Current Events in March 2009

The Federal Trade Commission has charged seven related companies with violating federal law by falsely promising to remove negative information from consumers credit reports, even information that is accurate and current, and by charging an up-front fee and failing to provide written disclosures. The agency seeks to make them stop the violations and pay restitution to consumers.

According to the FTC, the defendants charge consumers up to $2,000, including $300 in advance, promising to improve credit scores by removing information such as late payments, charge-offs, collections, inquiries, delinquencies, judgments, and accounts discharged in bankruptcy.

Their promotions include an ad on a third-party Web site stating, 100% Guarantee to raise your credit score! Transcripts from telephone calls with consumers include statements such as, I cant tell you much because Ill be giving you my trade secrets, but I can definitely guarantee that well take care of anything thats derogatory on her credit report. Its all legal.

In addition to facing deceptive marketing charges under the FTC Act, the defendants are charged with violating the Credit Repair Organizations Act by misrepresenting their services; charging in advance for credit repair services; and failing to provide consumers with written contracts and other materials that contain written disclosures required by law or deviating from the required wording for the disclosures.

The defendants are

• United Credit Adjusters Inc., doing business as United Credit Adjustors and UCA;
• United Credit Adjustors Inc., d/b/a United Credit Adjusters and UCA;
• United Counseling Association Inc., d/b/a UCA;
• Bankruptcy Masters Corp.,
• National Bankruptcy Services Corp.,
• Federal Debt Solutions Ltd.,
• United Money Tree Inc., and
• Ahron E. Henoch, Ezra Rishty, and Gerald Serino, also known as Jerry Serino.

Time and effort

The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your creditreport. If you find errors or mistakes, federal law gives you the right to have them corrected free of charge.

The Fair Credit Reporting Act requires each of the nationwide consumer reporting companies — Experian, TransUnion, and Equifax — to provide a free copy of your credit report, at your request, once every 12 months from AnnualCreditReport.com, a toll-free telephone number, or a mailing address.

Details are at www.ftc.gov/freereports. Reviewing your credit report regularly is an effective way to deter and detect identity theft.

New Jersey has entered into settlement agreements with seven telecommunications companies regarding their advertising and sale of pre-paid calling cards and concerns whether consumers were receiving the full amount of time for which they paid.

Getting less than what you paid for is illegal and these settlements ensure that the terms governing the use of calling cards are clearly and plainly disclosed to consumers, Attorney General Anne Milgram said. Weve told the industry that every second counts and these companies will account for every second on these cards.

The settlement terms mirror requirements contained in a new state law governing pre-paid calling cards that took effect last year.

These settlements, and the state law governing calling cards provide New Jersey consumers with protection against the deceptive sales practices which have plagued this industry for too long said David Szuchman, Consumer Affairs Director. Weve changed the business practices of this industry and the millions of consumers who buy calling cards each year will benefit.

The seven companies are:

• CVT Prepaid Solutions, Inc., 40 Cuttermill Road, Suite 500, Great Neck, New York 11201
• Dollar Phone Enterprises, Inc., 232 Broadway, Brooklyn, New York 11211
• Epana Networks, Inc., 1250 Broadway, 30th Floor, New York, New York 10001
• IDT Corp., 520 Broad Street, Newark, New Jersey 07102
• Locus Telecommunications, Inc., 111 Sylvan Avenue, Englewood Cliffs, New Jersey 07632
• STi PhoneCard, Inc., 30-50 Whitehouse Expressway, 4th Floor, Flushing, New York 11354
• Total Call International, Inc., 707 Wilshire Boulevard, 12th Floor, Los Angeles, CA 90017

The settlements conclude investigations into each companys business practices related to pre-paid calling cards. Each company has paid $5,000 to reimburse the Divisions costs. Other than CVT (which is no longer selling pre-paid calling calls), each company will pay $5,000 per year for the next three years to offset the cost of the Divisions continued monitoring for compliance.

As part of the settlements, each company also agreed to the following business practices:

• Comply with the Consumer Fraud Act and regulations, as well as any other state and/or federal laws, rules and regulations which are applicable to all future sales and marketing of pre-paid calling cards by or on behalf of the company;

• Ensure that all minutes or rates, or both, advertised on any pre-paid calling card, any point of sale material relating to that card or otherwise relating to any pre-paid calling service, shall be available to the consumer and there shall be no limitations on the period of time for which the advertised minutes, or rates, or both, will be available to the consumer unless those limitations are clearly and conspicuously disclosed in the same location on the card, advertising or point of sale material where the minutes or rates, or both are advertised;

• Ensure that all service minutes promoted, advertised or disclosed on any voice prompts provided at the time the consumer places a call with companys pre-paid calling cards shall be immediately available to the consumer on that call. The consumer shall not be charged for any busy signal or unanswered call;

• Not charge, apply or deduct from a pre-paid calling cards balance any fees, taxes, surcharges or other amounts for use of the card except: (1) the rate per minute for the particular destination called; (2) any permitted fees; and (3) any rate per minute, fee or charge for use of the card, or permitted for calls to or from international telephone numbers, international cellular and international wireless telephone numbers;

• Clearly and conspicuously disclose all permitted fees, as well as any other fees and surcharges, on its pre-paid calling cards and/or packaging materials and on its advertisements;

• Clearly and conspicuously disclose the companys policy of rounding off time for billing purposes on its pre-paid calling cards and packaging materials;

• Make available to consumers a toll-free customer service telephone number to address any post-order inquiries concerning all pre-paid calling cards, and clearly and conspicuously disclose to consumers the telephone number in all materials accompanying the pre-paid calling cards;

• Within thirty (30) days of settlement, make available through the toll-free customer service telephone number all information concerning any charges and deductions and its and its policy of rounding off time for billing purposes; and

• For a three-year period, maintain and preserve, and make available to the Division upon its request, specified documents and records.

