Current Events in December 2008

Embattled carmaker Chrysler is cutting its losses, closing its auto assembly plants for at least 30 days, and hopes the U.S. government throws it a lifeline.

The company had already scheduled a two week furlough for assembly line employees. This move simply extends it for at least another two weeks. Of course, what happens after that is far from certain.

"If I were a Chrysler worker, I'd be worried that the plant won't reopen," said Brian Johnson, an industry analyst at Barclays Capital told the Washington Post.

As many as 46,000 Chrysler employees are affected by the move, which begins Friday. The affected plants will not resume production before January 19. If production resumes at all depends on what happens with negotiations between Congress and the White House.

Chrysler says it needs at least $7 billion to get through the month of December. After Congress deadlocked over a plan to rescue all three U.S. carmakers, the Bush Administration signaled its intention to step in with some sort of emergency loans, supporting the companies until President-elect Barack Obama and the new Congress take office.

Obama has said he is unwilling to let the Big 3 fail. Democrats, who generally support a Detroit bailout, will have additional votes in the new Congress.

Chrysler isn't the only automaker to idle workers at the end of the year. Ford says it will halt production in January for an extra week and General Motors reported last week that it will temporarily close 20 of its factories.

All the carmakers cite dramatically lower consumer demand as the reason for curtailing production. Sales of all vehicles, both foreign and domestic, have fallen dramatically since September, when the U.S. economy seemed to suddenly grind to a halt.

"While the vast majority of investment services providers are honest professionals, the potential for fraud should concern us all," said NASAA President and Colorado Securities Commissioner Fred Joseph.

With more people in charge of their own investment portfolios than ever before, state securities officials are warning investors of the increasing sophistication of investment professionals who steal money from unsuspecting clients.

"Anyone, regardless of income, education, or profession, can become a victim when unscrupulous individuals use the growing field of financial advice to line their own pockets," Joseph said. "The risk of fraud is magnified as investors seek higher returns in today's troubled markets."

Joseph noted that the title "investment adviser" is a legal term that describes a wide range of people who provide advice about securities. These individuals also are referred to as wealth managers, investment counsel, and asset or portfolio managers. Joseph recommended investors consider the following five tips to help protect themselves from dishonest advisers:

• Investigate the investment adviser and salesperson thoroughly.

• Make sure the investment opportunity is registered for sale in the state in which you live.

• Always stay in charge of your money.

• Insist on a full explanation of investment recommendations and don't invest in something you don't understand.

• Keep notes about conversations and meetings.

Of the 25,857 investment adviser firms in the United States as of December 1, 2008, 14,500 were registered with and regulated by the states, 11,162 with the SEC and 195 both by the SEC and the states.

There are approximately 260,350 investment adviser representatives. Adviser firms with less than $25 million of assets under management generally are regulated by state securities regulators while firms with more than $30 million under management or that do business in 30 states or more states must register with the SEC.

Firms with assets between $25 and $30 million are allowed to register with either the SEC or applicable states at their discretion.

Most states require investment adviser representatives to pass an examination, undergo background checks, renew their registration annually and report changes in their businesses or addresses promptly.

States also review an applicant's disciplinary history and financial stability prior to allowing the investment adviser to conduct business in a given jurisdiction. More than 30 states require that investment adviser representatives be licensed while the SEC does not.

States also protect investors by actively pursuing a program of on-site examinations — some unannounced — of small investment advisers and careful screening of promotional materials. A 2007 nationwide series of coordinated examinations of investment advisers by 43 state and provincial securities examiners revealed a significant number of problem areas.

These exams revealed 2,135 deficiencies in 13 compliance areas. The top five categories with the greatest number of deficiencies identified in the examinations involved registration, unethical business practices, books and records, supervisory/compliance, and privacy.

The makers of a widely-advertised dietary supplement have agreed to pay $7 million to 33 states and to stop promoting their product as a cure for the common cold. It's the second big penalty for Airborne. In August, the company agreed to pay the Federal Trade Commission $30 million.

Airborne dramatically misrepresented its products as cold remedies without any scientific evidence to back up its claims, California Attorney General Edmund G. Brown Jr. said. Under this agreement, the company will stop advertisements that suggest that its products are a cure for the common cold.

Airborne began selling its products as a cold remedy on the Internet around July 2000 and on television in 2004. In its advertisements, Airborne featured people suffering from cold and flu symptoms and made unsupported statements suggesting its products were a cure for the common cold. These included:

• Airborne Cold Remedy
• A Miracle Cold Buster!
• Sick of Catching Colds?
• Take at the first sign of a cold symptom.

The company also requested that retailers sell Airborne products in the cold/cough aisle.

To substantiate their claims, Airborne relied upon studies that claimed the major ingredients in their products — Vitamin C, Vitamin E, Selenium, and Zinc — prevent colds. However, subsequent definitive studies found that these ingredients do not have any discernable effect to prevent colds. Despite the information, Airborne continued to market its products as cold remedies.

Investigators raised concerns about the levels of Vitamin A in Airborne products. In older formulations, Airborne contained 5,000 International Units of Vitamin A. If the product was taken as instructed, consumers would ingest up to 15,000 International Units of Vitamin A daily.

