Current Events in January 2009

The moratorium on evicting residents from foreclosed properties -- put in place by Fannie Mae and Freddie Mac in late 2008 -- has been extended until March.

The suspension applies to all single-family properties including owner-occupied properties that have been foreclosed upon as well as foreclosed properties occupied by renters.

Fannie Mae this month began implementing its National Real Estate Owned (REO) Rental Policy that allows qualified renters in Fannie Mae-owned foreclosed properties to stay in their homes. The new policy applies to renters occupying any type of single-family foreclosed properties at the time Fannie Mae acquires the property.

Eligible renters will be offered a new month-to-month lease with Fannie Mae or financial assistance for their transition to new housing should they choose to vacate the property. The properties must meet state laws and local code requirements for a rental property. On behalf of the company, property managers are contacting renters in Fannie Mae-owned foreclosed properties to notify them of their options.

Renters in Fannie Mae-owned properties can call 1-800-7-FANNIE for further information about their options.

Freddie Mac instituted a similar policy.

"First and foremost, Freddie Mac's REO Rental Option is intended to help cushion the impact of foreclosure on families who own or rent homes with Freddie Mac-owned mortgages," said David M. Moffett, Chief Executive Officer of Freddie Mac. "At the same time keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recovery in the housing market."

Under the REO Rental Option, leases will be offered to current renters on a month-to-month basis at market rents or the rent amount they were paying prior to foreclosure, whichever is less. The rent for former owner-occupants will be the market rent, which will determined by the property management firm Freddie Mac contracted to manage the program.

To qualify, current tenants and former owner-occupants must be able to demonstrate they have adequate income to pay the monthly rental amount. The home must also meet applicable building codes, or can be affordably brought into compliance, to be eligible.

Freddie Mac will also explore loan modification options that may enable owner-occupants to retain ownership of their homes by reinstating their mortgage with modified terms.

"In about half of all foreclosure sales there is no conversation between the borrower and the mortgage servicer about workouts. Before starting the eviction process, we want to ensure there is one last effort to achieve a workout," said Ingrid Beckles, Senior Vice President of Default Asset Management at Freddie Mac.

In 2008 Freddie Mac approved more than 87,485 workouts, enabling three out of five of its seriously delinquent borrowers to avoid foreclosure.

January 30, 2009
Victims of an Internet-based Ponzi scheme have filed a lawsuit against Bank of America and the organizers of the scheme in the United States District Court for the District of Columbia.

Using elaborate misrepresentations, including numerous video postings on YouTube, organizers induced victims from around the country to purchase so-called "ad packages" from the following entities: AdSurfDaily, AdSurfDaily Cash Generator, Golden Panda Ad Builder, and La Fuente Dinero.

The scheme promised that participants could earn large rebates for viewing web advertisements and commissions for referring additional participants.

Hundreds of millions of dollars were collected from approximately 140,000 victims across the country, in amounts ranging from $500 to $250,000 at large rallies and through online deposits.

"We intend to hold all defendants accountable for this Ponzi scheme, including the Bank of America, and secure the return of all funds that were lost by innocent victims, said Steven N. Berk, a partner in the law firm of Chavez & Gertler LLP and a former federal prosecutor representing the plaintiffs in this case.

How does Bank of America figure into all of this?

The complaint alleges that a scheme of this magnitude could not have been possible without the involvement of a financial institution like Bank of America.

At least one other financial institution closed the accounts of the organizers for suspicious activity, according to a sworn government complaint. VISA also considered the enterprise suspicious and would not process charges directed to the scheme by would be victims. And the very popular PayPal payment system rejected efforts by participants to purchase "ad packages" using their system.

Nevertheless, the suit charges Bank of America, in the face of tell-tale signs of money laundering and other criminal conduct, provided both the imprimatur of legitimacy to the scheme and the banking infrastructure that facilitated many thousands of transactions for over two years.

Beginning in November of 2006, Bank of America allegedly allowed the scheme's main perpetrator carte blanche at the bank. The complaint claims the scammers opened and maintained at least 10 separate accounts for running an unlawful Ponzi scheme. These accounts were opened at a tiny Bank of America branch in Quincy, Florida under various "doing business as" designations.

The suit claims Bank of America looked the other way when these accounts amassed deposits in the tens of millions of dollars from thousands of individual transactions.

"We expect to establish that Federal banking regulations, including the Bank Secrecy Act, the USA Patriot Act and related anti-money laundering regulations, clearly required Bank of America to scrutinize the legitimacy of the tens, if not hundred of millions of dollars deposited into a branch in Quincy, Florida to fuel this scheme. Red flag after red flag was ignored by Bank of America. And with the assistance of Bank of America, this fraudulent scheme needlessly expanded" said Steven N. Berk, Counsel for the Plaintiffs.

Eight OClock Coffee 100% Colombian at $6.28 per pound ranked number one in Consumer Reports tests of 19 ground coffees, besting Folgers, Maxwell House, and Starbucks -- Americas best-selling ground coffees.

A CR Best Buy, Eight OClock costs less than half the price of Gloria Jeans, Peets and other more expensive brands. CRs coffee experts deemed it a complex blend of earthy and fruity, with a bright, pleasing sourness -- a good thing in coffee parlance.

Starbucks Coffee Colombia Medium, $11.53 per pound, didnt even place among the top regular coffees and trailed among decafs. While the Regular rated Good, testers noted it had flaws such as burnt and bitter flavors, though milk and sugar may help.

Following Eight OClock and also ranking Very Good were two Midwest brews: Caribou Coffee Colombia Timana, at $11.76 per pound, and Kickapoo Coffee Organic Colombia, at $14.33 per pound. Both had fruity aromas and beat an array of larger players among regular coffees. But both come at a hefty price.

Other trendy brands fared less well. Bucks County Coffee Co. Colombia, from Langhorne, Penn., tasted only OK, and Peets Coffee Colombia from Berkeley, Calif., was burnt and bitter, despite costing $14 per pound.

Among decafs, Dunkin Donuts Dunkin Decaf, $10.25 per pound, Millstone Decaf 100% Colombian Medium Roast, $11.59 per pound, and Folgers Gourmet Selections Lively Colombian Decaf Medium Roast were the front runners. But even the best decaffeinated coffees couldnt match the best regular brews in CRs taste tests.

The full results of the coffee ratings are available in the March issue of Consumer Reports, on newsstands February 3rd and online at www.ConsumerReports.org.

You dont have to spend a lot to get a great cup of coffee, despite what some coffee snobs may tell you, said Bob Markovich, home and yard editor, Consumer Reports. Several of CRs top coffees could save you $25 to $75 each year over pricier brands even if you just drank one 6-ounce cup a day.