Letting homeowners reduce their monthly mortgage payments can significantly lower the rate of defaults compared with loan modifications that do not reduce payments, according to a new study of recently modified loans conducted by the University of North Carolina at Chapel Hill's Center for Community Capital.

Further, combining lower payments with a write-down of the loan balances for loans that exceed the value of the home can prevent even more defaults.

"Our data clearly show that not all loan modifications are created equal," says Roberto Quercia, director of the center, part of UNC's College of Arts and Sciences. "By using such data to inform policy and practice, the industry can reduce foreclosures and increase stability in the economy."

The study, "Loan Modifications and Redefault Risk: An Examination of Short-Term Impact," analyzed 10,000 loans that were modified to prevent default. These modified loans came from a pool of more than 1.3 million mostly subprime and adjustable-rate mortgages made during the peak of the mortgage boom, from 2005-2006.

The results show that the type of modification matters. Six months after receiving a modification, homeowners who got a "traditional modification" — where past due amounts and fees are added to the loan and the payment rises — had a 60 percent higher rate of delinquency than those whose modification led to a reduced payment.

A full third of delinquent borrowers in the sample received a modification that increased their payments. "This is like throwing a brick to a drowning man," said Quercia.

Digging deeper to take into account the risk profile of each loan before it was modified, researchers confirmed these trends: homeowners who obtained a rate reduction were about 13 percent less likely to redefault than similar borrowers in similar situations who received a traditional modification. Those whose rate reduction was accompanied by a principal reduction were 19 percent less likely to redefault.

These findings come at a time when 12 percent of all loans — nearly 6 million mortgages — are past due or in foreclosure and 20 percent of all homes in America are "underwater," meaning their mortgaged property is worth less than the amount they owe on their loan.

Policymakers at present are encouraging servicers to reduce monthly payments as a percentage of household income by subsidizing lenders that reduce payments to 31 percent of household income. These plans rely more heavily on interest-rate reductions and term extensions than on the crucial tool of principal write-down.

"Our results support the Obama administration's efforts to seek more broad-based, systematic loan restructuring," Quercia says. "They also suggest the need to reduce the principal amounts on loans, especially loans in which the household owes more than the home's worth, to minimize the risk of redefault long-term."

March 16, 2009
California Attorney General Edmund G. Brown Jr. and Ventura District Attorney Gregory D. Totten today clamped down on two companies — Imergent, Inc. and Stores On Line — that "falsely promised" customers that they could earn full-time income by selling merchandise over the Internet.

"These companies falsely promised customers that they could get rich by selling merchandise over the Internet," Brown said. "In reality, many customers were left in deep debt, paying high up-front costs, and never earning a dime from their websites. This agreement allows these customers to get back some of their losses."

These two companies sell website-based "stores," in packages of three or six websites, at a cost of between $2,700 and $6,000. They market their products at seminars, which they advertise through postcards and other mailings often sent to senior citizens with limited Internet experience. They often offer seminar attendees a meal and a free gift such as an MP3 player.

The companies made statements such as:

"Are you ready to claim YOUR share of eBay's annual $3.2 Billion in revenue? By attending our FREE 90-minute eBay Entrepreneur Training' Conference you will learn how eBay PowerSellers run successful Internet businesses and how an elite few use additional strategies to boost revenues way beyond the average seller. Learn how nearly half-a-million people create full-time incomes using eBay!"

At the seminars, the companies make tantalizing claims regarding the massive profits that can be earned by consumers who purchase their product. Often, however, these profits are never realized and the customer is left in serious debt.

One victim used the inheritance left by her father to purchase six websites, in hopes that they would help supplement her income after retirement. The victim spent over $10,000 in set up costs. Of the six websites the victim bought, only one has been set up, and it continues to cost more than it brings in.

In August of 2006, the California Attorney General's Office and the Ventura County District Attorney settled a previous case against Imergent, Inc. and Stores On Line. That settlement barred the defendants from engaging in conduct that violated California's laws governing Seller Assisted Marketing Plans.

The Attorney General's office continued to monitor the companies' business practices and discovered that they were violating the 2006 agreement and were continuing to sell Seller Assisted Marketing Plans without registering with the state.

A new action was brought in 2007 to enforce the prior judgment, and to seek penalties, restitution, and an injunction. Today's agreement resolves the 2007 action.

The companies have agreed to the following terms:

• Pay $147,600 for full restitution to California consumers who have complained to the Attorney General's Office, the Ventura County District Attorney, or directly with StoresOnLine.
• Pay $202,400 for restitution to California consumers who submit complaints within 90 days.
• Cancel all outstanding financing contracts for consumers who have complained.
• StoresOnLine will also send a letter to all California purchasers who have bought since January 1, 2008, offering them a 15
• day period within which to cancel the transaction and receive a refund.
• Register with the state as a seller of Seller Assisted Marketing Plans
• Provide a 15
• day right to cancel for purchasers over the age of 65
• Disclose clearly the circumstances under which StoreOnLine will charge consumers a web site hosting fee, and provide consumers the opportunity to opt out of hosting websites with Imergent, Inc. and Stores On Line.
• Provide the Attorney General's Office with recordings of sales presentations and notify the Attorney General and Ventura County District Attorney's Office when sales presentations take place in California, so they can be monitored.