This amount of Vitamin A poses potential health risks to vulnerable populations, including children and pregnant women. During the negotiation process, Airborne reformulated its product to contain only 2,000 International Units of Vitamin A.

Under todays agreement with 33 states, Airborne Inc. agreed:

• Not to make any claim concerning the health benefit, performance, efficacy or safety of its dietary supplements.
• Not to make any claims that imply that Airborne can diagnose, mitigate, prevent, treat, or cure colds, coughs, the flu, an upper respiratory infection or allergies.
• Not to require, demand, or otherwise influence where a retailer places Airborne, Inc. products, such as in the cold and cough aisle.
• Not to market any product that contains directions for use that would, if followed, result in an individual ingesting 15,000 International Units of Vitamin A per day.
• Pay a total of $7 million to the states.

Todays settlement covers all Airborne products including:

• Airborne- Original
• Airborne- Pink Grapefruit
• Airborne- Lemon Lime
• Airborne- Nighttime
• Airborne- Jr. On-The-Go
• Airborne- Seasonal Relief
• Airborne- Sore Throat Gummi Lozenges
• Airborne- Soothing Throat Gummi Lozenges
• Airborne- Power Pixies

The states involved in todays settlement include Alaska, Arkansas, Connecticut, Delaware, The District of Columbia, Florida, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, and Wisconsin.

If you're browsing the Internet with Microsoft's Internet Explorer, you could be vulnerable to hackers. That's the warning from computer experts, who say the browser has a security flaw that allows criminals to take control of consumers' computers and steal passwords.

Until Microsoft fixes the problem, experts suggest using another browser.

The technology security firm Trend Micro said its engineers detected a malicious JavaScript called JS_DLOAD.MD on several Web sites that exploits a zero-day vulnerability in Internet Explorer 7 through a heap spray on SDHTML.

After a successful exploit, it triggers a series of redirections to multiple URLs, then finally connects to one of several different domains.

"Unfortunately, since Microsoft's security updates failed to provide protection against this vulnerability, users of Internet Explorer are at risk even while surfing the Web on fully patched Windows XP and Windows 2003 systems," Trend Micro said in an advisory.

Microsoft says seven versions of Internet Explorer, which is used by most of the world's computers, are vulnerable to this security flaw. Microsoft is now at work trying to find a security patch.

"Microsoft is continuing its investigation of public reports of attacks against a new vulnerability in Internet Explorer," the company said.

Security experts say those still using Internet Explorer should be very careful about which Web sites they visit, since compromised Web sites can download the Trojan. They say the rule about never clicking on a link in a spam email is especially important to follow in this case, since hackers may be using spam to direct victims to compromised sites.

Once a hacker gains access to your computer, the keylogger software can capture your key strokes, stealing user names and passwords to your bank and other secure online accounts.

Lawyers from The Ohio State University Moritz College of Law filed the lawsuit in September, 2007 against Campus Dimensions Inc., a marketing and advertising firm; and OSU La Bamba Inc., a restaurant chain. The suit, filed in Franklin County, charged the companies with violating Ohio's Consumer Sales Practices Act.

Faculty and third-year law students in the Civil Law Practicum at Moritz had been monitoring credit card solicitation practices in the Columbus university area for more than a year.

According to the suit against La Bamba and Campus Dimensions, a credit card marketing event was held at the La Bamba restaurant, 1956 North High Street, in Columbus. Fliers for the event were posted around the OSU campus advertising a "Free Sandwich and Drink" for OSU students.

The original complaint stated violations occurred because the promotional fliers for the event advertised free burritos but did not disclose the offer's requirement that students apply for a credit card.

The settlement states that in the future, the companies will not participate in any credit card marketing plan which includes the violations alleged in the original suit. Those violations include:

• Failing to clearly state the conditions of an offer

• Using bait advertising

• Using "free" without clearly setting forth all terms and obligations of the offer

• Notifying prospective consumers about a prize or something of value without disclosing any and all conditions necessary to get it

The court also ordered La Bamba and Campus Dimensions to disgorge their profits from the marketing event, and to pay the Attorney General's Office money to be distributed to a nonprofit organization to promote the financial literacy of college students to improve their understanding and use of credit cards.

More Scam Alerts ...

December 15, 2008
Cooper Tire is recalling Cooper CS4 Touring (VR) tires, size 215/55R17, produced between September 7 and October 11, 2008.

The tires may have been cured for an inadequate amount of time. This condition can lead to tread separation, possibly resulting in loss of vehicle control and a crash.

Cooper Tire will notify owners and replace, mount, and balance any defective tires free of charge. Dealers will examine suspect tires to see if they fall in the recall population. The recall is expected to begin on or about December 18, 2008.

Owners may contact Cooper Tire Consumer Relations toll-free at 1-800-854-6288.

Consumers may contact the National Highway Traffic Safety Administration (NHTSA) at 1-888-327-4236 (TTY: 1-800-424-9153) or at www.safercar.gov.

