Current Events in March 2008

Pricey new-car extended warranties are usually poor deals, according to a recent survey and in-depth report published in Consumer Reports'Annual Auto Issue. Providing further evidence is action by the Missouri attorney general against several warranty companies in the St. Louis area.

Sixty-five percent of more than 8,000 Consumer Reports readers surveyed by the Consumer Reports National Research Center earlier this winter said they spent significantly more for a new-car warranty than they got back in repair cost savings.

Extended warranties are very lucrative for dealers, who are being squeezed by lower commissions and better pricing information. On average, dealers collected around $800 on each extended warranty they sold.

Meanwhile, Missouri Attorney General Jay Nixon took legal action against several businesses, most of them based in the St. Louis area, that he said used misrepresentation and deception to sell motor vehicle extended service contracts to consumers around the country.

Nixon said the coordinated filings of lawsuits and settlements, dubbed Operation Taken For A Ride, involve scores of consumers who were misled into paying for extended service contracts on their vehicles that, in most cases, they did not need.

CR Survery

In the Consumer Reports survey, respondents cited warranty costs of $1,000 on average that provided benefits of $700 -- an average $300 loss.

Some 42 percent of extended warranties were not used, and only about a third of all respondents used their plan to cover a serious problem. About one in five respondents (22%) said they had a net savings. Seventy-five percent did not buy extended warranties at all.

"Extended warranties sell costly 'peace of mind' for repair nightmares that probably won't occur," said Rik Paul, automotive editor, Consumer Reports. "Sellers know what tends to break, and in most cases consumers are betting against the house."

Extended warranties were, however, a better deal for those who bought more troublesome cars scoring lower in CRs reliability ratings, such as those from Mercedes-Benz. Still, only 38 percent of Mercedes-Benz owners said they saved money. The average loss was $100.

Lexus and Toyota owners lost the most money: $600 on average for Lexus and $550 for Toyota. Owners of Pontiacs and Jeeps broke even because on average they had covered repairs that equaled the warranty cost.

Consumer Reports' analysis of specific car makes was based on 5,465 responses from a December 2007 online survey of CR readers who owned 2001-2002 vehicles.

What to do

Consumer Reports experts suggest, among other things, shoppers put the $1,500 to $2,300 they might spend on an extended warranty into a money market savings account or mutual fund instead, to insure against unlikely significant repair costs.

For consumers who want absolute peace of mind and don't mind paying for an extended warranty, Consumer Reports offers the following advice:


• Don't feel pressured to buy an extended warranty at the same time as buying a new car. Instead, shop about six months before the vehicle's factory warranty runs out.
• Ask for and have a trusted mechanic review sample contracts before buying.
• Bargain hard -- sales commissions can be large.

'Taken for a Ride'

Missouri AG Nixon said the companies targeted by his office used use high-pressure, misleading tactics.

Its rather insidious how these companies prey upon consumers fears, sending misleading letters informing them that their current motor vehicle warranties were about to expire, when in fact many of the consumers possessed factory warranties that wouldnt expire for several months, Nixon said.

That was the hook to sell these consumers unneeded motor vehicle extended service contracts for hundreds or thousands of dollars. When consumers canceled the contracts, many received only a partial refund or no refund at all.

Nixon says the companies mislead consumers in letters and postcards with boldfaced statements such as Notification of Interruption! and Important Dated Material Enclosed leaving the impression that they are sent from the manufacturers who produced the consumers vehicles or the dealers who sold the vehicles to them.

In fact, Nixon said, the defendants fail to inform the consumers that they are not affiliated with the manufacturer, dealer or any local, state or federal government agency, and that the mailings amount to advertisements for the companys service contracts.

Many consumers confused, but not wanting their car warranties to expire went ahead and purchased the new, but in most cases unneeded, service contract the company was hawking, Nixon said.

In one case, an elderly consumer received a postcard stating that her motor vehicle warranty was expired or about to expire in March 2007, even though her actual extended warranty through General Motors wouldnt expire until November 2008. The consumer purchased a new service contract for $1,898 from the company, and the company refused to issue a refund when it was requested.

Nixon filed one of his lawsuits against that company, Vehicle Services Inc., of St. Peters, in St. Charles County Circuit Court, requesting injunctions, restitution for consumers, penalties and other relief. In addition, the Attorney General filed lawsuits today against the following businesses:

• TXEN Partners, which does business as Service Protection Direct of St. Louis; and a related company, United Warranty Solutions, for using misleading notification letters to pressure, confuse and intimidate consumers into purchasing MVESCs they did not need. The defendants failed to disclose coverage requirements to consumers who purchased MVESCs (such as the requirement to use a specific brand of oil to receive reimbursement for repairs); failed to honor contract terms and perform repair on consumers vehicles; and failed to issue refunds to consumers, including one consumer who is owed as much as $3,800. The lawsuit was filed in St. Louis County Circuit Court.

• Dealer Warranty Services of St. Charles, for using misleading notification letters to pressure, confuse and intimidate consumers into purchasing MVESCs they did not need. The defendant also misrepresented to consumers the cost of purchasing the MVESCs and debited the bank accounts of several consumers without authorization. The lawsuit was filed in St. Charles County Circuit Court.

• Certified Auto Warranty Services Inc., of Lenexa, Kan., which promised a 100 percent Money Back Guarantee to those consumers who purchased and canceled MVESCs, but then issued only partial refunds or no refunds at all. One consumer who paid $1,335 canceled her contract, but has received no refund to date. The lawsuit was filed in Greene County Circuit Court.