These types of schemes are promoted on TV infomercials, on the Internet, by direct mail, at trade shows, at invitation-only seminars, and through ads that may appear in the classified sections of newspapers or magazines. The ads promise big earnings, and promise that no selling or other experience is necessary.

If you believe you are a victim and have not yet made a complaint to the Attorney General's Office, you may be entitled to restitution if you submit a complaint within 90 days. You may file a complaint online at www.ag.ca.gov/consumers/general.php or call the Public Inquiry Unit at 1-800-952-5225.

March 16, 2009
Texas Attorney General Greg Abbott has resolved the states enforcement action against a direct mail marketing firm that operated an unlawful lead card scheme and targeted senior citizens.

The defendant, Prospect Pros LLC, which did business as American Seniors Alliance, used improper tactics to obtain senior citizens personal information. According to state investigators, the defendants packaged and sold the unlawfully obtained information to insurance companies and sales solicitation firms.

Under the agreed final judgment filed today, Prospect Pros LLC, Prospect Pros Inc. and owners William D. and Lynn Thompson, of Plano, are prohibited from sending misleading or untrue direct mail to senior citizens. In the future, the defendants must clearly disclose when mailers are sent on behalf of a particular insurance agent or other vendor and that these representatives may contact seniors who respond.

The newly required disclosures will ensure that senior citizens are aware of the direct mail solicitations true purpose. Prospect Pros has also agreed to pay $30,000 to reimburse the state for its attorneys fees.

In early 2006, the state took legal action against four lead card generation schemes, including Prospect Pros. All but one, Lead Concepts Inc. and its owner Christopher Weir, have been resolved.

Prospect Pros produced and mailed misleading direct mail solicitations that were intended to alarm senior citizens. The defendants mailers featured urgent messages in boldface type and appeared to come from government agencies and were intended to obtain the recipients personal information via postage-paid return cards.

Prospect Pros, for example, mailed a Medicare Update that purported to provide information about changes to the Medicare program and appeared to be sponsored by the federal government. By law, the lead card solicitation must state clearly that it is not affiliated with any governmental agency. Other mailers appeared to inform older Texans about estate and probate tax avoidance.

In other cases, mailers were designed to make elderly recipients think their government benefits might be in jeopardy and that returning the cards would preserve those benefits.

More Scam Alerts ...

President Barack Obama has outlined a major overhaul of the U.S. Food and Drug Administration, which has been the target of criticism amidst a series of high-profile foodborne illness outbreaks.

The president's plan would increase the number of food inspectors and update labs to better monitor the nation's food supply. He also toughened USDA rules, preventing sick cows from entering the food supply.

"Food safety is something I take seriously, not just as your president, but as a parent," Obama said in his weekly video address.

Obama has tapped former New York City Health commissioner Dr. Margaret Hamburg as FDA Commissioner. Dr. Joshua M. Sharfstein, Commissioner of Health for the City of Baltimore, was named as Principal Deputy Commissioner.

Obama also announced the creation of a new Food Safety Working Group. Obama said the Food Safety Working Group will be chaired by the Secretaries of Health and Human Services and the Department of Agriculture and it will coordinate with other agencies and senior officials to advise the President on improving coordination throughout the government, examining and upgrading food safety laws, and enforcing laws that will keep the American people safe.

Obama said the government is taking two additional steps to improve food safety. The Department of Agriculture will close a loophole to prevent diseased cows from entering the food supply, and the government will invest in the FDA to substantially increase the number of food inspectors and modernize food safety labs.

The White House says Hamburg is a nationally and internationally recognized leader in public health and medicine, and an authority on global health, public health systems, infectious disease, bioterrorism and emergency preparedness. She served as the Nuclear Threat Initiative's founding Vice President for the Biological Program. Before joining NTI, she was the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services.

Prior to this, she served for six years as the Commissioner of Health for the City of New York and as the Assistant Director of the National Institute of Allergy and Infectious Diseases of the National Institutes of Health.

Sharfstein serves as of the board of four affiliated nonprofit agencies. The White House says he has been recognized as a national leader for his efforts to protect children from unsafe jewelry and over-the-counter medication, and ensuring Americans with disabilities have access to prescription drugs. He is a member of the Board on Population Health and Public Health Practice of the Institute of Medicine.

The Consumer Federation of America said it welcomed the appointments, noting the "series of inexplicable foodborne illness outbreaks" over the past several years that the FDA has been unable to prevent or identify in a timely manner.

"We hope that these talented and caring individuals will bring a new era to the FDA," the group said in a statement.

The Federal Trade Commission has charged an Atlanta telecom company with deceptive marketing by promising consumers they would receive their rebates within eight weeks of submitting properly completed forms. In reality, tens of thousands of consumers did not receive their rebates within the time promised, and some had to wait up to a year or more for their checks, the agency said.

According to the Commission's complaint, American Telecom Services, Inc. (ATS), offered numerous rebates to consumers as part of its business as a distributor of telephones and phone services. The company has sold both traditional and Internet phones bundled with communications services.

Offering mail-in rebates ranging in value from $5 to $50 for its "Pay 'N Talk" program, ATS used third-party fulfillment houses to process and pay rebate requests received from consumers who bought its products. The FTC contends that the company misrepresented that consumers who bought eligible ATS products would receive their rebate checks within eight weeks after the company received their properly completed rebate requests.

Since 2006, the Commission alleges that tens of thousands of consumers who filled out their rebate request forms correctly and submitted them on time experienced substantial delays in receiving their rebate checks, including, in some cases, delays of a year or more. According to the complaint, the delays stemmed from ATS' inability to pay its third-party rebate fulfillment houses, as well as its refusal to pay fulfillment houses with which it had disagreements over rebate-related issues.

