end in foreclosure.

      The joint statement recommends a wide range of specific bankruptcy law changes, including the following:

      • End the Bankruptcy Code's special treatment of home mortgage loans.
      • Remove time-consuming credit counseling requirements.
      • Curb excessive fees during bankruptcy.
      • End mandatory arbitration in bankruptcy.
      • Create a minimum homestead exemption for the elderly.
      • Amend chapter 7 of the Bankruptcy Code.

      Bankruptcy Laws Contributing to Foreclosure Epidemic...

      Pennsylvania Class Action Challenges Payday Lender

      Philadelphia woman claims she was charged 2000% interest

      A Philadelphia woman has filed a multi-million dollar class action lawsuit against a Utah-based lender that makes payday loans through numerous Internet sites.

      According to the suit, Direct Financial Solution of Utah has unlawfully charged Pennsylvania consumers interest rates in excess of 2000% APR and has violated the usury laws of the Commonwealth of Pennsylvania. The suit seeks to recover millions of dollars in illegal interest and to halt the allegedly unlawful loans.

      Payday loans are short-term loans made to individuals who have poor credit and which require a deduction from the worker's paycheck for repayment. The Center for Responsible Lending estimates the industry costs Americans $4.2 billion a year by charging exorbitant fees.

      According to New Jersey attorney Steven Weisbrot, who is representing the plaintiff, the payday loan industry has migrated to the online marketplace after steps were taken to shut down their brick-and-mortar operations in Pennsylvania.

      These companies victimize those who live paycheck to paycheck and "they should be downright ashamed of themselves for putting working class families into desperate financial situations," Weisbrot said.

      The suit seeks to enjoin the lender from preying on the Pennsylvania working class and to recover millions of dollars in damages on behalf of all consumers who have been forced to pay excessive interest rates to what Weisbrot calls "cyber loan sharks" and "blood suckers."

      The owners of Direct Financial Solution have been sued in many states and have agreed to repay millions to the thousands of customers who have paid usurious interest on those loans, Weisbrot said.

      Lenders Fight Back

      With the federal government sitting out the battle, states have been trying to shut down or at least curtail payday lending, but the industry has been fighting back, flooding state legislatures with lobbyists.

      The industry says it provides a service to low-income consumers with poor or no credit. Banks will not lend them money, industry backers say, so "cash advance" stores or payday lenders fill a critical need.

      Critics counter that rather than providing a service, the payday lending industry is exploiting low-income consumers, trapping them in a spiral of debt. If a consumer borrows $100, a payday lender typically collects a fee of 15 percent, in this case $15.

      That might not sound like much, but for a two-week loan, it amounts to an annual interest rate of 390 percent -- and is typically about what street-level mobsters charged for loans in the early 20th century before organized crime was "eliminated" and usurious lending was legalized.

      If the payday lender were limited to charging an annual rate of 30 percent, the fee paid by the consumer would only be $1.15 on a two week loan.

      But a 2007 New York Federal Reserve Bank study rejects the notion of payday as predatory and concludes that high prices "may reflect too few payday lenders, rather than too many," The Wall Street Journal noted in an April 2 editorial. It adds that more regulation could reduce market entry and "the lack of competition could drive rates higher."

      Pennsylvania Class Action Challenges Payday Lender...

      Gas Prices Push Towards New Record, Texans Suffer

      Prices rising more quickly than anytime since 2000

      Rising gasoline prices have already reached summer peak-driving levels and are likely to push the price of a gallon of regular above $3 throughout much of the country as demand continues to build with the approach of summer.

      The 61 cent price rise since February is the quickest increase since 2000. While it's not unusual for gasoline prices to rise in the spring as refiners shift over to the summer grade of gasoline, the 2007 increases are unusual and they come at a time when refiner profit margins are the fattest they have been since Hurricane Katrina hit in August 2005.

      Nationally, drivers are paying an average of $2.82 a gallon for regular unleaded, according to AAA, of Heathrow, Florida.

      One month ago, regular gasoline sold for $2.54 and one year ago a gallon of regular cost $2.72. Midgrade gasoline now averages $2.99 a gallon and premium gasoline sells for an average of $3.10 a gallon. Diesel fuel averages $2.92 a gallon.

      Drivers in Needles, California pay the most for a gallon of regular at $3.79. People in Gaffney, South Carolina get the biggest break at he plump with a gallon of regular costing $2.19.

      Here is a look at some gasoline prices from around the country in the weekly ConsumerAffairs.com Gas Price Round Up.

      California: Southern California gas price averages stabilized in the last week, remaining within a penny of levels they reached last week and about 15 cents shy of the record high prices achieved last May, according to the Automobile Club of Southern California's Weekend Gas Watch.

      The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $3.26, which is one-tenth of one cent higher than last week, 20 cents higher than last month, and 37 cents higher than last year.

      In San Diego, the price is $3.30, which is four-tenths of a cent above last week's price, 22 cents above last month, and 39 cents above last year.

      On the Central Coast, the average price is $3.38, up 1 cent from last week, 19 cents above last month, and 39 cents higher than last year.

      In the Inland Empire, the average price is $3.29, three-tenths of a cent above last week, 22 cents higher than last month, and 37 cents higher than last year.