• National Dealers Warranty Inc., of St. Peters, which sent consumers postcards and letters informing them that they had limited time to purchase renewed, extended warranties for their vehicles. The company neglected to inform consumers that it was not affiliated with the dealers or manufacturers of the vehicle, or that it was actually offering to sell MVESCs instead of warranties. The lawsuit was filed in St. Charles County Circuit Court.

• National Auto Warranty Services Inc., of Wentzville, which also sent consumers postcards and letters informing them that their warranties were about to expire, and that it was offering them their final chance to purchase a renewed, extended warranty. The company failed to inform the consumers that it was not affiliated with the dealers or manufacturers of the vehicle, and that it was actually offering to sell MVESCs instead of warranties. In addition, the company violated the Missouri No Call Law by calling Missourians who were on the No Call list, as well as federal telemarketing laws by contacting consumers by phone and failing to honor their requests not to be called. The lawsuit was filed in St. Charles County Circuit Court.

• Smart Choice Protection of St. Louis, doing business as Direct Dealer Warranties, which also sent consumers postcards and letters informing them that their warranties were about to expire, and that it was offering the final chance to purchase a renewed, extended warranty. The company failed to inform the consumers that it was not affiliated with the dealers or manufacturers of the vehicle, and that it was actually offering the sell MVESCs instead of warranties. The lawsuit was filed in St. Louis City Circuit Court.

In addition to the lawsuits, the Attorney General filed assurances of voluntary compliance with two companies to settle allegations of misrepresentation in the selling of extended warranties:

• Carhill Enterprises, which does business as Consumer Protection Services, of 1232 Washington Avenue in St. Louis, will pay $7,209 restitution to eight consumers and $4,000 to the state to cover the costs of the investigation and enforcement of the case. The company also agreed to injunctive relief which requires them to inform consumers upfront of specific details of their product prior to purchasing. The agreement was filed in St. Louis City Circuit Court;

• Warranty Activation Headquarters, of 12244 Tesson Ferry Road in St. Louis, satisfactorily responded to all consumers who complained. The company will pay $5,000 to the state to cover the costs of the investigation and enforcement of the case, which was filed in St. Louis City Circuit Court. The agreement also requires the company to provide full refunds to any consumers who cancel within 30 days.

Nixon encouraged consumers who have complaints about businesses selling motor vehicle extended service contracts to file complaints with his office, by either going online to ago.mo.gov or by calling the Consumer Protection Hotline at 1-800-392-8222.

The town council of tiny Kilmarnock, Virginia, has done what the mighty Virginia General Assembly could or would not do -- banned payday lenders.

The Virginia legislature, after grappling with the issue of payday loans, came up with a compromise measure last week that would cap interest rates at 36 percent, lengthen the time that borrowers have to repay a payday loan, limit how many loans borrowers can get each year, and prevent lenders from making loans to members of the armed forces.

However, much to critics' chagrin, the measure allows payday lenders to keep in place some of the more objectionable "loan fees" that they say keep borrowers hooked on high-priced credit. The measure awaits the signature of Gov. Tim Kaine (D).

But in Kilmarnock, population 1,244, members of the town council voted 4-2 to keep payday lenders from setting up shop in the community. The vote came after a lengthy public hearing in which townspeople jammed the tiny council chambers to overwhelmingly express their disapproval.

It was a zoning ordinance that provided the town the opportunity to slam the door on payday lending for the town, located on Virginia's "Northern Neck," an isolated peninsula that juts into Chesapeake Bay .

The town's commercial zoning allows for banks, but had created a separate category for "small lending businesses." That category is currently not allowed under the ordinance and speaker after speaker urged the council to keep it that way. Many of the opponents were local clergy, or otherwise represented churches in the community.

"I can assure you that the clergy represented here today reflect a wide range of the political spectrum, but on this issue we are united," said the Rev. Megan Holloway, Assistant Rector at Kilmarnock's Grace Episcopal Church.

The sole proponent of amending the zoning was Randy Phelps, manager of the Advance America lending store in a nearby town. His company, whose Web site says it operates 2,800 stores nationwide, was seeking to open a cash advance store in a new strip shopping center, part of the town's new Wal-Mart complex.

"We're not evil people," Phelps protested to the council. "We provide a needed service."

But many, including Ward Scull, of Newport News, Virginia, disagreed. Skull, founder of a group called Virginians Against Payday Lending, had failed in his attempt to convince the Virginia legislature to ban payday loans in the state. He found a more receptive audience in this small Virginia town.

"Simply put, these are usurious loans that put people in a debt trap they can't get out of," Scull said. Payday lenders have spent millions of dollars to advertise and lobby against reform over the past year and given a reported $310,000 to state legislators' campaigns. But that spending did them little good in Kilmarnock, a picturesque village that was settled in the mid-1600s. The town is named for Kilmarnock, Scotland and occupies all of 2.69 square miles.

In a bid to become more profitable, many U.S. airlines reduced their number of flights and are now more quick to cancel or consolidate flights. While that might help the bottom line, it has done nothing to lift passengers' spirits, or make air travel a more pleasant experience.

Now, with skyrocketing fuel costs, this trend appears to be continuing. Speaking at the JPMorgan Aviation and Transportation Conference, Jake Brace, United Airlines executive vice president and CFO, said the company may reduce its fleet by 20 aircraft, or four percent of its aircraft.

He did not say how many, if any, flights would be eliminated, but said United would continue to reduce capacity this year.

It's just one of the moves Brace said will be necessary to offset what could be more than a $1 billion increase in fuel costs in 2008. A company press release, written for financial reporters in advance of the conference, reveals what else consumers can expect from the friendly skies.

