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    Telephone Industry Still Lacks Significant Competition

    25 years after AT&T breakup, competition comes from wireless, VoIP

    Janine Migden-Ostrander
    Ohio Consumers' Counsel

    April 21, 2009
    Twenty-five years after the breakup of AT&T, consumers have seen significant changes in how they make telephone calls, what they pay and the services they receive.

    The telephone monopoly agreed in a 1982 settlement with the U.S. Department of Justice to break itself into seven companies, called Baby Bells, to provide local telephone services by region. AT&T kept its long-distance service, then its most profitable division. The agreement went into effect in 1984.

    Technology and industry structures have since changed and AT&T has reconstructed itself, without many of the regulations that once applied to the original company. Instead of seven companies, there are three — AT&T, which also includes long-distance operations; Verizon, which absorbed former long-distance carrier MCI; and Qwest.

    The Office of the Ohio Consumers Counsel (OCC) has advocated on behalf of residential telephone consumers over those 25 years, making sure they have a voice when higher rates are proposed and service quality decreases. Its been a constant struggle.

    Are we better off today than we were 25 years ago?

    The answer depends on whos talking. Competition for AT&T service has not come from similar providers as was hoped when the government broke up the monopoly. Instead, it has come from companies offering mobile phone or Voice over Internet Protocol (VoIP) services. But these services are different.

    Many consumers are as dependent on mobile phones as they are on traditional land lines. Others still have phone service through a wire line, but that line might be connected to a cable TV system or directly to the Internet.

    Cell phones offer mobility, but require a wireless signal that is not available in many rural areas of Ohio. VoIP service requires a broadband Internet signal that also is not available to many. Unlike traditional wire line service that operates even during extended electrical outages, wireless and VoIP services cannot operate after back-up batteries, if any, are depleted.

    Less regulation

    Moreover, the price and quality of cell phone and VoIP services are generally not regulated by state government compared to the way the Baby Bells services were.

    Cell phone service with unlimited calling is typically more expensive for consumers than wire line service. VoIP service requires consumers to pay a separate monthly fee for access to the Internet and a charge for VoIP service itself.

    Today, 25 years after it was broken up, AT&T and other telephone companies seek fewer regulations and less regulatory oversight. While price has been deregulated, in order to protect consumers, the terms and conditions of service should continue to be regulated.

    Similar regulations should be applied to wireless and VoIP services to protect consumers of those services as well. It is fairly typical that services that have been deregulated in terms of price still retain regulation of consumer protections.

    Unfortunately, some traditional telephone companies have asked for rate increases even as they argue there is plenty of competition. This claimed competition should result in decreasing prices for consumers.

    Despite what the OCC considers to be the lack of effective competition for traditional phone service, the PUCO recently gave permission to AT&T Ohio to increase its basic local service rates. It has not yet increased these rates, but Cincinnati Bell (a company that was not part of the break-up) has increased some basic service rates in some exchanges by $3.75 per month over the last three years. Also, telephone companies tend to bundle services such as Caller ID and inside wire maintenance with their basic dial tone, which can be problematic for consumers who neither want nor need all the bells and whistles - and the expense - of additional services.

    Not nearly enough competition

    The OCC experts worry there is not nearly enough competition to drive down consumer costs and improve quality.

    Twenty-first century technology made construction and maintenance of telephone systems less expensive than 25 years ago, but prices are headed upward. We are fighting for consumers so they can benefit from cost savings. At the same time, we are advocating that all companies meet minimum telephone service standards.

    The upside of all this is that depending on where you live, you may be able to take advantage of bundled packages of services that include various telephone features as well as cable TV and/or Internet service. Long distance calling has become more affordable over the years as well.

    The OCC welcomes the development of new technologies and options for consumers, but believes consumer protections are needed to ensure fairness.

    Consumers must remain diligent and selective in their decisions about phone service. When given the opportunity to switch telephone carriers, you should research which company offers the best plan and cost for services. You should carefully read and understand your monthly bill and question charges you do not understand or believe you should not have to pay



    The Office of the Ohio Consumers' Counsel (OCC), the residential utility consumer advocate, represents the interests of 4.5 million households in proceedings before state and federal regulators and in the courts. The state agency also educates consumers about electric, natural gas, telephone and water issues and resolves complaints from individuals.

    Telephone Industry Still Lacks Significant Competition...
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    Energy Drinks Work, But Not The Way You Think

    Taste receptors improve athletic performance in unusual ways

    A runners clutching a bottles of an energy drink is a common sight, and it has long been believed that sugary drinks and sweets can significantly improve athletes' performance in endurance events. The question is how?

    Clearly, "sports" drinks and tablets contain calories. But this alone is not enough to explain the boost, and the benefits are felt even if the drink is spat out rather than swallowed. Nor does the sugary taste solve the riddle, as artificial sweeteners do not boost performance even when they are indistinguishable from real sugars.

    Writing in the latest issue of The Journal of Physiology, Ed Chambers and colleagues not only show that sugary drinks can significantly boost performance in an endurance event without being ingested, but so can a tasteless carbohydrate — and they do so in unexpected ways.

    The researchers prepared drinks that contained glucose (a sugar), maltodextrin (a tasteless carbohydrate) or neither, then carefully laced them with artificial sweeteners until they tasted identical. They asked endurance-trained athletes to complete a challenging time-trial, during which they rinsed their mouths with one of the three concoctions.

    The results were striking. Athletes given the glucose or maltodextrin drinks outperformed those on 'disguised' water by 2-3 percent and sustained a higher average power output and pulse rate, even though didn't feel they were working any harder.

    The authors conclude that as-yet unidentified receptors in the mouth independent from the usual 'sweet' taste buds must be responsible.

    "Much of the benefit from carbohydrate in sports drinks is provided by signaling directly from mouth to brain rather than providing energy for the working muscles," Chambers said.

    The team then used a neuro-imaging technique known as fMRI to monitor the athletes' brain activity shortly after giving them one of the three compounds. They found that both glucose and maltodextrin triggered specific areas of the brain associated with reward or pleasure, while the artificial sweetener did not. This acts to reduce the athletes' perception of their workload, suggest the authors, and hence enables them to sustain a higher average output.

    Their findings support the emerging 'central governor hypothesis' — the theory that it is not the muscles, heart or lungs that ultimately limit performance, but the brain itself, based on the information it receives from the body. Stimulating the brain in certain ways — such as swilling sugary drinks — can boost output, perhaps giving athletes that all-important edge over their rivals.

    Energy Drinks Work, But Not The Way You Think...
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      Massachusetts Tackles Timeshare Scam

      Owner collected $1.5 million for resort that was never used

      April 17, 2009
      The State of Massachusetts has obtained a temporary restraining order against a former timeshare operator who allegedly collected over $1.5 million from consumers for timeshare intervals at the Navigator Beach Club Resort, which were never made available for use.

      In a lawsuit, the Massachusetts Attorney General's Office alleges that the defendants' conduct violated the Massachusetts Consumer Protection Act and the Massachusetts Real Estate Time-Share Act in connection with the construction and development of the Navigator as well as the marketing and sale of the time-share intervals.

      The temporary restraining order prohibits Robert Reposa, the former owner of the Navigator Beach Club and LSC Associates (LSC), the time-share's developer and managing entity partner, from collecting monies from consumers for any time-share intervals in Massachusetts.

      "The defendants in this case took well over $1 million in deposits from consumers for Navigator time-share intervals, yet failed to ever complete construction on the time-share resort or even record the time-share licenses," said Attorney General Martha Coakley.

