News in May 2009

Texas Attorney General Greg Abbott has charged appliance retailer Conns, Inc. with failing to honor product warranties, misleading customers about the nature of its products, false advertising and other violations of the Texas Deceptive Trade Practices Act. According to the states enforcement action -- and information contained in more than 2,000 customer complaints-- the company unlawfully relied on aggressive and deceptive sales tactics to increase its extended service warranty sales for consumer appliances, electronics and other products.

Conn's, based in Beaumont, Texas, operates 75 stores in Texas, Louisiana and Oklahoma. Besides Abbott's suit, Conn's has also lost its long-time A+ rating from the Better Business Bureau. The BBB said Conn's now has "no rating."

The defendants are charged with using high-pressure sales tactics to deceive customers about their extended service warranties, Abbott said. Texas law contains important protections to prevent vendors from misleading customers about their goods and services. Todays enforcement action reflects a concerted effort to ensure the defendant is held accountable for violating the law."

Conns brochures obtained by state investigators claimed that the replacement warranties protected purchasers for a two full years from the date [they] purchased the product. However, customers did not actually receive two-year warranties. In fact, the replacement warranty agreements stated that they did not apply to any period covered by the manufacturers warranty, which typically covered one year after purchase. Thus the two-year extended warranty does not begin at the time of purchase as represented by Conn's.

Further, in the event a product had to be replaced, the replacement was not covered by the warranty. Thus, if a replacement product failed within the two-year period, it was not covered, despite the defendants promise to provide replacement coverage for a full two years.

The states enforcement action indicates that Conns failed to provide customers with a copy of the warranty agreement at the time of sale. As a result, purchasers were not adequately informed about exclusions, limitations, cancellation penalties and other provisions governing their warranty agreements.

Court documents indicate that, at the time of sale, Conns sales personnel told warranty purchasers that replacement products would be new, unused items. However, the actual terms of the warranty contract provide that the replacement products could be refurbished or rebuilt, rather than the new items customers were promised by Conns salesmen.

High-pressure sales

In an effort to increase warranty sales, Conns instructed sales personnel to rely on high-pressure tactics to overcome objections voiced by customers who declined to purchase extended warranties, the suit charges.

A Conns sales manual obtained by state investigators, which was marked not to be distributed to customers, said salesmen should create a sense of urgency and make [customers] live the service call [t]his is done by painting a picture in the customers [sic] mind, calling up that sickly feeling we all get in the pit of our stomachs when something goes wrong. The sales manual also provided a series of scripted responses to customer objections and reminds salesmen that selling more warranties would maximize their personal incomes.

The enforcement action also charges Conns with failing to fulfill its warranty obligations. According to customer complaints obtained by the Office of the Attorney General, Conns delayed repair appointments for weeks or even months, failed to repair the item to working condition, ignored calls, and ultimately, refused to give refunds or replace the defective products. Instead, customers received refurbished goods, not new products, as promised.

Depending on the product, the extended warranties cost anywhere from $100 to $1,000. The commissions from the sale of these warranties accounted for about 5 percent of Conns $900 million in annual sales revenue.

The states enforcement action seeks civil penalties and a court order prohibiting the Beaumont-based defendant from continuing its unlawful conduct. Conns is a major consumer products and electronics retailer with locations throughout Texas, Louisiana and Oklahoma. It is publicly traded on the NASDAQ. The Office of the Attorney General has received more than 2,000 complaints about Conns conduct.

The Attorney General seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as a $250,000 penalty if the defendants conduct financially harmed persons aged 65 or older.

President Obama on Friday promised a stronger emphasis on protecting and improving the nation's cyber-infrastructure, including the appointment of a "cybersecurity czar" to oversee and coordinate strategies, and increased funding for security and education in both the public and private sector.

In his speech, accompanying the release of a 76-page White House report on the government's cybersecurity policy, Obama framed the need for better defenses against hackers, data thieves, and foreign cyberattacks as both a political and economic imperative.

"Every day we see waves of cyber thieves trolling for sensitive information — the disgruntled employee on the inside, the lone hacker a thousand miles away, organized crime, the industrial spy and, increasingly, foreign intelligence services," Obama said. "America's economic prosperity in the 21st century will depend on cybersecurity."

Obama also stated that "Our pursuit of cyber security will not — I repeat, will not include — monitoring private sector networks or Internet traffic. We will preserve and protect the personal privacy and civil liberties that we cherish as Americans."

"Indeed, I remain firmly committed to Net Neutrality so we can keep the Internet as it should be — open and free," Obama added.

National Security Council (NSC) cybersecurity chief Melissa Hathaway, widely speculated to be a candidate for Obama's cybersecurity czar position, said that "Protecting cyberspace requires strong vision and leadership and will require changes in policy, technology, education, and perhaps law."

Among the recommendations in Obama's cybersecurity plan:

•  Appoint a cybersecurity policy official or "czar" to coordinate national cybersecurity strategies responsible
•  Prepare a cybersecurity incident response plan and work with the private sector to smooth partnerships and information sharing on cybersecurity efforts
•  Designate a privacy and civil liberties official to the NSC cybersecurity directorate.
•  Initiate a national public awareness and education campaign to promote cybersecurity.

Response to the plan was generally positive, though some criticized the White House for lacking specific recommendations. Bruce Schneier, chief technology officer of BT Counterpane and noted security expert, said that "I am optimistic about President Obama's new cybersecurity policy and the appointment of a new 'cybersecurity coordinator,' though much depends on the details."

Obama's renewed support for net neutrality, the principle that all Internet content should be accessed equally, also won praise. "President Obama's speech today makes it clear that he considers Net Neutrality an essential component of his administration's sweeping Internet agenda," said Craig Aaron, senior program director of Free Press.

A California resident has filed suit against insurance provider Kaiser Permanente, alleging that the corporation failed to refund her copayment after collecting under a personal injury award. Although the plaintiff's individual damages are negligible, the issue could affect hundreds or even thousands of Kaiser customers.

Nicole Glaus of Concord, CA incurred $517.20 in medical expenses after being rear-ended in a traffic accident. Glaus was subsequently awarded $4,250 in damages in a suit filed against the individual who rear-ended her. Kaiser's policy provides that, when a customer collects damages in a lawsuit, the insurance company can seek reimbursement of costs. Kaiser did this, but failed to credit Glaus for the $20 copayment that she initially forked over.

The suit is brought on behalf of all Kaiser members whose plans are part of a private employer group medical plan — as Glaus's was — and who reimbursed Kaiser after a successful lawsuit but never received their co-payment back afterwards.

Kaiser's own "Evidence of Coverage," or EOC, requires that Kaiser refund a consumer's copayment when collecting expenses after a lawsuit settlement. The suit says that Glaus and all other class members have an "equitable lien" against Kaiser, since the company wrongfully withheld money from them.

Glaus is being represented by the law firm of Lewis Feinberg Lee Renaker Jackson PC, based in Oakland, CA. Attorney Daniel Feinberg conceded that $20 is a small amount of money, but said enough customers have been affected that the aggregate amount of money at issue is likely substantial. "If you steal a million dollars from one person, you're gonna have a lawsuit," Feinberg told the San Francisco Weekly. "But if you steal it by small cuts, you can get away with it until someone files a class action to stop you."

The suit seeks reimbursement of unrefunded copayments and an injunction prohibiting Kaiser from continuing the practice in the future.

The action was brought under the Employee Retirement Income Reimbursement Act (ERISA), which protects individuals who might suffer discrimination from health insurance companies. The ERISA provisions at issue require Kaiser to act as a customer's fiduciary, and to administer the plan in the best interests of the consumer. The suit alleges that Kaiser breached that duty, stating that the "defendant has enriched itself at the expense of Ms. Glaus in violation of the fiduciary duty of loyalty."

This isn't the first time that co-payments have been at the center of a class-action lawsuit. In April, a settlement was reached in Massachusetts case where the manufacturer and a publisher of drug data colluded to inflate co-payments on name-brand drugs. Additionally, according to its website, the St. Louis law firm of Carey & Danis is investigation claims that several HMO's have charged excessive copayments over the last five to ten years.

Now that Congress has passed legislation cracking down on credit card abuses, three Congressional Democrats are asking the Fed to to strengthen its proposed regulation of bank overdraft fees.

Reps. Carolyn B. Maloney (D-NY), Barney Frank (D-MA), and Luis Gutierrez (D-IL) want consumers to opt-in to overdraft programs, rather than have banks sign them up automatically. They also want rules that would prohibit the posting of transactions in a sequence which maximizes overdraft fees.

"Overdraft fees...often take consumers completely by surprise...and {are} usually vastly disproportionate to the amount of the overdraft itself," the lawmakers said in a letter to Federal Reserve Chair Ben S. Bernanke. "It is only fair, then, that institutions be required to obtain consumers' affirmative consent before enrolling them in fee-based overdraft programs."

In releasing the letter, Maloney praised the Fed's effort to explore overdraft remedies but said, consumers simply shouldn't be enrolled in overdraft programs without their consent.

"Since Congress just required an affirmative opt-in to over-the-limit fees in my credit card reform law, regulations should similarly require an opt-in to overdraft fees," she said. "Whenever banks step over the line of reasonable business practices into abuse of consumers' trust and understanding, government needs to act."

Consumer have long complained about overdraft fees, saying they would prefer to have their purchase declined by the merchant if it would overdraw their account. Instead, the bank covers the overdraft but charges a fee.

"When overdraft fees are $30 or more, a $5 treat at Starbucks becomes a $35 shock after the overdraft fee is applied," Maloney said. "And when multiple purchases in a day are posted in a sequence that only benefits the bankincurring multiple feesthen something is broken in the system and must be fixed."

Fans of "American Idol's" Adam Lambert who believe that AT&T may have influenced his rival Kris Allen to win can take heart — a lawsuit against AT&T; for allegedly mistreating customers has been cleared to proceed.

A U.S. District Court judge in Washington ruled that a class action suit filed by former Cingular customers against the company is valid. The suit was brought over charges that as Cingular bought AT&T Wireless in 2004, it immediately dismantled the network, forcing customers to pay to switch over to the new network.

The plaintiffs alleged that in order to leave Cingular (which later rebranded itself as AT&T), they had to pay a steep termination fee of $175, and that they had to pay "upgrade" fees for new phones that functioned on the AT&T network.

The class is being led by MaryGrace Coneff of California. Thirteen other lead plaintiffs hail from Washington, Arizona, Florida, Virginia, Alabama, and New Jersey. The plaintiffs have all either paid transfer fees and bought new phones, paid early termination fees, or suffered poor cell service as a result of AT&T's conduct. The suit seeks reimbursement of charges and additional damages.

AT&T had pushed to dismiss the suit on grounds that their service contracts mandated that all disagreements with the company be handled in private arbitration. But Judge Ricardo Martinez disagreed, striking down that clause as "unconscionable" and a violation of consumer rights under Washington state law.

"[T]he actual award to the individuals that comprise a class is only one of the principal aims of a class action lawsuit," Judge Martinez wrote. "Class action lawsuits are necessary and effective avenues for consumers whose economic positions vis--vis their corporate opponents would not allow them to proceed on a case-by-case basis."

AT&T claimed its contracts were built to be friendly to customers, citing its willingness to pay for all arbitration costs and a potential award of $5,000 if any arbitration is found in the customer's favor. But Judge Martinez cited testimony from consumer lawyers who said the sheer cost and time involved in pursuing individual claims against a company the size of AT&T's would be unethical and unfair to the customer.

Martinez insisted that "the Court will not condone such a broad and exculpatory practice."

"This is a major victory for AT&T customers all over the nation, said Harvey Rosenfield, founder of California-based Consumer Watchdog. The company broke its promise to its customers, making them pay millions of dollars more than they should have. Now we can move forward to get people their money back."

AT&T spokesman Fletcher Cook said the company disagreed with the court's decision, and was planning its response.