The United States Department of Agriculture (USDA) will now test certain meat and poultry products — including baby food, hot dogs, and chicken nuggets — for the chemical melamine.

The action by the agency's Food Safety and Inspection Service (FSIS) comes amid concerns that melamine contamination in some imported foods--specifically those that contain milk products imported from China--may have spread to meat and poultry.

"In light of recent disclosures of melamine being found in certain imported food products, FSIS has determined that it is prudent to do a small amount of sampling to see if there is any reason to be concerned about the presence of this chemical in meat and poultry products," the agency wrote.

As ConsumerAffairs.com has reported, Chinese officials in September discovered melamine in the powered infant formula made it that country. Officials later learned that some dairy plants intentionally added the chemical to milk products to make them appear to have higher protein levels.

China's melamine-tainted milk scandal is blamed for the deaths of at least six infants in that country and the illnesses of thousands of other babies.

The tentacles of that contamination spread around the world to such products as candies, yogurt, cookies, and coffees.

FSIS officials say federal investigators will, over the next 12 weeks, collect meat and poultry products that contain such milk-derived ingredients as non-fat dried milk, casein, whey, evaporated milk, and milk powder, and test them for melamine. The agency will collect 45 samples a week from retail stores for these tests.

FSIS officials will test the following products for melamine contamination:

• Baby food (containing a significant amount of meat or poultry products);

• Cooked sausages (including hot dogs or frankfurters with and without cheese products);

• Breaded chicken (bite sized morsels or nuggets with and without cheese products);

• Meatballs;

• Meat and poultry wrapped in dough and pizza (including calzones)

Melamine is used make plastic and fertilizers. Doctors say it can cause kidney stones and lead to kidney failure.

For years, the Food and Drug Administration (FDA) did not allow melamine in any human or pet food.

FDA officials, however, recently reversed that position, saying levels of melamine below 2.5 parts per million (ppm) in food did not pose a health risk.

The only exception to this new standard is infant formula. The FDA said the levels of melamine--or one of its analogues alone-- that did not pose a health concern in infant formula was below 1.0 ppm.

Melamine is blamed for the illnesses and deaths of thousands of dogs and cats in the United States last year.The presence of that chemical in the imported wheat gluten from China triggered the largest pet food recall in U.S. history.

The latest cataclysm to rock Wall Street is the news that prominent financier Bernard Madoff has been arrested for running what he allegedly called "a giant Ponzi scheme." Losses to investors may run as high as $50 billion, the Securities and Exchange Commission (SEC) charged in a civil complaint.

It's potentially the largest such schemes ever uncovered -- nearly five times larger than the fraud that drove WorldCom into bankruptcy in 2002.

Madoff, a former chairman of the Nasdaq Stock Market, allegedly deceived wealthy investors who thought they were reliably earning 2% or more per month on their money even when financial markets were performing poorly.

Madoff, 70, for decades has headed Bernard L. Madoff Investment Securities LLC, a Wall Street firm that "makes a market" in securities, meaning that it puts buyers and sellers of privately-traded equities together. That firm's operations were separate from the money management services Madoff provided for high-net-worth individuals, many of whom now fear they have been wiped out.

FBI agents arrested Madoff yesterday, acting on a criminal complaint that alleged Madoff had used funds paid in by new investors to pay existing investors what they thought were earnings on their investments.

Madoff told agents who went to his apartment to arrest him that there was "no innocent explanation" for his activities, The Wall Street Journal reported. Madoff told the agents he was "broke" and had decided his scheme "could not go on" and said he expected to go to jail, the newspaper reported.

Madoff reportedly broke the news to his sons earlier this week, telling them he had "absolutely nothing" and "it's all just one big lie."

Individuals who had entrusted their wealth to Madoff were in shock. "This is going to kill so many people," said a current investor quoted by the Journal. "It's absolutely awful."

A New Jersey man said he was "in a state of panic." He said his family had about $1 million invested in Madoff's firm. His 86-year-old mother-in-law depended on the fund for her living expenses, he said.

The securities fraud charge carries a maximum penalty of 20 years in prison and a maximum fine of $5,000,000, according to Lev Dassin, Acting U.S. Attorney for the Southern District of New York.

December 12, 2008
Britax is recalling certain Frontier child restraint systems because of a problem with the harness straps.

The recall affects Models E9L54E7 (Frontier Red Rock), E9L54H6 (Frontier Rushmore), E9L54H7 (Frontier Pink Sky), E9L54M6 (Frontier Canyon), and E9L5490 (Frontier Sahara), manufactured between April 1 and September 18, 2008.

If the harness straps are loosened using one strap at a time, the harness straps may become detached from the metal yoke located on the back of the child seat. Should the harness straps become detached, the child will not be properly restrained, possibly resulting in an increased risk of injury in the event of a vehicle crash.

Britax will mail the consumer notice and remedy kits to all registered owners free of charge. Owners who have not registered their seats with Britax must call Britax at 1-704-409-1700 and request a kit. The recall is expected to begin on or about January 7, 2009.

Information and instructions related to the campaign will be posted on the Britax website at www.britaxusa.com no later than December 17, 2008. Owners with other questions can contact Britax at 1-704-409-1700.