CRs testers focused on 100% Colombian -- a best selling bean -- for regular coffee. Most of the six decaffeinated coffees tested are a blend of different beans. Testers consider a great cup of Colombian to have lots of aroma and flavor, some floral notes and fruitiness, a touch of bitterness, and enough body to provide a feeling of fullness in the mouth. Woody, papery, or burnt tastes are off-notes.

Weeks of sipping and swirling confirmed that even 100% Colombian coffee and its Juan Valdez logo dont guarantee quality. CRs testers unearthed other surprises: Chock full oNuts and Maxwell House have pushed coffee thats heavenly and good to the last drop since 1932 and 1907, respectively. But off-notes, little complexity, and for Chock full oNuts, variable quality, put both behind Eight OClock.

How to choose

• Consider how you take it. Coffees judged Very Good taste fine black. Milk and sugar can improve a mediocre coffee, but not even cream is likely to help the lowest-scoring coffees.

• Choose a good coffeemaker. The best rated by CR reached the 195 degrees to 205 degrees F required to get the best from the beans and avoid a weak or bitter brew. A top Michael Graves model costs just $40.

• Consider grinding for fresher flavor. Even the best pre-ground coffee just cant beat the best fresh ground when it comes to taste. One top grinder from CRs January 09 report, the Mr. Coffee IDS77 costs only $20.

A former U.S. Congressman has indicted on federal money laundering and tax charges related to a investment fraud scheme that took more than $10 million from victims, according to federal prosecutors.

Wester Cooley, who represented Oregon's 2nd Congressional District in the 1990s, was named in a seven-count indictment filed in United States District Court in Los Angeles, according to U.S. Attorney Thomas O'Brien. Cooley currently lives in Palm Springs.

The indictment outlines an alleged scheme in which Cooley, along with George Tannous and De Elroy Beeler Jr., reputedly solicited hundreds of victims across the country to purchase unregistered stock in Bidbay.com, Inc., also known as Auctiondiner.com, Inc., and several related shell companies. Cooley was the vice president of Bidbay.

The indictment alleges that victim investors were lured by several false statements, including claims that Bidbay.com and/or the shell companies would soon be acquired by Ebay, Inc. for $20 per share.

Ebay never had any intention of acquiring Bidbay.com and had even sued Bidbay.com for trademark infringement over the use of "bay" in its name, prosecutors said.

Cooley is charged with taking more than $1.1 million of investor money in 2002, laundering it to conceal the fraud scheme, and using much of the money for his own personal benefit.

The indictment further alleges that Cooley falsified his 2002 tax return to avoid the payment of taxes on the investor money he received by claiming a bogus deduction and failing to disclose to the Internal Revenue Service nearly a half-million dollars he received from investors.

The charges against Cooley relate to charges previously filed against Beeler and Tannous. Tannous pleaded guilty to one count of conspiracy and one count of subscribing to a false tax return on May 19, 2008, and he is scheduled to be sentenced by United States District Judge Dean D. Pregerson on April 20.

Beeler entered guilty pleas to one count of conspiracy and one count of mail fraud on December 8, 2008 and is scheduled to be sentenced on June 22.

Cooley is charged with six counts of concealment money-laundering and one count of subscribing to a false tax return. If he is convicted of all seven counts, Cooley faces a statutory maximum sentence of 38 years in federal prison.

As most of his colleagues have when teams from their states play, Pennsylvania Attorney General Tom Corbett is cautioning consumers to be wary of potential scams -- including bogus sweepstakes offers, "too good to be true" travel packages or game-day ticket offers.

"The excitement surrounding another Super Bowl trip for the Pittsburgh Steelers may cause some fans to act quickly, without carefully reviewing all the details of a ticket offer or travel promotion," Corbett said. "Scam artists are counting on the fact that enthusiastic fans may not be as attentive as they should be."

Corbett said the Attorney General's Bureau of Consumer Protection has received complaints about bogus Super Bowl contest notifications recently sent to Pennsylvania residents.

"The scam letter, which implies that the contest is affiliated with the NFL and VISA, informs consumers that they have won a prize of $100,000 and two tickets to the Super Bowl," Corbett said. "The letter also includes a check for several thousand dollars that consumers are supposed to use to pay the taxes for their prize -- wire transferring the money to a 'claim agent' who will verify their winnings."

Corbett said the criminals, mainly based in Canada or overseas, have been using these types of sweepstakes notifications to lure Pennsylvania consumers into cashing counterfeit checks and wire-transferring money for several months. The Attorney General's Office issued a warning to consumers about aggressive "easy money" lottery and sweepstakes scams last October.

"The lure of a large cash prize, combined with tickets to the Super Bowl, may be too much of a temptation for some consumers," Corbett said. "Unfortunately, consumers who try to claim their prize by sending money to these scam artists will quickly learn that there is no $100,000 jackpot, there are no Super Bowl tickets, and the check they were given to pay the taxes will eventually be returned as counterfeit or forged."

Corbett also encouraged Steelers fans considering a trip to Florida for the game to shop carefully for their travel packages or tickets:

• Make sure that you are dealing with a reputable travel agent and do not assume that ads offering travel deals are being offered by travel agencies.

• Pay particular attention to what the travel package does and does not offer. Do not assume that every package includes airfare, hotel accommodations and tickets to get into the game.

• If the package includes airfare and a ticket to the game, federal rules apply. The travel agent must either have the game tickets in hand, or have a written contract to obtain the tickets before the agent can make the offer. If a ticket is offered, but never provided, you may be entitled to a full refund of the entire package price.

• Do not be pressured into making an immediate decision about a particular package.

• Research the hotel and its location. In some instances, consumers have been told that their hotel is within walking distance to the venue, when in reality it was too far to walk and required additional expenses to either rent a car or pay for other ground transportation.

• Get all the terms and conditions of your package in writing, including the cancellation policy in the event that you are unable to make the trip.

• Use a credit card to pay for travel packages and tickets. Do not use cash or wire money. You can dispute charges on a credit card and have little-to-no recourse when using cash.

• Be wary of unknown and private sellers who refuse to provide you with verifiable contact information.

• Be cautious of travel packages that appear to be extremely cheap or extremely expensive.

• Contact the Better Business Bureau or Attorney General's Office to see if the travel agency is in good standing.

"In the past, our office has heard from consumers who fell victim to phony travel agents and ticket sellers," Corbett said. "In several cases, consumers learned at the gate that their tickets were counterfeit and they were denied entry. In other cases, fans purchased hotel rooms that were inconveniently located. Still others told our office that they were quoted a certain amount on a Super Bowl package and were charged additional fees for services that they thought were included."

More Scam Alerts ...