Although corporations claim arbitration is a fair way to avoid the costs of settling disputes in court, a number of consumer organizations oppose the "forced arbitration" clauses hidden in a variety of business contracts. The clauses are anything but consumer-friendly: they are usually shoved into the middle of dozens of paragraphs of fine print, and force the consumer to take the contract as it is or abandon it altogether.

Additionally, a recent study by Public Citizen found that an arbitration tribunal hearing credit card claims ruled against consumers 94 percent of the time. The study also revealed the close relationship that corporations and tribunal associations share: one arbitrator heard 68 cases in one day, and ruled in favor of the corporation every time.

May 26, 2009
California Attorney General Edmund G. Brown has filed 79 criminal charges against three men who he says "callously swindled" thousands of individuals, including many retirees who lost their life savings, in a $200 million Ponzi scheme.

The defendants — James Stanley Koenig, 57, of Redding; Gary T. Armitage, 59, of Healdsburg; and Jeffery A. Guidi, 54, of Santa Rosa — were arrested and are now in custody. Bail has been set at $5 million each.

The three — James Stanley Koenig, 57, of Redding; Gary T. Armitage, 59, of Healdsburg; and Jeffery A. Guidi, 54, of Santa Rosa — "callously swindled thousands of individuals out of $200 million to bankroll their extravagant lifestyles," said Brown. "They took investors money and used it to pay for an 80-acre castle estate, a Lear jet, luxury homes and fancy cars. The Ponzi scheme ultimately collapsed under its own weight, causing hardship to thousands, many of whom were retirees who lost their life savings."

The charges mark the culmination of a year-long investigation, which found that Koenig, Armitage and Guidi created a network of more than 55 business ventures over a period of 10 years to enrich themselves and keep their Ponzi scheme afloat.

Brown's investigation revealed that in 1997, the three men began peddling construction and real estate projects across California. This included: "Quail Hollow," a residential subdivision in Susanville; Lake College, a for-profit vocational school in Redding; Mountain House Golf Course near Tracy; a light industrial distribution center in Brentwood; and dozens of other so-called "investment opportunities."

Victims were promised that these were safe, secure, low risk investments with double-digit returns, averaging 12 percent.

In recruiting their victims, Armitage organized "investment planning seminars," many of which targeted retirees, in the Bay Area and throughout California. Based on advice from these seminars, Californians invested sums ranging from $50,000 to more than $1 million. Some turned over their entire retirement portfolios and savings accounts.

Many of the construction and real estate projects, however, were poorly managed and were not financially viable, resulting in huge losses. Some projects were left unfinished or ended up in foreclosure.

Rather than inform investors about the failures, the complaint says Koenig, Armitage and Guidi sought to attract new investors, whose funds could be used to offset losses and pay returns to earlier investors. In doing so, the defendants withheld vital information that impacted investment decisions, including past business failures and Koenig's 1986 federal fraud conviction.

With double-digit returns and no knowledge of the investment failures, most investors kept their money in place and many invested in new projects. This Ponzi scheme continued for more than 10 years.

Under this scheme, the defendants' company would purchase an assisted living facility and sell it to one of their affiliate companies. The affiliate would then sell ownership shares in the property as an "investment opportunity" at an even higher price to new investors. Meanwhile, an additional affiliated company would manage the property to maximize revenue.

Revenues, however, were not reinvested into the facilities, but were pooled and used to pay interest to investors and keep investors at bay.

In April 2007, the Ponzi scheme began to collapse under a mountain of debt, and the defendants were unable to pay interest to investors. Nevertheless, they continued to solicit new investors in the vain hope that they could keep the operation alive, raising $23 million from 91 new investors.

The defendant's businesses finally went closed their doors in June 2008.

During the course of its investigation, Brown's office identified more than 1,000 victims with losses totaling $200 million.

Over the 10 years, Koenig, Armitage and Guidi siphoned fees, revenues and profits from their business ventures for their personal benefit, using the funds to purchase an 80-acre castle estate, a Lear jet, luxury vehicles, lavish vacations and expensive wine and art.

The three were charged with selling securities by means of false statements or material omissions in violation of Corporations Code Section 25401/25540 and residential burglary in violation of Section 459 of the Penal Code:

• Koenig was charged with 40 counts of securities fraud and 37 counts of residential burglary.

• Armitage was charged with 42 counts of securities fraud and 37 counts of residential burglary.

• Guidi was charged with 39 counts of securities fraud and 33 counts of residential burglary.

If convicted on all counts, each could face more than 100 years in prison.

More Scam Alerts ...

May 26, 2009
Advanta is freezing the accounts of nearly one million credit-card holders, most of them small businesses and self-employed professionals, effective next Saturday. The company said it is trying to cut its losses and preserve capital.

An email sent to Advanta clients said:

Your Advanta Business Card account is funded by an independent trust which owns the balances you owe on your account and provides funding for new transactions. We expect the trust to stop funding activity on our accounts. The trust also restricts our flexibility to fund activity on your account. Unfortunately, as a result, effective May 30th all Advanta Business Credit Card accounts, including your account, will be closed.

The email said customers would not be required to immediately pay off their balance and could continue making payments under the terms of their agreement.

Industry analysts called the move unprecedented and said it indicates the company is under severe financial stress.

The move was described by industry analysts as unprecedented and indicative of severe financial stress. Earlier this year, the Philadelphia-area company eliminated 300 jobs, or a third of its workforce, and cut its dividend 88 percent. It lost $75 million in the first quarter of this year, compared with a profit of $18 million in the same quarter last year.

Advanta said its customers defaulted last month at a rate of 20.15 percent, compared with 17.31 percent in March. Outstanding credit-card balances at the end of April were $4.5 billion. The company hopes customers will pay off their balances, but it is not clear what business Advanta will have left after that.

The disclosures came in a regulatory filing by the Advanta Business Card Master Trust, which bundles Advanta's small-business loans for sale to investors.

Customers have been complaining for months that Advanta has raised their interest rates without warning and, in some cases, closed their accounts or reduced their credit lines.

"Advanta raised my annual percentage rate from 19% to 38% after I had used the card and would not provide any detailed explanation for why they took this action," said Matt of O'Fallon, Mo. "They have lowered my credit line now to $2800 and I'm sure once I submit the payment in full they will cancel the card."

"I have had perfect credit and Advanta still managed to raise the interest rate to 37.99% and it was impossible to talk to anyone who spoke good English," said Dick of Appleton, Wis. "I made offers to pay them off, took bank loans to pay them off, was still overcharged and the rate jacked up for no reason."

Circuit City is back, sort of. The bankrupt consumer electronics retailer has sold its name and Web site to Systemax, a company that sells consumer electronics online.

Circuit City liquidated and closed all of its stores earlier this year, a victim of the recession that fatally worsened its already weakened competitive position.

Systemax may not be a household name among consumers, but it has a following among online electronics consumers, who are familiar with its TigerDirect brand. The company sells computers and other gear through its Web site and catalogs.

It also has a history of trying to breathe new life into dead brands. It acquired CompUSA two years ago after it declared bankruptcy and now sells products using the well-known brand.

Systemax relaunched CircuitCity.com May 23, designing the front page to look similar to the old Circuit City Web site. However, some visitors to the site report that once you navigate past the home page, the other pages look more like Tigerdirect.com and CompUSA.com pages.

Consumers who had accounts at Circuit City, or did business with the retailer, can expect to be the recipient of marketing by the newly reconstituted brand. As part of the deal with Circuit Citys liquidators, Systemax also received the former companys mailing lists.

There have been no announced plans to open actual retail locations, and the Web site notes that the new Circuit City does not honor warranties issued by the old Circuit City.

Systemax is by no means a newcomer to the consumer electronics business. It was founded in 1949 and reported sales in excess of $3 billion last year. Shares of the company are traded on the New York Stock Exchange.

With home foreclosures at an unprecedented and historic high, the National Consumers League (NCL), which has long tracked illegal scams through its Fraud Center, warns millions of consumers are more vulnerable than ever to mortgage fraud and bogus foreclosure rescue schemes.

As federal and state governments undertake a much-needed crackdown, NCL urges a renewed focus on consumer education to help consumers avoid falling victim to these criminals in the first place.

Mortgage fraud costs the lending industry an estimated $4-6 billion annually, according to the Prieston Group. At a time when consumer's pocketbooks are stretched thinner each day due the tight economy, homeowners are increasingly vulnerable to fraudsters offering them a way to avoid losing their homes.

Unfortunately, for tens of thousands of Americans, these schemes almost always end up with consumers losing money, having their credit further damaged, and losing their biggest investment: their homes.

"We welcome the recent actions by the federal and state governments to tackle the growing threat of mortgage fraud," said Sally Greenberg, NCL Executive Director. "However, vigorous enforcement actions — while a critical component of fighting fraud — must be combined with education to help consumers recognize and avoid these scams in the first place."

Mortgage modification and foreclosure rescue scams come in a variety of guises, but some of the common ones include:

• Upfront Fee Scam. Fraudster promises, for an upfront fee, to negotiate with homeowners bank to pay down back-payments, but scammer ultimately takes the money and disappears.

• Lease-back or repurchase scams. Con artists promise to pay a mortgage and lease it back to their victims if the consumer signs over the deed. The scammer then raises the rent, sells the house, steals equity, or even evicts the tenant.

• Refinance fraud. Victims sign over ownership of the house, thinking they are signing documents for a new loan at a lower payment level.

• Bankruptcy schemes. The scammer encourages the victims to stop paying their mortgage and offers to file bankruptcy for the consumer, for a fee.

• Appraisal fraud. An appraiser — in cahoots with a bank — overvalues the home, then secures an unnecessarily large loan at high interest rates for the homebuyer. Another scenario is that the appraiser undervalues the home in order to justify a short sale and subsequent re-sale at market value for profit.

"Recent multi-agency federal and state actions to tackle the threat of mortgage fraud are a positive step in helping to protect consumers," said Greenberg. "Fraudsters should be apprehended and brought to justice. All too often, however, victims of these schemes have already been ruined financially by the time mortgage fraud rings are broken up by law enforcement. Now, more than ever, enforcement should be tied to prevention by devoting more resources to educating consumers through churches, community centers, senior centers, schools, and libraries. This is needed particularly in vulnerable low-income, elderly, and immigrant communities, whose members are frequent targets for mortgage fraud."

Two class action lawsuits have been filed in the wake of the recall of Hydroxycut, a popular weight-loss supplement that has been linked to liver damage and other life-threatening side effects.

The suits, filed in Canada and Tennessee, accuse Iovate Health Sciences, which manufactures Hydroxycut, of failing to warn of the drug's dangers or take proper precautions to protect its users.

Hydroxycut was voluntarily recalled on May 1 after the Food and Drug Administration (FDA) identified numerous health risks posed by the drug. The Administration received 23 complaints of liver damage resulting from use of the product, ranging from jaundice to the need for a transplant. A 19-year-old man died in March 2007 from liver failure apparently caused by Hydroxycut; amazingly, the death was not reported to the FDA until March of this year.

The drug poses other serious risks, including heart failure, seizures, and rhabdomyolysis, a muscle condition where muscle fibers break down to the point that they are released into the bloodstream. In some serious cases, this condition can lead to kidney failure.

The Canadian suit, filed on May 4, defines a class of any Canadian who purchased Hydroxycut after May 1, 2003. The suit alleges that Iovate failed to warn on the label of Hydroxycut's possibly serious side effects. The suit seeks $20 million plus punitive damages.

The Tennessee suit, filed on May 20 in the United States District Court for the Middle District of Tennessee, defines a class of anyone who purchased a Hydroxycut product. The lead plaintiffs, all from Tennessee, spent varying amounts of money on Hydroxycut products before the recall was announced. The suit alleges counts under negligence, breach of express and implied warranties, fraud, failure to warn, unjust enrichment and violations of the Tennessee Food, Drug and Cosmetic Act, among others.