"The company is executing against its fuel conservation plan, leading efforts to pass commodity costs onto customers, and identifying new sources of revenue by unbundling services," the release states. "United recently announced a $25 second bag fee for non-elite customers that is expected to generate $100 million in annual revenue."

Brace said the aircraft targeted for mothballs are generally older, narrowbody planes that are less fuel efficient. Additionally, he said the company has increased its fuel hedges since January, and now has 20 percent of its fuel hedged for full year 2008.

Brace said United is looking to further reduce other costs and is reviewing non-aircraft capital spending having already delayed the purchase of new aircraft until the industry recovers to a level where he says those assets can earn a reasonable return.

"We are taking a prudent step now by reducing our fleet, taking assets out of the network that don't make sense at these fuel prices, to better position United to be successful in an ever-challenging environment," Brace said. "United has an aggressive five-year plan focused on creating shareholder value. We have led the industry in reducing domestic capacity and continue to lead efforts to pass commodity costs onto our customers, as other industries do."

But as airlines such as United reduce domestic capacity, consumers are left with fewer, and more expensive options for air travel.

Underlying todays growing epidemic of type 2 diabetes is a much larger epidemic called prediabetes which is when the blood sugar levels are higher than normal but not high enough to be called diabetes.

Fortunately, a diagnosis of prediabetes doesnt mean that youre destined for diabetes. Prediabetes can be reversed, and diabetes prevented, by making some basic lifestyle changes. Heres what you should know.

Pre-Diabetes

Almost everyone who has type 2 diabetes has passed through prediabetes first. According to the American Diabetes Association there are around 54 million people in the United States who have prediabetes. If left untreated, it almost always turns into diabetes within 10 years.

And even if its not high enough to be labeled diabetes, high blood sugar can significantly harm your body causing high blood pressure and damage to your heart, blood vessels, kidneys and eyes.

Do you have it?

Prediabetes is like the warning light in your car that comes on when youre about to run out of gas, letting you know theres a problem looming, but you still have time to do something about it. But, prediabetes can be tricky too because it usually causes no outward symptoms, so most people that have it dont realize it.

The only way to know for sure is to get a simple blood test done by your doctor. (Tip: Check your personal risk at www.yourdiseaserisk.com click on diabetes). Here are the factors that increase your risk of prediabetes and diabetes. If you fall into one or more of these categories you need to get tested:

• Over age 45. Prediabetes risk increase with age.

• Are overweight with a body mass index (BMI) of 25 or more. To calculate your BMI see www.nhlbisupport.com/bmi. The heavier you are the greater your risk. Also, having excess fat around your waist, rather than around the hips and thighs, increases risk.

• Have a family history of diabetes.

• Have high blood pressure (140/90 or higher).

• Have low HDL (good) cholesterol and high triglycerides.

• If youre Hispanic, Asian, African or Native American.

• Had gestational diabetes (high blood sugar during pregnancy) or gave birth to a baby weighting over nine pounds.

Good News

Being diagnosed with prediabetes doesnt mean that youre destined for type 2 diabetes. Prediabetes can actually be reversed and diabetes prevented by making some simple but consistent lifestyle changes that include:

• Losing weight: If youre overweight, losing just 5 to 10 percent of your body weight coupled with moderate exercise can reduce your risk of developing full-fledged diabetes by nearly 60 percent.

• Exercising: Regular exercise (about 30 minutes at least five days per day) helps control your weight and blood glucose level. Talk to your doctor about what types of exercise might be appropriate for you.

• Eating healthy: Eat whole grains, fruits and vegetables high in fiber, limit fat consumption and go easy on the salt and sugar. Visit www.diabetes.org and click on Nutrition and Recipes for healthy diabetic food tips, recipes and other nutrition information.

• Not smoking: Smokers are more likely to become diabetic.

Note: Oral diabetes medications may also be an option to reduce your risk of developing full-blown diabetes. Or, if you have high blood pressure or abnormal cholesterol levels, medication for these conditions may be necessary to lower your risks.

Savvy Tips: For more information and dozens of free publications on all aspects of diabetes visit the National Diabetes Education Program at www.ndep.nih.gov or call 800-860-8747. Or for extra help, contact the American Association of Diabetes Educators (800-338-3633, www.diabeteseducator.org) to locate a diabetes professional in your area.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit www.savvysenior.org. Jim Miller is a contributor to the NBC Today show and author of The Savvy Senior book.

Nixon filed suit Branson Log Homes, which does business as Executive Timbers Resort and Golf Course, seeking injunctive relief and civil penalties, as well as the restitution.

Consumers who contacted Nixons office complained that Branson Log Homes:

• Failed to provide required notice to consumers of their right to cancel contracts, and failed to allow consumers to cancel those contracts within five days after they purchased the timeshare membership or property;

• Billed consumers for maintenance or upkeep fees on property they were trading in, after neglecting to inform consumers that they would be required to pay such fees;

• Didnt reimburse consumers for maintenance fees after telling them those fees would be reimbursed;

• Promised that consumers who purchased a timeshare membership, plan or property from the defendant would receive specified benefits or other merchandise, such as membership in a travel club, but then didnt make good on those promises; and

• Didnt tell consumers that the defendant was more than $30,000 in debt to the travel club it counted on to provide travel club memberships to consumers.

A number of consumers spent thousands of dollars and attempted to trade in their existing timeshares as part of an agreement to purchase a new timeshare from Branson Log Homes, Nixon said. Many were promised travel club memberships that were never delivered. Others are still paying out of their own pockets for maintenance on timeshares because the defendant omitted essential information about the timeshare trade process and implied that the consumer would no longer have to pay.