The proposed consent order prohibits ATS from misrepresenting the time in which any rebate will be mailed and from failing to provide any rebate within the time it specifies — or within 30 days if no time is specified in the offer. It also prohibits ATS from misrepresenting any material terms of any rebate program, including the status of the rebate or reasons for delay in providing a rebate.

The order also contains record-keeping and reporting provisions designed to ensure ATS's compliance with its terms.

Scam artists have — in the words California Attorney General Edmund G. Brown Jr. — "sunk to a new low" and are using the forged letterhead of major lenders to con worried consumers into paying thousands of dollars for non-existent loan modification services.

Brown's warning comes on the heels of the recent arrest of Anna Santos, 22, a key player in a loan modification scam using forged letterhead, on charges of money-laundering, conspiracy, and four-counts of grand theft.

Santos is accused of joining with members of the defunct First Gov loan modification ring in a separate criminal enterprise with a disturbing twist. They used forged mail and envelopes that appeared to be from victims' lenders.

Santos allegedly obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department" and opened several bank accounts and two post office boxes under that name. She and other members of the ring mailed flyers that appeared to be from victims' lenders or a government entity. The flyer used a large, bold header that read "Final Notice" and advised homeowners that they qualified for a special program to save their home from foreclosure.

After providing their mortgage information, homeowners received what appeared to be "confirmation" that the lender had been notified about the loan modification. Many victims also received loan modification documents that appeared to be from the victim's lender. The documents were — of course — forgeries.

The victims were informed they had been placed in a "probationary" program and their mortgage payments should be submitted to "Payment Processing Department" and sent to a given post office box address. None of the payments were credited to the victims' home loans.

Payments sent to the post office box were retrieved by Santos and deposited into the bank accounts she had opened. The money was then transferred to bank accounts held by other members of the ring.

Many victims paid over $6,000 to this loan modification scam.

Here's what homeowners can do to avoid becoming a victim:

• DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, new window, for review.

• DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

• DON'T transfer titled or sell your house to the foreclosure rescuer. Fraudulent foreclosure consultants often promise that if the homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.

• DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."

• DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

• DO contact housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Babies across America are sitting in bubbles tainted with cancer-causing chemicals and other toxins linked to serious health effects, according to a consumer group.

The Campaign for Safe Cosmetics says it hired an independent lab to test bubble bath, baby lotion and other products intended for babies and children — purchased in cities across the U.S. — for 1,4-dioxane and formaldehyde. Both chemicals are contaminants that do not appear on product labels, and both are carcinogenic; formaldehyde can also trigger rashes in those with sensitive skin.

The lab tested 48 kids' products for 1.4-dioxane and reportedly found it in 67 percent of the products. Of the 28 products tested for formaldehyde, 82 percent were said to be positive.

Seventeen products were contaminated with both 1.4-dioxane and formaldehyde. Many of the contaminated products are advertised as "gentle," "pure" or "naturally refreshing."

"We know that cosmetics can be made without hazardous ingredients and contaminants," the group said in a statement. "So what's going on? How is it legal for companies to sell baby and kids' skincare products that contain toxic chemicals used in embalming fluid, fumigants and automotive coolant? Worse yet, these chemicals aren't even on the label, so even the most ingredient-conscious parents wouldnt know whether the product is safe."

Consumer product companies, such as Johnson & Johnson, dismissed the report as alarmist and misleading.

"The FDA and other government agencies around the world consider these trace levels safe, and all our products meet or exceed the regulatory requirements in every country where they are sold," Johnson & Johnson said in a statement. "We are disappointed that the Campaign for Safe Cosmetics has inaccurately characterized the safety of our products, misrepresented the overwhelming consensus of scientists and government agencies that review the safety of ingredients, and unnecessarily alarmed parents."

The Campaign for Safe Cosmetics cites the National Academy of Sciences in reporting several factors that can contribute to children's special vulnerability to the harmful effects of chemicals:

• A child's chemical exposures are greater pound-for-pound than those of an adult.

• Children are less able than adults to detoxify and excrete chemicals.

• Children's developing organ systems are more vulnerable to damage from chemical exposures.

• Children have more years of future life in which to develop disease triggered by early exposure.

The chemicals were not disclosed on product labels because they're contaminants, not ingredients, and therefore are exempt from labeling laws.

Formaldehyde contaminates personal care products when common preservatives release formaldehyde over time in the container. Common ingredients likely to contaminate products with formaldehyde include quaternium-15, DMDM hydantoin, imidazolidinyl urea and diazolidinyl urea, the group said.

1.4-dioxane is a byproduct of a chemical processing technique called ethoxylation, in which cosmetic ingredients are processed with ethylene oxide. The group says manufacturers can easily remove the toxic byproducts, but are not required by law to do so.

The Campaign for Safe Cosmetics is a national coalition of nonprofit health and environmental organizations. It says its goal is to protect the health of consumers and workers by requiring the personal care products industry to phase out the use of chemicals linked to cancer, birth defects and other serious health concerns, and replace them with safer alternatives.

March 12, 2009
The state of New Jersey has revoked the certificates of registration for two funeral homes and a cremation service in Newark that were allegedly involved in illegal body parts harvesting. The action shut down all three businesses.

The Board of Mortuary Science also found that Stephen K. Finley, who with his wife owns the Berardinelli Forest Hill Memorial Home, Funeraria Santa Cruz and Cremation at a Low Cost, acted as a funeral director in violation of a January, 2009 order that revoked his license.

The revocation of the registrations follows the temporary closures of the funeral homes and cremation service ordered by the Board as an interim action earlier this month.