The plaintiffs in the Tennessee action experienced a number of symptoms as a result of taking the drug, including nausea, vomiting, abdominal pain, headaches, and extreme fatigue.

Very popular

The extremely popular drug currently accounts for 90% of weight-loss supplement sales. In 2008, Iovate sold more than 9 million units of the drug.

The FDA's advisory states that, Although the liver damage appears to be relatively rare, FDA believes consumers should not be exposed to unnecessary risk. Shortly after the statement was released, Iovate voluntarily recalled the drug from the market.

The FDA said that, while liver damage is rare, those affected did not exceed the recommended dosage of the drug. The Administration has yet to determine why the drug causes such damage.

The Los Angeles Times reported this week that an Army radio operator had to be medically discharged after suffering from a serious case of rhabdomyolysis, most likely as a result of using Hydroxycut during a three-month period in 2007. Robert Tropea suffered from serious muscle aches and had black urine. Moreover, tests showed extremely serious organ and muscle damage.

Tropea conceded to the Times that he didn't recognize a lot of the ingredients listed on the supplement's label. But they were selling it as something safe, and I took what they said and ran with it, he said.

The recall points to the serious problems with oversight of over-the-counter dietary supplements. Under the Dietary Supplement Health and Education Act (DSHEA), which took effect in 1994, it is the manufacturer's responsibility to ensure that a given drug is safe for consumer consumption. While the company is technically required to rely on adequate evidence in reaching this conclusion, they do not have to provide this evidence to the FDA unless the drug contains an entirely new dietary ingredient. Whether the Hydroxycut controversy will change this shoddy procedure remains to be seen.

A statement on the website hydroxycutinformation.com explains that, While this is a small number of reports relative to the many millions of people who have used Hydroxycut products over the years, out of an abundance of caution and because consumer safety is our top priority, we are voluntarily recalling these Hydroxycut-branded products.

Recalled products

The list of products being recalled by Iovate currently includes:

• Hydroxycut Regular Rapid Release Caplets
• Hydroxycut Caffeine-Free Rapid Release Caplets
• Hydroxycut Hardcore Liquid Caplets
• Hydroxycut Max Liquid Caplets
• Hydroxycut Regular Drink Packets
• Hydroxycut Caffeine-Free Drink Packets
• Hydroxycut Hardcore Drink Packets (Ignition Stix)
• Hydroxycut Max Drink Packets
• Hydroxycut Liquid Shots
• Hydroxycut Hardcore RTDs (Ready-to-Drink)
• Hydroxycut Max Aqua Shed
• Hydroxycut 24
• Hydroxycut Carb Control
• Hydroxycut Natural

The FDA has not yet determined which ingredients, dosages, or other health-related factors may be associated with risks related to these Hydroxycut products. The products contain a variety of ingredients and herbal extracts.

By Truman Lewis
ConsumerAffairs.com

May 24, 2009
It's a victory some say is largely symbolic, but American consumers got a Memorial Day present from Congress and the Obama Administration: the Credit Card Accountability, Responsibility and Disclosure Act (CARD), signed into law by President Obama Friday afternoon.

Obama called the measure "common-sense reforms designed to protect consumers." It bans unfair rate increases, prevents unfair fee traps, requires plain language in plain sight for disclosures, increases accountability all around, and institutes protections for students and young people. The Federal Reserve had already ordered similar protections but its decree will not become effective until mid-2010.

President Obama and lawmakers applaud following his signing of the Credit Card Accountability, Responsibility and Disclosure Act. (White House photo)

Under the new law:

• credit card issuers will be required to tell card holders how long it will take to pay off a balance and what it will cost in interest if they only make the minimum monthly payments;

• retroactive rate hikes that appear on a bill "suddenly with no rhyme or reason" will be barred, Obama said;

• companies will have to post their agreements online;

• consumers will have to mail statements 21 days before payment is due, instead of 14;

• shifting payment dates will be prohibited; and

• 45 days' notice will be required for changes in terms and conditions.

More details are available on the White House Web site.

It's estimated that the average household debt by credit cardholders who carry a balance is around $17,000. The White House said that every year, Americans pay around $15 billion in penalty fees. Nearly 80 percent of American families have a credit card, and 44 percent of families carry a balance on their credit cards.

Obama said the changes were not intended to encourage reckless spending.

"We're not going to give people a free pass; we expect consumers to live within their means and pay what they owe. But we also expect financial institutions to act with the same sense of responsibility that the American people aspire to in their own lives," he said at the Rose Garden signing ceremony.

Reaction

Consumer activists generally applauded the measure while bankers said it would restrict credit available to consumers and slow the economic recovery.

"While even consumers who usually pay off their cards monthly are hit by unfair rate hikes and lowered credit limits, industry employs predatory tactics aimed at 'revolvers,'" the Center for Responsible Lending said in a statement.

Gun provision

Sen. Tom Coburn (R-Okla.) tacked on an unrelated provision that allows visitors to national parks and wildlife refuges to carry loaded weapons if they are already licensed to carry firearms. Congressional leaders decided not to contest the measure in order to meet Obama's request that the measure be ready for signing before Memorial Day.

Another class action has been filed in the ongoing Chinese drywall saga, this one on behalf of three North Carolina homeowners who complained of illness and damage to their homes as a result of the wallboard.

Around 550 millions pounds of Chinese drywall was imported into the United States during the period between 2004 and 2006. This was in part due to a domestic shortage because of the housing boom, but construction in the wake of Hurricane Katrina also played a significant role.

The most commonly-cited culprit is Chinese manufacturer Knauf Plasterboard Tianjin Co., Ltd. (KPT), although other companies may also have imported defective drywall.

A number of other suits have already been filed in Florida, Virginia, Mississippi, Louisiana, and North Carolina. All in all, consumers in at least 16 states are affected. Florida and Louisiana appear to be the hardest-hit.

Lennar Homes, based in Miami, has already confirmed that some of its homes contain KPT drywall and has promised to take action. Lennar is the nation's second-largest homebuilder by volume.

The North Carolina suit alleges that the drywall caused several medical conditions, including nausea, sore throat, fatigue, and respiratory problems. The homeowners also say that metal products including wiring, appliances, and utensils were damaged by the noxious emissions from the drywall. These claims are similar to those that other homeowners have experienced.

The affected drywall tends to emit an egg-like sulfuric odor, which not only corrodes metal and leads to wheezing but which can also cause serious health problems like asthma and even pneumonia.

The suit asks the company to buy back the affected houses or pay to replace the drywall. Houses built with the defective drywall have become essentially worthless due to the hazards associated with them.

Meanwhile, the Senate Subcommittee on Consumer Protection, Product Safety and Insurance is seeking $2 million in emergency funds to expedite research relating to the problem. Additionally, an Environmental Protection Agency (EPA) study showed that Chinese drywall contains sulfur and other chemicals including two associated with acrylic paint not found in drywall manufactured in the United States. The EPA is now going to test both domestic and Chinese drywall under conditions similar to those in the pertinent states.

On Thursday, the Senate held hearings on the matter, hearing testimony from both federal officials and homeowners affected by the problem. While the hearing allowed senators the opportunity to understand the consequences of the epidemic, some were clearly concerned with the lack of consensus on what the next step will be.

Weve got to figure out what in the world these people are gonna do, said Sen. Bill Nelson (D-FL), who has taken a leading role since the story broke earlier this year. They cant afford rent and paying the mortgage if they are still living in the house.

Meanwhile, communities are taking preemptive action to ensure that homeowners in their area are not affected by the problem. The Nofolk, Virginia city council unanimously approved a measure banning the use of Chinese drywall in the city. This is the first ban approved in the United States, although more are almost certain to follow. The measure requires builders to provide proof that they are not using Chinese-made drywall; failure to do so will result in a denial of their building permit.

The Federal Trade Commission is joining with a number of states to crack down on fraudulent telemarketers claiming to help police, firefighters, and veterans.

The FTC, along with 61 Attorneys General, Secretaries of State, and other law enforcers of 48 states and the District of Columbia, have launched Operation False Charity, taking enforcement actions against 32 fundraising companies, 22 non-profits or purported non-profits on whose behalf funds were solicited, and 31 individuals.

The FTC and state agencies also released new education materials, in both English and Spanish, to help consumers recognize and avoid charitable solicitation fraud.

In these difficult economic times, Americans want to make every contribution count, said FTC Chairman Jon Leibowitz. The good news is theyre still being generous and donating to charitable organizations, including those that support our police officers, firefighters, military families, and veterans.

"The bad news is that some unscrupulous operators have seized on this goodwill to make a quick buck. The actions were announcing today demonstrate that federal and state partners will find charity scammers and we will stop them, Leibowitz said.

All of us share a deep trust and respect for our law enforcement officers, firefighters, and military service members, said Attorney General Chris Koster of Missouri. The attorneys general across the country will not stand idly by while greedy telemarketers take advantage of that trust and respect.

In Massachusetts this week, Attorney General Martha Coakley filed two separate actions this week against four professional solicitors and the two charities they fundraised for.

The first action alleges that Our American Veterans, a Georgia-based organization; its president, Sydney Young; and its professional fundraiser, Golden State Marketing, Inc., a Delaware corporation with offices located in New Bedford, engaged in deceptive solicitation practices in violation of state Consumer Protection laws.

The complaint alleges that the defendants misled donors into believing that fundraisers were calling on behalf of veterans groups based in Hingham and Hull and that their donations would benefit veterans in those communities.

The complaint further alleges that the defendants failed to disclose their status as professional fundraisers, and failed to honor requests to discontinue its solicitation campaign to raise funds for disabled and indigent veterans. A preliminary injunction hearing has been scheduled in this case for June 9, 2009.

In the second action filed in court, the Attorney Generals Office alleges that Disabled Police Officers Counseling Center, Inc., a Florida-based charity; its president, Terry Morrison; and its professional fundraisers, Patrick Kane, doing business as the Kane Marketing Group, Mark Hemphill, doing business as Infiniti Marketing Firm, and James Vincent, doing business as Northeast Advertising, misled potential donors into believing that fundraisers were volunteers calling on behalf of local disabled police officers.

The complaint also alleges that the defendants in this lawsuit did not disclose their status as professional fundraisers, did not disclose the charitys Florida address, and did not file fundraising reports for their fundraising campaigns, all of which are required by law. A preliminary injunction hearing has been scheduled in this case for June 19, 2009.

Given todays economic climate, charitable organizations are already struggling to secure funding for their missions through donations, Coakley said. Fraudulent solicitors not only take money away from legitimate organizations, but they also undermine the public's confidence in legitimate charitable fundraising. Fortunately, through some simple research and good common sense, donors can prevent much of this fraud, and ensure that donated funds go to support the worthy causes, rather than unscrupulous individuals.

May 21, 2009
Nutro Products has announced a voluntary recall of select varieties of NUTRO NATURAL CHOICE COMPLETE CARE Dry Cat Foods and NUTRO MAX Cat Dry Foods with Best If Used By Dates between May 12, 2010 and August 22, 2010. The cat food is being voluntarily recalled in the United States and ten additional countries. This recall is due to incorrect levels of zinc and potassium in our finished product resulting from a production error by a US-based premix supplier.

Two mineral premixes were affected. One premix contained excessive levels of zinc and under-supplemented potassium. The second premix under-supplemented potassium. Both zinc and potassium are essential nutrients for cats and are added as nutritional supplements to NUTRO dry cat food.

The company said the probelm was identified during an audit of the documentation from the supplier. A company spokesman said an "extensive review confirmed that only these two premixes were affected." The recall does not affect any NUTRO dog food products, wet dog or cat food, or dog and cat treats.