      "Time-share developers cannot mislead consumers by making sales pitches that promise what they cannot deliver in order to obtain hard-earned money from consumers," Coakley said.

      According to the complaint, from 2005 through 2008, Reposa and LSC targeted and deceived over 100 consumers, including dozens of senior citizens, in connection with the sale of time-share intervals for the Navigator, a time-share resort located in Dennisport, Massachusetts. The defendants allegedly gave consumers false assurances that the resort was financially sound and would be completed by 2007.

      Coakley says the defendants took significant payments from consumers for time-share weeks, but never recorded the individual time-share licenses, or completed the construction on the project beyond installation of some rough plumbing and electricity in Navigator's pre-existing buildings.

      As part of their sales strategy, Coakley claims Reposa and LSC also falsely represented that the Navigator would be part of a time-share exchange network, which would allow consumers to exchange their time-share week at the Navigator for a week at a different resort, but evidence suggests that any membership the Navigator had in an established time-share network was quickly revoked.

      According to the complaint, prices for the time-shares ranged from $10,900 up to $54,900. By at least as early as the summer of 2006, however, Reposa and LSC allegedly knew that the Navigator was experiencing financial problems and that construction would not be completed by its target date. In an effort to quickly acquire as much cash as possible from consumers, the defendants allegedly induced consumers into paying off their entire remaining balances by offering an "early payment" discount.

      The complaint further alleges that Reposa and LSC violated the Massachusetts Real Estate Time-Share Act by failing to record consumers' time-share licenses with either the Barnstable County Registry of Deeds or the Barnstable County Registry District of the Land Court, thereby leaving no record of consumers' time-share interval ownership.

      Under the temporary restraining order issued April 15, 2009, by Judge Christopher Muse, the defendants are prohibited from forming a business to manage or develop a time-share resort in Massachusetts, destroying records that relate to their personal and business finances and disposing of any of their assets. As part of this lawsuit, the Attorney General's Office is seeking restitution, penalties and costs, including attorney's fees from the defendants. A hearing for a preliminary injunction is scheduled for Tuesday, April 21, 2009 at 2:00 p.m. in Suffolk Superior Court.

      More Scam Alerts ...

      Massachusetts obtained a TRO against a former timeshare operator who allegedly collected over $1.5million from consumers for timeshare intervals at the Nav...
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      Federal Court Reinstates Credit Card Suit

      Merchants charged with violating identity theft law

      By Jon Hood

      April 16, 2009
      A federal court reinstated a consumer class action alleging violations of the Fair and Accurate Credit Transactions Act (FACTA), meaning the case will likely be heard by a jury. The suit alleges that vendors violated the Act by printing too much credit card information on consumers' receipts.

      FACTA was passed in 2003 as an amendment to the Fair Credit Reporting Act (FCRA). FCRA requires merchants to take certain steps to protect consumers' credit information. FACTA is aimed specifically at protecting identity theft, and provides that "no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder ..."

      The plaintiffs in the action, Bobbie Harris and Julie Best Grimes, originally filed separate suits against Mexican Specialty Foods, Inc. and Rave Motion Pictures, respectively. Both complaints requested class certification for a class action lawsuit. The suits defined putative classes consisting of every customer who used a credit or debit card at either merchant's location, and whose receipt included more than the last five digits of their credit card number.

      The district court dismissed both actions, ruling that FCRA's damages provision is unconstitutionally vague and thus unenforceable. If a law does not sufficiently define a term or element of an offense, the statute's vagueness renders it unconstitutional. The reasoning behind this is that if a law does not adequately dictate which actions are illegal, people cannot be held to account for taking those actions.

      FCRA allows plaintiffs to collect between $100 and $1,000 for "willful violations" of the law. The district court ruled that this provision was unconstitutionally vague because it provided no criteria to allow a judge how much to award a given plaintiff.

      The Eleventh Circuit overturned the district court, ruling that the statute is not unconstitutionally vague. The court first noted that other laws, such as the Copyright Act, contain larger damage ranges that FCRA. Further, the court noted that the law sufficiently tells vendors which conduct is illegal (printing more than the last five digits of a credit card number).

      The court further ruled that the law did not give juries an excessive amount of discretion in awarding damages, since it limited their awards within a $900 range.

      In its ruling, the Eleventh Circuit vacated the district court's dismissal, and sent it back for further proceedings. As a result, Harris's and Grimes's lawsuits, which have since been consolidated, will likely be sent to a jury.

      While FACTA originally held merchants liable for printing either more than five digits or the expiration date, they are now only liable for the former. In 2008, then-President Bush signed legislation exempting merchants from liability for simply printing credit card expiration dates on the receipt. The law applied retroactively, wiping out any suits involving illegal printing of expiration dates. Thus, for liability under the Act, a merchant must have printed more than the last five digits of a consumer's cardholder.

      A federal court reinstated a consumer class action alleging violations of the Fair and Accurate Credit Transactions Act (FACTA), meaning the case will like...
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      Time Warner Cable Backs Down On Bandwith Caps

      Company halts trials of "metered broadband" after negative publicity blitz

      Consumers scored a big win today when Time Warner Cable announced it would halt proposed trials of "metered" Internet broadband services, where users would pay extra for going over "caps" on the plans they subscribed to.

      "It is clear from the public response over the last two weeks that there is a great deal of misunderstanding about our plans to roll out additional tests on consumption-based billing," said Time Warner Cable CEO Glenn Britt. "As a result, we will not proceed with implementation of additional tests until further consultation with our customers and other interested parties, ensuring that community needs are being met."

      The announcement that Time Warner Cable was backing down on the trials was made by Senator Chuck Schumer outside the company's regional headquarters in Rochester, New York. "The Internet is vital, like water, like electricity, and before you dramatically mess around with the way its provided, you ought to be very, very careful," he said.

      The cable company had planned to roll out trials for metered broadband in several markets, including Rochester, Austin, Texas, and Greensboro, North Carolina, where subscribers would select one of several "tiers" of service based on their usage, with each tier including a cap on how much bandwith the user could utilize, and over-use charges if the user exceeded the cap.

      But the plan was greeted with massive protests, both online and off. Users organized town meetings in the test markets to challenge what they saw as a punitive billing system designed to protect the cable company's investment in video and television services — by penalizing those who watched lots of video and TV shows online, which could easily cause the user to exceed their cap.

      Web sites and blogs such as Karl Bode's Broadband Reports.com and Philip Daupier's StopTheCap.com became focus points for opposition to the caps, providing daily updates on the campaign against Time Warner Cable's policy. Activists used Twitter to debate with Time Warner Cable representatives over every aspect of the proposed changes.

      The opposition grew so severe that it convinced Congressman Eric Massa (D-NY) to push for legislation that would ban "unfair pricing structures" and address Internet service competition in areas only served by one cable or one telecom provider.

      Massa called Time Warner Cable's retreat a "grassroots victory," but said he would "move forward with our legislation to ensure that any future plans to charge customers based on how much they download do not spring up anywhere else."

      Media watchdog group Free Press sent a petition with over 15,000 signatures urging the company to back down on its plan. Free Press' campaign director Tim Karr echoed Massa's statement that while the company's policy change was a huge victory, the issue would no doubt come up again.

      "Let this be a lesson to other Internet service providers looking to head down a similar path...Consumers are not going to stand idly by as companies try to squeeze their use of the Internet," Karr said.

      Britt's own language in the statement implied that the issue would be revisited, as he said Time Warner Cable would continue to roll out tools to help subscriber measure the amount of bandwith they use.

      "While we continue to believe that consumption based billing may be the best pricing plan for consumers, we want to do everything we can to inform our customers of our plans and have the benefit of their views as part of our testing process," he said.