"These businesses are closed and will not re-open for the safety of the public," New Jersey Attorney General Anne Milgram said. "Despite his license revocation, Finley was found to have functioned as a funeral director and interacted with the public, endangering those who came to the businesses."

Finley was allowed to retain ownership of the funeral homes and cremation service but had to employ licensed funeral directors to arrange for and preside over funerals, under terms of the January order with the Board. Undercover investigators from the Division's Enforcement Bureau went to the funeral homes on two separate occasions and made funeral arrangements directly with Finley.

"Finley demonstrated that he cannot be trusted to keep his word by his violating the legal order of the licensing board. My hope is that he never again is in a position where he can harm the public," said David Szuchman, New Jersey's Consumer Affairs Director.

The Board in January ordered the revocation of Finley's funeral director's license after an investigation by the Division's Enforcement Bureau, with the assistance of the Kings County District Attorney's Office and the Food and Drug Administration, uncovered that Finley was involved in a scheme to harvest tissue from the dead without obtaining the proper consent. This tissue was then allegedly sold and used in surgical procedures.

The leader of the alleged scheme, Michael Mastromarino, pleaded guilty in New York to enterprise corruption, body stealing, and reckless endangerment.

More Scam Alerts ...

This is the year Congress may take action to ensure schools offer healthier food to their students.

Rep. Lynn Woolsey (D-CA) has introduced a bill that would get junk foods out of schools once and for all, a measure likely to be addressed when Congress reauthorizes the Child Nutrition Act, which expires this year.

Current federal law prohibits only the sale of narrowly defined "foods of minimal nutritional value" in the cafeteria during meal times. But the nutrition standards for those foods haven't been updated in 30 years, during which time obesity rates in children have tripled.

The Child Nutrition Promotion and School Lunch Protection Act would have the U.S. Department of Agriculture update the nutrition standards for foods sold alongside school meals in cafeterias, vending machines, school stores, and elsewhere. Those standards would apply throughout the school day, and everywhere on campus — important reforms in an era where "multi-purpose rooms" are replacing cafeterias and vending machines line hallways.

While the typical school lunch is reasonably balanced, according to the Center for Science in the Public Interest (CSPI), children may replace it with, or add to it, sugary sports drinks, pizza, French fries, Snickers bars, Cheetos, or other nutritionally poor choices from a la carte, vending, and other sources.

"Despite pockets of progress in some states and school systems, most schools make junk food readily available to children," said CSPI nutrition policy director Margo G. Wootan. "But junk food in schools helps fuel an epidemic of obesity and diabetes in children. And, it undercuts the considerable federal investment we make in the healthy school lunch program."

Current nutrition standards keep some junk food out of the schools but let other junk food in through the back door. Today, doughnuts are allowed but lollipops are not. Cookies are fine, but breath mints are banned.

"It undermines the federal nutrition standards for meals if students spend their money on unhealthy options, said Woolsey. "It also undermines the role of parents who give lunch money to their children expecting them to eat something wholesome and nutritious and their money is spent on unhealthy options instead. That s why I introduced this legislation, and I look forward to working with my colleagues to get it signed into law."

USDA's definition of foods of minimal nutritional value hasn't changed since 1979. The Carter Administration's definition was focused on making sure foods sold in schools had five percent or more of the recommended daily intake levels of protein, vitamin C, calcium, and other nutrients.

However, that definition included no maximum amounts for calories, saturated fat, or sodium — all of which children now consume too much of. As a result, innocuous products like seltzer water or breath mints are forbidden, while ice cream bars and doughnuts are perfectly acceptable.

"Look, you can see how officials 30 years ago might have been concerned about whether our children were getting enough riboflavin or niacin," Wootan said. "Today, we need to reorient food policies toward preventing obesity, diabetes, and other diet-related diseases that might result in this generation of children living shorter lives than their parents."

"Many of the foods being sold to our students on school grounds undermine federal investment in healthy school meals, nutrition education, and the lifelong lessons that parents teach their children about healthy eating habits," said National PTA President Jan Harp Domene. "Families and local leaders have successfully advocated to remove unhealthy alternatives from some schools, but it is time for national leadership on this issue."

Besides CSPI and the National PTA, the legislation is backed by a coalition of medical, health, and children s advocacy groups including the American Dental Association, American Diabetes Association, American Dietetic Association, American Heart Association, Partnership for Prevention, Save the Children, and School Nutrition Association. The bill has 88 cosponsors.

March 11, 2009

Lobel Financial, a California-based sub-prime auto lender, has been forced to stop its illegal campaign of harassment and intimidation against borrowers behind in their bills.

"This company charged its customers exorbitant interest rates for car loans and then waged an illegal campaign of harassment and intimidation when they couldn' t pay up," said Attorney General Edmund G. Brown Jr. "Now Lobel must stop its abusive tactics and comply with the law."

Lobel Financial, which makes loans to customers throughout the state, provides financing to people with poor credit who purchase vehicles through used-car dealerships. The typical interest rate of their loans is between 21-23 percent. Lobel performed its own debt collection efforts when consumers failed to make the required payments.

In 2007, the California Attorney General's Office initiated an investigation into Lobel s debt collection practices. The investigation found that Lobel frequently violated California's Fair Debt Collection Act by:

• Calling its customers repeatedly and allowing the phone to ring continuously;

• Calling a customer's employer and family members; and

• Using a false name when calling.

Additionally, Brown says the company used more sophisticated pre-texting tactics to obtain confidential information of their customers. For instance, Lobel allegedly deceived ATT Wireless into providing confidential telecommunications records of at least 190 California ATT customers.