Nixons investigation revealed that many consumers have lost between approximately $7,000 and $17,000 in dealing with Branson Log Homes, although some consumers may have lost more.

The lawsuit is requesting that the court order the defendant to stop violating state consumer protection laws. In addition, Nixon is asking the court to order Branson Log Homes to pay restitution to all consumers who suffered a loss due to the defendants unlawful conduct, appropriate civil penalties and all costs associated with the investigation and prosecution of the case.

With spring break here and families planning for summer vacations, Florida Attorney General Bill McCollum is warning consumers to be wary of the various scams and fraud which could be associated with vacation packages and other travel-related services.

McCollum encouraged consumers to report travel-related fraud involving Florida companies to his office (at myfloridalegal.com, particularly issues related to improperly disclosed surcharges, misleading advertisements or problems associated with timeshares.

Florida is well-known for its allure to travelers, from both within the state and other locations, and we must protect not only our citizens and our guests but also our reputation as an attractive destination, said McCollum.

The Attorney Generals Office announced settlements earlier this week with two cruise lines over the imposition of a fuel supplement on cruise passengers. Royal Caribbean Cruise Lines and Celebrity Cruises agreed to refund $21 million to consumers nationwide who were charged the fuel surcharge after they had booked their cruise.

Timeshares

Other common travel-related problems are associated with vacation timeshares, which give consumers the right to use a vacation home for a limited, preplanned period. Timeshare scams occur both at the time of the original purchase and at the point of resale.

Victims of unscrupulous timeshare sales companies are often contacted either over the phone or are mailed a postcard asking the victim to call a toll-free phone number. Before consumers decide to either purchase or resell a timeshare, McCollum advised them to consider the following tips:

• Be wary of the hard sales pitch When it comes to purchasing a new timeshare, the salesperson may give the impression that the papers have to be signed that same day. Consumers should remember that they always have the right to leave the sales office and come back later.

• Consumers should always read their contracts to determine what cancellation rights they have after the papers are signed. Before buying a timeshare, consumers should consider whether they will want to return to the same vacation spot each year.

• Be wary of too-good-to-be-true claims when it comes to resales The company's salespeople are likely to claim that the market in the area where the resort is located is "hot" and that they are being overwhelmed with buyer requests for that resort. In some cases, the salespeople may even claim they have a buyer waiting in the wings who wants to buy the timeshare. Consumers should be skeptical of these types of claims.

• Question up-front fees Most resale companies require consumers to pay a $300-500 advance listing fee before the sale of the timeshare can take place. In a typical real estate transaction, the fee is paid from the proceeds of the sale at the time of the sale. Consumers should also find out if the salespeople are licensed real estate brokers and should contact the licensing agency in the state where the company is located to determine if their license is valid, and whether there are any complaints lodged against the broker.

• Consider other options when it comes to resale Consumers may want to try selling their timeshares "by owner" by placing advertisements in a newsletter or magazine read by potential timeshare buyers. A licensed real estate broker in the area where the resort is located may be another option. Some companies also offer contracts which allow consumers to exchange their timeshares for units in different areas.

The lawsuit seeks a court order requiring Peter Heyel, owner of American Heritage Tours and other tour and travel operations, to pay full restitution and damages to defrauded customers, plus penalties and costs. The suit also seeks to permanently ban Heyel from the travel industry unless and until he posts a $100,000 performance bond.

We are confident our investigation of Mr. Heyel and the resulting lawsuit will put an end to his practice of victimizing senior citizens, said Attorney General Andrew M. Cuomo. Travel agents have an obligation to operate in an honest and reliable fashion.

According to court documents, between 2005 and 2006, Heyels American Heritage Tours, also known as Heritage Tours, Connecticut Heritage Tours, Amtrak Tours and Voyages TC, accepted large deposits and payments in advance for bus tours, weekend travel and Broadway show packages. Heyel then canceled or severely altered the itinerary of the trips and failed to provide refunds.

In particular, the suit contends that he operated in a deceptive and fraudulent manner, made numerous misrepresentations regarding accommodations, transportation and travel insurance and refused to provide refunds after failing to provide promised services.

According to court documents, Heyel charged consumers for travel insurance policies that were never obtained and ignored repeated consumer inquiries regarding refunds for canceled trips.

Among the allegations:

• A senior center paid Heyel $5,247 for 55 people to take a trip into Manhattan for lunch and to see the Broadway show Chicago. Heyel canceled the trip two days beforehand and never refunded the money.

• A retirees club paid Heyel $5,148 for a trip for 54 people, including bus travel from Poughkeepsie to New York City, lunch and tickets to Broadways Beauty and the Beast. The trip was canceled and no refund given.

• 22 senior citizens arranged a 3-night trip to Niagara Falls and Toronto through Heyel, which was to include bus transportation, lodging, breakfast and dinner each day. He accepted a $3,000 deposit. At the last minute, Heyel informed the group that he was unable to charter a bus and that they would have to get their own if they wanted to go on the trip. The trip was canceled and no refund was given.

• A seniors group paid $7,102 for a trip to New York City including lunch in Times Square and tickets to The Lion King. Heyel told the group at the last minute that he couldnt get tickets to the play and never rescheduled the trip or refunded the payment.

Heyel also failed to file a certificate of doing business in Queens, Rockland and Dutchess Counties -- a violation of New York state law.