Affected product was distributed to retail customers in all 50 states, as well as to customers in Canada, Mexico, Japan, Korea, Thailand, Malaysia, Singapore, Indonesia, New Zealand, and Israel. The company said it is working with all of its distributors and retail customers, in both the US and internationally, to ensure that the recalled products are not on store shelves. These products should not be sold or distributed further.

Consumers who have purchased affected product should immediately discontinue feeding the product to their cats, and switch to another product with a balanced nutritional profile. While the company said it has received no consumer complaints related to this issue, cat owners should monitor their cat for symptoms, including a reduction in appetite or refusal of food, weight loss, vomiting or diarrhea. If your cat is experiencing health issues or is pregnant, consumers should contact their veterinarian.

Consumers who have purchased product affected by this recall should return it to their retailer for a full refund or exchange for another NUTRO dry cat food product. Cat owners who have questions about the recall should call 1-800-833-5330 between the hours 8:00 AM to 4:30 PM CST, or visit www.nutroproducts.com.

Recalled Pet Food

The varieties of NUTRO NATURAL CHOICE COMPLETE CARE Dry Cat Foods and NUTRO MAX Cat Dry Foods listed below with Best If Used By Dates between May 12, 2010 and August 22, 2010 are affected by this recall.

Read verbatim complaints and comments from consumers.

Craigslist CEO Jim Buckmaster has fired back at South Carolina Attorney General Henry McMaster, who has been threatening to prosecute Buckmaster on criminal charges of soliticting prostitution. In an unusual turnabout, Buckmaster has filed suit against McMaster, seeking an injunction that would bar him from filing charges.

McMaster and other state Attorneys General have been hounding Craiglist because of postings by men and women that solicit sex, entertain invitations to amorous encounters and otherwise enable citizens to communicate with each other.

Buckmaster's suit argues that his site's activities are protected by the First Amendment and, more specifically, by the Communications Decency Act, enacted by Congress in 1996 to protect Web sites, telecommunications providers and other interactive communications media from being held responsible for the content of messages posted by their users.

McMaster's threats are "unwarranted by the facts" and "represent an unconstitutional prior restraint on free speech," Buckmaster wrote in his blog.

Last week, Craiglist agreed to shut down its "erotic services" section and open a new "adult services" section, which will be reviewed by human editors. Explicit prostitution advertisements and pornographic material will not be allowed, Craigslist said. That didn't stop McMaster, though. He continued to threaten legal action if ads implicated in prostitution continued to appear on the site.

The Wall Street Journal quoted a University of South Carolina law professor, Ann Bartow, as saying McMaster, who is running for re-election, was either "grandstanding" or simply did not understand the Communications Decent Act.

In New York, Attorney General Andrew Cuomo on Wednesday indicted seven people accused of promoting a prostitution ring in New York City via Craigslist but did not name the site as an accessory.

Press reports in major cities said the number of obvious prostitution ads on Craiglist had dropped since the site changed its policy.

Less than three months after Ticketmaster settled a suit accusing it of redirecting consumers to its partner TicketsNow.com in an effort to drive up prices, TicketsNow is again being accused of ripping off loyal customers.

In the February settlement, thousands of consumers who tried to buy tickets to a show at the New Jersey Meadowlands by either Bruce Springsteen or the E Street Band were redirected to TicketsNow.com, where they were charged prices as high as four times the actual face value of the tickets. This in spite of the fact that original tickets were still available on Ticketmaster's own site.

The suit should probably not have come as a surprise; the relationship between the two companies provides ample incentive for such shady practices. Ticketmaster bought TicketsNow in January 2008 for $265 million. The purchase was designed to move Ticketmaster, already an industry giant, into the vaunted secondary ticket market. Companies like Ticketmaster are primary ticket sellers, meaning that they sell the original ticket.

Secondary ticket companies essentially act as online scalpers, where people who bought tickets on Ticketmaster can go and resell them for more than their actual worth. Depending on the event's popularity, ticketholders can make a handsome sum; a recent Garth Brooks event allowed some to turn an eight-fold profit. At the time of the acquisition, TicketsNow was the second largest secondary ticketer, behind only StubHub!, and Ticketmaster was already the number one primary ticketing company.

The settlement in the February case, negotiated by New Jersey Attorney General Anne Milgram, placed a wall between Ticketmaster and TicketsNow. Ticketmaster promised not to link to the subsidiary for at least a year for all shows and entertainment events. Ticketmaster agreed to pay New Jersey $350,000, and to set up a random drawing for 1,000 consumers who filed complaints against Ticketmaster with the Division of Consumer Affairs. The winners of the drawing received tickets to one of two concerts scheduled for May 21 and May 23 at the Meadowlands.

Those not selected in the drawing were given a $100 Ticketmaster gift certificate and the chance to purchase two tickets to a future Springsteen show before sales opened to the general public.

In the current scandal, TicketsNow told over 300 consumers who bought tickets for a Springsteen show on May 18 in Washington that the tickets wouldn't be available. The website essentially oversold the show, collecting money for tickets that didn't exist in the first place.

TicketsNow has acted quickly to try to right the problem, no doubt cognizant of the fact that they are being eyed closely by regulators and the public at large. The company offered the wronged consumers a full refund and a TicketsNow gift card equal to what they paid for their ticket. Customers who balk at the offer were also given the choice of better seats to an earlier show, along with $75 for gas and $150 for a hotel room.

This chivalrous offer has done nothing to assuage New Jersey Rep. Bill Pascrell (D) from vowing to introduce legislation mandating the FTC to create a framework of rules for the secondary ticket market. According to Pascrell, Right now there is no transparency, no checks and balances. No one knows what the hell is going on. He went one step further by calling the secondary ticket market legalized scalping.

Looking at Ticketmasters's website, one would think that the partnership between the two companies is a roaring success and great news for consumers. The site proclaims that, The partnership between Ticketmaster and TicketsNow allows fans the greatest choice and access to live entertainment while ensuring reliability of service, convenience, and security.

The online ticket market has proved problematic several times over the past year.

In March, Pennsylvania Attorney General Tom Corbett announced a settlement with the fan website of child star Miley Cyrus, which offered $30 memberships in a fan club with the incentive of early access to ticket sales. The website, however, failed to inform fan club members that sales went public within fifteen minutes of first being offered to members. The site also offered pre-sale codes for early access to tickets, when in fact all tickets were already sold out. Under the settlement, 996 consumers got their membership extended by four months.

Additionally, Ticketmaster faces yet another suit regarding the bait-and-switch implicated in the February case. Phish fan John O'Hurley filed suit in federal court in Massachusetts. The suit says that consumers who log onto Ticketmaster are told that tickets are sold out and immediately rerouted to TicketsNow O'Hurley's confirmation e-mail said he had purchased nine tickets for a total of $2,064; the face value of the tickets, however, was $60.

President Obama today ordered federal government agencies to sweep their regulatory histories going back ten years for any regulation that would preempt or block stronger state laws and remove them, reversing a long-running trend towards "preemption" of laws that protect consumers at the state level.

The memorandum, released today by the White House and published in the Federal Register, affirmed that "Throughout our history, State and local governments have frequently protected health, safety, and the environment more aggressively than has the national Government."

"In recent years...executive departments and agencies have sometimes announced that their regulations preempt State law, including State common law, without explicit preemption by the Congress or an otherwise sufficient basis under applicable legal principles," the statement added.

Under the new directive, heads of federal agencies would not be able to issue regulations that conflicted with state law unless the regulation specifically included language describing the preemption, or that did not cohere with existing federal orders governing preemption.

The Constitutional Accountability Center (CAC) hailed the decision as a rebuke of the Bush administration's frequent usage of preemption, saying that "President Obama reaffirmed the critical role that state and local governments play in our constitutional system."

In recent years, numerous industries have argued that federal laws should preempt state laws on a variety of topics, from roof strength standards for cars, to predatory lending laws, to cell phone contracts. The common business argument has been that a single, simple federal standard is easier for businesses to navigate than a patchwork of 50 different state laws.

Critics charge that the real reason businesses favor federal preemption is that it's easier to lobby a few lawmakers on Capitol Hill to pass weak federal laws that block stronger state laws, and that national law should be a floor, not a ceiling, for state laws.

Ian Millhiser, an attorney with the National Senior Citizens Law Center, said on his personal blog that "President Obama's policy memorandum shows that he understands that the federal government cannot be an obstacle to states who want to protect their citizens in a manner that goes above and beyond bare federal standards."

U.S. Congressman Bart Stupak (D-Mich.), has introduced legislation to block the import of substandard building materials. Consumers in Florida and elsewhere complained of allergy-like symptoms apparently resulting from a sulfur compound wafting from Chinese drywall in their homes.

Americans expect structural building materials to be safe and effective, Stupak said. Industry testing and recent media accounts indicate much of the building materials pouring into the United States from overseas, particularly from China, are unsafe and unreliable.

Stupak's bill also addresses concerns about substandard steel from China. In April 2008 the Congressional Steel Caucus held a hearing on the steel questioned and determined that U.S. Customs inspectors do not have the authority to reject inferior steel and cannot ensure that it will not end up in U.S. infrastructure.

The U.S. Customs and Border Patrol (CBP) is the federal agency charged with enforcing trade laws at the border, but has no authority to enforce product safety standards. Stupak asked the agency to report back on CBPs current authority and what additional authority is needed to make sure substandard steel is not used in the United States, as well as what if any additional resources would be required for enforcement.

The Michigan Congressman said that Chinas increased steel production has severe consequences for American steel producers, as well as domestic industries that use steel. Currency manipulation and policies by the Chinese government have encouraged substandard Chinese steel to flood the U.S. market, Stupak charged. Independent laboratory tests have confirmed that significant quantities of Chinese steel do not meet high-strength requirements, he said.

This junk should be turned around and shipped right back to China, Stupak said. CBP made it clear in our discussions that they lack the authority to reject a product so I have introduced legislation to give the agency the authority to reject and not offload substandard building materials in the United States.

CBPs testimony at the 2008 hearing focused on steel. The Chinese drywall complaints are of more recent origin but have provided ammunition for Stupak and others seeking a sharp curb on Chinese building materials.

Consumers have complained of foul-smelling sulfuric odors and gases that are corroding electrical wiring in homes and may be responsible for chronic health problems. An estimated 35,000 homes have been affected in Florida, along with homes in Louisiana, Mississippi, Texas and Virginia.

Although there are no high-profile documented cases of substandard cement entering the United States, Stupak included cement in the legislation as a precaution given recent reports of problems in other countries and the increased demand expected for cement as construction projects funded through the American Recovery and Reinvestment Act begin.

A cheaper product does not save money when that product creates costly health and safety hazards for Americans, Stupak said. Federal law should ensure whether it is food, drugs, toys or building materials that the products imported into this country are held to the same rigorous health and safety standards as American-made goods. If not, then that product should never be allowed to enter our country.

Stupak, as chairman of the House Energy and Commerce Committees Subcommittee on Oversight and Investigations, said he has found through 18 hearings he has held on unsafe imports of food and drugs that products are entering the United States "every minute" without proper inspection and without being held to the same safety standards as American-made goods.

May 20, 2009
Despite accumulating evidence and moves by retailers to drop products containing bisphenol A — commonly called BPA — the Food and Drug Administrations official position remains that the chemical can be safely used to make infant formula bottles.

Now the Milwaukee Journal Sentinel reports that it has obtained emails that it says show the FDA relied on chemical industry lobbyists to help reach that conclusion.

The emails show the lobbyists examined BPAs risks, tracked legislation that would have limited or banned it, and even monitored news coverage.

In one case, the newspaper reports the FDAs deputy director requested information from the chief industry lobbyist to discredit a study that found the chemical caused miscarriages in workers exposed to it.

In the document published by the newspaper, Mitchell Cheeseman, deputy director of the FDAs center for food safety and applied nutrition, said: Id like to get information together that our chemists could look at to determine if there are problems with that data in advance of possibly reviewing the study.