Lobel is also accused of using a calling card scam to con consumers into providing their calling information. It had a third-party vendor send the customer a free phone card; the company would then obtain information about the calls made by the customer using the calling card.

Hundreds of California consumers across California were victimized by Lobel's constant harassment and illegal debt collection activities, Brown says. Lobel Financial will pay $150,000 in civil penalties and $100,000 to the state for attorneys' fees and costs.

The U.S. Food and Drug Administration is warning consumers not to eat Queso Fresco Fresh Cheese Mexican style soft cheese or any Queso Cotija Molido Mexican style grated cheese manufactured and distributed by Peregrina Cheese Corp. of New York City.

The agency says these products could be contaminated with Listeria monocytogenes, an organism which can cause serious and sometimes fatal infections in pregnant women, young children, frail or elderly people, and others with weakened immune systems.

Although healthy individuals may suffer only short-term symptoms such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, Listeria monocytogenes infection can cause miscarriages and stillbirths among pregnant women. Consumers who may have recently consumed these products and have these symptoms should contact their health care providers, the FDA advises.

No illnesses are known to be associated with the products at this time. The company is recalling certain products based on sampling and analysis by the FDA that detected Listeria monocytogenesin some of the samples.

The company is recalling two lots of its Queso Fresco Fresh Cheese Mexican style soft cheese and one lot of its Queso Cotija Molido Mexican style grated cheese.

The Queso Fresco Fresh Cheese comes in a 14-ounce foil wrapped packages marked with lot number 4469 or 4477 affixed to each package on a white sticker and bearing UPC number 8 17424 00024 6 and Plant # 36-8431.

The Queso Cotija Molido Cheese comes in 15-ounce clear plastic bags that are marked with UPC number 8 17424 00027 7 and Plant # 36-1388, but do not contain a lot number or production date.

Both products were distributed to retail stores in the New York City boroughs of Brooklyn, Queens, Bronx and Manhattan, and two towns in Pennsylvania (Scranton and Hazelton) in early February. The company has contacted all its customers and instructed them to destroy all affected products in their inventory.

Consumers who purchased any of the products are urged to discard them immediately. Although the FDA detected Listeria monocytogenes in only one production date of Peregrina Cheese Corporation's Queso Cotija Molido Cheese, the agency is urging consumers to discard all of these products because they do not contain a lot code or production day code to allow consumers to distinguish between a product that is of concern and a product that is not of concern.

Maytag has announced a massive recall of 1.6 million fire-prone refrigerators. The recall includes Maytag, Jenn-Air, Amana, Admiral, Magic Chef, Performa by Maytag and Crosley brand refrigerators.

The company said that an electrical failure in the relay, the component that turns on the refrigerator's compressor, can cause overheating and pose a serious fire hazard. Maytag has received 41 reports of refrigerator relay ignition, including 16 reports of property damage ranging from smoke damage to extensive kitchen damage.

The recall includes certain Maytag, Jenn-Air, Amana, Admiral, Magic Chef, Performa by Maytag and Crosley brand side by side and top freezer refrigerators.

The recall follows reports by consumers like Christopher of Castaic, Calif. "I was awakened this evening to the smell of electrical smoke. I traced it to the motor of my fridge," he told ConsumerAffairs.com last month.

Kim of Sandy, Utah, had a similar experience.

"Our Maytag side by side refrigerator model no. MSD2756AE started to smoke out of the control panel in the door for the ice and water dispenser. I took the control panel so I could unplug it to stop the smoking," Kim said in a December 2008 review. "The solenoid was so hot it melted all the surrounding plastic to a point it was dripping. We were very lucky to be home when this started so it did not start a fire or cause more damage."

"I contacted our local Maytag repair shop and the technicain said there were no recalls and this sort of thing happens all the time with refrigerators," Kim said.

The problem is hardly a new one. Consumers have been mentioning it for years. In November 2008, Phyllis of Wendell, Mass., reported her Maytag refrigerator had caught fire.

"Thick yellow/brown smoke (was) billowing from refrigerator. After getting it outside and cooled down, saw that controls in back top of refrigerator unit had totally melted," she said.

Model numbers

The affected refrigerators were manufactured in black, bisque, white and stainless steel. They have model and serial numbers printed on a label located on the top middle or left upper side of the refrigerator liner and have the following model and serial number combinations:

Refrigerators with freezers on the bottom are not included in this recall.

The refrigerators were sold at department and appliance stores and by homebuilders nationwide from January 2001 through January 2004 for between about $350 and $1600. They were made in the United States.

Consumers should immediately contact Maytag to determine if their refrigerator is included in the recall and to schedule a free in-home repair. Consumers should not return the refrigerator to the retailer where it was purchased.

For more information, contact Maytag toll-free at (866) 533-9817 anytime, or visit the firm's Web site at www.repair.maytag.com

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

Job seekers will register with employment agencies, check employment ads, mail out unsolicited resumes, network, post resumes on job search sites and search Craigslist.

In fact, the UK Association for Payment Clearing Services which tracks the prevalence of fake job ads said that fake ads are up 345 percent over the past three years. Unfortunately identity thieves are taking advantage of these uncertain economic times to scam job seekers and gather personal identifying information.

The Identity Theft Resource Center offers these tips:

• Protect your Social Security Number by limiting how many people see it. Never put your SSN on a resume. Let a company ask for it when they consider you a serious applicant. To minimize your risk, you also may want to not list your home address and just put your city and state on the resume.

• Consider opening a separate email account for your job search and keeping your primary email address private. Placing your email address on a resume could open the door to spam and phishing, account verification, and other email scams. (The recent Monster.com breach exposed resumes and email addresses. If you had placed your Social Security number or home email address on your resume, you could have made yourself a target.)