      Time Warner Cable Backs Down On Bandwith Caps...
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      Consumers Left to Sweep Up as Martha Stewart Tables Shatter

      Courts, feds, the press, Kmart and Martha turn their backs on consumers

      As winter turns to spring, consumers across the country are once again waking up to the sounds of their Martha Stewart Everyday glass tabletops exploding into thousands of tiny pieces. The tables, sold at Kmart, have a long history of spontaneously shattering, and they dont show signs of stopping anytime soon, not that anyone in authority seems to care.

      Months after a federal court dismissed a class action lawsuit alleging that the tabletops are defectively manufactured, owners of the product remain without recourse and several hundred dollars poorer, as they are left to clean the glass off of their patios and sometimes dig it out of their skin.

      Late last year, a federal court in Illinois rejected class certification in the action, ruling that the court would have to decide individual issues of causation for each plaintiff, making a class action impracticable.

      The suit, originally filed in 2005 on behalf of lead plaintiff Michelle Ronat, alleged that Kmart refused to give aggrieved customers refunds or replacements, since the tabletops werent covered under warranty. Martha Stewart Living Omnimedia (MSLO) — named after convicted felon and media darling Martha Stewart — when confronted by consumers, passed the buck to JRA Manufacturing, the Chinese company that produced the tables. The manufacturer, in turn, said the problem lay in a design defect attributable to MSLOs designers.

      The suit, prosecuted by Horwitz, Horwitz & Paradis, a New York class action firm, sought replacement tabletops for an estimated 300,000 consumers. With tabletops potentially costing as much as $500 apiece, the action threatened to leave MSLO liable for up to $150 million.

      The glass replacements cost so much because JRA, the manufacturer, declared bankruptcy in 2007, leaving consumers unable to obtain factory replacements. Instead, they have been forced to have glass custom-made to fit their tables. In some cases, individuals could end up paying more for the replacement top than they did for the entire table set in the first place.

      Although MSLO contends that a relatively small number of consumers were affected, ConsumerAffairs.com has received hundreds of complaints over the past five years, as have other Internet sites. Like the swallows returning to Capistrano, the complaints increase predictably each spring, as tables are brought back outside and exposed to the sun's rays.

      Additionally, according to the lawsuit, because the tabletops werent covered under warranty, Kmart didnt keep records of most complaints. As a result, the complaints Kmart does have on file likely represent only a fraction of actual incidents.

      Similar complaints

      Affected consumers experiences are strikingly similar, and the most common and disturbing thread is that there is no way to know when a table is about to explode.

      My Martha Stewart Glass topped patio table exploded after only one year of use, writes Marylou of Brockton, Ma. I am left with a set of six chairs and no table to use. I received minor cuts from cleaning up all of the exploded glass which is fine but emotionally I was very upset after spending all that money on something that is now useless to us.

      In a similar vein, Judy of Unionville, Oh., writes, Table shattered into a million pieces. Paid good money for poor quality. It is so sad especially with the economy like it is. Who can afford this[?].

      A considerable number of consumers have had more than one table shatter. Some bought a set and ended up having several shatter over time, as happened to Lisa of Austintown, Oh.

      Two years after I purchased this set, the glass on the leaf design coffee table shattered into a hundred pieces, writes Lisa. The following year, the glass on the round table shattered ... The damage was not due to abuse by the owner. A defect in the product is obviously the cause.

      Others replaced tables that exploded, only to relive the experience months or years later. Thats what happened to Margaret of Cedar Rapids, IA.

      [We] have now had TWO patio tables from the Victoria Collection explode, writes Margaret. The first time it was over a year since we had it and our Kmart replaced it with a new table. It just happened again and it has been over [a] year or more.

      CPSC mulls the problem

      Martha Stewart Tabletops

      Trina Harris' visiting family was sitting at this table when it exploded in Yakima, Wash.

      Stephanie Green's "Lazy Susan" portion of her table exploded after less than two years of ownership in Van Nuys, Calif.

      Karen Dozier's local Kmart in Bakersfield, Calif., told her that it was probably vandalism that caused her table to shatter while she vacationed in Cancun, Mexico.

      More about Martha ...

      The Consumer Product Safety Commission (CPSC) looked into the problem in 2006. The Commission asked MSLO to redesign the tables which MSLO has supposedly done but never issued a recall.

      Even after years of complaints, the official cause of the problem remains a mystery. In 2006, ConsumerAffairs.com contacted glass experts to get their opinions, but many were at a loss.

      Ken Toney of the Custom Glass Corporation in Kittanning, Pa., told ConsumerAffairs.com that he ha[d] no idea what would cause that. He speculated that, because the glass was made overseas, a defect in the molecular compound could have caused it to shatter.

      However, William Lingnell, an expert who testified in the Ronat action, had a different theory. He hypothesized that the glass tabletop bumps against the tables metal frame, creating microcracks in the glass. According to Lingnell, these cracks eventually cause the glass to explode entirely. Lingnell noted that the edges of the glass are not dressed, or smoothed over; rather, theyre jagged and rough. This makes it easier for the glass to bump up against the metal edges of the table, form hairline cracks, and eventually explode.

      The JRA tabletops are made from tempered glass, which breaks into very small pieces, making it less dangerous than glass that breaks into larger shards. Nonetheless, a number of consumers have reported cuts and other injuries caused by the tabletops.

      A few days ago, the table shattered right in front of me and on top of my feet and legs, describes Tracy of South Park, Pa., in a representative complaint. My son, thank God, had just gotten up less than a minute before it shattered. I was covered in blood and slivers of glass. It was quite frightening.

      Some injuries were even more startling. Pam of Beavercreek, Oh., described the scene after her table exploded with her granddaughter sitting underneath.

      Glass was all over her. One big chunk stuck in her calf. She had blood everywhere. We ended up ... [at the h]ospital. She had glass all over. She had stitches in her leg and she has tiny scars various places from the little [shattered] pieces.

      Martha's not in

      Customer service has been virtually nonexistent.

      Kmart refuses to cover the glass under consumers warranties and routinely directs them to MSLO. Martha Stewarts conglomerate, in turn, blames Kmart and JRA, and essentially refuses to assist customers.

      In November 2008, when Martha Stewart herself was confronted by New York reporter Arnold Diaz, she was adamant that, We are not the liable party. Kmart is responsible for the tables. She also insisted that, I have not heard of one reported injury. With Kmart and MSLO pointing fingers at each other, JRA long gone from the marketplace, and Ronats suit dead in the water, consumers are left to fend for themselves.

      The Diaz incident was highly unusual. The daily press, which spends much time and energy complaining about Internet bloggers supposedly poaching on its turf, looks down its nose at consumer journalism and spends more time planning the table arrangement for the annual Gridiron Show or Radio-TV Correspondents Dinner than it does confronting Martha Stewart about her exploding tables.

      One consumer did manage to get MSLOs attention. David Potts of Marietta, Ga., called Kmart in 2005 to report that his tabletop had shattered. At first, Kmart was characteristically unresponsive, until Potts told them something that grabbed their attention: he was also known in some circles as Dave Michaels, the 1990s-era CNN anchor. Kmart relayed the inquiry to MSLO, which promptly took care of Potts.

      Potts himself was injured as he tried to clean up the broken glass. As Potts told ConsumerAffairs.com, I was sitting at my computer when I heard this tremendous crash. I went outside to see what it was and it looked like my patio was covered in ice. It was the glass from the table top. I got a couple of slivers of glass in my fingers while I was cleaning it and here I am a year later and I can still feel pain in the tips of my fingers.