Consumers may contact the National Highway Traffic Safety Administration (NHTSA) at 1-888-327-4236 (TTY: 1-800-424-9153) or at www.safercar.gov.

Approximately 38 percent of adults in the United States and nearly 12 percent of U.S. children aged 17 years and under use some form of complementary and alternative medicine, according to a new nationwide government survey.

This survey marks the first time questions were included on children's use of CAM, which is a group of diverse medical and health care systems, practices, and products such as herbal supplements, meditation, chiropractic, and acupuncture that are not generally considered to be part of conventional medicine.

The survey, conducted as part of the 2007 National Health Interview Survey, included questions on 36 types of CAM therapies commonly used in the United States — 10 types of provider-based therapies, such as acupuncture and chiropractic, and 26 other therapies that do not require a provider, such as herbal supplements and meditation.

"The 2007 NHIS provides the most current, comprehensive, and reliable source of information on Americans' use of CAM," said Josephine P. Briggs, M.D., director of the National Center for Complementary and Alternative Medicine.

"These statistics confirm that CAM practices are a frequently used component of Americans' health care regimens, and reinforce the need for rigorous research to study the safety and effectiveness of these therapies. The data also point out the need for patients and health care providers to openly discuss CAM use to ensure safe and coordinated care," she added.

CAM use among adults

Comparison of the data from the 2002 and 2007 surveys suggests that overall use of CAM among adults has remained relatively steady — 36 percent in 2002 and 38 percent in 2007. However, there has been substantial variation in the use of some specific CAM therapies, such as deep breathing, meditation, massage therapy, and yoga, which all showed significant increases.

The most commonly used CAM therapies among U.S. adults were:

• Nonvitamin, nonmineral, natural products (17.7 percent) Most common: fish oil/omega 3/DHA, glucosamine, echinacea, flaxseed oil or pills, and ginseng

• Deep breathing exercises (12.7 percent)

• Meditation (9.4 percent)

• Chiropractic or osteopathic manipulation (8.6 percent)

• Massage (8.3 percent)

• Yoga (6.1 percent).

Adults used CAM most often to treat pain including back pain or problems, neck pain or problems, joint pain or stiffness/other joint condition, arthritis, and other musculoskeletal conditions. Adult use of CAM therapies for head or chest colds showed a marked decrease from 2002 to 2007 (9.5 percent in 2002 to 2.0 percent in 2007).

Consistent with results from the 2002 data, in 2007 CAM use among adults was greater among:

• Women (42.8 percent, compared to men 33.5 percent)

• Those aged 30-69 (30-39 years: 39.6 percent, 40-49 years: 40.1 percent, 50-59 years: 44.1 percent, 60-69 years: 41.0 percent)

• Those with higher levels of education (Masters, doctorate or professional: 55.4 percent)

• Those who were not poor (poor: 28.9 percent, near poor: 30.9 percent, not poor: 43.3 percent)

• Those living in the West (44.6 percent)

• Those who have quit smoking (48.1 percent)

CAM use among children

Overall, CAM use among children is nearly 12 percent, or about 1 in 9 children. Children are five times more likely to use CAM if a parent or other relative uses CAM. Other characteristics of adult and child CAM users are similar — factors such as socioeconomic status, geographic region, the number of health conditions, the number of doctor visits in the last 12 months, and delaying or not receiving conventional care because of cost are all associated with CAM use.

Among children who used CAM in the past 12 months, CAM therapies were used most often for back or neck pain, head or chest colds, anxiety or stress, other musculoskeletal problems, and Attention Deficit/Hyperactivity Disorder (ADD/ADHD).

The most commonly used CAM therapies among children were:

• Nonvitamin, nonmineral, natural products (3.9 percent) Most common: echinacea, fish oil/omega 3/DHA, combination herb pill, flaxseed oil or pills, and prebiotics or probiotics

• Chiropractic or osteopathic manipulation (2.8 percent)

• Deep breathing exercises (2.2 percent)

• Yoga (2.1 percent).

"The survey results provide information on trends and a rich set of data for investigating who in America is using CAM, the practices they use, and why," said Richard L. Nahin, Ph.D., MPH, acting director of NCCAM's Division of Extramural Research and co-author of the National Health Statistics Report. "Future analyses of these data may help explain some of the observed variation in the use of individual CAM therapies and provide greater insights into CAM use patterns among Americans."

Just about the time government statistics found that American families' net worth had plunged $2.8 trillion, a group of economists predicted that the current recession may turn out to be the longest and most painful downturn since the Great Depression.

The decrease in net worth during this year's third quarter was fueled largely by plunging real estate values. The U.S. Federal Reserve reported that real assets lost $646.9 billion as home values plummeted in a wave of foreclosures. Nationwide, the average price of a single family home is now back to what it was in 2004.

And look out — the fourth quarter is likely to be even worse, the Fed said. Job layoffs increased sharply in October following the sudden Wall Street credit crises in mid September. So far this year, nearly two million U.S. jobs have disappeared.

The findings coincided with the release of the Wall Street Journal's latest economic-forecasting survey, which found economists expect the downturn to conclude in June 2009, marking an 18-month duration, the longest postwar period of decline.