      "Wholesale gasoline prices in California started going down more than two weeks ago, and that decrease may have finally started trickling down to affect gas station prices," said Auto Club spokesperson Carol Thorp. "Oil industry analysts say that's because more refineries in the state now are increasing their output."

      Texas: Retail gasoline prices in the Lone Star state have climbed for 10 straight weeks.

      Pump prices for regular gasoline in 11 Texas markets rose an average of 11 cents to $2.71 per gallon, according to the AAA Texas weekly gasoline price survey.

      In Brownsville the price of gasoline is even higher then the state average. Overnight the price rose 12 cents a gallon to $2.79 there.

      "According to the U.S. Department of Energy, gasoline inventories have been weak for several weeks and demand continues to be up," said AAA Texas spokeswoman Rose Rougeau. "If both indicators remain, prices will more likely continue to go up as well."

      The AAA survey showed the state's most expensive gas is in El Paso, where regular averaged $2.77 per gallon, a 10 cent increase from last week.

      San Antonio and Corpus Christi both have the cheapest gas this week, with regular averaging $2.62 per gallon. That is up 13 cents in Corpus Christi and 12 cents in San Antonio from last week.

      "The increase was so huge," Rougeau said. "The increases from last week to this week were double-digit increases. We've had increases for the last 10 weeks."

      Florida: Gas prices are continuing their march toward $3, with the average hitting $2.86 in the state.

      Southwest Florida prices already are beyond that.

      A gallon of the regular stuff will set you back an average of $2.88 in the Bradenton-Sarasota-Venice market, AAA reported. It was an average of $2.90 in markets to the south.

      That's up 30 cents from a month ago and up about 12 cents from this time in 2006.

      Refineries have struggled to keep up in recent weeks as production problems persist, while the typical slack in demand between the winter heating season and summer driving months has yet to materialize in the Sunshine State.

      Gas Price Roundup...

      Best Buy Sued Over "Shower Cam"

      The Best Buy "Geek Squad" brochure says that only "agents you can trust" will be sent to repair your computer, but a lawsuit filed in Los Angeles County Superior Court alleges just the opposite.

      The suit, filed by 22-year-old Sarah Vasquez and her mother, alleges that Geek Squad employee, 26-year-old Hao Kuo Chi, placed a cell phone camera in the bathroom for the purpose of videotaping Sarah and her younger sister.

      According to the lawsuit, Chi placed the phone on the bathroom sink at an angle that would record anyone in the vicinity of the shower.

      Vasquez used the bathroom to take a shower and once out of the shower, she saw the camera phone along with its blinking red light.

      Feeling that something wasn't right, Vasquez walked out of the bathroom to tell her sister about the phone, and when Vasquez returned to the bathroom, the phone was gone.

      The younger sister later found the phone in her bedroom, removed the memory chip, and that's when it all fell apart for Chi. The video images on the chip show Vasquez in the shower.

      The suit alleges negligent hiring, fraud, invasion of privacy, among others.

      Best Buy released the following statement: "Best Buy was not informed of this action prior to being contacted by the media today. Obviously, we intend to cooperate fully with any investigation into this matter."

      The Best Buy "Geek Squad" brochure says that only "agents you can trust" will be sent to repair your computer but a lawsuit alleges just the opposite....

      Senate Hears from Pet Food Lobbyists, FDA Officials, Promises Action

      Consumers Inflamed by Nationwide Epidemic of Dog, Cat Deaths

      By Joseph S. Enoch and Lisa Wade McCormick

      April 12, 2007
      Senators today heard from industry lobbyists and government bureaucrats at a hearing into the nationwide pet food poisonings, but unrepresented were the thousands of consumers who have lost their pets.

      Two of Peggy G's dogs
      Not invited to testify was Peggy G., a grieving dog owner from Jacksonville, Arkansas. Had she been on Capitol Hill, she would have told the assembled politicians, bureaucrats and assorted apologists how the food she fed three of her dogs led to their untimely deaths on Easter Sunday.

      Sen. Dick Durbin (D-Ill.) chaired the hearing which pitted Food and Drug Administration (FDA) representatives and pet food lobbyists against the bipartisan Appropriations Subcommittee. Earlier in the day, the FDA warned that some recalled pet food may still be on store shelves and warned retailers and pet owners to be careful.

      "Many cats, dogs and other pets, considered members of the family, are now suffering as a result of a deeply flawed pet food inspection system," Durbin said. "The FDA's response to this situation has been wholly inadequate -- we need to establish standardized inspections, impose penalties on companies who delay reporting health problems and increase communication between the FDA and the state inspectors so that we can catch problems more quickly. These sound like basic steps but the FDA has failed to put them in place."

      Durbin's remarks highlighted the many flaws in the pet food industry's patchwork inspection system, which is not all that different from the haphazard, industry-dominated, system that supposedly protects humans.

      To begin with, the FDA has only inspected about 30 percent of all pet food plants since 2004, said Stephen Sundlof, director of the agency's Center for Veterinary Medicine. He said many of those visits occurred after recalls had been put in place or during the Mad Cow scare.

      The FDA had never inspected the Menu Foods facility in Emporia, Kan., where many of the recalled products had been made, until after Menu Foods reported a problem.