After more than a year of planning, the Senate has concluded the public still isn't ready for U.S. TV stations to switch to digital broadcasting. Lawmakers have approved a measure that would delay the switch until June 12.

Leaders in the House say they have the votes to approve the delay and President Obama says he will sign it.

The switch to digital broadcasting is currently scheduled to take place February 17, but the entire process has been mired in confusion and controversy. After the switch, consumers receiving TV over the airwaves not by cable or satellite will not be able to receive a signal unless they are using a digital TV.

Congress appropriated money to compensate consumers for the purchase of up to two digital converter boxes for their analog TVs, but many consumers were confused about whether they needed one or not. And it now turns out that even with a converter box, some of these consumers still won't be able to receive digital signals. Lawmakers say the delay will give engineers time to work out a solution.

Problems in the program began popping up early last year. The process has spawned a constant stream of consumer complaints.

Some consumers might wonder why the switch has to take place at all. The answer is money. The U.S. Government has already sold the old broadcast frequencies, which AT&T, Verizon Wireless and other carriers will use to expand their mobile networks. Public safety agencies will also use some of the vacated spectrum space.

At the time, government officials concluded moving broadcasters to digital frequencies would be easy and painless. After all, weren't most consumers getting their TV from either cable or satellite?

Many, it turns out, aren't. Millions of consumers still get their TV directly over the air, on VHF and UHF channels, along the 700-MHz spectrum. Though some may prefer this form of reception, it is not hard to conclude that many others are of limited income, who cannot afford cable or satellite delivery.

The government's program to help consumers make the switch to digital TV recently ran out of money. That stopped the flow of vouchers consumers could use to purchase digital converter boxes.

Angry consumers

The most often-heard complaint among the hundreds received by ConsumerAffairs.com is that the government is sending out converter box coupons that either have already expired or are so close to their expiration date that the consumer can't use them — and can't get a replacement.

"We received our DTV Converter Box Coupons after the expiration date. When we called to get new one with correct expire dates, they sent us a letter stating that we received cards and there would be no others issued," said Charles of St. Louis. "This program has been mismanaged the way our economy has been mismanaged."

"It really is an eye opener as to where the government is heading. It should have been as simple as using a coded debit card specifically for the converter boxes. Simple program could have fixed this, but they inconvenience the consumers they want to support this major change in viewing. Pretty lame actually," Charles concluded.

R.L. of Lake Dallas, Texas, had a similar experience.

"I applied for a coupon for a converter box on 9-19-08. It NEVER arrived. When I checked the website (dtv2009.gov) for a status on the coupon, it said it was expired. I applied online for another coupon on 1-5-09 (we're supposedly entitled to two), it said that because program funding is not currently available, you will not receive coupons unless more funding becomes available," R.L. said.

"I thought the government was supposed to be helping us with this DTV transition.....what a SCAM!"

January 26, 2009
Under a settlement announced today, Hotels.com and Expedia.com, two of the worlds leading online travel companies, have agreed to add features to their online travel reservation systems so that millions of travelers with disabilities can use their online services to search for and reserve hotel rooms that have the accommodations they need.

As part of the settlement, Hotels.com and Expedia.com will gather information about hotels accessibility features, and will then incorporate that information into their websites so that travelers can both search for hotels with rooms that offer the particular accommodations they need, and make special requests online to book those accessible rooms.

Each special request will be given individual attention by a trained customer service representative, who will work with the customer to accommodate his or her needs. These new features will be rolled out later this year.

For years, travelers with disabilities have been unable to take advantage of the convenience and low cost options of booking hotel rooms online, said plaintiff Bonnie Lewkowicz. Now, for the first time, I will be able to reserve a hotel room online that meets my needs, just like anyone else.

Lewkowicz and co-plaintiff Judith Smith are members of AXIS Dance Company, a not-for-profit company of professional dancers with and without disabilities based in Oakland, Calif. Ms. Smith and Ms. Lewkowicz both rely on wheelchairs for mobility.

By adding website features to meet the needs of disabled consumers, Hotels.com and Expedia are showing that they are true leaders in the hospitality industry added Victoria Ni , a staff attorney at Public Justice, a public interest law firm specializing in cutting-edge litigation nationwide. We hope and believe that other online travel agencies will follow their lead.

In 2006, American online consumer travel sales generated $79 billion. For American travelers, the Internet is an indispensable resource for planning trips and booking lodgings and transportation.

Adults with disabilities spend over $10 billion annually on travel, and almost half of them consult the Internet to support their travel needs.

Wheelchair users need wide doorways and grab bars and accessible bathrooms. People with visual or hearing impairments also need accessible features, such as Braille signage or a text telephone.

Plaintiffs in the California lawsuit Smith v. Hotels.com L.P. were represented by the public interest law firms of Disability Rights Advocates (DRA) and Public Justice, and a leading class action law firm in Mill Valley, Calif., Chavez & Gertler LLP.

This settlement ushers in a new era in the online travel industry. A wheelchair user who reserves a hotel room online will no longer have to worry that she or he literally might not be able to enter the room after they arrive, said Kevin Knestrick, an attorney with DRA, a non-profit law center based in Berkeley, Calif., that specializes in high-impact lawsuits on behalf of people with disabilities.

No damages were sought in the case, which was filed in the California Superior Court for Alameda County.

January 22, 2009
The Federal Trade Commission has charged a mortgage broker with discarding consumers' tax returns, credit reports, and other sensitive personal and financial information in an unsecured dumpster, in violation of federal law.

According to the FTC, in December 2006, approximately 40 boxes containing consumer records were found in a publicly-accessible dumpster. The records included tax returns, mortgage applications, bank statements, photocopies of credit cards and drivers' licenses, and at least 230 credit reports.

The agency says that Gregory Navone of Las Vegas, who has owned numerous companies that handle sensitive consumer information, kept the documents in an insecure manner in his garage before improperly disposing of them.

As charged in the FTC's complaint, the defendant has failed to implement and monitor policies and procedures requiring secure disposal of credit reports; ensure that employees or third parties assigned to transport such documents for disposal are qualified to do so and have received appropriate guidance or training; alert employees or third parties to such documents' sensitive nature or instruct them to take precautions; and oversee the transport of such documents for disposal, or otherwise confirm that the documents are disposed of in a way that ensures that they cannot practicably be read or reconstructed.

The complaint also alleges that the defendant provided customers of two mortgage brokerage companies that he owned — First Interstate Mortgage Corporation and Nevada One Corporation — with a written statement claiming that the companies maintained "physical, electronic, and procedural safeguards that comply with federal standards to store and secure information about you from unauthorized access, alteration and destruction."