The economists on average said the unemployment rate will peak at 8.4% in response to this recession, as pain in the labor market extends into 2010.

"For the household sector, this will be the worst event we've had in the post-World War II period," said Bruce Kasman of J.P. Morgan Chase & Co.

But at least the economists surveyed by the Journal said the situation could be worse.

"The downturn would be deeper still, in our view, were it not for an ultra-aggressive combination of monetary and fiscal stimulus that will soon move into high gear," Morgan Stanley economists Richard Berner and David Greenlaw said in a research note. "Authorities are pulling out all the stops: Quantitative easing by the Fed and the largest-ever fiscal stimulus package likely will promote stability in the economy late in 2009 and a moderate recovery in 2010."

On the employment front, the situation is still deteriorating. The U.S. Labor Department reported today that the number of Americans filing for first time unemployment benefits surged to 573,000. That's a 26-year high and the number of workers now receiving benefits is at its highest level since 1982.

At the request of the Federal Trade Commission, a U.S. district court has issued a temporary halt to a massive scareware scheme, which falsely claimed that scans had detected viruses, spyware, and illegal pornography on consumers computers.

According to the FTC, the scheme has tricked more than one million consumers into buying computer security products such as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus. The court also froze the assets of those responsible for the scheme, to preserve the possibility of providing consumers with monetary redress.

According to the FTCs complaint, the defendants used an elaborate ruse that duped Internet advertising networks and popular Web sites into carrying their advertisements. The defendants falsely claimed that they were placing Internet advertisements on behalf of legitimate companies and organizations. But due to hidden programming code that the defendants inserted into the advertisements, consumers who visited Web sites where these ads were placed did not receive them.

Instead, consumers received exploitive advertisements that took them to one of the defendants Web sites. These sites would then claim to scan the consumers computers for security and privacy issues. The scans would find a host of purported problems with the consumers computers and urge them to buy the defendants computer security products for $39.95 or more. However, the scans were entirely false.

According to the complaint, the two companies charged in the case Innovative Marketing, Inc. and ByteHosting Internet Services, LLC operate using a variety of aliases and maintain offices in various countries. Innovative Marketing is a company incorporated in Belize that maintains offices in Kiev, Ukraine. ByteHosting Internet Services is based in Cincinnati, Ohio.

The complaint alleges that these two companies, along with individuals Daniel Sundin, Sam Jain, Marc DSouza, Kristy Ross, and James Reno, violated the FTC Act by misrepresenting that they conducted scans of consumers computers and detected a variety of security or privacy issues, including viruses, spyware, system errors, and pornography. The complaint also names a sixth individual, Maurice DSouza, as a relief defendant who received proceeds from the scheme.

On December 2, 2008 the FTC requested and received a temporary restraining order from the U.S. District Court for the District of Maryland. Under its terms, the defendants are barred from falsely representing that they have run any type of computer analysis, or that they have detected security or privacy problems on a consumers computer.

They also are barred from using domain names obtained with false or incomplete information, placing advertisements purportedly on behalf of a third party without that partys consent, or otherwise attempting to conceal their own identities. The order also mandates that companies hosting the defendants Web sites and providing domain-registration services take the necessary steps to keep consumers from accessing these Web sites.

The FTC seeks to permanently bar the defendants from engaging in scareware marketing. The FTC also asks the court to order the defendants to provide monetary redress to consumers or otherwise give up their ill-gotten gains.

As part of an ongoing effort to warn the public about the risks posed by scareware and other types of Internet fraud, the FTC has produced a new alert for consumers. To learn more, see the alert Free Security Scan Could Cost Time and Money .

More Scam Alerts ...

If you received a letter saying you'd won a big prize in the Acme Lottery, you might be more likely to ignore the letter, correctly thinking that it was a scam. But if you got a letter saying you'd won the Reader's Digest Lottery, you might be more likely to bite.

Scammers, it seems, have figured that out. More and more, they are using the names of well known and trusted companies in their fraudulent schemes, according to Kansas Attorney General Steve Six.

Six says consumers in central Kansas have received notifications of prizes accompanied by documents that appear to be checks. The consumer is asked to deposit the check in their bank account, then wire money using Western Union or MoneyGram back to the issuer of the check to pay "clearance or processing fees."

The consumer is directed to call a number from an area code in Quebec, Canada to "release winnings and validate [the] check" that was enclosed. The letter also contains a seal similar to the official seal for the United States Department of Justice, and claims it is "Approved by the Attorney General."

In reality, those rare legitimate sweepstakes winnings do not require advance payment of fees or taxes. Taxes are collected by government agencies, not by a company that provides the sweepstakes winnings.

Many scam artists will issue a check to a consumer, then ask the recipient to deposit the check, and before the check has time to clear the issuing bank request the consumer wire money from their account back the scam artist. These requests are usually accompanied with a sense of urgency, that the prize must be claimed by a certain date, and waiting for the check to clear the issuing bank would allow the prize to expire.