• Check out a company you found on a website carefully before giving them your information, for example Craigs List. Anyone can create a website, but it doesnt mean that they are a real company. You can find information on a company through the Better Business Bureau or the State Attorney General where the company is located. You can also Google the business to find out more about them. Most reputable companies will have a significant presence on the Internet, not just a few mentions.

• Avoid any website that requires you to pre-register with your SSN, home address or drivers license number. Also, you should not be required to prepay to view job listings. Both these requirements are strong indicators of a scam.

• Update your computer security prior to emailing resumes and receiving email correspondence. Making sure your computer security is currently updated against viruses, Trojans, and other types of computer malware can help to protect you from any intrusion in an attachment you might receive.

• Make sure the person who contacted you actually works at the listed company and is not someone who has posted a job pretending to be part of a company. Does the URL address include the name of the company? If not, who actually sent it? Call the company involved, and ask for the Human Resources Department. Some companies recommend not responding via email to any person asking for more information, but rather to call the company directly. Rarely does a company hire someone sight unseen.

• Be wary of some common job scams. Avoid any company, especially a foreign company that wants to hire you as a payment representative or accounts receivable clerk. This scam indicates that you get to keep a percentage of all checks or money orders you place in a bank account for them. Do not open a bank account for a company. You will be the responsible party should any money laundering occur, or if checks bounce. This is called a money mule scam.

Another scam is to notify you that you are one of the finalists for a job, and they need your Social Security number to do a background check. If you have not had a face-to-face interview with the company, you should be very skeptical. No one gets a job based on a resume alone.

Finally, watch out for the work-at home scams, especially those that ask you to forward packages you receive to a third party. That package may contain stolen goods or illegal drugs. There is rarely need to have a private party as a freight forwarder.

The safest ways to job search are to use local want ads, visit the unemployment office, use temp employment services, tell friends and family about your search, and network via professional groups and business acquaintances. When contacting a local company you can meet them, see the facilities, and ask acquaintances in that industry about their reputation. Consider not contacting foreign companies, especially those from Nigeria, Russia and third world countries.

Should you decide to use the Internet, ITRC strongly recommends that you read the safety tips on job seeking websites and report any suspicious posting to the website concerned.

A tortilla company linked to several outbreaks of gastrointestinal illness in school children is now shut down under action taken by the Food and Drug Administration (FDA).

FDA officials entered into a consent agreement Friday with the Chicago Del Rey Tortilleria Inc., its president, and two general managers that prevents the company from making or distributing soft-shell flour tortillas until it corrects multiple sanitation violations.

The FDA said its enforcement action comes on the heels of the companys extensive history of violating the agency's Good Manufacturing Practice (cGMP) requirements for food.

The FDAs complaint alleges the companys manufacturing operations do not adequately protect consumers against the risk of contamination.

We cannot allow a company to produce potentially contaminated products because of failing to have adequate procedures in place, Michael Chappell, acting associate commissioner for regulatory affairs at FDA, said in a written statement. This enforcement action shows the FDA will take the appropriate measures deemed necessary under the Federal Food, Drug and Cosmetic Act to protect the public's health.

When FDA officials inspected the companys Illinois plant, they discovered cleaning chemicals stored improperly, unsuitable containers used for food processing, and other unsanitary conditions.

The FDAs complaint stated flour tortillas made by the company were associated with several outbreaks of gastrointestinal illness in school children, which triggered a recall of the products.

Under the FDAs action, the company must hire sanitation and food processing experts to develop quality control measures. These experts will also inspect and certify the company complies with FDA regulations and meets other consent decree requirements.

The company cannot start making and distributing tortillas until the FDA inspects the facility and determines it is in compliance with the consent decree and other federal food and safety regulations. If the company fails to comply with the consent decree, the FDA could order it to stop making and distributing food, recall its products, or to take other corrective actions. The company could also face fines of $6,000 per day for being non-compliant.

Consumers who have food safety questions about these or other products can call the FDA's toll-free Food Safety Hotline at (888) SAFEFOOD. They can also report any problems to the www.fda.gov/opacom/backgrounders/complain.html FDAs consumer complaint coordinator in their area.

March 5, 2009
Recaro is recalling about 5,400 Signo child restraint systems. A defective spring could allow the central front adjuster strap to slip, keeping the harness from being securely tightened.

In the event of a crash, a child might not be properly secured and could be injured or killed.

Recaro will notify ownes and replace any defective system free of cahrge. Owners can contact Recaro at 1-888-473-2290.

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.

Unless you have been hiding under a rock, you've probably seen advertisements on how the government is giving away grants for almost any need. Need to pay medical bills or fix your busted old clunker of a car? No worries, there are free grants for that — at least according to the hundreds of Web sites currently populating the Web.

"Obama's New Free Grants: Obama Is Giving Out Free Grants To Help Those in Need," reads one ad. "Government Grants Exposed: We've Tested 47 Grant Websites To Tell You Which Ones Really Pay!" exclaims another.

Although government grant scams have been around almost as long as the government itself, the majority of the sites being advertised today didn't exist before the November 2008 election.

According to the grant Web sites, Washington and President Obama are not only bailing out Wall Street, they will also gladly bail out you and everyone on your street — all in the form of free government grants.

Earn Cash From Grants!

One of the hundreds of sites we visited was earncashfromgrants.com. According to their testimonials, people who have purchased the $1.00 Rapid Grants Solutions Kit have received grants for just about everything — even to fix their cars.

But those in the know say it just ain't so.