The Attorney Generals Office is seeking more than $29,000 in restitution, a penalty of $5,000 for each instance of deceptive and unlawful practice, a $10,000 penalty for deceptive practices targeting senior citizens and $2,000 in costs.

More Scam Alerts ...

"Once your information is out there, it can be compromised at any time," she said. "It can happen to anyone."

As Chief Communications Officer for the College of Business Administration at San Diego State University (SDSU), the sharp-tongued and sharp-witted Finch is accustomed to pressure-cooker situations. So it was that when she noticed an unexplained attempt to charge $2900 to her MasterCard, she didn't waste any time digging in to investigate the problem.

"I applied for a Sears store credit card in 1985," Finch told ConsumerAffairs.com. In 2001, Sears turned over their card accounts to Citibank, which converted them into true MasterCard credit cards -- apparently a perfectly legal practice."

In June 2007, Finch received notice that her card information had been used to make purchases at Stein Diamonds, an online jewelry store in Los Angeles. Finch's personal information had also been used to open up another new credit account in her name, but without her consent.

"The thieves used the Internet to change the billing address for the card to one...in Indianapolis, Indiana," Finch said. "I contacted Stein Diamonds to find out it was they who contacted Sears CitiBank MasterCard...they had noticed an unusually large amount of activity coming from Sears Citibank MasterCards. It was only after Stein alerted Citibank that I received the call from [Citibank]."

Finch filed reports with the police in San Diego and Indianapolis. Indianapolis police detective Brett Seach was assigned to her case and visited the address being used as Finch's, and found it was a freight forwarder shipping goods to Russia.

The freight forwarder noticed the unusual amount of activity and contacted another detective in Seach's division to investigate. The police told Finch they suspected a data breach inside Citibank, "but could do nothing."

Finch estimated she spent roughly 600 hours dealing with the breach, including setting up fraud alerts on her credit reports and "hours and hours on the phone with Citibank." She also contacted the Identity Theft Resource Center in San Diego for assistance. Statistics from the Center indicate that the average identity theft victim spends $6,000 and 600 hours dealing with fallout from the breach. Finch was "dubiously honored" to find out she was a leading statistic.

But the story doesn't end there.

Cover-Up?

In October 2007, Finch found a post on the Free Money Finance blog detailing a case of a data breach and identity theft remarkably similar to hers, dated August 14, 2006.

"Both my wife and I had out IDs stolen this year," a reader wrote. "[T]he first card was opened in my name at Sears (whose credit is run by Citi) and the thieves spent $2400. Citi thought that this was unusual, so they red flagged it, and found out that the phone number the thieves put down didn't match the one on my credit report. They called me to ask if I had opened an account in Phoenix that morning. Living in Oregon, I told them I hadn't. They closed the account and advised me to call the credit agencies, which I did, and put the fraud alert on my account. Good thing too, I stopped these bastards from opening 3 more cards in my name."

A furious Finch contacted Citibank again as well as the Attorney General of South Dakota, where Citibank's credit card division is located. Citibank representative Mark Browne responded to her in November 2007, saying that the bank "had no knowledge of any compromise," and that this was an "isolated incident" not related to a system breach or an "unauthorized release of cardmember information" by Citibank or Sears.

"Information compromises can happen at a variety of places external to Citibank," Browne wrote. "[W]e have no way of identifying when or where your personal information was compromised."

But Finch wasn't convinced.

"Even if Citibank wasn't responsible, all of the paths lead back to them," Finch told ConsumerAffairs.com. "They told me the information might've been stolen from a doctor's office or an employer," she said.

Finch sent her case to the FBI, which passed it through multiple agents before telling her again that there was no way to follow up on what happened.

"I had three attorneys on the case, all of whom advised me that Citibank is only obligated to alert customers, not fix the security breach for which they may be responsible, or provide assistance to identity theft victims. There's simply nothing anyone can do."

Finch also found Citibank's offer of a year of free credit monitoring insufficient. "One year's just not enough, particularly when more fraudulent activity could happen at any time. I want to be able to monitor my credit on a long-term basis without having to pay for something that wasn't my fault."

What Really Happened?

"Flipping" store cards into true credit cards, without the cardholder's consent or sometimes even without their knowledge, is indeed a common practice in the industry, especially by Citibank.

Macy's store card owners had a similar experience to Finch's in October 2007, when many of their cards were converted into Citibank MasterCards, often with different interest rates and terms. Not only does the conversion potentially harm the cardholder's credit rating, it also creates a brand-new account that identity thieves can use to buy merchandise or open other new accounts.

In March 2006, a few months before the August fraud incident that was similar to Finch's, Citibank shut down thousands of its ATM and debit cards in several countries as a result of a breach of the network used to process payment transactions on behalf of Visa, who co-owned the Citibank debit cards.

Neither Visa or Citibank would comment on the particulars, but industry analysts pieced together that a contractor may have been storing personal identification numbers (PINs) without sufficient security, enabling hackers to steal the numbers and create "clone" cards to make withdrawals from unsuspecting victims' accounts. While debit cards were chiefly affected by this breach, someone may have gotten access to Finch's information and held onto it to use later.

The truth is that there may never be a way to detail what happened.

The financial industry has made an art of revealing only the barest amount of information about any data breach to the public, regularly claiming that there was no evidence of fraud or theft at the time, offering free credit monitoring to the affected, and simply moving on without any large-scale efforts to improve security or provide consumers more options.

Finch's colleague at SDSU, associate professor Murray Jennex, is a certified information security professional and identity theft expert. In an article for SDSU's "Insights Executive Education" magazine, Jennex said that "Eighty percent of the risk for security breaches come from within the company while 20 percent of the risk is from outside the company. A lot of it comes from disgruntled employees or people who aren't aware of what they need to do for security."