      Eric Nelson, president of the American Association of Feed Control Officers (AAFCO), said that few inspections are required because the industry, with help from the AAFCO, regulates itself well.

      The AAFCO is a voluntary trade group that puts its logo and quality assurance on pet food products that pay to be a member of the organization. However, further questioning by Durbin revealed that the AAFCO only has one full-time employee, does no inspections and makes no promises as to the quality of the products is endorses.

      Reporting Delays

      Another issue was Menu Foods' delay in reporting.

      Durbin said Menu Foods first noticed a potential problem on February 20, 2007 but did not contact the FDA until March 15.

      Sundlof, who gruffly refused to speak with ConsumerAffairs.com following his testimony, said that there is no means in place to punish Menu Foods for delaying almost a month in reporting the problem.

      Durbin also expressed concern about the FDA's incomplete data. Durbin said websites and blogs have provided better information to consumers than the FDA.

      The FDA's website currently has no succinct list of all the pet foods and treats recalled. Instead, there's a list of press releases which one must click through to find out what products are safe. The FDA's website also tends to coincide with the agency's conflicting reports on what is the actual cause of the thousands of animals' falling ill.

      "As of Monday, a page titled 'FDA Update and Synopsis' stated that 'All the contaminated wheat gluten has been traced,'" Sen. Herb Kohl, (D-Wisc.) said. "But a few clicks away in a Frequently Asked Questions section, the FDA states, 'We are still tracing the contaminated wheat gluten.'"

      "Obviously pet owners can get two very different ideas, depending on where they click," Kohl continued.

      Sundlof promised Durbin the website's issues would be addressed but a few hours after the hearing, there was still no list of recalled products and the discrepancy Kohl noted still exists.

      A Government Accountability Office report released in February highlighted the nation's "flawed" food inspection patchwork. That report found 15 agencies share food inspection responsibilities and that often some inspections overlap while other foods are hardly inspected at all.

      Since that report's release, many Congressmen have vowed to fix the problem, probably by giving all food inspection jurisdiction to one agency. No legislation has been introduced yet.

      Durbin told ConsumerAffairs.com he is working on legislation that will address the problem but did not specify how broad the scope of his pending legislation will be.

      Consumers Speak

      Peggy G. of Arkansas would have told Congress that her dogs -- Spicy, Zorro, and Roxie -- were treasured members of her family, just like her children. And she'd have asked them to pass laws that ensure the food she and other pets owners feed their dogs and cats is safe.

      "If people care enough to pass laws that prevent cruelty to animals, why don't they care enough to pass legislation to make sure pet food is safe?" asks Peggy G. of Jacksonville, Arkansas. "I would like to see Congress pass laws that require the inspection process for pet food manufacturers be equivalent to the process that plants that make human food go through."

      Peggy would also have told members of the Senate sub-committee that the recall isn't broad enough -- and should include more brands of pet foods.

      Specifically, Ol' Roy dry food. That's the brand Peggy fed her dogs. The one she says made her dogs sick and caused them to die.

      But it's not included in the nationwide recall of nearly 100 brands of pet food.

      "Congress needs to know that it's not just the brands of pet food on the recall list that are affected," she says. "There are probably a whole lot more out there.

      "I know it was the food that killed my dogs. It's the only thing they ate."

      Peggy says the dogs were healthy and active when she and her family left their home on Easter morning.

      "They had just eaten some of the Ol'Roy," she recalls. "We were gone for about five or six hours and when we got back, one of the dogs -- our Chihuahua-mix, Roxie -- was dead in the backyard. And two of our other dogs were very sick. They were vomiting, had diarrhea, and were lethargic."

      Peggy says she tried to find a local veterinarian willing to examine her dogs -- on a payment plan.

      "We'd spent so much money on bills, rent, and utilities that my husband's paycheck would not pay for the vet bills upfront," she says. "But none of our local vets would see them without payment that day.

      "We finally found a vet in Tulsa -- some 300 miles away -- who would take them on a payment plan." Peggy says their St. Bernard-mix, Spicy, died on their way to Tulsa.

      "We hadn't been in the car an hour," she says. "When we stopped for gas, a man saw us and asked what's wrong with the dogs. We told him, and he offered to take Zorro, our Shepherd-mix, to his vet who was much closer. But Zorro didn't even make it to that vet. He died on the way.

      "I wish I had the money to test the dogs' bodies to see why they died," she adds. "But I believe it was the food that killed them."

      Dry Food Blamed

      Susan S. of Gainesville, Georgia, is also convinced the Purina dry food she fed her 16 dogs contributed to their illnesses. And to the death of her Great Pyrenees, who suddenly died last month.

      "When I returned home from work, I found Sampson, my Great Pyrenees, dead," she says. "This was a two-year-old, healthy dog. I checked his gums and eyelids and they were healthy in appearance. But he had been lethargic after eating the Purina food.

      "Several of my other dogs then began to vomit, have diarrhea, and they would not eat their food, which was very unlike them."

      Susan says the dogs had eaten Purina dry food -- which in not included in the massive recall of 60 million containers of pet food -- for years. And they'd never had any problems until last month.