"I have never seen an individual get a government grant to repair their car," said Gail Vertz, CEO of the American Association of Grant Professionals. "I've been in the grant business for 22 years and looking at these Web sites is frightening. It looks like they are targeting individuals who are in financial distress," Vertz said.

On one of the sites, we gained access to the "members area" where the grant "secrets" were supposedly located. There we found three electronic books (e-books) on the subject of government grants.

In one e-book, The Truth Behind Government Grants Exposed, the author (whoever he or it might be) admits that grants are not easy to get. The e-book goes so far as to say, "Now, I know what you must be thinking, but don't be discouraged because understanding that you do not qualify for the majority of Federal and Private Grants is the first step to actually getting a grant."

That's a strange statement considering their Web site says that "you may qualify for a piece of the millions and millions of dollars awarded each year by private and government grant agencies to regular people like you."

But never mind such niggling details. The book goes on to suggest that you might not even need a grant. Instead, maybe you just need a loan, or an entitlement such as Social Security, Medicare or Workers Compensation.

We wondered just who might know the U.S. government so intimately that it had access to such closely-guarded get-a-grant secrets. We discovered that earncashfromgrants is the Internet property of — what else? — a Canadian company called 1021018 Alberta Ltd., an outfit that has already been sued by Microsoft and Symantec for software piracy.

Now, one must wonder why a Web site would go to so much trouble just to make a dollar. In reality, losing a dollar might be the least of your troubles if you fell for this pitch.

Once you read the terms and conditions of any of the "grant" sites, you'll see that purchasing their "product" will also enroll you in various membership programs, typically ranging in price from $30.00 to $70.00 per month. Most will also enroll you in third-party programs and your credit card will be hit every month until you cancel, which isn't easy to do when you don't know where the charge is coming from.

You'll also probably see some type of trial period. However, many of the sites we checked out started the trial the day that you place the order. Most sites said they gave a 7-day trial but that it could take 5 to 10 days to receive the product. Considering the trial started the day you ordered, the trial would be over by the time you receive the product, therefore your credit card would be charged for all the member fees.

Bogus "review" sites

Just as we saw with the "run your car on water" scheme, the government grant sites typically will flood the Internet with advertising for sites that look like legitimate "review" Web sites.

The majority of these sites are affiliates of the main "grant" companies. The affiliate will create fake reviews and testimonials, along with bogus pictures of supposedly thrilled customers, and then when you click to order you will be taken to the main Web site.

The affiliates make money if you order, and some online forums even teach affiliates how to make a good "review" site, complete with asking a neighbor to write a testimonial.

In an effort to make the sites look more legit, most will use President Obama's picture along with news logos from CBS, NBC, Fox News, etc.

Knowing full well that their product had not been featured by any news station, we asked one telemarketer why their Web site said, "As seen on CNN." She told us that it was because they had bought an advertisement on the CNN Web site, hence the reason they bragged about being seen on CNN.

Many consumers have questioned why legitimate sites allow such advertising.

"The government grants ads are blatantly deceptive, such as the one of President Obama holding up a check," said James, owner of the blog WafflesAtNoon.com. James has been tracking these bogus sites and has a huge list on his blog, but having been in advertising for 20 years, he also questions why advertising companies accept these ads in the first place.

"When I got into advertising in 1989, things were far different. I remember having conference calls to discuss a single questionable word in an ad. Before the internet, advertisers had to jump through hoops to get their ads approved," James said. "Now it's like Mad Max or the Old West. We can't trust advertising even on the most reputable Web sites because they sell advertising to third parties who then re-sell it."

In most cases, a Web site that displays third-party ads can't predict what ads will be shown. And even if a site can block each individual ad, there are numerous new sites created each day that would need to be found and blocked — a virtually impossible task for most sites.

"Consumers need to understand that advertising is not the same thing as news or entertainment. It's paid propaganda and its only purpose is to get you to do something -- buy something, vote for somebody, send somebody money," said the president of one well-known site who insisted on anonymity because he said he was so embarrassed at the grant ads that pepper his site.

"The fact that an ad appears on Oprah Winfrey's show, or in the New York Times or on ConsumerAffairs.com doesn't mean that the product, service or candidate being advertised is any better than similar things advertised somewhere else. The people who write news and produce shows have nothing to do with the ads, and vice versa."

"There's nothing wrong with advertising but consumers have to recognize it for what it is," the Web site president said.

Feds take note

Some of the grant ads have begun to garner the attention of the Federal Trade Commission.

"We care enormously about protecting consumers," said Lois Greisman, Associate Director of the Division of Marketing Practices at the Federal Trade Commission. "We sue bad spammers, bad telemarketers, and bad get-rich-quick schemes," Greisman said. "Even if a company is in Canada, we can sue them here."

Greisman said she wants to hear from consumers about these grant companies, especially if the consumer has purchased anything or had their credit card charged without their knowledge.

"They need to file a complaint at FTC.gov. Our complaint database is available to more than 1600 law enforcement entities, both in the U.S. and Canada."

Research pays off

The fake grant sites want you to believe that you, as an individual, can get a federal government grant, but the fairy tale they tell is just that — a fairy tale. Grants are almost never awarded to individuals.

"The fact is, 98 percent of federal grants are awarded to schools, local governments, colleges and universities, and non-profit organizations," said Vertz of the American Association of Grant Professionals.

Organizations can research grant opportunities by hiring a grant writer. A grant writer will locate potential funding sources such as the feds, the states and foundations. They also develop relationships with funders. Expect to pay $50.00 to $200.00 per hour for their service.

The government also has a Web site dedicated to the subject of grants at http://www.grants.gov Grants.gov.

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