      Causation questions

      The class action suit was felled by individual issues of causation. Specifically, the court noted that some table tops may have been broken because of human error, such as a flower pot being dropped on the glass, rather than by spontaneous shattering. The court also said that differences in state laws made the class unmanageable.

      Individual causation factors are often used to justify the dismissal of consumer class actions. Just last week, a class action involving Microsoft Vista was tossed on similar grounds.

      The court also noted that it would be difficult to fashion a uniform remedy for all class members. Since some plaintiffs tables were practically brand new when they shattered, while others had been around for years, it would be impossible for the court to decide how to distribute a settlement award.

      Despite the run of bad luck, owners of Martha Stewart tables are not completely out of options. They can file a complaint on ConsumerAffairs.com, or can report their experience to the CPSC. Consumers could theoretically file their own suits, although the costs of doing so would likely outweigh the amount recovered from MSLO.

      Consumers Left to Sweep Up as Martha Stewart Tables Shatter...
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      West Virginia Sues Texas Debt Settlement Company

      Crackdown on deceptive marketing for debt relief continues

      The crackdown continues on companies that promise distressed consumers debt relief but provide only more trouble. West Virginia has filed suit against Able Debt Settlement, Inc. of Irving, Texas, seeking injunctive relief and restitution for consumers who paid for debt settlement but only received ruined credit and debt collection calls.

      Able Debt Settlement, formerly of Dallas, Texas, claims to settle consumers' debts. Many consumers find out, however, that Able Debt Settlement doesn't settle debts and then refuses to refund the very large fees it charges.

      West Virginia Attorney General Darrell McGraws Consumer Protection Division started an investigation of Able Debt Settlement in 2007 and obtained an injunction against the company when it refused to comply with the investigation. Able tried to stop McGraw by twice asking the West Virginia Supreme Court to intervene. The Court refused Able Debt Settlement's petitions, allowing McGraw to continue the investigation.

      Although debt settlement services are unrestricted in some states, West Virginias law regarding debt settlement only permits for-profit companies to charge a fee of two percent of the payments made by consumers. In his complaint, McGraw is alleging that Able Debt Settlement was charging more than the two percent fee allowed by state law and not settling debts.

      "Debt settlement companies that simply sign consumers up, take their money and then fail to negotiate debts on behalf of consumers will not be tolerated in West Virginia," McGraw said. "Consumers in desperate financial situations should consult an attorney or non-profit credit counseling agency before paying any money to an unknown debt settlement company."

      The debt settlement industry has arisen as consumer credit card debt has ballooned in the past few years. Debt settlers claim to make repayment plans to help consumers repay outstanding debts, at a deep discount, to avoid being sued or filing for bankruptcy. Monthly payments are then made by consumers to the debt settlers, who are supposed to then negotiate with creditors to reduce the amount of debt owed.

      West Virginia Sues Texas Debt Settlement Company...
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      Toymaker Fined $1.1 Million For Consumer Violations

      Company accused of not providing data on products

      Mega Brands America Inc., of Livingston, N.J., formerly Rose Art Industries Inc., has agreed to pay a $1.1 million civil penalty, settling allegations that the company failed to provide the government with timely information about dangers to children with Magnetix magnetic building sets, as required under federal law.

      In December of 2005, Rose Art filed an "initial report" with the Consumer Product Safety Commission that a 22-month-old child from Washington state had died, due to ingesting multiple magnets that fell out of pieces from a Magnetix set. The report contained no other product or incident information and Rose Art attributed the magnets falling out to unusually abusive play by the toddler's older siblings.

      On February 1, 2006, Rose Art submitted a full report that again lacked incident and product information, the agency said. Rose Art stated that it did not retain any complaint or incident records. On March 31, 2006, Rose Art voluntarily recalled nearly 4 million Magnetix sets for users under the age of 6.

      After discovering documents that led CPSC staff to believe Rose Art had compiled incident information, a subpoena was issued to the firm — which had been renamed Mega Brands America and was under new ownership and control — to obtain product and incident information.

      CPSC said it learned through the subpoena that at the time Rose Art filed its "initial report" in December 2005, it had received over 1,100 consumer complaints that magnets had fallen out of plastic pieces from dozens of different Magnetix models. Additionally, the subpoena revealed that Rose Art had received at least one report of an injury due to magnet ingestion, prior to the toddler's death in Washington state.

      By the time Rose Art agreed to the recall of Magnetix in March 2006, it had received more than 1,500 complaints of magnets falling out of plastic pieces in more than 65 different models of Magnetix, according to the CPSC.

      In April 2007, Mega Brands America expanded the recall of Magnetix sets for users of any age, after more than 25 children suffered intestinal injuries that required surgery to remove the magnets.

      Federal law requires firms to report to CPSC within 24 hours of obtaining information reasonably supporting the conclusion that a product contains a defect which could create a substantial product hazard, creates an unreasonable risk of serious injury or death, or violates any consumer product safety rule, or any other rule, regulation, standard, or ban enforced by CPSC.

      In agreeing to settle this matter, Mega Brands America and its parent, Mega Brands Inc., of Montreal, Canada contend that 1) Mega Brands Inc. did not know of the Magnetix defect at the time it acquired Rose Art and 2) Rose Art's prior owners never advised Mega Brands Inc. of the problems of associated with Magnetix.

      CPSC said it strongly encourages consumers to check to see if they have any of the recalled building sets and return them to Mega Brands for a free replacement toy. Potentially millions of recalled units remain in homes today and accessible to young children.

      Toymaker Fined $1.1 Million For Consumer Violations...
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      Last-Minute Tax Tips

      When all else fails, an automatic extension will buy you time

      April 14, 2009
      Haven't filed your income tax return yet? The Internal Revenue Service offers these last-minute reminders to taxpayers who have not yet filed a tax return, paid what they owe or requested an extension of time to file as the April 15 tax filing and payment deadline approaches.

      File and Pay on Time

      Taxpayers who owe taxes and dont file their tax return by the deadline may face interest on the unpaid taxes and a failure-to-file penalty. Interest and penalties add to the total amount a taxpayer owes. Filing by the deadline allows taxpayers to avoid the failure-to-file penalty, even if they cant pay all or some of their taxes by the deadline. Taxpayers who cant file their return by the deadline can request an extension of time to file. However, an extension of time to file is not an extension of time to pay.

      Taxpayers who file on time but dont pay all or some of their taxes by the deadline could face interest on the unpaid amount and a failure-to-pay penalty. Taxpayers who cant pay the full amount should pay as much as they can by the deadline to minimize any interest and penalties due. In addition, taxpayers may take advantage of a variety of electronic and other payment options, such as using charge or debit cards to pay their taxes, to make it easier.

      Taxpayers may also pay any taxes owed by check made out to the United States Treasury using Form 1040-V, Payment Voucher, which must be included along with the payment and tax return. Taxpayers who have already submitted their tax return, but still need to pay all or some of their taxes, may mail the check to the IRS with Form 1040-V.

      File Electronically

      Taxpayers can take advantage of e-filing, which is fast, accurate and easy. Most available tax preparation programs check for errors and necessary information, increasing the accuracy of the return and reducing the need for correspondence with the IRS to clarify errors or omissions. With most programs, taxpayers can usually file a state tax return at the same time they electronically file their federal return. Once the return is accepted for processing, the IRS electronically acknowledges receipt of the return. Generally, when someone files electronically, their refund will be issued in about half the time it would take if they had filed a paper return. Those who choose direct deposit will get their refund in even less time.