      "So it has to be something that's in the food now," says Susan, who holds a master's degree in entomology. "Something in that food changed because they'd eat it before. And all 16 refused to eat the food."

      Susan says she tried to mix in table food with the dry food -- hoping they'd eat something.

      "But the dogs picked out the table food and left the dry food. They are still rejecting the dry food, which is unlike them because they always cleaned their bowls. I think they know something is wrong with the food."

      When asked what she'd say to members of the pet food industry attending today's hearing on the recall, Susan replies: "I would ask them to make an affordable, nutritious pet food that I could have confidence in and could feed to my animals. At this point, I'm not confident with the pet food that's out there now."

      Susan would also ask them why it's taken so long to identify the problem with the pet food -- a problem the Food and Drug Administration blames on melamine-tainted wheat gluten.

      "I have a background in science and it offends me that it took this long to identify the problem. And there are still a lot of unanswered questions."

      She adds: "What I'm saying is 'why are we tolerating this kind of contaminants in the food without having them identified?' If I was going to make chicken food to give to chickens that would be used in human food, I would want to be sure that there's nothing in the (chicken feed) that is detrimental to humans. If you have a substance that's causing (these problems), why not eliminate it from the food? How can you responsibly sell that product to the public? That's my problem."

      Are more stringent regulations for the pet food industry the answer?

      "I think there needs to be a consistent set of laws," Susan says. "Whether they are federal, state, or local laws, there needs to be some kind of accountability and consistency so that whatever happens in Kansas at one plant is consistent with what happens at the plant in New Jersey."

      Menu Foods, which announced its recall on March 16, 2007, has production plants in Emporia, Kansas, and Pennsauken, New Jersey.

      In the meantime, Susan tried her dogs on a new brand of food today -- one her local animal control officer recommended.

      Some of the dogs tried it, she says. But others walked away from it.

      "If they won't eat this, I'm going to give them rice and boil it with barley and chicken broth. Financially this will be extremely difficult for me, but I will not let my dogs continue to suffer and die."

      More about the Pet Food Recall ...

      Senate Hears from Pet Food Lobbyists, FDA Officials, Promises Action...

      Dieting May Be Harmful To Your Health, Study Warns

      Exercise is the Key to Keeping Weight Off

      Low carb, low fat, low calorie -- whatever the diet, a new study suggests it might actually do more harm than good.

      Researchers at UCLA analyzed the results of more than 30 studies involving thousands of people who went on diets to lose weight. That found that more than two thirds who lost weight regained it, putting themselves at risk of a heart attack in the process.

      Constantly losing pounds and putting them back on is called "the yo-yo effect."

      Doctors say repeated change in body weight eventually puts additional stress on the heart and leads to other health problems. Among the potential ailments stemming from repeated weight loss and regain are cardiovascular disease, stroke, diabetes and altered immune function.

      The study is published in the April edition of American Psychologist, the journal of the American Psychological Association.

      "You can initially lose 5 to 10 percent of your weight on any number of diets, but then the weight comes back," said Traci Mann, UCLA associate professor of psychology and lead author of the study. "We found that the majority of people regained all the weight, plus more."

      In fact, the researchers concluded that for many people, it would have been healthier for them to not try to lose weight by dieting at all. Exercise, on the other hand, appears to be more helpful. The researchers identified exercise as a key factor leading to sustained weight loss.

      "Studies consistently find that people who reported the most exercise also had the most weight loss," the authors said.

      Dieting May Be Harmful To Your Health, Study Warns...

      Sallie Mae Settles Student Lending Probe

      Agrees to Pay $2 Million and Adopt New Code of Conduct

      Sallie Mae, the nation's largest student lender, has agreed to pay $2 million and adopt a new code of conduct on its lending practices, as part of a settlement with New York Attorney General Andrew Cuomo, who has been investigating the often-cozy relationship between lenders and college financial aid officers.

      Under the agreement, Sallie Mae agreed to discontinue call centers or other staffing for college financial aid offices, discontinue paying financial aid officers for appearing on advisory boards, and discontinue paying for any trips or travel for any financial aid officer.

      Sallie Mae serves almost 10 million borrowers, manages a portfolio of over $142 billion in loans nationwide, and has relationships with over 5600 schools.

      "Sallie Mae is the largest student lender in the United Sates. Their adoption of this code of conduct will affect millions of students and thousands of schools around the country, and will help set a new industry standard that all lenders should adopt," Cuomo said.

      "With Sallie Mae's $2 million contribution to an education fund, thousands of college bound students will now have more information on how to wisely choose the best student loan for them."

      Congress has taken an interest in Cuomo's investigation. "With today's skyrocketing college costs, it is inexcusable for any financial institution to be collecting excess profits at the expense of students and parents," said U.S. Rep. George Miller, the chairman of the House Education and Labor Committee.

      "Cuomo's settlement with Sallie Mae demonstrates the value of vigorous oversight, and is an important step towards ensuring that all student lenders abide by the highest ethical standards." Miller said, "The sole purpose of the federal student loan program is to help students pay for college, not to pad corporate profits."

      Cuomo's nationwide investigation into the student lending industry has uncovered many questionable conflicts of interest including revenue sharing agreements, university call center staffing by lender employees, gifts and trips from lenders to financial aid directors, and even apparent stock tips to financial aid officers.