"It takes a lot of intelligence to be good at security because there's so much technology and so many things to learn about your particular systems so that it can be implemented properly," Jennex wrote. "On the other hand, the tools are so easy to use that you don't have to be all that smart to be an effective hacker. And most of these tools are available online, for free."

Suzanne Finch is one of the luckier ones. She suffered no financial losses from the breach, and moved quickly to get assistance from experts in the fraud and identity theft realm with her case. But she recognizes that her personal information -- her life -- "is seriously compromised. This could keep you from buying a home," she said.

"There's no justice," Finch said. "In the end, all we have is our good name, and we have to do all we can to protect it."

In November, 2007, a 13-year-old Ohio boy used his home computer to create a fake MySpace profile titled "Your Princeypal." Although no name was included, the profile featured a picture of the principal at the boy's school and the statement, "I am the hillside middle school principal."

The profile goes on to describe the supposed poster as a child molester who performs sex acts in his office and enjoys watching gay porn.

School officials took action and in February, 2008, the 13-year-old was expelled from school for the offense of "malicious harassment." However, according to The Smoking Gun, the parents, Toader and Marianna Osan, have now sued school officials for violating the free speech rights of the 13-year-old.

Questions also exist as to why a 13-year-old was on MySpace when the required minimum age is 14.

As the tragic case of Megan Meier proved, fake and impostor social networking profiles are no laughing matter, as numerous ConsumerAffairs.com readers have discovered.

"Someone has created a false account with all my personal information/pictures," complained Jennifer, of Bronx, New York. "They are also making false accusations causing unknown people to try and contact me. They have provided strangers with my phone numbers and job/home address."

Steve, of San Diego, California, wrote, "Someone constructed a web page using my daughter's personal information including her pictures, phone number, etc. They portrayed her as someone soliciting sex of different types. We have contacted MySpace via email numerous times but no one has replied."

And Leslie, of Alpharetta, Georgia, said that someone set up a MySpace account using her daughter's picture and identity. "My daughter is 10 years old. I have sent emails to have the myspace removed to no avail," Leslie wrote.

More space, more profiles

MySpace began as a way for bands to promote their work and intermingle with other musicians. Today, however, MySpace has grown to be the social networking monster of the Internet with over 100-million active profiles, most of them teens looking for their own "space" to hang out.

As MySpace has grown, so have the number of impostor profiles. While many fake profiles can be labeled a "parody," other profiles are made with the clear intent of causing harm or harassment to another individual. And creating an impostor profile is easy thanks to the fact that MySpace has no age or identity verification.

Critics accuse MySpace of not caring but there are some very real hurdles. While it might be feasible to verify the age and identity of someone 18 or older, trying to verify a minor's identity is very difficult.

"When it concerns a kid, how do we want to manage children's information and data in the United States?" said Marsali Hancock, President of the Internet Keep Safe Coalition. "Who will hold the information and how will it be shared? It's not something that can be easily implemented," Hancock said.

Without verification, it takes only an Internet connection to create a real or fake profile. But getting a fake profile removed is another story entirely.

MySpace includes a link at the bottom of every profile to report abuse, but many people misuse this to harass someone who has posted a legitimate profile. In addition to the "report abuse" link, MySpace recommends the victim send a "salute."

What is a salute?

To submit a salute, MySpace says that you'll need to send them a picture of yourself holding a handwritten sign with the word "MySpace.com" and your "Friend ID." You'll also need to include the address of the impostor profile.

"I think the salute is ridiculous. At the time it was put in place, I told them it was ridiculous," said Parry Aftab, Internet privacy and security attorney and the Executive Director of WiredSafety.org.

Requiring this "salute" puts the burden on the victim instead of the person who made the fake profile, critics say. Further, if someone is impersonating you and you don't have an account with MySpace, you must create a profile before sending the salute.

This can be a real problem for someone who doesn't have access to the Internet.

"My son is incarcerated in prison and has no access to the internet or email," wrote Dana, of Lake Geneva, Wisconsin. "Someone has created a Myspace page for him that is disgusting and vile."

Dana said that she has repeatedly contacted MySpace because her son was extremely upset, but the profile remained online. "People think it is his page," Dana wrote.

ConsumerAffairs.com made numerous requests to MySpace asking for comment, but the company, owned by Rupert Murdoch's News Corporation, did not respond to our calls and e-mails.

Safe Harbor

Angry victims harbor visions of suing the Web site and the person responsible for creating the fake profile. However, suing MySpace, Facebook, or any other social networking site is difficult due to something called the Safe Harbor Provision.

Under the Safe Harbor Provision, most Web sites are immune from prosecution as long as they cooperate in tracking down the person that created the impostor profile.

But this doesn't mean that the impostor can't be taken to court.

"One of the things intriguing to me is that people will do things on the Internet that they wouldn't think of doing in a newspaper or magazine," said John Nockleby, Professor of Law at the Loyola Law School in Los Angeles.

"Masquerading as another person certainly could potentially violate several torts. A tort is a civil wrong."

"One example would be misrepresentation, where a person misrepresents another person and causes some kind of harm. Another example is false light, which means that even if a statement isn't defamatory, it could still be false and put the person in a false light," Nockleby said.

"A few areas to consider would be defamation and violation of privacy," said David Sorkin, Associate Professor at the John Marshall Law School in Chicago. "However, if it's a privacy case, a lawsuit can open those details to the entire world, especially if the media picks it up."