      Use IRS Free File

      Free electronic filing from nearly 20 companies is available to taxpayers whose 2008 adjusted gross income was $56,000 or less. That means 70 percent of all taxpayers, or 98 million filers, can take advantage of the IRS-sponsored Free File program. The only way to access this program is through this Web site. There is no charge for this service.

      This year, the IRS and its partners are offering a new option, Free File Fillable Forms, which opens up Free File to virtually everyone, even those whose incomes exceed $56,000.

      Free File Fillable Forms allow taxpayers to fill out and file their tax forms electronically, just as they would on paper. It allows taxpayers to enter their tax data, perform basic math calculations, sign electronically, print their returns for recordkeeping and e-file their returns. This option may be right for those who are comfortable with the tax law, know what forms they want to use or dont need assistance to complete their returns.

      Choose Direct Deposit

      Whether filing electronically or on paper, taxpayers can opt to have their federal tax refund deposited directly into their bank account. Taxpayers who choose direct deposit will get their refunds faster than those who receive a paper check. Taxpayers who both e-file and use direct deposit will receive their refunds even faster. And, a refund that is directly deposited in a savings or checking account cannot be stolen or lost in the mail.

      Using direct deposit is easy. Paper return filers just enter bank account and routing numbers in the boxes provided on Form 1040, 1040A or 1040EZ.

      Taxpayers can split their deposits into up to three different accounts. Most e-file and tax preparation software allows taxpayers to split refunds. Paper return filers need to file Form 8888, Direct Deposit of Refund to More Than One Account, to split a refund among different accounts.

      Make Sure Your Paper Return is Error-Free

      Those who file a paper return can avoid most potential delays in processing the return and can avoid additional correspondence with the IRS to clarify errors by making certain they:

      • Double-check their figures.
      • Make sure all Social Security numbers are correct.
      • Sign their form.
      • Attach all required schedules.
      • Send their return or request an extension by the April 15 filing deadline.

      Pay Electronically

      Electronic payment options are convenient, safe and secure methods for paying taxes or user fees. Taxpayers can make payments online, by phone using a credit or debit card, or through the Electronic Federal Tax Payment System. Taxpayers who e-file their return may use the electronic funds withdrawal option for submitting an electronic payment. They can e-file before April 15 but schedule their payment for withdrawal on April 15.

      Some taxpayers who itemize may now deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction. The deduction is subject to the 2 percent limit on Form 1040, Schedule A. Taxpayers should not add the convenience fee to their tax payment.

      For those who cant file or pay on time, the IRS provides extensions of time to file and payment plans.

      Request an Extension of Time to File

      Taxpayers who can't meet the deadline to file their tax return can get an automatic six-month extension of time to file from the IRS by filing Form 4868, Automatic Extension of Time to File, but they must submit the request by April 15. Taxpayers can e-file the extension request from a home computer or through a tax professional who uses e-file at no cost. Several companies offer free e-filing of extensions through the Free File Alliance; these companies are listed on IRS.gov.

      The extension gives taxpayers until Oct. 15 to file the tax return. However, an extension of time to file does is not an extension of time to pay. Those who owe taxes can make a payment when they file the extension either by mailing a check made out to the U.S. Department of the Treasury or by several electronic payment methods, such as electronic funds withdrawals from bank accounts and credit card payments.

      Apply for an Installment Agreement

      An installment agreement allows taxpayers to pay any remaining balance in monthly installments. Taxpayers who owe $25,000 or less may apply for a payment plan electronically, using the Online Payment Agreement application. Or they may attach Form 9465, Installment Agreement Request, to the front of their tax return. Taxpayers must show the amount of their proposed monthly payment and the date they wish to make their payment each month. The IRS charges $105 for setting up the agreement or $52 if the payments are deducted directly from the taxpayers bank account ($43 for qualified lower-income taxpayers).The IRS will automatically give taxpayers the low income installment agreement fee if they qualify. The taxpayer does not have to request it. Taxpayers are required to pay interest plus a late payment penalty on the unpaid taxes for ea ch month or part of a month after the due date that the tax is not paid. A taxpayer who does not file the return by the due date including extensions may have to pay a failure-to-file penalty.

      Avoid Scams

      There are numerous scams in which people receive unsolicited e-mails, phone calls or faxes that claim to come from the IRS or include an IRS logo or send recipients to a phony IRS Web site, and which request personal and financial information that may be used to commit identity theft. Typically, identity thieves use someones personal data to empty the victims financial accounts, run up charges on the victims existing credit cards, apply for new loans, credit cards, services or benefits in the victims name, file fraudulent tax returns or even commit crimes.

      Anyone who receives one of these bogus e-mails, phone calls or faxes should avoid responding, clicking on any links or opening attachments. Recipients may forward the e-mails or report the calls to phishing@irs.gov.

      For more information about filing and paying taxes, visit IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. Taxpayers can download forms and publications from IRS.gov or request a free copy by calling toll free 800-TAX-FORM (800-829-3676).

      Last-Minute Tax Tips...
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      Texas Targets Hurricane Ike Scammers

      Attorney General charges roofers with deceptive practices

      Texas authorities have taken legal action against three men who ran an unscrupulous construction scheme that targeted victims of Hurricane Ike.

      Attorney General Greg Abbott on Monday charged Benton R. Barber of Houston, Cody Miller of Houston, and Jacob R. Horn of Dallas with violating the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA).

      State officials said the men ran the following unlicensed businesses in Texas: 1 Day Roof, Roof Teams, Roof All Texas, Green Star Roofing, HB Roof Partners LLC, HBCI Texas Ltd. and Horn Brothers Roofing.

      According to the state, the defendants sent misleading fliers and delivered deceptive door-to-door mailers and post cards to homeowners hardest hit by Hurricane Ike. Those advertisements referred to the official-sounding "Texas Department of Insurance Agency," and bore the state of Texas seal, which gave consumers the false impression they were from an official state agency.

      "The postcards state that 'A brief review is required for you to possibly receive additional benefits from your insurance provider,'" the state alleged in its lawsuit.

      The deceptive materials further urged homeowners to contact the fraudulent — but official-sounding — "Disaster Relief Management Team."

      The misleading advertisements used such language as "Urgent!" and "Response Requested" and gave consumers information about the defendants' businesses. That, the lawsuit alleged, duped consumers into believing the state sanctioned these businesses.

      The fliers also encouraged homeowners to visit a Web site the defendants set up, which looked similar to the official Web site for the state of Texas.

      For a fee, the defendants claimed they could to negotiate with homeowners' insurance companies — action they falsely implied would "facilitate relationships and payments from insurance carriers."

      "The Statements' overall appearance leads a reader to believe that the Defendants sending this information are affiliated with either The Department of Insurance, a state organized Disaster Relief Management Team, or insurance adjusters hired by the State to oversee claims," according to the state's lawsuit. "However, neither the Department of Insurance nor any other governmental agency has any part in this private business, does not approve of or sanction the Defendants' businesses, has not licensed the individual or businesses, and the Defendants are not agents of the State nor are they performing services on behalf of the State."

      The Texas Department of Insurance is the state agency that regulates insurance carriers. That agency, which received numerous complaints about the defendants' fliers, referred this case for prosecution to the attorney general's office.

      The state's lawsuit seeks restitution for homeowners who purchased the defendants fraudulent services and civil penalties of up to $20,000 for each violation of Texas law.

      More Scam Alerts ...