      Last week, Cuomo announced landmark multi-million dollar settlements with eight universities and Citibank. In 2006, Sallie Mae and Citibank accounted for 22% of the private loans nationwide.

      The Student Loan Code of Conduct adopted by Sallie Mae in its settlement with Cuomo includes the following provisions:

      1. Ban on Financial Ties. Lenders are prohibited from giving anything of value to any college in exchange for any advantage sought by the lender. This severs any inappropriate financial arrangements between lenders and schools and specifically prohibits "revenue sharing" arrangements.

      2. Ban on Payments for Preferred Lender Status. Lenders may not pay or give colleges any financial benefits whatsoever to get on a college's preferred lender list.

      3. Gift and Trip Prohibition. Lenders are prohibited from giving college employees anything of more than nominal value. This includes a prohibition on trips for financial aid officers and other college officials paid for by lenders.

      4. Advisory Board Rules. Lenders are prohibited from paying college employees anything of value for serving on the advisory boards of the lenders.

      5. Call-Center and Staffing Prohibition. Lenders must ensure that employees of lenders never identify themselves to students as employees of the colleges. No employee of a lender may ever work in or providing staffing assistance a college financial aid office.

      6. Disclosure of Range of Rates and Defaults. Lenders must disclose to any requesting school the range of rates they charge to students at the school, the number of borrowers at each rate at the school, and the lender's historic default rate at the school. This will ensure that schools will have the information they need to select preferred lenders who are best for students and parents.

      7. Loan Resale Disclosure. Lenders shall fully and prominently disclose to students and their parents any agreements they have to sell loans to any other lender.

      Sallie Mae Settles Student Lending Probe...

      Vonage CEO Exits as Company Struggles to Survive

      Internet Start-Up Mired in Legal Challenges, Slow Growth, High Costs

      Embattled Internet telephone provider Vonage said its CEO, Michael Snyder, has stepped down. The company's founder and chairman, Jeffrey Citron, will serve as interim CEO while a replacement is found.

      Vonage also said it will cut about 10% of its 1,800 employees and impose a hiring freeze as it tries to trim $30 million in operating costs during tghe second quarter.

      Vonage is locked in a bitter struggle with Verizon, which claims the Internet start-up has infringed several of its patents. A federal district court jury in Virginia agreed and last week a federal judge ordered the company to stop signing new customers, a virtual death sentence.

      But Vonage got at least a temporary reprive when a federal appeals court temporarily stayed the order.

      Vonage is running low on cash and has promised its investors it would grow quickly to reach profitability. It's been losing customers nearly as fast as it signs new ones, so if the judge's no-new-customers order is reimposed, Vonage could see its existing base of 2.2 million customers erode quickly.

      Vonage has about 2.4 million customers nationwide. It has said in its reports to investors that it spent $275 on marketing costs for every subscriber it adds, a figure Citron said is too high.

      If the appeals court rules against Vonage, it would likely reimpose the ban on signing new customers laid down by U.S. District Judge Claude Hilton. In his ruling, Hilton said he considered the possibility that his order could result in bankruptcy for Vonage, but said he concluded that there is adequate competition in the telecommunications industry and that, whether or not Vonage survives, the public will have adequate access to telephone service.

      Snyder, a former executive at Tyco International, was hired as CEO a few months before Vonage's initial public offering last May, partly to smooth over investor concerns about Citron, who got into hot water with securities regulators in the late 1990s when he was CEO of Datek Online, an online brokerage firm.

      Citron, then 32, was fined $22.5 million for illegal trading and fraudulent bookkeeping. The Securities and Exchange Commission (SEC) said it was, at the time, one of the largest securities fraud settlements ever. Citron, who admitted no wrongdoing in the settlement, was permanently barred from the securities industry.

      Vonage hasn't been kind to investors. Its shares are down more than 80% since its IPO, as cable systems ramp up their telephone service packages and Verizon keeps the company tied down in court. Vonage also faces a suit from Sprint Nextel Corp. that has not yet come to trial.

      Vonage executives insist they will survive the legal challenge and claim to be developing a "work-around" solution that will let them continue to operate without infringing Verizon's patents.

      Customers Restless

      Although it advertises extensively and attracts a steady stream of new customers, Vonage has had a hard time hanging onto customers. Many complain about the audio quality of their phone calls, while others are never able to master the hook-up process, which requires installing a router between their Internet connection and their telephone. Billing disputes are also a common theme in the more than 400 Vonage complaints filed with ConsumerAffairs.com.

      "I had dropped calls, couldn't call or receive calls, etc. So, I decided to go back to my land line," said Ashby of Forest Hill, Md.

      "Vonage promised service that could not be delivered, stalled for several months and have billed me for service not delivered," said Peter of Big Bear Lake, Calif. "I have called for a resolution on this matter many times, they simply shuttle the calls from one nincompoop to another until the customer gives up."

      Vonage also faces a consumer class action filed in U.S. District Court in California which charges that it misled consumers about the quality and reliability of its service and engaged in false advertising and deceptive business practices.