"You also have to realize that if the profile is seen as just a parody, there may be no legal violations" and therefore no remedy, Sorkin added.

Here to stay

Under current law, impostor profiles and other objectionable Web content are here to stay, at least until social networking Web sites take the responsibility of setting up effective verification procedures.

But it's not likely that will happen, said one attorney knowledgeable in the topic, because Web sites potentially open themselves to a greater risk of prosecution by trying to verify all postings than by verifying none.

"Once you voluntarily assume responsibility for the content on your site, you also take on the very real risk that you will be held accountable if some of the content is inaccurate or defamatory," said Joan E. Lisante, a Northern Virginia lawyer who has worked with Internet publishers, including ConsumerAffairs.com.

Thus, it's likely there will be many more parents who feel like Christine, of Levittown, Pennsylvania.

"Someone created an account with my 16 year old son's picture which was doctored to be pornographic. I'm going to need to see a doctor for help myself if it isn't removed soon."

Granted, it's not a good situation, but if you stop after calling the police and your insurance agent, the burglary could get even worse. If you've used your credit card to open an account on Xbox Live, the thief could be downloading games and buying points. Because your credit card is tucked safely in your wallet, you may be none the wiser.

The Belgian gamers' blog Fragland.net has reported just such an occurrence in Canada. It is advising its readers to keep credit card information off their game consoles.

The post raises an important point in this era of e-commerce. Our fictional burglary victim might also be vulnerable to credit card theft when a computer is lost or stolen.

If the owner is a frequent e-commerce customer, at a site such as Amazon.com, he may have a credit card on file for purchases. He may also have checked the box that says "remember me on this computer," so that his user name and password automatically pops up. It's an open invitation for the burglar to go on a shopping spree.

The best advice is to immediately contact your credit card company if a burglar steals your Xbox or PC.

More Scam Alerts ...

(Citibank) moved my due date to cause me to be late and give them the ability to charge a late fee and move my rate from 3.99% (for the life of the balance) to 24.44%, wrote Jeff of Noblesville, Ind. I have always paid electronically on the 24th. ... It sent my monthly bill for Citibank from $211 to $495.

While the exact numbers are difficult to quantify, ConsumerAffairs.com has found numerous complaints, some going back as far as 2001. Consumer advocates say the banks' tactics are greedy, unnecessary and more than coincidence.

The consumer groups all agree this is a serious problem. We all get complaints about it, said Ed Mierzwinski, consumer director at the U.S. Public Interest Research Group, a nonprofit consumer advocacy organization.

It's really too bad because this likely affects consumers with serious debt, said Norma Garcia, senior attorney with the Consumers Union, the nonprofit publisher of Consumer Reports. If it's through autopay they're likely trying to resolve their debt through their bank.

Common practice

It is common for the credit card companies to change due dates as much as six days or more from month to month according to Mierzwinski and to consumer complaints.

For the first time that I can recall in 14 years of using my Chase MasterCard, they decided to change the due date making it several days SOONER than it used to be, from approximately the 20th to the 14th, wrote Karen of Middlefield, Ohio.

Mierzwinski said the companies frequently use the excuse of operating on a fixed 30 or 31-day schedule regardless of the actual length of the month. But he said that doesn't explain why there are often six days or more of a discrepancy from one month to the next.

I don't know of anyone that has a 35-day month followed by a 25-day month, he said.

The credit card companies advertise the ability to choose your due date as a service to their customers, but most of the complaints ConsumerAffairs.com received are from consumers who chose a particular date, only to have the bank fail to honor it.

The benefit of that offer would be undone if they changed the date without the consumer's consent, Garcia said.

Sara of Brooklyn, N.Y. had to cancel her Chase credit card when three months in a row she asked for a due date of the 19th and three months in a row her due date was the 13th.

I am still being expected to pay my $29 late fee, Sara wrote.

Chase responds

Chase aims to make it easy for our customers to do business with us, Chase representative Megan Stinson wrote in an e-mail. We offer flexible payment methods for customers and the ability for them to choose their payment due date to help them better manage their finances.

When an account is opened, it is clearly disclosed that the payment due date may vary slightly, by up to five days, from statement to statement depending upon the number of days in the month, Stinson continued. This information is also communicated to our customers when they request a new payment due date, whether that is online or with a Chase representative.

However, Stinson did not answer many of ConsumerAffairs.com's specific questions including why Chase does this, how long it has been doing it and how consumers can get their money and lower interest rates back.

Citibank is mum

For two days, Citibank representative Samuel Wang promised to answer ConsumerAffairs.com's questions but did not do so and now is not returning e-mails or phone calls.

ConsumerAffairs.com could find no similar complaints involving other large credit card companies.

McDaniel recently warned consumers in his state to be on the lookout for a recurring telephone scam. And, he says, he's received information leading him to believe the whole thing is being orchestrated by prison inmates who, let's face it, have a lot of time on their hands.

In the prison phone scam, prisoners make collect calls at random. Once the inmate connects with a person on the other end of the line, he lies to the unsuspecting individual and states that there has been an accident and that this was the listed emergency contact number for the "unidentified victim."

The inmate then instructs the person to call his supervisor at *72 and the number to the jail. Once the person calls the number, however, they are not connected to anybody, but rather, they unknowingly provide the inmate with open access to their own residential phone line.

The inmate can then call anyone he wants and talk as long as he wants. Some victims of this scam have been defrauded out of hundreds of dollars in long-distance calls.

"If you get a call like this, it's important to stay calm and stay alert," said McDaniel. "Verify the information through an independent source, such as the police department, phone operator or hospital, which will help prevent you from suffering emotional, and possibly financial, stress."