In a report last October, a scientific panel assembled by the FDA to study the agency's position on the controversial found a lot to criticize. While not taking a position on whether BPA is safe, the panel criticized the FDA for allegedly ignoring studies that claim BPA is dangerous.

In ignoring that research, the panel said, the FDA is creating what it called a false sense of security among consumers, who assume products containing BPA pose no threat because the FDA says its safe.

Baby bottles

Some retailers, including Wal-Mart, have taken those studies very seriously, pulling products containing BPA from their shelves, if the products are intended to be used by children.

BPA is widely used in plastic manufacturing, since it is added to plastic to make it more rigid. It's used in clear, plastic water bottles, for example. It's also found in infant formula bottles.

Studies have suggested that's not a safe use, since the animal studies involving the chemical have linked it to changes in body chemistry, and in some cases to increased cancer risk.

At present, the FDA's position is that the levels of BPA in products used by both adults and children are not high enough to cause a health risk in humans. In taking issue with that position, the panel said the FDA does not have an adequate number of infant formula samples and relies too heavily on averages, rather than accounting for variability in the samples.

It also noted that new research on BPA in adult humans and animals was published after the FDA draft report, but was not included in the final report. It took issue with the margins of safety for BPA exposure cited by the agency, as being inadequate.

The FDA, at the time, said the advisory panel "raised important questions" and said the whole issue needs more study.

National consumer groups have filed objections in the federal bankruptcy court in New York that is overseeing the Chrysler bankruptcy proceeding, asking the court to preserve the rights of consumers who have suffered or will suffer injury or loss caused by defects in Chrysler vehicles to seek compensation from Chrysler.

The groups do not aim to delay the bankruptcy, but to ensure that the new company that emerges does not leave customers who have been, or will be in the future, injured by Chrysler cars with no avenue for obtaining relief, according a statement issued by the groups.

The objection was filed on behalf of the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety (CARS), National Association of Consumer Advocates (NACA) and Public Citizen.

Consumers are the only ones who can save Chrysler, said Rosemary Shahan, president of CARS, a non-profit consumer group based in Sacramento, Calif. Preserving their rights should be the first priority, not the last.

We want to ensure that consumers voices are heard in the bankruptcy proceeding, said Adina H. Rosenbaum of Public Citizen, lead counsel for the consumer groups.

No remedy

Unless the groups succeed, the claims of families of victims who died due to unsafe Chrysler vehicles and people who suffered devastating and debilitating injuries will be wiped out. When the new Chrysler/Fiat company emerges from bankruptcy, owners of vehicles who seek refunds under state auto lemon laws will also be left without a remedy.

For consumers injured, burned and paralyzed by defects in Chrysler vehicles, wiping out Chryslers liability destroys any possibility for an independent life, said Clarence Ditlow, director of the Center for Auto Safety. Taxpayers are already paying for Chryslers bailout; they shouldnt pay for injuries in crashes caused by Chrysler.

As dealerships shut down in towns across the country, Consumer Action wants to ensure that consumers are not abandoned during the bankruptcy process, said Linda Sherry, director of National Priorities at Consumer Action.

The groups objection was filed jointly with three individuals who have cases pending against Chrysler for injuries and deaths allegedly caused by Chrysler vehicles.

The H1N1 — "Swine Flu" — virus has now spread to 48 states, according to the U.S. Centers for Disease Control and Prevention (CDC). There are presently 5,710 confirmed cases.

Forty countries have officially reported 9,830 cases of influenza A(H1N1) infection, including 79 deaths, according to the World Health Organization (WHO); 5,123 cases have been confirmed in the United States.

New York City is among the hardest-hit areas in the U.S. At least 26 schools have been closed there and an assistant school principal died over the weekend of complications from the H1N1 flu.

The closings are also having an effect on schools that remain open, as worried parents keep children home. In what Department of Education officials call a "significant drop," on Tuesday only 85.5 percent of New York City's 1.1 million students were present, compared with 88.5 percent a week before. In Queens, only 83.2 percent of students were present for school on Tuesday.

We continue to see a rising tide of flu in many parts of New York City, said New York City Health Commissioner Thomas R. Frieden. As the virus spreads, we will look to slow transmission within the individual school communities by closing individual schools. Unfortunately, we fully expect to see more severe illness in the coming days, particularly among people who have underlying health problems."

New York officials said Monday's death of a 16-month-old toddler was not related to swine flu. Jonathan Zamora of Queens was admitted to Elmhurst Hospital with flu-like symptoms and later died.

Emergency rooms throughout New York filled up with concerned parents and sick children. ABC News reported more than 400 people crowded the emergency department at Elmhurst after the Zamora toddler's death.

No more dangerous than regular flu

Although the new flu virus continues to spread rapidly, it is still no more dangerous than regular flu, U.S. health officials say. Patients hospitalized with the flu who have underlying problems usually fare worse than otherwise healthy people who have also been hospitalized.

In an early release of the U.S. Centers for Disease Control and Prevention's journal Morbidity and Mortality Weekly Report, California health authorities assessed 30 people hospitalized for the H1N1 swine flu. One difference between these patients and patients with seasonal flu was their average age. At 27, the swine flu patients were much younger than most patients with seasonal flu who required hospitalization.

Health officials in both the United States and abroad have previously reported that the H1N1 swine flu seems to be targeting teens and young adults, unlike the regular flu, which usually strikes hardest at the elderly and the very young.

About two-thirds of the hospitalized patients in California had at least one underlying medical condition that put them at higher risk for influenza and its complications, Dr. Anne Schuchat, the CDC's interim deputy director for science and public health program, said during an afternoon teleconference Tuesday.

"The most common conditions were chronic lung disease, conditions associated with immunosuppression, chronic heart disease, obesity and pregnancy. There were five pregnant women in this series of patients," she said.

"Although the majority of hospitalized people infected with this new H1N1 virus recovered without complications, certain people did have severe and prolonged disease," Schuchat said. "None of these patients died. There are still some of these patients in the hospital, so we don't know whether they will make it or not."

Find out everything you need to know about swine flu.

Smishing enables spammers to dupe people into revealing personal information — including bank account numbers and personal passwords — with phony text messages to their cell phones.

Consumers who fall for this scam are likely to have their identities stolen, and their bank accounts drained in short order.

"Smishing" is the latest evolution of harvesting personal data for fraud. "Phishing" occurs when users receive seemingly legitimate emails from authorities asking for personal information, only to be redirected to a fake Web site where their personal data is stolen.

"Vishing" is a similar technique used over Internet phone calling services such as Vonage and Skype. The scammers place hard-to-trace calls urging respondents to provide their personal data for various reasons.

Many computer users have learned to identify and delete spam e-mails that falsely appear to originate from legitimate banks, credit card companies and government agencies. Internet service providers and spam filters often block these messages so they never reach their intended targets.

Those types of spam filters, however, are not available for most cell phone text messages.

"While misspelled e-mail messages and broken address links make it simpler to judge a spam e-mail, determining whether a text message is legitimate may be difficult," said the office of Texas Attorney General Greg Abbott. "There are no images — only text — and the message is usually short."

Smishing messages, for example, may threaten consumers about a charge that can only be cancelled if the user visits the phony Web site displayed in the message.

Another common smishing scam directs consumers to call a toll-free number to complete or cancel a financial transaction. "An operator at the number will helpfully take the callers credit card or debit account number — and use that information to defraud the caller," authorities said.

Legitimate financial institutions do not call or e-mail customers seeking this information. Customers who are concerned about a purportedly pending charge should contact the service provider or bank directly and inquire about it.

Abbot's office said consumers can protect themselves from getting taken in a smishing scheme by:

• Never responding to text messages that ask for personal information;

• Never calling any unknown telephone numbers provided in a text message;

• Never clicking on any Web links provided in a text message. Activating those links may direct consumers to fraudulent Web sites -- or allow identity thieves to capture their personal information. Legitimate financial institutions do not call or e-mail customers for this type of information. Customers who are worried about a pending charge should contact the service provider or bank directly;

• Deleting the phony text message

May 19, 2009
ConsumerAffairs.com has appealed the refusal of the U.S. Food and Drug Administration (FDA) to release lab results, citizen complaints and other documents related to NUTRO pet food.

The consumer Web site has received more than 800 reports from consumers who say their pets became ill and, in some cases, died after eating NUTRO products. ConsumerAffairs.com first requested the FDA documents under the Freedom of Information Action (FOIA) last spring, but the FDA denied the request, saying that granting it could interfere with law enforcement proceedings.

Questioned by ConsumerAffairs.com reporter Lisa Wade McCormick, an FDA official who spoke on the condition of anonymity said that the request was denied because the agency was investigating NUTRO. But the FDA's Center for Veterinary Medicine (CVM) then issued a press release claiming that NUTRO was not being investigated.

The CVM is not the FDA division that handles complaints about pet food and is not the division to which the FDA employee who confirmed the investigation is assigned.

"Though the reports on whether the FDA is investigating Nutro have been conflicting, the FDAs official position is that there is no pending investigation of Nutro. Therefore, the FDA may not rely on the 'law enforcement' exemption of FOIA because, according to the FDA, there is no pending enforcement proceeding against Nutro," said Cameron Stracher, a New York attorney who represents ConsumerAffairs.com.

Despite the FDA's denial that it is investigating NUTRO, consumers have confirmed that FDA inspectors came to their homes investigating their pets' deaths.

In one instance, the FDA investigator told a consumer that he had learned of her pet's death by reading her complaint on ConsumerAffairs.com.

Why not?

"The FDA's odd insistence that there is no investigation -- when all the evidence indicates that there is -- leads to an even more obvious and urgent question," said James R. Hood, president of ConsumerAffairs.com. "If the agency is telling the truth and there is indeed no investigation, it seems logical to ask 'Why isn't there?'"

"One would think that NUTRO and the FDA would be curious as to why so many pet owners have reported their animals became ill after eating NUTRO products and -- in some cases -- mysteriously improved when they were switched to other foods. A public relations blitz won't get to the bottom of it. The FDA needs to stop stalling and do its job," Hood said.

Just yesterday, Sherri of Ann Arbor, Mich., wrote about her experience with NUTRO: "My pure bred Portuguese water dog began vomiting, having loose stools and acting lethargic after 4 months on Nutro Natural Choice Herring & Rice Formula. The vet could not explain, blood levels normal, intestinal antibiotics/probiotics given, intestines 2x normal size, surgery revealed no obstructions, every time food was readministered it began again. Vet suggested I stop Nutro after learning about other dogs problems. My dog is now on Natural Balance and is doing perfectly fine."

Sherri said she contacted NUTRO about a week ago. They said they'd contact her vet, but so far, they have not, she said. They also said they'd send her an envelope for samples of the food. She said they have not done that, either.

In her posting, Sherri urged other pet owners to contact the FDA and ask it to investigate.

Read verbatim complaints and comments from consumers.

A federal court in Des Moines, Iowa on May 1 dismissed a group of consolidated cases against chemical and housewares company DuPont. The 22 suits, consolidated from 15 states, alleged that DuPont knew for more than 20 years that cookware containing the company's non-stick coating, popularly known as Teflon, could make consumers sick, but concealed evidence of this from the public.

U.S. District Judge Ronald Longstaff found that individual issues differing among the plaintiffs would each require their own inquiry, making the suits improper. In his order, the judge wrote that "the only common factor binding together all of the present plaintiffs is use of nonstick-coated cookware ... Each of [the other] issues will require an individualized inquiry, which the court believes will render each class action unmanageable."

The actions alleged that, when heated to normal cooking temperatures, Teflon-coated pans release toxic particles that pose a health risk to consumers. The suits claimed that DuPont had a duty to warn consumers of the dangers of Teflon but failed to do so.