      Verizon Suit

      Verizon sued Vonage in June, claiming that Vonage had illegally used key technologies owned by Verizon to connect Internet calls to regular telephone networks and claimed it had lost hundreds of thousands of customers to Vonage as a result of the infringement.

      Like many companies that try to capitalize on new technology, Vonage has attracted numerous competitors, including the huge telephone and cable companies it had hoped to displace. Much of the growth Vonage had hoped for has instead gone to the cable companies, which have aggressively rolled out telephone service packages bundled with high-speed Internet and video services.

      Between them, Cablevision and Time Warner have signed more than 3 million customers, business that Vonage had been counting on to meet its projections.

      Vonage has also run afoul of the regulatory thicket that is the telecom market. It has been required by regulators to add many of the very fees and surcharges already collected by its old-line competitors. That has taken away much of the low-cost advantage Vonage had been counting on.

      Since it sells itself as a replacement for traditional telephone service, Vonage also found itself required to beef up its 911 service, a major unanticipated expense.


      Not everyone is critical of Vonage. The president of CompTel, a telecommunications trade association, says Verizon is using its market dominance to stamp out competition.

      "We're seeing a still-dominant monopoly aggressively using its monopoly revenue to pursue and drive out of the market competitors," Earl Comstock told The Washington Post. "This isn't about protecting their patents. It's about crushing their competitors."

      Comstock predicted Verizon will use the same tactic to go after other competitors.

      Vonage CEO Exits as Company Struggles to Survive...

      FDA Warns That Recalled Pet Food May Still Be On Shelves

      Menu Foods Recalls More Cat Food Made With ChemNutra Wheat Gluten

      The FDA is advising pet owners that recalled pet food may still be on the shelves in some stores. The agency is urging retailers across the country to be vigilant in removing all products associated with the pet food recall, which began on March 16, 2007.

      To verify the effectiveness of the recall, FDA has conducted approximately 400 checks of retail stores across the country. Based on the checks, FDA believes most companies have removed the recalled product; however, some have not. FDA said it will continue to monitor retailers' efforts to remove these items from the shelves.

      "FDA's priority is to make sure that cats and dogs have safe food to eat," said Stephen Sundlof, D.V.M., director of FDA's Center for Veterinary Medicine. "Many of us are pet owners and animal lovers, and we want pet owners to feel assured that we are doing everything we can to make sure that all contaminated food is off the shelves."

      Yesterday, Menu Foods and Nutro Products expanded their recalls of pet food.

      Menu said its latest recall was prompted by reports from the US Food and Drug Administration about the presence of melamine in cans of cuts and gravy pet food produced in Menu Foods' Canadian production facility, Menu Foods said it undertook an accounting of all recalled wheat gluten supplied by ChemNutra Inc. to Menu Foods in the United States.

      As the result of that review, Menu Foods said it has identified a single interplant transfer of the ChemNutra supplied wheat gluten, shipped from Menu Foods' plant in Emporia, Kansas, to its plant in Streetsville, Ontario. The wheat gluten was subsequently used in the production of pet food in December, 2006 and January, 2007, which is being recalled by Menu Foods.

      The new varieties in the United States and Canada have been added to the recall list. The latest recall group is listed below, and a complete list of recalled products, including the new items can be reviewed at www.menufoods.com.

      Nutro Products said it's ordering all its wet pet food product made with wheat gluten removed from store shelves -- regardless of production dates.

      "Pet owners are fed up with confusing information regarding the Menu Foods recall," Dave Kravis, President and CEO of Nutro Products, stated in press release. "I had previously ordered a broader recall of affected products than what Menu Foods had suggested. Given this new information from Menu Foods, I have ordered all wet pet food products containing wheat gluten to be removed from store shelves. Our dry pet food is not made by Menu and remains unaffected by the recall."

      Kravis said his company has also suspended all shipments to retail stores of Nutro's wet canned and pouch products that contain wheat gluten it's able to confirm their safety. He asked customers with the following Nutro wet pet food products (which are made by Menu Foods and contain wheat gluten) regardless of "best by date," to immediately stop feeding the products to their pets:

      • All Cat Pouch Food Products
      • Listed Cat 3.0 oz can products
      • All Dog Pouch Food Products
      • Listed Dog 12.5 oz Canned Products

      Kravis said Menu Foods' recall does not include Nutro's dry pet food. Nutro's dry pet foods are not produced by that Canadian company and do not contain wheat gluten. Nutro's dry pet foods, biscuits and treats, are not involved in the recall and remain safe for pets to eat, Kravis said.

      Menu Foods, he added, only manufactures wet, canned and pouch products for Nutro.