      Texas authorities have taken legal action against three men who ran an unscrupulous construction scheme that targeted victims of Hurricane Ike....
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      Pepsi Takes Coke To Court Over Energy Drink Claims

      Gatorade vs. Powerade at heart of "false advertising" dispute

      Pepsi and Coca-Cola normally compete in the soft drink aisle, but the two beverage giants are about to square off in court. PepsiCo is suing its competitor for false advertising.

      At issue is Pepsi's Gatorade sports drink. Coke is currently promoting its own sports beverage, Powerade ION4, by suggesting Gatorade is "an incomplete sports drink."

      Lawyers for Pepsi argue the claim is false and they want a judge to order Coke to stop the ads. The Pepsi legal team claims the Coke campaign is all "a calculated, intentional strategy designed to falsely and viciously attack the readily identifiable market leader, Gatorade, in the hopes of unfairly gaining precious market share."

      So, why does Coke say Gatorade is "incomplete?" Coke claims that Gatorade doesn't have all the electrolytes a sports drink should have to replenish the body's minerals. Specifically, it says Gatorade doesn't have calcium and magnesium and that Powerade does.

      Visitors to the PowerAde Website are immediately hit with the claim, with a flash program loading a partial Webpage and the message "you wouldnt settle for an incomplete Website, so don't settle for an incomplete sports drink."

      Pepsi responds that Powerade may contain calcium and magnesium, but does so in such trace amounts they're meaningless.

      The lawsuit, filed in federal court in New York, claims Coke's extensive ad campaign against Gatorade is deceptive and amounts to unfair competition.

      Pepsi Takes Coke To Court Over Energy Drink Claims...
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      New York Sues Process Server for High-Volume Debt Collectors

      Company allegedly failed to serve legal notices on consumers; law firm also faces suit

      New York Attorney General Andrew M. Cuomo today announced criminal charges against Long Island-based American Legal Process (ALP) and its CEO and President William Singler. He charged that the company failed to provide proper legal notification to thousands of New Yorkers facing debt-related lawsuits, causing them unknowingly to default and have costly judgments entered against them without the chance to respond or defend themselves.

      According to the court papers, ALP, as a legal process server, was hired by high-volume debt collection law firms in New York to serve legal papers, usually a summons and complaint, notifying individuals that they are being sued and must answer the complaint. ALP, however, allegedly engaged in sewer service, where process servers take advantage of individuals facing lawsuits by failing to properly alert them and denying them the chance to respond.

      As a result, thousands of judgments were allegedly obtained against unsuspecting New Yorkers, many of whom first learned they were being sued when they found their bank accounts frozen or their wages garnished. ALP allegedly covered up the fraud by falsifying sworn affidavits of service in courts across New York. The Attorney Generals Office also filed a parallel civil suit against ALP and Singler seeking a court order prohibiting them from engaging in improper service of process, monetary damages and substantial penalties.

      In addition, Cuomo announced his intent to sue one of ALPs largest customers, the law firm of Forster & Garbus, for violations of New York States consumer protection laws. According to Cuomo, Forster & Garbus used ALP to serve over 28,000 summons and complaints across the state, but failed to supervise the company and relied on legal papers from ALP that it knew or should have known were false.

      The laws of this state are supposed to ensure that each and every New Yorker has their day in court, said Attorney General Cuomo. If proven to be true, the schemes detailed in the cases filed today undermined the legal rights of thousands of citizens by corrupting our legal system and abusing individuals who happened to have consumer debts."

      With respect to the notice sent to the law firm of Forster & Garbus, the Attorney General said: "I am putting all law firms on notice that they are responsible for the conduct of the companies they use to serve complaints and other legal documents. Law firms cannot turn a blind-eye to abuses perpetrated on their behalf.

      Legal process servers are hired by law firms to serve legal papers, usually a summons and complaint, which notify individuals that they are being sued. New York law explicitly states how summons must be served upon individuals facing legal action. A process server can deliver the summons directly to the person being sued; can deliver the summons to a substitute person of suitable age and discretion at the place of business or the home of the person being sued and then mail the summons; or, should the first two options be exhausted after several attempts, can "nail and mail," meaning the summons is posted on the door of the home or workplace of the person being sued and the summons is mailed to them.

      According to the court papers filed today, between January 2007 and October 2008, ALP claimed to have served 98,000 summons and complaints throughout New York State to New Yorkers alleged to owe debt. The majority of these were done through nail and mail, the method of service that is easiest to abuse. The Attorney Generals investigation revealed that thousands of legal documents were not properly served, or served at all, to the individuals they were intended for.

      Furthermore, ALP allegedly attempted to cover up its unlawful business practices by falsifying documents, submitted to courts across the state, swearing that proper legal notification had been duly served upon these individuals. According to the criminal and civil complaints filed today, ALPs conduct included:

      • Instances in which ALP process servers claim to have made process serving attempts in more than one place at the exact same time. In one particular case, a process server claimed to have been at four different addresses at precisely the same moment;
      • Instance in which an ALP process server claimed to have made process serving attempts that would have required him to drive more than 10,000 miles in a single day;
      • Instances in which ALP process servers claim to have made process serving attempts before they had actually received the summons and complaint from ALP; and
      • Instances in which ALP process servers claim to have made process serving attempts before the summons and complaint had actually been filed with the appropriate court.

      According to the criminal complaint, Singler organized and orchestrated ALPs fraudulent activities. He was personally responsible for notarizing thousands of legal documents submitted to the New York Courts in which his process servers purportedly swore individuals had been served, when they had not.

      The civil lawsuit announced by Cuomo today charges that ALP and Singler violated multiple New York statutes by falsifying these legal documents, which were in turn used by debt-collection law firms who provided them to courts as proof that New Yorkers had been given proper legal notice of the lawsuits against them. In many instances, the individuals had not been given proper legal notice and failed to appear in court, ultimately having default judgments entered against them. The lawsuit seeks monetary damages, penalties and injunctive relief against both ALP and Singler.

      The Attorney Generals letter today to Forster & Garbus provides the required five-day notice of his intent to sue the firm pursuant to NYS consumer protection law. In the same 20-month period in 2007 and 2008, Forster & Garbus used ALP to serve more than 28,000 summons and complaints throughout the state. In obtaining default judgments, Forster & Garbus submitted to courts ALP affidavits of service to show that service had been proper when in many cases it had not been. The Attorney Generals notice letter makes clear that Forster & Garbus, by failing to supervise ALP and relying on affidavits that it knew or should have known were false, has harmed the New Yorkers who were the defendants to its lawsuits, the courts, and the clients who that law firm was representing.

      New York Sues Process Server for High-Volume Debt Collectors...
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      Texas Charges JK Harris with Misrepresentation

      Firm overstates its ability to reduce tax debts, suit alleges

      Texas Attorney General Greg Abbott today charged JK Harris & Company with misrepresenting their ability to help Texans resolve their unpaid tax obligations. The state charged that JK Harris failed to provide promised services, misrepresented its employees professional skills and experience, overstated its ability to reduce debts that customers owe to the Internal Revenue Service, and accepted large, prepaid fees from customers whose tax liabilities the firm knew or should have known it could not reduce.

      The defendants are charged with unlawfully misrepresenting and overstating their ability to reduce unpaid debts that taxpayers owe to the IRS, said Attorney General Greg Abbott. Struggling Texans who paid large, upfront fees were told that their unpaid taxes could be resolved for pennies on the dollar. Todays enforcement action seeks restitution for the defendants Texas customers and a court order enjoining the defendants unlawful conduct.

      The suit names JK Harris LLC and related companies, JKH Financial Recovery Systems LLC, and Professional Fee Financing Associates, along with the firms owners, John K. Harris and Charles R. Harris, Jr. Citing Texas Deceptive Trade Practices Act violations, the state is seeking an injunction, penalties, fees and restitution for the Texas-based JK Harris customers.