The suits specifically singled out perflourooctanoic acid, colloquially known as PFOA, as the culprit of the emissions. The Environmental Protection Agency (EPA) has said that PFOA is likely a cancer-causing agent in humans. This concern originated with an EPA study showing the chemical to be present in the bloodstream of 90% of Americans.

Millions of consumers were covered by the actions and, had they been successful, damages would have likely reached into the billions. At the time the suits were filed, attorney Alan Kluger said the class "could well contain almost every American that has purchased a pot or pan coated with ... Teflon."

A whopping 70% of cookware sold in the United States contains a non-stick coating. The equipment is far more popular than traditional stainless steel cookware, which is generally preferred by chefs but harder to clean. Teflon was approved by the Food & Drug Administration (FDA) in 1960 after the agency found elevated levels of flourinated compounds on a hamburger cooked in a Teflon-coated pan but judged them to be of little significance.

The suits sought damages, the cost of replacement cookware, and labeling warning consumers of the the possible dangers posed by Teflon. It also asked for the creation of two funds: one to monitor the health of class members, and another to fund scientific research to further study the potentially damaging effects of Teflon use.

DuPont insists that no studies have ever shown Teflon to be dangerous. Indeed, DuPont's website has a prominently featured section devoted solely to the cookware's professed safety. DuPont notes that the EPA, on its own site, asserts that it "does not believe there is any reason for consumers to stop using any consumer or industrial related [non-stick coated] products." Further, DuPont points out that the U.S. Consumer Product Safety Commission (CPSC) rejected a petition to require warning labels for the cookware.

However, the Environmental Working Group (EWG) notes that the EPA has never extensively tested the safety of Teflon. Indeed, in 2006 a group of scientific advisors to the EPA unanimously recommended that PFOA be considered a likely carcinogen.

In that recommendation, the board members questioned why the EPA had ignored certain unpublished studies, and noted that the EPA itself had conceded that animal studies had provided "suggestive evidence" that PFOA is a possible human carcinogen.

A study from the 1980s, which was never published, found tumors in lab rats linked to the chemical. A rebuttal study, conveniently funded by DuPont and 3M, questioned the former study's veracity.

DuPont is the world's largest chemical company, second only to BASF. The company is responsible for the creation of a number of popular chemicals, including Teflon, Corian, Kevlar, and Lycra.

May 19, 2009
College and high school graduations have produced thousands of new people in the labor force, seeking that first job. With a recession and rising unemployment, Pennsylvania Attorney General Tom Corbett is advising new graduates, along with other consumers seeking work, to be wary of Internet job scams.

"It is important for all consumers to be watchful for online job scams, especially young people looking for part-time or summer work," Corbett said. "Falling for these schemes will not only leave you unemployed, but victims can also lose thousands of dollars and find themselves targeted by identity thieves."

Corbett says con artists typically use Internet postings or websites like Craigslist to publish ads that offer high pay for part-time employment, including work as personal assistants, 'mystery shoppers' and check processors.

The exact wording of these scams can vary greatly, but all of the offers have common themes:

• They offer "easy money" for little work.

• Consumers work from home, rather than an office.

• It is difficult to meet your "employer" in-person, often because they travel frequently or are based overseas.

• And consumers need to respond very quickly.

Corbett said the most important element in all of these scams is that consumers will eventually be asked to wire-transfer money to another person:

• Personal assistants may be asked to pay bills for the 'employer'.

• Check processors may think they are handling payments for an overseas business.

• 'Mystery Shoppers' may believe they are evaluating stores that deal with wire transfers.

"In reality, victims are depositing counterfeit checks or money orders into their bank accounts and then wire-transferring that money to scam artists overseas," Corbett said. "Eventually, these bogus checks will be returned and banks will require consumers to repay any funds they withdrew."

Corbett said that consumers should always be wary of online job offers that seem "too good to be true," especially any situation where you are being asked to wire-transfer money to someone you do not know.

A West Virginia judge has issued an injunction, blocking Able Debt Settlement of Irving, Texas from doing business in the state. Attorney General Darrell McGraw sued Able Debt Settlement last month, saying consumers paid Able for services they never received.

Able claims to settle consumers' debts for less than 50 cents on the dollar. Able charges consumers thousands of dollars for its services, but makes no effort to settle consumers' debts and then refuses to refund their money, McGraw charges. Instead of having their debt paid off, consumers are left with ruined credit and unpaid bills.

Debt settlement companies usually claim to negotiate with consumers' creditors to repay outstanding debts, at a deep discount. Consumers are instructed to stop paying their creditors and to make monthly payments to the debt settlement companies instead. The premise behind debt settlement is that creditors will eventually be willing to settle outstanding debt for pennies on the dollar.

With this injunction, Able is prevented from conducting any business in West Virginia, including any manner of debt settlement. Judge Irene C. Berger further ordered Able to contact its customers in West Virginia and advise them Able was prevented from operating in West Virginia. Finally, Judge Berger ordered Able to post a notice on its Internet website that its debt settlement services are not available in West Virginia.

McGraw's consumer protection division started an investigation of Able in 2007 and previously obtained a temporary 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.

"Debt settlement companies that promise to negotiate debts on behalf of consumers and fail to provide any services will not be allowed to operate in West Virginia," said McGraw. "Consumers who need assistance with paying their bills should either consult an attorney or seek the services of a non-profit credit counseling agency."

Illinois Attorney General Lisa Madigan has reached an agreement with U.S. Energy Savings Corp. that will allow hundreds of Illinois consumers to terminate contracts and receive $1 million in restitution as a result of a lawsuit filed last year alleging that the alternative gas supplier sold fixed-rate gas contracts using misleading sales tactics that falsely promised significant consumer savings.

My office has received a nearly unprecedented number of calls from consumers who were deceived by false assurances that they would receive significant savings by switching to this alternative gas supplier, Madigan said. This agreement will help to protect Illinois consumers and ensure that this company provides full, upfront disclosures about its products terms and conditions so that consumers can make informed decisions.

Ann of Chicago told ConsumerAffairs.com in January that she had signed a U.S. Energy Savings contract because she thought the salespeople were with Peoples Gas. "Afraid I was scammed by signing a paper about keeping my gas bill low today," she said.

In neighboring Indiana, Carter of Valparaiso had a similar experience.

"In June 2008, when natural gas prices spiked very high, I was visited by a high-pressure sales team from U.S. Energy Savings Corp. and signed a 5 year fixed-price natural gas contract," he said. "The economic consequences have been terrible. Like many consumers who have gotten scammed by these energy contracts, my energy bills this year skyrocketed, while the price of natural gas plummeted to now less than half of the $1.09 per therm I am paying."

"Based on my careful calculations, I have paid $400-500 more for gas just in the past four months because of this contract, despite keeping my thermostat ridiculously low (low 60s in daytime, 56 at night)," he said.

Madigans lawsuit alleged that Illinois Energy Savings Corp., which does business as U.S. Energy Savings Corp., sold its Natural Gas Fixed Price Program to the participants of Northern Illinois Gas Companys (Nicor) Customer Select and Peoples Energy Choices for YouSM programs with deceptive claims that the fixed-rate program would offer significant savings by locking consumers into a consistent gas price before rates spiked.

As part of this sales pitch, however, the companys door-to-door sales representatives failed to disclose that the fixed gas price was actually higher than prices historically offered by regulated utility suppliers such as Nicor. According to Madigans complaint, consumers were led to believe that they would automatically save money by enrolling in the U.S. Energy Savings program.

The Attorney Generals lawsuit further alleged that U.S. Energy Savings sales representatives violated the Illinois Consumer Fraud and Deceptive Business Practices Act by failing to disclose the existence of an early termination fee, failing to properly identify themselves as representatives of an alternative natural gas company and failing to obtain consent from the account holder to switch gas suppliers from the regulated utility to an alternative supplier. U.S. Energy Savings denied the allegations in the lawsuit.

The agreement requires U.S. Energy Savings to make $1 million available to pay as restitution to Illinois consumers. Eligible consumers will receive notice of the settlement within 30 days and must submit claim forms to U.S. Energy Savings by Aug.12, 2009. Also as part of the agreement, U.S. Energy Savings must allow current eligible customers to cancel contracts without paying an early termination fee.

In addition, the agreement prohibits U.S. Energy Savings from using deceptive or unfair practices during the course of soliciting customers for natural gas supply contracts. Under the agreement, during solicitation, in any print materials, on its Web site and in its Welcome Letter for new customers, the company must make clear and conspicuous disclosures regarding: the type of product that consumers will receive, the price for service, terms and conditions of service, and the existence of any early termination fee.

U.S. Energy Savings also must clearly disclose that consumers will be leaving their regulated utility company to enroll with the reseller of natural gas. The agreement also places a $50 cap on the amount that U.S. Energy Savings can charge customers for early termination. Finally, the agreement requires U.S. Energy Savings to investigate and terminate sales representatives who mislead consumers, provide false information during solicitations and forge contracts or agreements.

Since 2005, the Attorney General has filed four lawsuits against alternative gas suppliers, and earlier this year, she drafted and negotiated pro-consumer legislation to regulate the alternative suppliers. The legislation, which was drafted by the Attorney Generals office and sponsored by Rep. Thomas Holbrook (D-Belleville), Rep. Marlow Colvin (D-Chicago) and Sen. Don Harmon (D-Oak Park), was enacted in April 2009 and requires stricter disclosure practices and limits termination fees.

Specifically, the new law:

• Requires all sales solicitations to clearly disclose the prices, terms and conditions of all products and services;

• Prohibits suppliers from misrepresenting their affiliation with a gas utility, governmental body or consumer group;

• Provides consumers with a right to cancel within 10 days after the gas utility notifies them of the switch and 10 days after the date of the first bill if they find that the service is not as promised;

• Limits early termination fees to $50 and requires any agreement containing an early termination clause to disclose the total cancellation fee.

Illinois consumers who would like more information about todays agreement or the new law should contact Madigans Consumer Fraud Bureau at (800) 386-5438.

Those annoying calls telling you that your car warranty is expiring and that youd better act now to do something about it should be a thing of the past -- at least for now.

A federal judge has issued a temporary restraining order stopping telemarketing company Voice Touch, Inc., its principals James and Maureen Dunne, its business partner Network Foundations LLC, and Network Foundations principal Damian Kohlfeld from making any further calls in violation of the Do Not Call Registry and other provisions of the Telemarketing Sales Rule and the FTC Act.

The move follows charges by the Federal Trade Commission that the defendants were operating a massive telemarketing scheme that used random, recorded phone calls to deceive consumers into thinking that their vehicles warranty is about to expire.

Today the FTC has disconnected the people responsible for so many of these annoying robocalls, said FTC Chairman Jon Leibowitz. We expect to see a dramatic decrease in deceptive auto warranty calls, but we are still on high alert.

If consumers continue to receive unsolicited robocalls to numbers on the Do Not Call registry, they should report them to DoNotCall.gov.

Related matter

In a related matter filed by the FTC, Judge John F. Grady of the United States District Court for the Northern District of Illinois issued a temporary restraining order against automobile warranty sales company Transcontinental Warranty, Inc., and its CEO and president, Christopher Cowart, who are clients of Voice Touch.

In both cases, the court found that the FTC established a likelihood of success on the merits.

The court barred deceptive claims about extended warranties, froze the defendants assets, and appointed receivers over Transcontinental and Network Foundations to ensure that documents are preserved and assets are not dissipated.

The restraining orders are in effect until a preliminary injunction hearing set for May 29, at which time the judge will reassess what type of relief should remain in place until the case proceeds to trial.

Constant annoyance

The spam calls have targeted Americans randomly on both cell phones and landlines, even when the recipient is on the federal "Do Not Call" registry. The call plays an automated message that offers a deal on an extended car warranty.

U.S. Senators Charles E. Schumer (D-NY) and Mark Warner (D-VA) had pressed the FTC for action and announced a few days ago that the agency expected to take action soon.