A similar type of scam includes information that the consumer has won a foreign lottery, but that certain fees must be paid before the check can be issued. Six says U.S. consumers are ineligible for foreign lottery winnings.

It's not only Congress and the American taxpayer coming to the aid of ailing U.S. automakers. A group of Midwest credit unions are pledging $10 billion in low-cost financing for the purchase of General Motors vehicles.

The plan is called Invest in America, according to a news release posted on the Michigan Credit Union League's Web site. The release said the credit union league is talking to Ford Motor Co. and Chrysler LLC about similar programs.

The league claims a membership of aboutg 12 million consumers. The program will be tested in the four states, possibly going nationwide early next year, the release said.

The program is effective immediately and will run through June 30. It offers eligible vehicles at a price discount to credit union members and their households. Members who buy cars under the program also are eligible to get an additional $250 bonus cash between now and Jan. 5.

"This new arrangement with Midwest credit unions creates a tremendous value for GM and for thousands of credit union members," said Mark LaNeve, GM vice president of vehicle sales, service and marketing. "We appreciate the credit unions' promotional support and are pleased to make this offer."

"Credit unions have a long history of helping hard-working Americans in troubled times," said Daniel Mica, CEO of the Credit Union National Association.

Credit union members can find details on the discounts at www.lovemycreditunion.org and obtain an authorization number to take to any GM dealership. The price discount applies to purchases of eligible new Buick, Cadillac, Hummer, Saab, Chevrolet, GMC, Saturn and Pontiac vehicles.

In Washington, Congress and the White House have tentatively agreed on a plan to pump $15 billion into the U.S. auto industry. An industry czar appointed by President Bush would oversee the companies' use of the funds.

The House has scheduled a test vote on the measure.

December 10, 2008
Dill Air Control Products is recalling snap-in rubber tire valve stems sold between November 2006 and July 2007.

If you purchased tires between November 2006 and July 2007, and if the valve stems in your wheel contain the unique Dill cap (shown below), you should have the valve stems inspected for cracks in the rubber.

These valves may lack the required additive to protect the rubber against deterioration from ozone exposure. As a result, affected valve stems, when subject to high levels of ozone, may weather and crack earlier than normal for this product. Over time, such a crack could progress to the point that it leaks air resulting in a loss of tire pressure. Loss of tire pressure can result in a flat tire and/or loss of vehicle control, which could cause a crash without warning.

The recall is for models APC TR413, TR414, and TR418.

Tire dealers will inspect your Dill ACP valve stems and replace them if cracked at no charge to the consumer. The tire dealer will then file a claim with Dill.

For more information, see www.tirevalverecall.net or call 1-888-364-2982.

Consumers may contact the National Highway Traffic Safety Administration (NHTSA) at 1-888-327-4236 (TTY: 1-800-424-9153) or at www.safercar.gov.

Mortgage interest rates are down to their lowest level in nearly a year, likely to get lower, but just as likely to reverse course at any time.

However, with a rate lock, you could freeze out higher rates or take a gamble on a lower, even more affordable rate.

Here's the scoop.

Just a week after the Federal Reserve unveiled a $600 billion plan to reduce mortgage interest rates to 4.5 percent for home buyers, the federal gambit appeared to be paying off.

Fixed interest rates (FRMs) on 30-year conforming mortgages dropped nearly a half percentage point to 5.53 percent by Dec. 4, according to Freddie Mac's weekly survey. The 30-year FRM has not been lower since Jan. 24, 2008, when it was 5.48 percent. The FRM rate last week was also down more than a full percentage point from the 2008 high of 6.63 percent in July.

Even if the Fed's effort peters out, squeezed by an economy that appears to be resisting jump starts, rates could get lower because the U.S. Treasury Department is weighing in with its own efforts to push rates even lower than 4.5 percent. Unlike the Fed's program, which targets only homebuyers, the Treasury's program would include lower interest rates for homeowners who want to refinance.

Still more downward pressure on rates comes from President-elect Barack Obama who has repeated his desire to see more of the existing $700 billion bailout and other funds funneled directly to struggling homeowners.

Lower interest rates can make housing or a refinance more affordable.

A 6 percent interest rate on a $250,000 mortgage costs about $1,500 month in principal and interest; about $1,400 at 5.5 percent and $1,270 at 4.5 percent.

When rates get as low as you need them to go, they could just as quickly reverse course and leave you twisting in the wind -- unless you've got a contracted mortgage rate lock in your pocket.

Rate locks avoid higher costs

A written and signed mortgage rate lock contract can be your ticket to ride.

Rate locks are typically designed to protect homebuyers from rising rates, but those refinancing for lower rates can also benefit.

A traditional mortgage rate lock is a lender's guarantee that your mortgage will come with a specific interest rate, points, other costs and terms.

A rate lock's terms also include a specified period for the lock. The benefits of the lock are only good for as long as the term of the rate lock.

If you fail to complete your home purchase or don't refinance before the clock runs out, and interest rates rise, you could have to pay any higher costs.

Higher costs can include a higher mortgage rate, more points, and even more up front cash down. More cash down may be necessary to keep the actual amount financed low enough so your monthly payments remain in line with what you can afford or what the lender will allow.