      The defendants advertising and marketing materials claimed that JK Harris could settle customers unpaid tax obligations for pennies on the dollar. JK Harris typically charged $2,000 to $5,000 paid in advance for its tax resolution services, which largely relied upon the IRS Offer-in-Compromise (OIC) program.

      According court documents filed by the state, the defendants charged customers without actually reviewing individual tax files to see whether individual taxpayers were eligible for relief through the OIC program which is limited to very specific situations. The states investigation revealed that few of JK Harris customers qualified for OIC relief. Further, the suit charges that the defendants often failed to file their customers OIC application forms and frequently took no steps to reduce customers tax debts. When customers realized that JK Harris had undertaken little or no action, they frequently demanded refunds and the defendants often failed to return the customers money.


      The states enforcement action also cites the defendants for misleading customers about JK Harris regional employees qualifications.

      While the defendants advertisements claimed that former IRS agents, Certified Public Accountants, lawyers, and other professionals were available to meet with consumers in 325 locations in 43 states, investigators discovered that JK Harris regional offices are staffed by sales personnel who are not trained tax experts. As a result, Texas customers who believed they could actually meet with JK Harris tax resolution experts in person were misled.

      The Better Business Bureau and the Office of the Attorney General said they have received approximately 1,000 complaints against the company in the past 36 months. Texans considering tax resolution services should research a firm before entering into a contract or paying any fees.

      Texas Charges JK Harris with Misrepresentation...
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      Key Corporate Earnings Due This Week

      Telltale signs of economic recovery or continuing meltdown

      In the last few weeks there have been tantalizing signs that the recession may be bottoming, and even President Obama says he sees "glimmers of hope" in the economy, despite an unemployment rate of 8.5 percent.

      But this week may offer more concrete evidence, one way or the other, about the direction of the economy. A number of key U.S. based corporations will report their first quarter earnings this week, and the numbers will not only influence the future direction of the stock market, but give policy makers insight into the strength of the economy.

      For consumers, this week may determine whether their 401(k) accounts continue to recover or give up most of the gains they've recorded in the market's four week rally. It may also determine whether corporations will continue layoffs or begin to plan for future growth.

      On Tuesday, look for earnings reports from CSX Corporation, Johnson and Johnson, and Intel. These three companies represent diverse sectors of the economy, and all three are bellwethers.

      CSX is a major U.S. railroad, whose profits depend on other companies transporting raw and finished goods to market. If shipments remain flat or decline further, that's a bad sign for the economy. If shipments increase, then the reverse is true.

      Johnson and Johnson has weathered the current recession as well as any company, since it makes products that consumers use on a daily basis. But the company also produces prescription drugs, and if sales in that sector falter, that's a bad sign for the economy. If consumers are cutting back on prescription drug purchases they are likely feeling a lot of economic pressure.

      Intel Corp. produces computer chips and its earnings report will provide insight into the corporate economy. An increase in demand for computer chips means computer makers are gearing up for new demand. A disappointing earnings report from Intel, on the other hand, will signal a sluggish business environment in the months ahead.

      Friday is also a big day for earnings reports. General Electric will report its earnings then, and could well provide a snapshot of the economy, since GE is made up of so many diverse businesses. Analysts will closely inspect the numbers from GE Capital, for clues on how the financial sector is doing.

      Citigroup, which also reports on Friday, will also provide insight into how the battered financial sector is doing. Citi helped fuel the recent Wall Street rally when it reported that it had moved into the black during the first two months of the year. If that trend is borne out in its first quarter earnings report, analysts say it would be a very hopeful sign for the economy and could kick the stock rally into overdrive.

      On the other hand, a disappointing earnings report could trigger a significant sell off, with investors concluding that hopeful signs of a recovery were simply premature.

      Key Corporate Earnings Due This Week: In the last few weeks there have been tantalizing signs that the recession may be bottoming despite an unemployment r...
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      Vista Class Action Reaches End of the Road

      Judge denies amended class, prohibits additional filings

      A federal judge in Washington has again denied class certification in a lawsuit involving Microsofts Vista operating system, leaving the plaintiffs with few options after years of trying to move the case forward.

      The long-running suit alleges that Microsoft allowed computer manufacturers to label machines as Vista capable, thereby leading consumers to believe that the computers were capable of operating any version of the Microsoft operating system. In fact, according to the suit, the machines were only compatible with Vista Basic, which lacks a number of features included in higher-priced versions.

      A little over a month ago, Judge Marsha Pechman decertified the original class of plaintiffs, which had originally been certified in February 2008. In that ruling, which initially seemed like a death blow for the suit, the judge ruled that the plaintiffs had not proven that Microsofts labeling computers as Vista capable had increased demand for the machines.

      The plaintiffs pled a price inflation theory, which essentially alleged that, by allowing computers to be labeled Vista capable, Microsoft drove up demand for the machines and caused consumers to pay more than they would for a computer only able to run Vista Basic. While the class was originally certified on the condition that the plaintiffs prove class-wide causation, their failure to do so led to Pechmans order stripping the class a year later.

      That ruling was a major blow, given that attorneys for the class had estimated Microsofts potential liability at $8.5 billion just a few weeks earlier.

      Refusing to throw in the towel, the plaintiffs refiled, alleging a more narrowly-defined class that they said would solve any problems with causation. This amended class included two distinct groups: consumers who bought their computers through a program that allows owners of XP-equipped machines to upgrade when Vista became available, and those whose computers didnt support advanced Vista graphics.

      In her latest decision, Pechman ruled that the newly-defined class suffers from the same causation-based flaws that led to the February decertification. Pechman wrote that because the plaintiffs underlying claim is that they were deceived by the Vista marketing campaign, each class member would have to prove that the campaign was the cause of his purchase, making a class action so costly and time-consuming as to render it impossible.

      Pechman specifically constrained the plaintiffs options going forward to either appealing her decision, or proceeding with individual suits on behalf of the six named plaintiffs. This prevents the plaintiffs from narrowing the class even further, and effectively renders the class action dead in the water unless Pechman is overturned on appeal.

      In statements made before the latest ruling, attorneys with Gordon Murray Tilden LLP, which represents the plaintiffs, said that they would appeal an adverse ruling to the Ninth Circuit Court of Appeals.

      Individual suits would have a much better chance of succeeding, since each plaintiff could presumably show that he or she bought the computer because of its status as Vista capable. While this might be of some comfort to the named plaintiffs, damages resulting from these suits would be negligible, especially when compared to the billions of dollars that plaintiffs for the class had hoped to recover.

      One of the main justifications for a class action lawsuit is that damages for each plaintiff are small enough to make individual suits futile, since the time and money spent prosecuting them may exceed the amount eventually recovered. For this reason, unless plaintiffs appeal is successful, Microsoft is unlikely to pay much of a price for the Vista marketing campaign.

      Vista Class Action Reaches End of the Road...
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      Computer Scam Targets African-American Churches

      'Free' information kiosks cost churches $50,000 and up

      Dampening Easter services at African-American churches around the country this year is a computer scam that District of Columbia officials say has cost some congregations $50,000 or more.

      District of Columbia Attorney General Peter Nickles filed suit against several individuals and companies accusing them of a nationwide scam to defraud African-American church congregations of hundreds of thousands of dollars. The scam allegedly targeted up to 50 predominantly congregations in the District, as well as many more in Maryland, Michigan, Wisconsin, Texas, California and other states, he said.