Navone is charged with violating the Fair Credit Reporting Act and the rule regarding Disposal of Consumer Report Information and Records by failing to take reasonable measures to protect consumer information derived from consumer reports against unauthorized access in connection with its disposal. He is also charged with violating the FTC Act by falsely representing that FIM and Nevada One implemented reasonable and appropriate measures to protect sensitive consumer information from unauthorized access, and that the companies contractually required service providers to safeguard customers' information and use it only to provide services for FIM and Nevada One.

With the opening of another tax season, consumer advocates at the National Consumer Law Center and Consumer Federation of America are warning taxpayers to steer clear of refund anticipation loans, which they call one of the most avoidable tax-time expenses.

New figures reveal that RALs drained the refunds of 8.67 million American taxpayers in 2007, costing them $833 million in loan fees, plus over $68 million in other fees. In addition, another 11.2 million taxpayers spent $336 million on related financial products to receive their refunds.

"In tough economic times, quick money may be tempting. But American taxpayers need every dollar of their refunds, and waiting just a week or two will put more money in their pockets," advised NCLC Staff Attorney Chi Chi Wu.

RALs examined

RALs are bank loans secured by the taxpayer's expected refund — loans that last about 7-14 days until the actual IRS refund repays the loan. That's a good indication of just how needless most RALs are: Most taxpayers could have their refund in two weeks or less even without the costly loan.

"If you want your refund fast, file electronically and have your refund direct deposited to your own bank account," said Jean Ann Fox, Director of Financial Services for CFA.

Taxpayers who have a bank account can avoid the expense of a RAC - generally about $30 - by having their refunds direct deposited into their account, which is just as fast. H&R Block customers who received the Block Emerald Card in a prior year can have their refunds direct deposited onto those cards, and avoid a RAL or RAC.

Price of RALs

How much will taxpayers pay if they get a quickie tax loan? The price of a RAL includes several components:

• A loan fee ranging from $34 to $130, which is usually broken down into a "Refund Account" fee and a "Bank Fee."

• Some tax preparers may charge one or more separate add-on fees, sometimes called "application," "administrative," "e-filing," "service bureau," "transmission," or "processing" fees. Add-on fees can range from $25 to several hundred dollars. Add-on fees are not charged by H&R Block, Jackson Hewitt or Liberty Tax.

In general, the effective annual interest rate (APR) for a RAL can range from about 50 percent to nearly 500 percent. If a $40 add-on fee is charged and included in the calculation, the effective APRs range from about 85 percent to nearly 1,300 percent.

RAL loan fees can vary significantly. H&R Block and JPMorgan Chase generally have lower RAL fees. In fact, they claim that these loans bear an effective APR of 36 percent, which is the traditional small loan rate cap in many states.

However, these figures do not include the "Refund Account" fee, which they claim is for the temporary account into which the taxpayer's refund is later deposited to repay the RAL. If the Refund Account Fee is included, it more than doubles the APR.

Nonetheless, there are some real and significant price differences between various RAL outlets. For example, a RAL in the amount of $3,000, which is typical, costs from $62 to $110. Taxpayers should avoid RALs in the first place; but if they insist on getting one, they should shop around for RAL costs before selecting a commercial preparer.

Tax preparers and their bank partners also offer an "instant" same day RAL for an additional fee, from $25 to $55. Some of the APRs for an instant RAL of around $1,500 are 185 percent (Block) and 211 percent (Chase).

Finally, consumers who do not use one of the commercial chains should also ask if the preparer charges any add-on fees. Mystery shopper testing conducted during the 2008 tax season revealed that some independent preparers charge several add-on fees for both RALs and RACs.

One preparer charged $324 in add-on fees; several others charged $45. Santa Barbara Bank & Trust allegedly limits tax preparers to $40 in add-on fees; however, the preparer that charged $324 in add-on fees used Santa Barbara as its lender.

Return of the pay stub RAL

Last year saw the demise of "pay stub" and "holiday" RALs. These were RALs made prior to the tax-filing season, before taxpayers received their IRS Form W-2s and could file their returns. Unfortunately, this demise was short-lived. Both H&R Block and Jackson Hewitt are promoting loans made before the tax season based on anticipated refunds.

Jackson Hewitt's version is called the iPower Line of Credit, up to $500, issued by MetaBank. MetaBank charges a 1.5 percent fee for the first advance from the line, and a 10 percent charge per advance thereafter, plus 18 percent periodic interest. If a taxpayer borrows the entire $500 in the first advance, she would be charged a $57.65 fee. If the iPower loan is repaid in one month, the total fee would be $65.15. A one month, closed-end loan with the same loan amount and fee would have an APR of 177 percent.

H&R Block's version uses its Emerald Advance Line of Credit. This is a line of credit that Block had offered previously to its Emerald Card customers, and is available for some customers on a year-round basis, for up to $1,000. This year, however, Block explicitly promoted the Emerald Advance as a tax-related pre-season loan and made it available to new customers.

The Emerald Line of Credit carries an interest rate of 36 percent plus an annual fee of $45. For a $500 advance repaid in one month, the total fee is $60. A one-month, closed-end loan with the same loan amount and fee would have an APR of 158 percent, if the annual fee were to be included in the finance charge (which Truth in Lending does not require).

If however, the borrower keeps the line open after tax season, the interest rate is lowered to nine percent, but requires either payroll direct deposit to Block's Emerald Card or a savings account linked to the card.

RALs based on pay stubs present risks to taxpayers, because they are based on estimated tax returns before the taxpayer receives final tax information from a W-2. For example, before filing the tax return, the preparer will not have any information if the IRS is planning to seize all or part of the taxpayer's refund to pay a child support or student loan debt. H&R Block does state that it conducts underwriting for its loans based on considerations other than the estimated refunds.

In addition, Jackson Hewitt in the past appeared to force pay stub RAL borrowers to return to the same office to have their taxes prepared, preventing these taxpayers from going to competitors or seeking free volunteer assistance.

The MetaBank agreement appears to assume the taxpayer will return to Jackson Hewitt for tax preparation and requires the borrower to have her RAL, RAC or tax refund loaded onto the iPower card. In addition, Jackson Hewitt may be charging a $25 or $35 "tax planning fee" for iPower loans.

In the early months of 2008, U.S. airlines were crowded with passengers but losing money because of skyrocketing fuel costs. In 2009, fuel prices are much lower, but carriers continue to struggle as the recession discourages people from flying.

To cope, both United and American have announced plans to cut capacity in the face of falling demand. United announced its plans as it reported a fourth quarter pre-tax loss of $547 million.

"Our industry continues to be challenged by a volatile fuel and revenue environment, and against that backdrop, we are delivering strong cost results even as we reduce capacity and improve quality," said John Tague, executive vice president and chief operating officer.