"It's about time these robocalls were terminated," Schumer said. "This prompt, aggressive action by the FTC should provide a bit of relief to the Americans besieged by these fraudulent calls. Almost everyone knows someone who's received these calls. It's about time we find out who's behind them, and put a stop to this harassment."

"In addition to violating the 'Do Not Call List' law, these scammers are peddling phony car warranties that exploit consumers," said Warner. "We've heard of Virginians receiving these calls when they do not even own a car, and others who are understandably upset that the automated calls tie-up their phone lines, costing them time and money."

Schumer and Warner revealed that they themselves have both received these calls in recent weeks.

Unrecognized number

The scam begins when someone's phone rings from an unrecognized number. The caller then turns out to be a computerized voice selling car warranties with voice starting out by saying "Out of warranty? You are still eligible to reactivate warranty coverage. This is the final call before we close the file."

The recording typically gives the caller an option to stop receiving calls, usually saying, "press two to be removed from the follow up list." However, the calls continue to come. The company making the calls has no idea what car a person is driving because the calls are randomly generated, so their contention that your warranty "is about to expire" is bogus.

In his letter to Leibowitz, Schumer wrote, "Not only are these calls a nuisance, but they tie up land lines and can eat up a user's cell phone minutes, possibly leading to a higher cell phone bill due to overage charges. Consumers should not have to pay in both money and time for this or any other type of robo-dialer harassment."

May 15, 2009
Scammers operating as locksmiths are ripping off consumers around the country, quoting one price on the phone but submitting a bill for a much larger amount once the work is done. In North Carolina, state officials have taken action against one network of phony locksmiths.

"It's frustrating to find yourself locked out of your home or car, and it's even worse when someone you call for help tries to rip you off," North Carolina Attorney General Roy Cooper said. "Taking advantage of vulnerable customers is no way to do business, and were stepping in to stop it."

A state court judge has agreed with Cooper's request for a temporary restraining order to bar several locksmith companies and their owners from advertising, offering or performing any locksmith services in North Carolina. Cooper is seeking a permanent ban on the companies, refunds for consumers, and civil penalties of $5,000 for each illegal act by the companies.

Named as defendants in the lawsuit filed today are: 704 Locksmith, Inc. of Charlotte which does business in the Triangle area under several names including Raleigh Locksmith, Durham Locksmith, Apex Locksmith and Smithfield Locksmith; NC Charlotte Locksmith which does business throughout central and western North Carolina using a variety of names such as Charlotte Locksmith, Concord Locksmith, Hickory Locksmith, and Shelby Locksmith; Anna Konevsky of Charlotte, president of 704 Locksmith and NC Charlotte Locksmith; Locksmith Services, Inc. of Charlotte, which also operates as Cary Locksmith and Atlantis Locksmith; and Tamir Avraham of Charlotte, president of Locksmith Services, Inc.

According to the Attorney General's investigation, the defendants advertise online and in the yellow pages using names, telephone numbers and addresses that make their companies appear to be local. In many cases, they use names and addresses that belong to legitimate locksmith businesses. Coopere says no one who works for the defendants is actually a licensed locksmith as required by law, but the companies advertise and perform locksmith services.

North Carolina consumers have called these companies looking for a local locksmith who could come let them into their home, business or car. As alleged in complaint filed by Cooper's office, consumers are routinely quoted one price on the phone and then charged a much higher price by the locksmith who shows up to do the work. Consumers are typically told that their lock must be drilled even when that isn't necessary, which will cost them $100 more and destroy the lock. People are then charged another $100 or more to replace their destroyed locks. The defendants usually demand payment in cash, refusing to let consumers pay by credit card.

To avoid falling victim to similar scams, Cooper recommends the following tips:

• Whenever possible, check out a business before you do business with them by calling your state Attorney General's Office and the Better Business Bureau.

• People who practice skilled trades such as locksmiths are required to be licensed. Before someone does work for you, ask if they're licensed and write down their license number.

• Get a price quote in writing before you agree to any work.

• For services you may need in an emergency, such as a locksmith or plumber, find a good one before an emergency happens. Ask family and friends for recommendations, check them out and then save their contact information so youll have it when you need it.

More Scam Alerts ...

The state of New York is moving to shut down an immigration scam that targeted and defrauded over a dozen immigrants out of tens of thousands of dollars.

According to the complaint, Queens businesswoman Miriam Mercedes Hernandez would charge her victims up to $15,000 in exchange for help in securing permanent residence. She allegedly told clients she had the connections necessary to get their status adjusted within eight months.

After eight months, however, her victims received none of the legal documentation they were promised. When they confronted Hernandez, she allegedly threatened to call the authorities if they complained to anyone. The lawsuit filed by Attorney General Andrew M. Cuomo seeks to bar her immediately from continuing her fraudulent business practice, as well as secure restitution for the victims and penalties and costs for violating New York law.

"This city owes its history and its heritage to the immigrants who built it," said Cuomo. He called the case, "a classic example of fraud — lying, cheating and exploiting people trying to permanently make this country their home."

Hernandez is charged with engaging in fraud and deceptive practices, as well as violating New York civil rights laws and the New York Immigrant Assistance Service Provider Law.

She is said to have falsely promised assistance to over a dozen individuals seeking legal status. In order to secure her services, she would on occasion tell her clients that she would only help them if they could bring her up to ten additional clients. She would then charge them all up to $7,500 as an initial fee, and up to $15,000 per person in total in exchange for the promise of having their status adjusted within eight months. According to the complaint, Hernandez took the fees from her victims but never performed the services promised.

The lawsuit is a result of the Cuomo's investigation into allegations that immigrants and their families are being targeted for fraudulent and unauthorized immigration related services with false promises of United States legal permanent residency and/or citizenship.

The investigation has found that these individuals target specific ethnic communities through word of mouth and advertisements. Victims of immigration fraud lose thousands of dollars and risk being accused of filing false documents with the immigration authorities or becoming subject to deportation proceedings.

May 14, 2009
Hewlett-Packard is recalling about 70,000 lithium-ion batteries used in its H-P and Compaq notebook computers because they can overheat, posing a fire and burn hazard.

The firm and government regulators are aware of two reports of batteries that overheated and ruptured, resulting in flames/fire that caused minor property damage. No injuries have been reported.

The recalled lithium-ion rechargeable batteries are used with various HP and Compaq notebook computers. Models that can contain a recalled battery include:

The notebook model is located at the top of the service label on the bottom of the notebook. Batteries that can be subject to the recall will have one of the following bar code labels (^ in the code can be any letter or number):

The computers were sold by computer and electronics stores nationwide, hp.com and hpshopping.com from August 2007 through March 2008 for between $500 and $3000. The battery packs, made in China, were also sold separately for between $100 and $160.

Consumers should immediately remove the recalled battery from their notebook computer and contact HP to determine if their battery is included in the recall and to request a free replacement battery. After removing the recalled battery from their notebook computer, consumers may use the AC adapter to power the computer until a replacement battery arrives. Consumers should only use batteries obtained from HP or an authorized reseller.

For additional information, visit the HP Battery Replacement Program Web site at http://www.hp.com/support/BatteryReplacement or call (800) 889-2031 between 7 a.m. and 7 p.m. CT Monday through Friday.

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

Two brothers who authorities say "ripped off homeowners" seeking help in reducing their property tax assessments are in hot water.

California Attorney General Edmund G. Brown Jr. has filed suit against Sean and Michael McConville and their businesses, "Property Tax Reassessment" and "Property Tax Adjustment Services," seeking an end to the scam and at least $2.5 million in civil penalties.

"These scam-artists ripped off thousands of homeowners for property reassessment services readily available free of charge," Attorney General Brown said. "This lawsuit seeks to end the deception and blocks these companies from continuing to scam homeowners."

The suit contends that these companies:

• Made and continue to make untrue and misleading statements with the intent to induce consumers to purchase products and services;

• Distributed solicitations implying a government connection, approval or endorsement;

• Distributed solicitations that appear to be billing statements; and

• Engaged in unfair competition.

The Southern California-based companies targeted tens of thousands of Californians looking to lower their property taxes with mailers that read like government billing statements, featured official-looking logos and demanded hundreds of dollars in payments for reassessment and reassessment appeal services.

The statements warned homeowners that if payments were not received by the "due date" they faced late fees or would have their file marked "non-responsive" or "ineligible for future tax reassessments."

Brown contends that neither company adequately informed consumers that they were not a governmental entity, the solicitations were not a bill, purchase of the services was not required and services were available free of charge from county assessors.

Additionally, few, if any, of the property tax assessment services homeowners were billed for in 2008 were completed.

These companies continue to solicit California homeowners and have recently sent out mailers with due dates of May 26, 2009.

Last week, the Ventura District Attorney's Office charged one of the brothers, Sean McConville, with 20 felony counts for criminal conduct stemming from his property tax reassessment operations.

To avoid becoming a victim, Brown says homeowners who believe their property value has declined and they are paying too much in property taxes should:

• Never pay money for something they did not ask for; and

• Avoid a middleman and instead contact a local county tax assessor's office for a free property value reassessment.

May 14, 2009
For the eighth year in a row, serious injuries caused by all-terrain vehicles (ATVs) increased, and children under age 16 continued to suffer a significant portion of those injuries, according to a report released by the Consumer Product Safety Commission (CPSC). Estimated deaths on ATVs increased as well.

"Every year, more and more families are devastated by deaths and injuries caused by ATVs. This tragic problem continues to be in dire need of an aggressive and immediate solution," stated Rachel Weintraub, Director of Product Safety for Consumer Federation of America. "Congress, CPSC, state legislatures, the ATV industry, and the consumer and health care community still have miles to go before we adequately reduce the hazards caused by ATVs."

"This new report shows more of the same -- continued high death and injury rates among children on all-terrain vehicles," said American Academy of Pediatrics President David T. Tayloe, Jr., MD, FAAP. "ATVs continue to kill and seriously injure children at alarming rates. The CPSC's meager efforts to stem the tide have been entirely ineffective, and industry has done nothing to make these dangerous vehicles safer."

Major findings in the CPSC's 2007 Annual Report on ATV-related Deaths and Injuries include:

• Serious injuries requiring emergency room treatment rose from 146,000 in 2006 to 150,900 in 2007, an increase of less than one percent that was not statistically significant. Since 2001, there has been a statistically significant 37% increase in serious injuries.

• The estimated number of ATV-related fatalities fell slightly from 948 in 2005 to 882 in 2006. To date, 542 reports of ATV-related fatalities have been identified for 2007, but this number is expected to increase as additional data are gathered. The states with the highest numbers of reported deaths identified in the period 2005-2007 were West Virginia (143), Florida (123) and Kentucky (114).

• In 2007, at least 107 children younger than 16 were killed on ATVs. This accounts for 20 percent of fatalities.

• Children under 16 suffered 40,000 serious injuries in 2007 -- or 27 percent of all injuries. This is a 2 percent increase from the 2006 estimate. CPSC found that this decrease was not statistically significant. Since 2001, there has been a statistically significant increase of 17% in the number of children under 16 seriously injured on ATVs.

The CPSC data include a risk estimate of ATV injuries per 10,000 four-wheel ATVs. The risk estimate for 2007 is 153.9 compared with 163 in 2006. In making this determination, CPSC estimated that there were 9.5 million ATVs in use in 2007 and 8.6 million in use in 2006. In August 2006, CPSC denied a petition filed over six years ago by consumer and health groups demanding action on ATVs. Instead, the Commission moved forward with a rulemaking that would result in ATV standards. There is no timeline for the full rulemaking process and work on the rulemaking appears to have stalled.

The CPSC's rulemaking, however, describes the development of a "transitional ATV" for children age 14 and older, which is of particular concern to consumer and public health advocates. These ATVs would likely have engines larger than those currently recommended for children under 16.