      While it is not surprising that in tough economic times we see an increase in financial scams, what is unconscionable is that these Defendants allegedly targeted their scheme at religious congregations — groups whose funds are often used to feed the poor, assist people with housing, and otherwise benefit those in need in their community, Nickles said. The community is outraged at this egregious behavior, and I intend to aggressively pursue recovery on behalf of these congregations, many of which have been severely impacted by this scam.

      The Districts suit alleges that the defendants approached numerous congregations offering free computer kiosks that they could place in the church lobbies to provide community and church information. Some churches were allegedly told they could make money from advertising.

      Long-term lease

      As part of the agreement to receive the equipment, congregation officials unwittingly signed documents that obligated the groups to long-term lease payments amounting to $50,000 or more. But in fact, Nickles suit alleges, the computer equipment was valued at no more than a few thousand dollars, and in some cases, did not function properly.

      Defendants named in the case are Television Broadcasting Online, Inc., Washington, D.C.; Urban Interfaith Network, Inc., Oxon Hill, Md.; Michael Morris, Willie Perkins, and several national leasing companies, including United Leasing Associates of America, Brookfield, Wis.; Balboa Capital, Irvine, Calif.; and Chesapeake Industrial Leasing, Baltimore.

      Although Nickles' lawsuit is thought to be the first governmental action against the companies, several churches in Wayne County, Mich., have filed a civil suit against TVBO, Urban Interfaith and United Leasing, claiming fraud and civil conspiracy. They are seeking monetary damages and to have the leases voided.

      United Leasing, through its attorney Steve Morgan, denied the allegations and will seek to have the lawsuit dismissed, the Milwaukee Journal-Sentinel reported. Morgan said United Leasing simply provided the financing and had no contact with the churches other than when they signed leases. He said the leases contain the same standard wording used by other leasing companies throughout the nation and are not unusual.

      The newspaper said that over the last year, United Leasing has filed lawsuits against 39 churches in eight states, contending the churches owe it at least $1.4 million for failing to make monthly payments on the computer kiosks they leased.

      The "business-as-usual" defense is customarily used by leasing companies that finance — and profit from — scams and get-rich-quick schemes but it doesn't always work. In 2003, Leasecomm agreed to cancel $24 million in judgments and reform its business opportunity financing contracts to settle charges by the Federal Trade Commission and an eight-state task force that the practices violated federal and state laws.

      Leasecomm had financed the purchase of supposed business opportunities such as work-at-home operations using business opportunity sellers as its agents.

      Angry mayor

      Washington, D.C. Mayor Adrian Fenty reacted angrily to news of the alleged scam. He called on the Justice Department to open a civil rights investigation into the matter.

      "They made it seem like they were bringing a technological advance to the church, and what they were doing was setting themselves up to take thousands of dollars from the churches who needed the money for their own survival," Fenty said at a news conference, The Washington Post reported.

      Fenty said some church bank accounts were raided after the congregations provided their checking account information to the companies. Washington's Mount Horeb Baptist Church said it lost $62,000 and has had to cut back services to make ends meet. United Leasing said it debited the church's checking account 22 times in one day without the congregation's consent, removing $62,801, but said the lease the church signed permitted it to do so.

      Dampening Easter services at African-American churches around the country this year is a computer scam that D.C. officials say has cost some congregations...
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      Time Warner: Metered Broadband Will Prevent "Internet Brownouts"

      Chief operating officer reveals details of tiered pricing plans

      If Internet users don't moderate their bandwith consumption, and providers don't put in caps on their usage, the Internet could start seeing "brownouts" by 2012, said Time Warner Cable's chief operating officer Landel Hobbs today.

      Preventing outages for users was the rationale behind Hobbs' latest statement on Time Warner Cable's plans to expand its metered broadband trials to more areas of the U.S. The cable company is testing a "pay-by-the-byte" approach to billing and consumption of Internet services, rather than the flat-price "all you can eat" model of most competitors.

      "Here at Time Warner Cable, consumption among our high-speed Internet subscribers is increasing by about 40 percent a year," Hobbs said. "As a facilities based provider, weve built a network that must be maintained and upgraded. We have increasing variable costs and we have to continue to invest in the network itself. "

      The idea of "Internet brownouts" comes from the "exaflood," the concept that the many interlocking networks that form the modern Internet will break under the strain of accomodating increasing data consumption. First advanced as early as 1995, the theory was revived in 2007 due to the increasing prominence of online video streaming and television broadcasting.

      Proponents of the "exaflood" used the concept to oppose "net neutrality," the idea that all Internet users should access all content equally, without hindrance or favoritism. The "exaflood" concept was substantially refuted by research indicating that worldwide Internet consumption was growing modestly, and actually declining in some regions, as recently as December 2008.

      New details on "tiers"

      Hobbs also added more detail on Time Warner Cable's new packages and pricing plans under the tiered model, which include:

      • A 1 gigabyte (GB) per month tier offering speeds of 768 kilobytes (KB) download /128 KB upload for $15 per month, comparable to DSL speeds. Over-use charges would be $2 per GB per month. Hobbs said this package would be for "light" Internet users.

      • The current Internet offerings would get increased bandwidth tier sizes, to 10, 20, 40 and 60 GB for the company's Lite, Basic, Standard and Turbo packages, respectively. The package prices would remain the same, and over-use charges would be $1 per GB per month.

      • The company will introduce a 100 GB Road Runner Turbo package for $75 per month (offering speeds of 10 MB/1 MB). Overage charges will be $1 per GB per month.

      • Hobbs said that all overage charges would be capped at $75 a month.

      • Time Warner Cable will also roll out new upgraded DOCSIS 3.0 infrastructure in the trial markets where caps are being tested, at speeds of 50 megabytes (MB) for download and 5 MB for upload, at $99 per month.

      The trial markets currently include Rochester, New York, Beaumont, Texas, and Greensboro, North Carolina, which will see the new plans rolled out by August. Depending on the result of the trials, the services may roll out to Austin and San Antonio, Texas, by October.

      First reactions to the latest tier plans were critical. Scott Cranfill, a Rochester-based Web developer who has been campaigning against the caps, said that it was "[mindboggling] that TWC thinks tossing us such a paltry bone as 20 more GB and a cap on overages will be good enough. Not good enough."

      Karl Bode, editor of Broadband Reports,said that "A real concession would be if the carrier announced they were eliminating overages completely, and affixing caps that were more reasonable as the age of HD video approaches. "

      The chief criticism of metered broadband plans — besides claims that the over-use charges are too high — is that it will scare users away from watching video online, or uploading their own videos, for fear of breaching their plan's cap and paying extra fees. Critics say the purpose of metered broadband plans is to protect cable and telecom companies' investments in existing television networks.

      Time Warner: Metered Broadband Will Prevent...
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      Ross Stores Recalls Folding Patio Chairs

      April 9, 2009
      Ross Stores Inc. is recalling about 730 folding patio chairs. The side supports on these chairs can splinter when weight is placed on them, posing a fall hazard to consumers.

      Ross Stores has received one report of a consumer who suffered shoulder pain after her chair collapsed.

      The folding wooden patio chairs are made of eucalyptus. SKU 400037791757 and manufacturer style number KTOC-1638-ROS are printed on a hangtag attached to the chair.

      The chairs, made in Vietnam, were sold at Ross Stores nationwide in February 2009 for about $50.

      Consumers should stop using these chairs immediately and return them to any Ross Store for a full refund.

      For additional information, contact Ross Stores at (877) 455-7677 anytime, or visit the firm's Web site at www.rossstores.com.

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

      Ross Stores Recalls Folding Patio Chairs...
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