United said it would cut an additional 1,000 jobs beyond the 1,500 previously announced layoffs. When all is said and done, United will have trimmed its workforce by 30 percent.

Both United and American said they would announce reductions in flights later in the first quarter, and throughout the rest of 2009. United said it expected to remove 100 aircraft from its fleet this year, meaning a reduction in the number of flights available to consumers.

American also reported fourth quarter earnings, showing a loss of $340 million. A year ago it lost $69 million in the same period.

The company said it expects its full-year mainline capacity to decrease by more than 6.5 percent in 2009 compared to 2008, with a reduction of domestic capacity of approximately 9 percent and a reduction of international capacity of more than 2.5 percent compared to 2008 levels. On a consolidated basis, American said it expects full-year capacity to decrease by nearly seven percent in 2009 compared to 2008.

AMR expects mainline capacity in the first quarter of 2009 to decrease by more than 8.5 percent compared to the first quarter of 2008, with domestic capacity expected to decline by more than 11.5 percent and international capacity expected to decline by nearly 4 percent compared to first quarter 2008 levels. AMR expects consolidated capacity in the first quarter of 2009 to decrease by more than 8.5 percent compared to the first quarter of 2008.

"Our fourth quarter and full-year 2008 results reflect the difficulties all airlines faced last year, but we believe our steps to reduce capacity, bolster liquidity, and improve revenue helped us better manage the challenges of record fuel prices and a weak economy," said AMR Chairman and CEO Gerard Arpey. "We believe these actions and our fleet renewal efforts have put us on sounder footing as we face continued economic uncertainty, slower travel demand, and fuel price volatility in 2009. We intend to continue managing our business — from capacity and fleet planning to balance sheet repair, fuel hedging and revenue initiatives — conservatively and with discipline. I want to thank employees for their commitment during a difficult 2008. While significant hurdles remain, I am guardedly optimistic we can regain momentum in 2009."

The Food and Drug Administration has issued a Public Health Advisory to alert consumers, patients, health care professionals, and caregivers about potentially serious and life-threatening side effects from the improper use of skin numbing products.

The products, also known as topical anesthetics, are available in over-the-counter and prescription forms.

Skin numbing products are used to desensitize nerve endings that lie near the surface of the skin, causing a numbness of the skin. These topical anesthetics contain anesthetic drugs such as lidocaine, tetracaine, benzocaine, and prilocaine in a cream, ointment, or gel. When applied to the skin surface, they can be absorbed into the blood stream and, if used improperly, may cause life-threatening side effects, such as irregular heartbeat, seizures, breathing difficulties, coma, or even death, the agency warns.

FDA has received reports of adverse events and deaths of two women who used topical anesthetics before laser hair removal. In February 2007, the FDA issued a Public Health Advisory — "Life-Threatening Side Effects with the Use of Skin Products containing Numbing Ingredients for Cosmetic Procedures," to warn consumers about these products.

Patients for whom an over-the-counter or prescription topical anesthetic is recommended should consider using a topical anesthetic that contains the lowest amount possible of medication that will relieve your pain.

Also, health care professionals should determine whether adequate pain relief can be safely achieved with a topical anesthetic, or whether a different treatment would be more appropriate.

The FDA strongly advises consumers not to:

• Make heavy application of topical anesthetic products over large areas of skin;

• Use formulations that are stronger or more concentrated than necessary;

• Apply these products to irritated or broken skin;

• Wrap the treated skin with plastic wrap or other dressings; and

• Apply heat from a heating pad to skin treated with these products.

• When skin temperature increases, the amount of anesthetic reaching the blood stream is unpredictable and the risk of life-threatening side effects increases with greater amounts of lidocaine in the blood.

A recently published study in Radiology looked at women taking acetaminophen and ibuprofen by mouth versus applying lidocaine gel, a topical anesthetic, to the skin to decrease discomfort during mammography. The lidocaine gel was applied to a wide skin surface area and then covered with plastic wrap. There were no serious or life-threatening side effects reported in the study, nor were any reported when FDA discussed the results with the doctor who performed the study.

The study results favored the use of lidocaine as there was significantly less discomfort than with the plain gel or oral acetaminophen or ibuprofen. However, given the life-threatening side effects associated with the use of topical anesthetics during laser hair removal, FDA is concerned that similar side effects could occur when topical anesthetics are used during mammography. Further, the study was small and it is possible that a larger study might show different findings.

Patients should talk with their health care professional if they are considering using a topical anesthetic before a mammogram. The following summarizes advice for patients if a topical anesthetic is recommended for their use:

• Use a topical anesthetic that contains the lowest strength, and amount, of medication that will relieve the pain;

• Apply the topical anesthetic sparingly and only to the area where pain exists or is expected to occur;

• Do not apply the topical anesthetic to broken or irritated skin;

• Ask their healthcare professional what side effects are possible and how to lower their chance of having life-threatening side effects from anesthetic drugs; and

• Be aware that wrapping or covering the skin treated with topical anesthetics with any type of material or dressing can increase the chance of serious side effects, as can applying heat to the treated area while the medication is still present.

With bankrupt retailer Circuit City's announcement that it's going out of business, 34-thousand employees in the U.S. are losing their jobs. But Circuit City customers who purchased service contracts from the firm are also wondering about their future.

"Due to the bankruptcy and store closings, what will happen with a three year extended warranty I purchased in August for a new laptop computer?" Annette, of Croyden, Pa., asked ConsumerAffairs.com. "Will a third party take over the contract or is there a way to get my money back as this was a very expensive warranty — approximately $450."

The answer from Circuit City is that Annette and other service contract holders have nothing to worry about.

"Circuit City Advantage Protection Plans have been backed by third-party independent companies for more than 15 years and as a result, are not impacted by Circuit City's closing," the company said.

In other words, Circuit City just sold the "warranties," but was never the company that stood behind them. The company says all Circuit City Advantage Protection Plans are fully backed by the Assurant Solutions companies.

"Assurant Solutions operates as Federal Warranty Service Corporation, Sureway, Inc., and United Service Protection, Inc. Assurant Solutions is part of Assurant, Inc. (NYSE: AIZ), and its extended service contacts are backed by an Assurant insurance subsidiary rated A "Excellent" by A.M. Best Co.," the company said in a statement.

Even though Circuit City is closing its remaining 567 U.S. stores, it will continue to operate in Canada. The company says Canadian operations are not affected. Circuit City employees about 3,000 people in Canada.

Beverly Burdette was suspicious when her 82 year old father, Fred Burdette, purchased overpriced household items that he did not need, such as trash bags and light bulbs, as well as items he did not like, from a telemarketer. The telemarketer told him that the money would go to help "handicapped veterans."

Because he was a disabled World War II veteran and felt the money was going to a good cause, Fred agreed to purchase several items.