Here are some other tips to help you avoid falling victim to this scam:

• Ask the caller for his or her name, position and contact information;
• Verify your loved one's whereabouts and health by calling them directly;
• Never dial an unknown number at the request of an unsolicited caller;
• Do not always rely on what appears on your caller ID as the actual person or entity calling you; check it out for yourself, especially if you are being asked for personal information;
• Never dial a number you do not know or did not find on your own; and
• Always trust your instinct. If the information you receive over the phone sounds fishy, just hang up.

McDaniel said he has no evidence that this scam is being operated out of Arkansas prisons and jails, but is asking corrections officials to investigate. He says he has learned that it is being run from other states, and is concerned that such scams can spread rapidly and are often adopted in copycat fashion.

More Scam Alerts ...

Mortgage brokers, who arranged loans, then sold them to banks and to Wall Street, are in the crosshairs of various state government investigators, as the subprime mortgage debacle continues to unwind.The state of Massachusetts has filed a lawsuit against Lehi Mortgage Services, Inc., a Quincy-based mortgage broker, alleging that Lehi Mortgage fraudulently procured mortgage loans by submitting to lenders asset and income information for loan applicants that was fabricated or inflated.

The suit, filed by Attorney General Martha Coakley, seeks injunctive relief to prohibit Lehi Mortgage from acting as a mortgage broker, civil penalties, and reimbursement of Commonwealth's costs and attorney's fees.

Coakley said her office took after following a referral by the Massachusetts Division of Banks, which said its probe found brokering misconduct in numerous mortgage loans arranged by Lehi.

In addition to filing the lawsuit, Coakley obtained a temporary restraining order to prohibit Lehi Mortgage from destroying documentation related to the business of brokering mortgage loans and prohibiting Lehi Mortgage from transferring or otherwise disposing of company assets.

"Irresponsible behavior by mortgage brokers has directly contributed to the foreclosure crisis that has devastated communities across the state," Coakley said. "Our office will continue to hold businesses accountable for their role in fraudulent mortgage lending, and will continue to work closely with the Division of Banks in doing so."

The complaint asserts that Lehi Mortgage violated the Massachusetts Consumer Protection Act by:

• Soliciting, arranging, and submitting loan applications to lenders that it knew or should have known contained false or inflated asset information;

• Soliciting, arranging, and submitting loan applications to lenders that it knew or should have known contained false and inflated income;

• Failing to make timely and complete mortgage broker disclosures as required by law; and

• Providing loan applicants with loan "pre-approval" letters in violation of Division of Banks regulations that prohibit "pre-approvals" by brokers.

The suit claims that Lehi Mortgage secured mortgage loans for consumers who would not otherwise have qualified for such loans, and, as a result, Lehi Mortgage received fees from lenders it otherwise would not have received had it submitted accurate information.

Last week, Illinois Attorney General Lisa Madigan has issued subpoenas to Countrywide Home Loans, Inc., and Wells Fargo Financial Illinois, Inc., to determine whether the lenders unfairly steered African American and Latino borrowers into higher cost home loans in violation of fair lending and civil rights laws.

Madigans probe follows a Chicago Reporter study finding that the Chicago area led the country in high-cost home loans for the second year in a row.

The study also found marked disparities in loan pricing between white and non-white borrowers, with African American borrowers three times as likely as white borrowers to receive a high-cost home loan and Latino borrowers twice as likely.

The report examines the financial and ethical questions surrounding whether, and how, U.S. companies should address the obesity epidemic.

"Employers need to realize that obesity is not solely a health and wellness issue," said Labor Economist Linda Barrington, Research Director of The Conference Board Management Excellence Program and co-author of the report.

"Employees' obesity-related health problems in the United States are costing companies billions of dollars each year in medical coverage and absenteeism. Employers need to pay attention to their workers' weights, for the good of the bottom line, as well as the good of the employees and of society," she said.

Among the report's findings:

• Obesity is associated with a 36-percent increase in spending on healthcare services, more than smoking or problem drinking. More than 40 percent of U.S. companies have implemented obesity-reduction programs, and 24 percent more said they plan to do so in 2008.

• Estimates of ROI for wellness programs range from zero to $5 per $1 invested. ROI aside, these programs may give companies an edge in recruiting and retaining desirable employees. Meanwhile, some say it may be more effective just to award employees cash and prizes for weight loss rather than devote resources to long-term wellness programs.

• Employers need to weigh the risks of being too intrusive in managing obese employees against the risks of not managing them. There is evidence that as weight goes up, wages go down. Employers should be fully aware of any potential discrimination risk before addressing employees' weight, whether for the employee's own good or that of the company.

• The jury is still out on the costs and benefits of paying for employees' weight-loss surgeries. While obese employees medically eligible for bariatric surgery (about 9 percent of the workforce) have sharply higher obesity-related medical costs and absenteeism, some say companies are unlikely to recoup surgery costs before these employees have left for other jobs.

• How employers communicate a wellness or weight-loss program is as important as how they design it. Companies should involve employees in planning health initiatives, rather than working from the top-down, and should make sure personal privacy is protected.

The report includes three case studies: Public Service Enterprise Group (PSEG), a large self-insured utility with high BMI and low turnover, targets obesity as a major plank in its multifaceted wellness initiatives.

H-E-B, a Texas-based retail chain, believes retail's high turnover can make it all the more important to catch employees, from checkout clerks to executives, under the wellness umbrella. And Aetna Inc. says that adding incentives increased participation in its wellness programs and produced major savings.