Likewise, if you are refinancing to stave off foreclosure and miss the deadline, you could lose your home if the lender won't approve you for a higher rate.

In a refinance where your home is not at stake, you've got some wiggle room. You can take out less cash, wait out the market or otherwise cope.

Locks can also push costs down

You can also benefit from a rate lock when interest rates are falling.

If interest rates fall during the lock period, you can't take advantage of the lower rate unless you rewrite the lock at additional cost or initially include a "float down" provision in the original lock.

The "float down" option grants you a lower rate if rates fall within a given window of time. Again, unless otherwise contracted, float down rate locks stick you with the higher rate if rates rise during the lock period.

You may be able to negotiate for a float down that also has a specific rate lock so you don't pay a higher rate, but you'll pay through the nose for the lock because the lender is taking on greater risk.

Solid contract necessary to lock or float

Myriad rate lock variations underscore the importance of being sure the language of the lock contract gives you the specific options you need for a sufficient term.

Getting it in all writing removes the potential of trying to enforce a verbal agreement should a dispute arise.

The contract should lock in the interest rate, points and other costs, whenever possible. The agreement should include your name; the lock's effective date; lock cost; what terms are locked; the lock's expiration date and time; and any post-lock options.

Lock as soon as you see the desired rate or "on application" -- when you first apply for the mortgage -- so that your rate is locked as you spend time getting the application approved. That's particularly important if you barely qualify at today's rates, and an increase would make buying unaffordable.

Of course, you can choose to set the lock "on approval," especially in markets where loan application checks are prolonged due to heavy demand for housing or in markets like today's market of heavily scrutinized applications.

In any event, the lock period should be long enough to allow for settlement, contingencies, and other potential delays. Locks average 30 days, but can range from 15 to 60 days. Obviously, the longer the better, but the longer the more expensive the lock can be.

Devil in the details

• Locks can cost money. Shop around for both the terms of the lock contract and its cost, which varies from lender to lender. Some lenders want up-front lock fees. Others take them at settlement. There are non-refundable fees, flat fees, and fees based on a percentage of the mortgage, and a host of variations.

• Before settling on a lock-in period, determine the average time for loan processing in your market. Ask your lender to estimate the time necessary to process your loan. Verify the information with other realty and mortgage professionals. If the loan doesn't close on time, lenders can extend your lock for free or charge more.

• Once you lock-in a rate, if you haven't already, quickly submit the application and other required documents. You should have previously checked your credit report, prepared income, job, debt, asset and other documents to back up your application information. You should also stay in close contact with the lender to be sure the application is progressing quickly.

• Verify the rate lock is from the bank, mortgage lender, credit union or other entity actually writing the loan, not a broker, loan officer or go between. A broker can obtain a rate lock from the lender, but he or she can't actually write the lock.

• If you have a floater, keep an eye on the market to determine when to grab a rate.

• The Federal Reserve's"A Consumer's Guide To Mortgage Lock Ins" offers extensive rate lock information and your local or state mortgage regulatory agency may offer specific rules lenders must follow when granting rate locks.

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Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

December 9, 2008
Graco is recalling nearly 44,000 Comfortsport convertible car seats, in the Frazier Fashion line.

These seats were equipped with a large sized, supplemental pad or "body pillow" that partially obscures the child airbag warning label which is on the seat pad, a violation of federal safety standards. Serious injury could occur to the child should the seat be improperly placed in the vehicle.

Owners may contact Graco at 1-800-345-4109 or by e-mail at consumerservices@gracobaby.com.

The recalled seats were manufactured from November 1, 2006 through October 8, 2007.

U.S. automakers, reeling from the credit crisis and sudden drop in sales, appears likely to get some help from the U.S. government to stave off bankruptcy. After initially declining to offer help to Detroit in its last two months on duty, the Bush Administration now appears willing to go along with a $15 billion bridge loan.

But as two days of hearings before the House and Senate made clear last week, Washington will not be writing a check without attaching some hefty strings. As a result, cars produced by a "bailed out" Detroit are likely to be a different breed than what's being offered today.

The incoming Obama administration supports federal help for the automakers, but has made clear that it expects a major restructuring in the way the companies do business and in the kinds of cars they made and sell.

"What we can't give is a blank check for an industry that isn't prepared to reform itself, to rationalize itself, and to retool for the markets of today and tomorrow," said David Axelrod, who as Obama's senior advisor has the president-elect's ear.

Obama, appearing on NBC's Meet The Press Sunday, suggested some auto executives should lose their jobs and also said government aid to the automakers would be contingent of big changes in Detroit.

"They're going to have to restructure," the president-elect said. "If they expect taxpayers to help in that adjustment process, they can't keep putting off the kinds of changes that they, frankly, should have made 20 or 30 years ago."

Part of that restructuring could potentially turn the "big three" automakers into the big two. Some members of Congress — in particular Sen. Robert Bennett (R-UT) and Sen. Bob Corker (R-TN) pressed executives for GM and Chrysler to renew merger talks.

"Our country can't really deal with three separate automakers," Corker told the executives.