Beverly's initial suspicions were confirmed when the company, I Glo Workshop, Inc. of Phoenix, Arizona began billing her father for other items that he did not purchase. After receiving a complaint from Fred Burdette, West Virginia Attorney General Darrell McGraw's office began an investigation.

As a result, I Glo agreed to settle pending charges by the state.

In the agreement, I Glo agreed to obtain a license and surety bond and to inform consumers of their unconditional right under West Virginia law to cancel telemarketing sales within seven days. I Glo also agreed to refund all payments it collected from West Virginia consumers, which resulted in refunds of $5,828.89 and canceled debts of $4,832.06 for 99 West Virginia consumers.

"Consumers should always be wary when receiving calls from telemarketers offering deals on goods and services that sound too good to be true," McGraw said. "Consumers should insist that the terms of the sale be disclosed in writing before making a purchase. If the telemarketer refuses to disclose the terms in writing, the consumer should walk away or, in this case, hang up the phone."

In order to avoid unwanted telemarketing calls, consumers may register their telephone numbers with the Federal Trade Commission's National "Do Not Call" Registry by calling 1-888-382-1222 or by visiting www.donotcall.gov.

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Health officials have long suspected that some cigarettes are more addictive than others. Researchers at the University of Medicine and Dentistry of New Jersey now say there's something to that — menthol cigarettes are harder to quit, particularly among African American and Latino smokers, they say.

The research team conducted a study that examined the effects of menthol on quit rates among a diverse group of nearly 1,700 smokers attending a Tobacco Dependence Clinic at the UMDNJ-School of Public Health.

"Lower quit rates among African-American and Latino menthol cigarette smokers at a tobacco treatment clinic" appears in next month's print edition of The International Journal of Clinical Practice.

"We previously found that menthol cigarette smokers take in more nicotine and carbon monoxide per cigarette. This study shows that menthol smokers also find it harder to quit, despite smoking fewer cigarettes per day," said study author Kunal Gandhi, MBBS, MPH, a researcher in the division of addiction psychiatry at the UMDNJ-Robert Wood Johnson Medical School.

"These results build on growing evidence suggesting that menthol is not a neutral flavoring in cigarettes," said Jonathan Foulds, director of the Tobacco Dependence Program. "It masks the harshness of the nicotine and toxins, affects the way the cigarette is smoked and makes it more deadly and addictive."

According to Foulds, more than 80 percent of the African American smokers attending the clinic smoke menthols, and have half the quit rate of African Americans who smoke non-menthol cigarettes.

The researchers believe the cooling effect of the menthol makes it easier to inhale more nicotine from each cigarette and, therefore, to obtain a stronger and more addictive nicotine dose.

"That may be part of the reason why African-Americans have much higher rates of lung cancer," Foulds said.

The researchers also are concerned that more young and Latino smokers are becoming addicted to menthol cigarettes. The tobacco industry may target its marketing of menthol cigarettes to groups with less cash to spend, such as youths, with the aim of getting them hooked even on fewer cigarettes per day, they said.

Their study findings may have implications for future regulation of cigarettes. Recent legislation in New Jersey and pending federal legislation bans fruit- and candy-flavored cigarettes but allows menthol to be added.

You could call it "the year of the foreclosure." 2008 shaped up as a bad one for the nation's housing market, with a total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — reported on 2,330,483 U.S. properties during the year.

That's an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units — one in 54 — received at least one foreclosure filing during the year, up from 1.03 percent in 2007.

The data was supplied in a monthly compilation by RealtyTrac, a real estate firm specializing in marketing foreclosed property.

Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007.

"State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth quarter numbers overall, but that effect appears to have worn off by December," said James J. Saccacio, chief executive officer of RealtyTrac. "The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac and Fannie Mae, along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners.

"Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami. And the recent California law, much like its predecessors in Massachusetts and Maryland, appears to have done little more than delay the inevitable foreclosure proceedings for thousands of homeowners."

The California law, which requires lenders to provide written notice of their intent to initiate foreclosure proceedings 30 days prior to issuing a notice of default (NOD), resulted in a reduction of NODs from 44,278 in August to 21,665 in September. Notice of Default filings then surged by 122 percent, to over 42,000, in December. Similar patterns have occurred in other states, such as Massachusetts and Maryland, where similar types of foreclosure prevention legislation has been enacted.

Nevada, Florida, Arizona post top state foreclosure rates

More than 7 percent of Nevada housing units (one in 14) received at least one foreclosure notice in 2008, giving it the nation's highest state foreclosure rate for the year. A total of 77,693 Nevada properties received a foreclosure filing during the year, an increase of nearly 126 percent from 2007 and an increase of nearly 530 percent from 2006.

Florida registered the nation's second highest state foreclosure rate in 2008, with 4.52 percent of its housing units (one in 22) receiving at least one foreclosure filing during the year, and Arizona registered the nation's third highest state foreclosure rate, with 4.49 percent of its housing units (one in 22) receiving at least one foreclosure filing during the year.

Other states with Top 10 foreclosure rates for 2008 were California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey.

California, Florida, Arizona post highest 2008 foreclosure totals

A total of 523,624 California properties received a foreclosure filing in 2008, the nation's highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006.

With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006.

Arizona's 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006.

Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

Sunbelt cities plus Detroit land on top 10 metro foreclosure rates list

With 9.46 percent of its housing units (one in 11) receiving a foreclosure filing during the year, Stockton, Calif., registered the highest foreclosure rate among the nation's 100 largest metropolitan areas in 2008. Other California cities in the top 10 were Riverside-San Bernardino at No. 3 (8.02 percent, or one in 12 housing units); Bakersfield and No. 4 (6.17 percent, or one in 16 housing units); and Sacramento at No. 9 (5.20 percent, or one in 19 housing units).

Las Vegas documented the second highest metro foreclosure rate in 2008, with 8.89 percent of its housing units (one in 11) receiving a foreclosure filing during the year.

More than 6 percent of Phoenix housing units (one in 17) received a foreclosure filing during the year, giving the city the fifth highest metro foreclosure rate in 2008.

The foreclosure rate in Fort Lauderdale, Fla., ranked No. 6, with 5.95 percent of the metro area's housing units (one in 17) receiving a foreclosure filing in 2008. Other Florida cities in the top 10 were Orlando at No. 7 (5.48 percent, or one in 18 housing units) and Miami at No. 8 (5.21 percent, or one in 19 housing units).

With 4.52 percent of its housing units (one in 22) receiving a foreclosure filing during the year, Detroit registered the tenth highest metro foreclosure rate in 2008.

January 14, 2009
Giant Bicycle, Inc. is recalling about 1,000 bicycle. The affected models are 2009 model year TCR Advanced SL and SL (ISP) Bicycles and Frames.