      Menu Foods Update

      Brand Look For This Date On The Bottom of Can or Back of Pouch Variety Description Can / Pouch UPC
      Americas Choice, Preferred Pet Jan/2/10 Flaked Tuna 3oz Can 54807-59114
      Your Pet Dec/19/09 Sliced Beef/Gravy 3oz Can 72036-29026
      Nov/06/09 Sliced Variety Pack 3oz Can 72036-40013
      Pet Pride Dec/19/09 Sliced Beef/Gravy 3oz Can 11110-86264
      Nov 06 09 Sliced Variety Pack 3oz Can 11110-86003
      Laura Lynn Jan/2/10 Flaked Tuna 3oz Can 86854-02407
      Dec/19/09 Sliced Beef/Gravy 3oz Can 86854-02406
      Nutriplan Dec/19/09 Sliced Beef/Gravy 3oz Can 41130-06755
      Price Chopper Dec/19/09 Sliced Beef/Gravy 3oz Can 41735-12828
      Publix Jan/2/10 Flaked Tuna 3oz Can 41415-08327
      Dec/19/09 Sliced Beef/Gravy 3oz Can 41415-08827
      Stop & Shop Companion Jan/2/10 Flaked Tuna 3oz Can 88267-00286
      Winn Dixie Dec/19/09 Sliced Beef/Gravy 3oz Can 21140-19419
      J.E. Mondou Jan/2/10 Flaked Tuna 85g Can 71127-54202
      Medi-Cal Jan/8/09 Dissolution Formula 170g Can 70705-21280
      Nutro Products All Dates Chicken Cacciatore 3oz Can 79105-35205
      All Dates Orleans Seafood Jambalaya 3oz Can 79105-35206
      All Dates Beef Ragout 3oz Can 79105-35207
      All Dates Alaskan Halibut/Rice 3oz Can 79105-35221
      All Dates Kitten Chicken/Lamb 3oz Can 79105-35202
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      FDA Warns That Recalled Pet Food May Still Be On Shelves...

      Cornell Scientists Find A Second Contaminant in Pet Food

      China Dragging Its Feet, Investigators Complain

      Scientists at Cornell University's College of Veterinary Medicine may have found a second contaminant in the wheat gluten used to make the tainted pet food blamed for the deaths and illnesses of scores of cats and dogs across North America, the Pittsburgh Tribune-Review reported.

      Scientists also say they may have found this second -- unknown -- contaminant in the urine of infected animals.

      "The concerted effort now is to identify what else is in there, and what's in the 'crystals of infected animals' urine and tissue," Dr. Richard Goldstein, associate professor of medicine at Cornell University's College of Veterinary Medicine, told the Tribune-Review.

      The Food and Drug Administration has reported the wheat gluten -- imported from China -- is tainted with high amounts of the chemical melamine, commonly used in plastics.

      Goldstein told the paper his researchers have ruled out aminopterin -- a rat poison -- as the source of the contamination. New York officials earlier said they discovered that toxin in the tainted pet food.

      China Dragging Its Feet

      The Tribune-Review also quoted an FDA source saying that China is slowing the investigation of the nationwide pet food recall.

      Menu Foods recalled 60 million containers of wet pet food in March after dogs and cats across the country started to become sick and die after eating the food. The recall expanded in recent weeks to include nearly 100 brands of pet food and treats made with melamine-tainted wheat gluten imported from the Chinese company Xuzhou Anying Biologic Technology Development, Co. Ltd.

      An FDA official told the Tribune-Review that he asked the Chinese government to help investigate the tainted wheat gluten. But the Chinese government's response, he said, has been slow and incomplete. Chinese officials have previously promised to cooperate with the investigation.

      The FDA is now screening all wheat gluten imported from China and the Netherlands and seizing all wheat gluten from Xuzhou Anying.

      Melamine Effects Unclear

      In the meantime, the FDA and other researchers still aren't certain the high amounts of melamine made the animals sick.

      More than 10 laboratories are researching the crystals found in the infected animals and are working together to develop criteria to determine which kidney illnesses were caused by the contaminated pet food, according to the Tribune-Review.

      The labs will test urine and tissue samples from pets suspected of becoming ill from the food and possibly samples of the food, Dr. Goldstein told the paper. Pet owners and veterinarians, he said, are advised to keep samples of tissues, urine, and pet food.

      The animal rights group, People For The Ethical Treatment of Animals (PETA), previously said that excessive amounts of vitamin D in pet food might be the cause of the growing number of kidney problems and deaths in cats and dogs across the country.

      PETA's Vice President Bruce Friedrich -- citing laboratory evidence -- urged the FDA to refocus its investigation beyond wheat gluten and consider other possible contaminants in the pet food.

      In his letter to Dr. Stephen Sundlof, director of the FDA's Center for Veterinarian Medicine, Friedrich said: "Wheat gluten is used almost exclusively in wet foods. However, the mounting number of complaints of illness and death in cats and dogs who had eaten only dry food strongly suggests that there is a second source of the poisoning, another toxic ingredient.

      "Evidence from reputable laboratories indicates that an as yet unnamed ingredient may be to blame, perhaps a form of vitamin D."

      Friedrich cited the following examples to illustrate his contention:

      • A manufacturing error last year in the production of Royal Canin pet food resulted in excessive amounts of vitamin D3 in the food. This caused hypercalcemia, an abnormally high level of calcium in the blood that caused animals' kidneys to malfunction;

      • Research in endocrinology at Cleveland Clinic has confirmed that high levels of vitamin D3 in animals' blood causes kidney malfunction;

      • Symptoms associated with excessive vitamin D3 appear identical to the symptoms now being reported in dogs and cats.

      This has led "us to believe that this vitamin may be implicated in this new horror," Friedrich told the FDA.

      Cornell Scientists Find A Second Contaminant in Pet Food...