The Chrysler brand might survive a merger with GM, but it's likely many current models would not. Congress appears likely to press the carmakers to get rid of the least-profitable lines.

There will be changes to GM as well. In its recovery plan delivered to Congress last week, the nation's most cash-strapped automaker said it would reduce name plates and slash dealerships by 1,750 within three years. It said it would concentrate on core brands like Chevrolet, Cadillac, Buick and GMC, and might spin off or close down its Saab, Hummer, Saturn and Pontiac brands.

One plan being floated in Congress late last week included the creation of a special government "oversight board" made up of five U.S. cabinet secretaries and the administrator of the Environmental Protection Agency (EPA). The board would be led by a "car czar" appointed by the president. Presumably, this board could have a large saw in the kinds of products Detroit produces.

With Democrats controlling both the White House and Congress next year, an automotive bailout might also require U.S. carmakers to turn out fewer trucks and SUVs and more fuel efficient vehicles. And U.S. carmakers might not balk at that.

James Malackowski, president and CEO of Ocean Tomo LLC, a Chicago bank, says Detroit automakers are already well ahead of their international counterparts in that regard. Writing in the Detroit News, Malackowski says Ford and GM hold about one-third of all "green technology" patents.

So, even with gasoline prices at 2005 levels, carmakers are still on course to phase out gas guzzlers and produce vehicles that will dramatically reduce U.S. energy demand in the future.

In fact, Malackowski argues that allowing the car makers to fail could serve as a significant setback for future development of green technologies. Even though polls show Americans are overwhelmingly opposed to spending more tax dollars to "bail out" another industry, Congress — led by the Ohio and Michigan delegations — appears determined not to let that happen.

"I think it's a good investment because it's not taxpayer money for the automobile industry, it's taxpayer money for America, it's for the working families," said Rep. Charles Wilson (D-OH).

An operation that lured consumers with promises that they could earn big money as trained and certified "mystery shoppers " has agreed to pay $850,000 to settle charges of deceptive marketing and contempt.

Mystery shoppers are paid to shop or dine out and then provide reports about the experience. In March 2007, the Federal Trade Commission (FTC) Feds Charge Mystery Shopping Promoters — the three companies Mystery Shop Link, LLC; Tangent Group, LLC; Harp Marketing Services, Inc.; and five individuals — with violating the FTC Act in connection with a nationwide mystery shopping employment scam.

According to the FTC, the defendants claimed that MysteryShopLink.com was hiring mystery shoppers in local areas nationwide. The company ran help wanted ads in newspapers, and on radio and TV.

Consumers who responded to the ads reached the defendants' telemarketers, who represented that MysteryShopLink.com had large numbers of available jobs and not enough shoppers to fill them. In exchange for a $99 fee, consumers were promised enough work to earn a steady full-time or part-time income as mystery shoppers.

Instead, consumers received a worthless certification and access to postings for mystery shopping jobs controlled by other companies. Consumers had to apply for these mostly low-paying jobs, and had no advantage over anyone else who found the postings elsewhere on the Internet for free. Most consumers got no jobs and earned no money.

The FTC also charged five of the eight defendants — Mystery Shop Link, LLC, Tangent Group, LLC, and Robin Larry Murphy, Andrew Holman, and Kenneth Johnson — with contempt. That charge contended that Murphy violated the terms of a consent judgment in a prior telemarketing fraud case involving false promises of government jobs. The 1997 consent judgment barred Murphy from making material misrepresentations of fact while telemarketing, and required him to post a $100,000 bond.

In addition to seeking coempt sanctions against Murphy, the FTC also claimed that Mystery Shop Link, LLC, Tangent Group, LLC, Andrew Holman, and Kenneth Johnson were in contempt of the previous order because they all participated in running MysteryShopLink.com despite knowing about the prior consent judgment against Murphy.

The settlements were reached with two separate groups of defendants. The first includes defendants Mystery Shop Link, LLC, Tangent Group, LLC, and their principals, Robin Larry Murphy, Andrew Holman, and Kenneth Johnson. It resolves both the new case filed in 2007 and the contempt action.

Under the settlement, the FTC will collect the proceeds of Murphy's $100,000 bond. The settlement also includes a $17.8 million judgment, which is suspended based on the defendants' inability to pay. The settlement prohibits all the defendants from making misrepresentations in the future. As a repeat offender, Murphy is permanently banned from telemarketing, except for non-deceptive sales to businesses of telecommunications equipment.

The second settlement includes defendants Harp Marketing Services, Inc., and its principals, Aiden Reddin and Marc Gurney. Harp Marketing was the primary outside telemarketing firm that handled consumer calls, and thus sales, for Mystery Shop Link.

This settlement requires Harp and its owners to pay $750,000 in redress and prohibits them from making misrepresentations in the future. The Harp settlement also includes a suspended judgment of $6.8 million, the total amount of Mystery Shop Link sales made by Harp's telemarketers.

Both settlements prohibit the defendants from collecting payments from Mystery Shop Link customers, and from transferring or benefiting from information about those customers. Both also contain record-keeping and reporting provisions to assist the FTC in monitoring the defendants' compliance.

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