The density of the steerer tubes can cause the forks to crack and break, posing a fall hazard to the consumer.

Giant Bicycle has received one report of the fork cracking with no reported injuries.

This recall involves 2009 TCR Advanced SL Team, SL 0, SL 1, SL 2, and SL (ISP) model bicycles and frames in silver, charcoal, blue and red. The words Giant and TCR Advanced SL are printed on the frame. Steerer tubes with B, N or P at the end of the serial number are not included in this recall. Other TCR model bicycles are not included in the recall.

The bicycles were sold by authorized Giant Bicycle dealers nationwide from August 2008 through December 2008 for between $3,300 and $7,500. They were made in Taiwan.

Consumers should stop riding these bicycles immediately and contact an authorized Giant Bicycle dealer for a free inspection and replacement fork.

For additional information, contact Giant Bicycle toll-free at (866) 458-2555 between 9 a.m. and 5 p.m. PT Monday through Friday, or visit the firms Web site at www.giant-bicycles.com.

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

January 13, 2009

When it comes to filing your tax return, this is not a year to leave money on the table. In fact, the Internal Revenue Service wants you to take advantage of all the tax breaks you have coming to you — and there may be more of them this tax season. Mark Huffman reports on what to look for, and how to expedite your return.

Tax News

Drinking milk tainted with the chemical melamine increases the risk of developing kidney stones, health experts in China have confirmed.

The research is the first to positively link the plastic-making chemical with kidney problems, though doctors had strongly suspected a causal relationship. Melamine-tainted milk is blamed for the deaths of six children in China and making another 290,000 people sick.

Melamine-tainted candy is suspected in the illness of a Virginia girl and in the unexplained illness and deaths of thousands of family pets throughout the United States.

The chemical, used by some Chinese food manufacturers to register a higher nutritional value, is the source of a major scandal in China and has strained relations with its major trading partners.

The U.S. Food and Drug Administration says melamine-tainted food was not imported into the U.S., though anecdotal — meaning real-life — evidence suggests some products containing the chemical did in fact make it to U.S. shores.

In 2007 thousands of U.S. pets were killed or sickened because of melamine contained in pet food that imported from China. Unexplained animal deaths and illnesses continue to this day, without noticeable action or concern by agencies responsible for protecting the public.

In the kidney stone study, Chinese researchers analyzed urine sample of 15 Chinese children with kidney stones. The samples were compared to those from other children who consumed the tainted milk but did not develop kidney stones.

They concluded that melamine alone can lead to the creation of kidney stones, whose size are directly related with the amount of melamine that is consumed. Not everyone who comes in contact with melamine develops kidney stones, however. The researchers say there is a "safe level," above which the risk escalates.

Melamine is used to make fertilizers, plastics and other industrial goods. It is rich in nitrogen and can fool tests for protein in food products, leading unscrupulous food processors to use it in food and dairy products.

The study was published in the International Journal of Clinical Chemistry and Diagnostic Laboratory Medicine.

Halloween candy

In Virginia, a mother is convinced her six-year-old daughter received some melamine-tainted candy on Halloween — and those goodies caused the little girl's recent kidney problems. Maria H. of Suffolk says her six-year-old daughter, Jordan, never had any health problems until she ate some chocolates she received on Halloween.

Since then, Maria said, her daughter has experienced symptoms that doctors and the World Health Organization say are consistent with melamine poisoning — irritability, lethargy, pain in her right flank, high blood pressure, and crystals in her urine.

"My daughter had more than 20,000 crystals in her urine," Maria told ConsumerAffairs.com. "She was very sick (in mid-November) and refused to eat or drink for a week. She continued to get sicker and sicker. The doctor said it was the flu and she should be fine in a few days."

But Jordan's condition did not improve.

"She started having pain in her right flank," Maria said, adding her daughter was nauseous, vomiting, and had high blood pressure. "She was in an extreme amount of pain. The doctors thought she might have appendicitis."

Maria rushed her daughter to the emergency room.

"The E.R. staff was stumped," she said of Jordan's illness. "They took a CAT scan and were just about ready to send her home when her lab results came back. That's when we learned she had more than 20,000 crystals in her urine...the doctor seemed alarmed by that many crystals in urine."

The cause of all those crystals, however, baffled the emergency room physicians and staff.

"They said 'your daughter has suffered some kidney problems and has some crystals and a high amount of protein in her urine,' " Maria says, adding she pushed for the urinalysis. "But we don't know what they are or what's causing them."

The doctors tried to rule out some likely suspects.

"They asked if she drank soda and I said: 'No.' They asked about a high sodium diet. I said we have no sodium in our house. We eat all healthy, organic foods. I asked them what else could cause this and they said they didn't know.

"We've called every relative to see any has had any kidney problems," Maria added. "There is no family history of kidney stones. I've eliminated every possibility."

That's how Maria pinpointed the Halloween candy as the culprit of her daughter's illness. "We're sure it was the candy; it has to be."

The emergency room doctors didn't downplay her suspicions. "They said melamine in Chinese-made infant formula and other milk products had caused kidney problems in children in that country."

Difficult to prove

As ConsumerAffairs.com has reported, melamine-tainted milk products are blamed for last year's deaths of at least six babies in China and the urinary-related problems in nearly 300,000 other children in that country.

Chinese officials discovered some dairy plants added melamine — a chemical used to make plastic and fertilizer — to powered milk products to make them appear to have higher protein levels.

Melamine is not approved for use in foods sold in the United States. The Food and Drug Administration (FDA), however, recently concluded that melamine levels below 2.5 parts per million (ppm) do not raise health concerns.

The only exception is infant formula. The FDA now says melamine levels of 1 ppm or less in infant formula are safe.

The tentacles of China's melamine-tainted milk scandal spread to scores of other products sold in the United States and around the world, including eggs, yogurt, liquid milk, teas, and chocolates.

And those tainted products, Maria says, ultimately made their way to her quiet neighbor in Virginia and into her daughter's Halloween bag.

That's her theory, anyway. Proving it, however, is going to be difficult.

"There's no way to test the candy because my daughter ate it all," Maria said. "But we're sure the candy was tainted with melamine because our daughter has been healthy her whole life and this (Halloween candy) was the only thing new in her diet."

Maria also recalled seeing pieces of candy in her daughter's Halloween bag that looked like the melamine-tainted White Rabbit Creamy Candy, which were imported from China and distributed in the United States last September.

"I think what she ate were those little bunny candies that look like Tootsie Rolls," Marie says. "She probably ate several of them and that's what made her sick. Children don't just randomly get kidney stones. Something causes them. In this case, it has to be that tainted candy."