      Groups Urge FCC To Create Wireless Broadband Competition

      Telephone and cable companies deserve competition, advocates urge

      The Federal Communications Commission should use its upcoming auction of the valuable 700 MHz spectrum to create high-speed Internet service that will be a true competitor to broadband services offered by telephone and cable companies, according to a group of public interest and consumer groups.

      In a series of three filings with the FCC, the six-member Save Our Spectrum coalition said the Commission should structure the auction of the spectrum, and the service offered over it, so that the service will be operated in a non-discriminatory manner, under an open access structure following auction rules that will allow for greater participation than simply the incumbents.

      The members of the coalition are: Public Knowledge, Media Access Project, Consumers Union, Consumer Federation of America, New America Foundation and Free Press.

      In the filing on non-discrimination issues coordinated by Public Knowledge and New America Foundation, the coalition said the Commission should "establish a service rule for broadband services operating in the 700 MHz band that protects the consumer's right to use any equipment, content, application or service on a non-discriminatory basis without interference from the network provider."

      This recommendation would make certain the landmark 1968 Carterfone decision allowing consumers to attach devices ranging from fax machines to computers to the telephone network, and would implement Net Neutrality principles of non-discrimination.

      The open-access filing, coordinated by Consumers Union, argued that broadband deployment has advanced in other countries that allow competitors access to telephone-company networks.

      "It is imperative that we learn the lessons of the wireline market and make the appropriate policy corrections in the launch of the most promising wireless broadband markets," the filing said. "Wireless broadband has not been a useful 'third pipe' and will not be in the near future if this spectrum is auctioned to the very same vertically integrated telephone and cable incumbents that dominate the wireline market."

      In the proposed auction rules, a filing coordinated by the Media Access Project, the coalition recommended the Commission offer the new spectrum at the wholesale level, and should "either prohibit wireline and large wireless incumbents from bidding, or require them to bid through structurally separate affiliates."

      The Commission should also guard against the possibility that winners of the spectrum auction not keep the spectrum from being used by not constructing new services, the groups said.

      Groups Urge FCC To Create Wireless Broadband Competition...

      Civil Rights Groups Want Foreclosure Moratorium

      Groups call for immediate six-month moratorium

      National civil rights groups are calling for mortgage lenders, loan servicers and loan investors to institute an immediate six-month moratorium on subprime home foreclosures resulting from reckless and unaffordable loans in the subprime market.

      The groups include the Leadership Conference on Civil Rights, the NAACP, the National Fair Housing Alliance, the National Council of La Raza, and the Center for Responsible Lending

      The groups say they want to stop home losses for families that received unaffordable subprime mortgages with "payment shock." The predominant loan type marketed by subprime lenders in recent years are hybrid subprime mortgages, which begin with a temporary fixed interest rate that changes to a much more costly adjustable-rate mortgage (ARM).

      These so-called "exploding" ARMs, as well as other types of non-traditional mortgages, have been a driving force in massive foreclosures occurring today.

      As foreclosures continue to rise on subprime mortgages, a disproportionate share of the harm falls on black and Latino homeowners and the neighborhoods where they live. Forty percent of Latino families and over half of blacks who receive home loans get higher-cost mortgages, predominately subprime loans.

      To prevent further home losses in vulnerable communities, industry must work actively with homeowners to help them keep their homes by transitioning these borrowers into affordable loan products, the groups maintain.

      The groups said that the need for a moratorium on foreclosures is urgent. The six months will be time for the industry to work with the groups to establish benchmarks and set long-term goals for easing the foreclosure crisis and to assist borrowers.

      "As the nation seeks to recover from the devastation caused by reckless subprime lending, we must squarely address the disproportionate impact on African-American and Latino communities," said Wade Henderson, president and CEO of the Leadership Conference on Civil Rights.

      "For years, subprime lenders have targeted communities of color and aggressively marketed dangerous and abusive loans. As a result, people in communities of color have lost billions of dollars in home equity, and today they are losing their homes on a massive scale."

      "If lenders, servicers, Wall Street and policymakers allow the flood of subprime foreclosures to continue rising unchecked, years of economic progress in communities of color will be wiped out, and the racial wealth and equity gap will widen even further," said Hilary O. Shelton, director of the NAACP Washington Bureau. "Without intervention, subprime foreclosures will impose the greatest drain on African-American and Latino wealth ever experienced in this country."

      "Homeowners saddled with defective loans need relief," said Mike Calhoun, president of the Center for Responsible Lending. "Those responsible for these mortgages have a duty to fix the broken product they sold just like anyone else. The industry must work quickly."

      Recent lending data show that subprime mortgages -- which make up only 13 percent of the overall mortgage market -- account for over 60 percent of new foreclosure filings. "Latino and African-American families are being pushed into high-cost and risky home loans. The result," said Janet Murguia, president of the National Council of La Raza, "is that more of our families are falling victim to loans that were not a good fit in the first place. This is eroding the hard-earned wealth our communities spent decades fighting for."

      The groups also called on Congress to pass anti-predatory legislation, including a private right of action, to assure protection for minority and other communities and to see that this situation does not happen again.

      Civil Rights Groups Want Foreclosure Moratorium...