She added, "I have a three-year-old son. He doesn't like the same candy as Jordan. He likes the hard candies and she love chocolates. My son didn't eat those chocolates and he didn't get sick. There's no doubt in my mind what happened."

Maria contacted the FDA about her daughter's illness, but says the agency ignored her concerns. "They didn't take me seriously. They didn't seem concerned at all. They didn't take a report. The only agency that took a report was my local health department."

Maria said she contacted ConsumerAffairs.com to warn other parents about this potential danger — a job she says the FDA isn't doing.

"The FDA says on its Web site that no American children haven been affected by melamine. But that's not true. My daughter was affected badly. We thought we were going to lose her."

ConsumerAffairs.com contacted the FDA about Maria's concerns. The agency did not return our calls.

"This case should be investigated"

ConsumerAffairs.com also contacted Dr. Leslie Spry, a spokesman for the National Kidney Foundation. He wouldn't comment specifically on Jordan's case or make a diagnosis.

But the Nebraska-based nephrologist said Jordan's symptoms should be investigated further.

"Crystalluria (crystals in the urine) is a very uncommon event, especially in children," Dr. Spry told us. "I'd have her go to a pediatric nephrologist to find out if there is any damage to the kidneys. I'd want to know if there are still any crystals in the little girl's urine, what type of crystals, and if they've caused any damage."

Dr. Spry said Maria should also find out if there is any acid in her daughter's urine.

"If there is acid in the urine that might hint that maybe there is melamine," he said. "What we want is the pH level and a description of the crystals. Some are needle-like; others are hexagon-shaped. They all look different under a microscope.

"This [case] should be investigated."

Dr. Spry also confirmed that "melamine intoxication" can damage the kidneys. "I have not seen a case of melamine intoxication that I was aware of, but it does indeed cause kidney damage by producing crystals in the urine."

Melamine, however, isn't the only source of that problem.

"There are a number of other causes of crystalluria," Dr. Spry said. "(They) include drinking antifreeze (ethylene glycol) or vitamin C overdose (which causes oxalate crystals to be seen in the urine). Uric acid crystals can be seen in patients with certain kinds of leukemia and cancers in children. Uric acid crystals look different in the urine depending on the pH (amount of acid) in the urine."

Back in Virginia, Maria continues to dig for answers to her daughter's illness.

She ruled out Dr. Spry's possibilities, saying there isn't any antifreeze around her home, her children don't take vitamins, and her daughter doesn't have cancer.

Maria next plans to take Jordan to a kidney specialist, just like Dr. Spry recommended."I've already called and talked to several people at the hospital about the lab results. They said they didn't know what types of crystals were in my daughter's urine."

Maria is still waiting for copies of those lab reports. In the meantime, she's contacted parents in her neighborhood to see if their children experienced similar health problems as Jordan's.

"I've learned that three kids on my street all had flu-like symptoms — just like Jordan's — shortly after Halloween. There were all sick the same week (in mid-November). Those moms were all concerned, but they didn't take their kids to the emergency room and get a urinalysis."

She adds, "A lot of parents might be told their children have the flu and they should just wait it out. My daughter was initially diagnosed with the flu. It was only when we took her to the children's hospital — and I pushed for a urinalysis — that we learned she didn't have the flu. She had kidney stones."

Maria is worried about the long-term effects this illness will have on her daughter.

"She hasn't been the same since Halloween," she said. "She's thin, pale, has bags under her eyes, and complains of a stomach ache every day. She's also paranoid every time she gets a stomach ache that we're going to have to take her back to the emergency room. This whole thing is very scary."

The Better Business Bureau's (BBB) stamp of approval has historically provided a high comfort level for consumers.

In the past, the bureau labeled businesses "satisfactory" or "unsatisfactory" for resolving consumer complaints. In 2009, the business watchdog is employing a new rating system.

Starting this month, businesses will be rated based on 16 weighted categories with a scale from AAA to F. The BBB Reliability Report's algorithm calculating a company's ranking revolves around a set of subjective characteristics including the nature of business, length of time since opening, whether the business is "problematic in the industry," and BBB accreditation, i.e., are they a paying member.

Certainly the years in business category yields information. But a new high-end restaurant could get a lower grade than a ten-year-old hole in the wall. Using the new grading system for six "cookie cutter" chain Taco Bells we checked, three received B's, one got a CCC, and two received CC's. Yet all reports from these Santa Barbara locations show no consumer complaints.

Beyond fast food, world famous chef Wolfgang Puck's week-in-advance booked restaurant, Spago, in Beverly Hills only earns a subpar B under the new system.

Comparing consumer reviews on Tripadvisor.com, Joe's Caf ranks 101st out of 288 Santa Barbara restaurants. Conversely, Spago matched expectations scoring 4th out of 182 Beverly Hills establishments. So how is the BBB's score possible?

Businesses with Bureau accreditation, such as Joe's Caf receive AAA scores. Just like Spago's, the restaurant has no complaints. The only difference, Joe's Caf is older and a paying member of the BBB. (Without the expensive "Pay for OK" accreditation, there is apparently no way to achieve the AAA ranking.)

Reaching beyond L.A.'s restaurant industry, many Los Angeles area retailers including Gucci, Ferrari, and Cartier are also now sporting the weak B grade.

If you are a non-paying BBB member, a single complaint can plummet scores. With just one complaint Ferrari Maserati of Beverly Hills, Porsche of Downtown LA, Dolce & Gabbana, and Prada were downgraded to CC's and D's. At the same time, SavePlus, a wholesale retailer of discount clothes (who also has one complaint on record), enjoys the AAA rating. (Coincidently, SavePlus is a paying BBB member).

And there is more. If the entire industry product or service is "bad" in the eyes of the BBB, it may be extremely difficult to get above a C. You start at a depressed level and can only go down. The 90-point calculation determining the total grade subtracts as many as 41 points just for "type of business."

We conducted a survey of several BBB offices around the country to discover who these unfavorable industries were. Adding greater confusion, there was no general consensus from office to office. The BBB claims negatively assessed "types of businesses" are based on levels of complaints. But none of the offices we contacted named construction, banks or car dealers, the largest complaint industries according to the Bureau's own published list.

Some of the named targets from our calls include movers, credit and loan companies, and psychics (how do you judge their reliability?). Other criticized businesses could soon join the list such as taverns, cigar stores, ice cream shops (think "obesity"), and gun retailers. Even the best of companies in these industries will not rise up to the "B" level or "A" stratosphere once their industry has fallen into the BBB crosshairs.

What's the solution? Every business stop paying the BBB to support their bogus rating system. At least that will level the playing field.

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Richard Berman is the president of Berman and Co., a Washington, D.C. based public affairs and communications firm

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