The CPSC, the ATV industry, the Consumer Federation of America, and many other consumer advocates recommend that children ages 12 through 15 not ride ATVs with engines larger than 90 cc's.

On August 14, 2008, the President signed into the law the Consumer Product Safety Improvement Act, which includes a provision focused on ATVs dealing primarily with protecting the economic interests of the largest ATV manufacturers.

The provision makes the current ANSI/SVIA voluntary standard mandatory; requires that the manufacturer of any ATV imported into the U.S. be party to ATV Action Plans; requires that CPSC continue its rulemaking process and consider multiple factors when categorizing youth ATVs; and requires that CPSC consult with NHTSA to determine the safety of numerous aspects of ATV safety.

The ANSI/SVIA standard sets forth a description of a transitional ATV, which contradicts that of CPSC's proposed rule. The speed limit for transitional ATVs in the ANSI/SVIA standard is considerably higher than that in CPSC's proposed rule.

"The CPSC data show that the hazards posed by ATVs continue unabated. Children should not be riding adult-size ATVs, ATVs must be designed to eliminate hazards and enforcement must be effective at both the federal and state level," stated Weintraub.

Craigslist founder Craig Newmark announced today that the popular classified-ad site would shut down its "erotic services" section, and relaunch it as an "adult services" category, with much stricter enforcement of rules and higher fees for posting ads.

The decision came in response to mounting criticism from Attorneys General of a number of states, who claimed Craiglist was enabling prostitution, human trafficking, and child exploitation.

South Carolina Attorney General Henry McMaster even threatened to prosecute Craigslist CEO Jim Buckmaster if the company did not change its policies.

"We are optimistic that the new balance struck today will be an acceptable compromise from the perspective of these constituencies, and for the diverse US communities that value and rely upon Craigslist," Newmark said.

Under the new "adult services" category, submitted posts from legal adult service providers would be manually approved or rejected by Craigslist's staff, and would cost $10 to post, but could be reposted for $5.

"It's clear to everyone that Craigslist's erotic services section was nothing more than an Internet brothel," said Illinois Attorney General Lisa Madigan. "I'm encouraged that craigslist has agreed to fundamentally change how they operate and monitor their site. The steps theyre taking are the only effective way to prevent the exploitation of women and children."

Although both erotic services advertising and violent crime resulting from those ads have been a staple of the print newspaper industry, Internet services such as Craigslist have been singled out as enabling or increasing both sex trafficking and violent crimes.

At least one high-profile serial murderer has been dubbed the "Craigslist killer," as he found his victims using the site.

Newmark claimed that Craigslist was already much stricter in its ad policing procedures than most newspapers, attributing that to extensive cooperation of law enforcement, digital tracking and screening, and particularly the community's self-policing and moderation of ads that violate the site's terms of service.

"Working in tandem with various other protective technologies, [community policing] is an inescapable force to be reckoned with for anyone set on abusing free internet communications across a broad array of posting types," Newmark said.

Under Section 230 of the Communications Decency Act, Web site operators are not liable for the content that commenters post to the site. Online rights advocacy groups such as the Electronic Frontier Foundation criticized the Attorneys General, saying they had no legal recourse to pursue Craigslist for what its users did or did not do.

"If site operators were forced to screen all third party contributions under risk of civil or criminal penalty, the Internet would lose many of the vibrant services that have made it so dynamic," said EFF attorney Matt Zimmerman.

Zimmerman added that Web sites forced to comply with multiple states' wish lists of demands would be time-consuming and hinder their ability to do business.

Critics of the decision claimed that it would merely push illegal sex workers and businesses out of the spotlight and make them hard to find, and that the decision seemed motivated more by a desire to pursue headlines than investigate real incidents of human trafficking or violent crime.

The State of Illinois has sued a Chatsworth, California company and its owner for allegedly "cramming" consumers' phone bills with unauthorized monthly charges to cover cell phone repair warranties.

"This case demonstrates how schemers will go to great lengths to trap consumers into paying unfair charges and fees for services they never authorized or needed," Illinois Attorney General Lisa Madigan said. "I urge consumers to thoroughly examine their phone bills every month to make sure that they are not being unfairly billed."

Madigan's complaint alleges that the defendants, Minilec Warranty ISP, LLC., and its owner, Martin A. Schwartz, market cell phone warranties on the Internet at third-party Web sites. Consumers who sign up for the warranty deal must provide their name, home telephone number, cell phone number, e-mail address, zip code and cell phone brand name. The registration process informs the consumer that the warranty service will cost $29.95 per year but fails to clearly disclose that the charge will appear on consumers' local telephone bills.

Madigan's Consumer Fraud Bureau has received 17 complaints against Minilec since 2007, including complaints from consumers who say they never visited the Web site or authorized the purchase of the warranty service.

Madigan's suit alleges that the defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act by placing unauthorized charges on consumers' phone bills. According to the complaint, the defendants also deceptively characterize the charges on consumers' telephone bills as a monthly Internet service fee despite claiming online that consumers will be billed for cell phone warranties.

The charges allegedly appear on phone bills as "MINILEC ISP WARRANTY INET 1X SETUP FEE" for $10.00 and "MINILEC ISP WARRANTY INET MONTHLY FEE" for $19.95.

The complaint asks the court to enter a permanent injunction to ban the defendants from doing business in Illinois.

The suit also asks the court to order the defendants to pay restitution for consumers, civil penalties of $50,000 for violating the Consumer Fraud and Deceptive Business Practices Act, and an additional $50,000 for each violation committed with the intent to defraud.

The Food and Drug Administration has fired off a warning letter to cereal maker General Mills, taking issue with its claim that Cheerios Toasted Whole Grain Oat Cereal can reduce cholesterol.

In a letter to Ken Powell, Chairman and CEO of General Mills, the FDA said its review of the Cheerios label found serious violations of the Federal Food, Drug and Cosmetic Act. The agency said that if Cheerios reduced cholesterol the way the label said it does, then Cheerios isn't a cereal, its a drug. And an unapproved drug, at that.

Based on claims made on your product's label, we have determined that your Cheerios Toasted Whole Grain Oat Cereal is promoted for conditions that cause it to be a drug because the product is intended for use in the prevention, mitigation, and treatment of disease, the agency wrote.

Specifically, the FDA took issue with the following label claims:

• "You can Lower Your Cholesterol 4 percent in 6 weeks"

• "Did you know that in just 6 weeks Cheerios can reduce bad cholesterol by an average of 4 percent?

• Cheerios is ... clinically proven to lower cholesterol. A clinical study showed that eating two 1 1/2 cup servings daily of Cheerios cereal reduced bad cholesterol when eaten as part of a diet low in saturated fat and cholesterol."

The FDA says these claims indicate that Cheerios is intended for use in lowering cholesterol, and therefore in preventing, mitigating, and treating the disease hypercholesterolemia. And that's not all.

According to the FDA's interpretation of the cereal box label, Cheerios is intended for use in the treatment, mitigation, and prevention of coronary heart disease through, lowering total and "bad" (LDL) cholesterol.

Elevated levels of total and LDL cholesterol are a risk factor for coronary heart disease and can be a sign of coronary heart disease.

Because of these intended uses, the product is a drug within the meaning of section 201(g)(1)(B) of the Act [21 U.S.C. 321 (g)P)(B)], the agency said. The product is also a new drug under section 201(p) of the Act [21 U.S.C. 321(p)] because it is not generally recognized as safe and effective for use in preventing or treating hypercholesterolemia or coronary heart disease. Therefore,under section 505(a) of the Act [21 U.S.C. 355(a)], it may not be legally marketed with the above claims in the United States without an approved new drug application.

FDA has issued a regulation authorizing a health claim associating soluble fiber from whole grain oats with a reduced risk of coronary heart disease.

Like FDA's other regulations authorizing health claims about a food substance and reduced risk of coronary heart disease, this regulation provides for the claim to include an optional statement, as part of the health claim, that the substance reduces the risk of coronary heart disease through the intermediate link of lowering blood total and LDL cholesterol, the agency said.

The FDA said the claims made on the cereal box are not part of the soluble fiber/coronary heart disease health claim authorized under 21 CFR 101.81, and are therefore not permitted.

The agency said Cheerios is a misbranded product because it bears unauthorized health claims in its labeling. It also determined that the company's Web site, wholegrainnation.com, is part of the Cheerios label because the address appears on the product label.

That's problematic, the agency says, because the Web site makes several unauthorized health claims, including heart-healthy diets rich in whole grain foods can reduce the risk of heart disease.

The agency said General Mills must respond to the warning letter within 15 days outlining specific steps it has taken to correct the violations.

In a statement, the company said Cheerios soluble fiber heart health claim has been FDA-approved for 12 years, and Cheerios lower your cholesterol 4% in 6 weeks message has been featured on the box for more than 2 years.

The science is not in question, the statement said. The scientific body of evidence supporting the heart health claim was the basis for FDAs approval of the heart health claim, and the clinical study supporting Cheerios cholesterol-lowering benefit is very strong. The FDA is interested in how the Cheerios cholesterol-lowering information is presented on the Cheerios package and website. We look forward to discussing this with FDA and to reaching a resolution.

The parents of a Minnesota teenager who died on a 2007 People to People trip to Japan are outraged by the organizations latest marketing tactics: Sheryl and Allen Hill learned People to People recently used their deceased sons name, without their permission, in a letter designed to recruit more students to participate in the organizations Student Ambassador Programs.

It hurts, Sheryl said, fighting back tears. We feel tormented by themthey never stop. They continue to torment my family and my community.

Tyler Hill, 16, died in a Tokyo hospital on June 29, 2007, after People to People's delegation leaders allegedly failed to get him the medical attention he requested.

Tyler had Type 1 diabetes and complex migraine headaches — conditions his parents disclosed before their son left on his overseas journey. People to People, an organization that touts its ties to former President Dwight D. Eisenhower, assured the Hills it had a solid safety record and a 24-hour response team that could handle any medical emergency.

That failed promise is at the heart of a wrongful death lawsuit that is currently pending in Minnesota's Hennepin County District Court. The lawsuit alleges the organization and its delegation leaders refused to get Tyler the medical attention he requested after he and his group hiked Mount Fuji — and charges that his death was the result of their negligence.

Now the Hills have learned that People to People failed to honor another promise — to remove Tylers names from the organizations database. Last month, People to People sent a letter, using Tylers name, to Judd Griffith of Mound, Minnesota. Hes the Hills' friend who recommended Tyler for the 2007 trip to Japan.

Thank you for your prior support of People to People Student Ambassador Programs by providing a recommendation for Tyler Hill, states the letter, which is signed by Mary Jean Eisenhower, President and CEO of People to People International and President Eisenhowers granddaughter. The information you supplied was invaluable during our delegate interview and selection process.

The letter invites Griffith to nominate other students to participate in a 2010 People to People Ambassador Program.

Having served as a reference for a Student Ambassador candidate, you are already familiar with our program and likely know other outstanding young people who would contribute to and gain from an educational journey, Eisenhower writes.

Incensed

The letter incensed Griffith.

Whats disturbing to me is that I know in my initial letter I attested to Tylers character, and in that, I related a story about the health issues hes had and how hes overcome them, Griffith says. What bothers me about this letter is that it states my initial letter was used to evaluate, interview, and determine if he (Tyler) was a candidate. And yet look at how they failed miserably to care for him.

This (diabetes) was a known issue that Tyler had and they absolutely failed (to care for him). Why cant they come out publicly and say we really messed up? he asked. Griffith is also appalled that People to People would use Tylers name to lure more students.

To have this letter come and ask me for more names was a real slap in the face and a wake up call as to how they do or dont do business, he says, adding hes had pangs of sorrow that Tyler became involved with the organization. And then to read Mary Eisenhowers name of itthat totally incensed me that they could be so brain dead and not have a conscience."

The Hills understand their friends anger and appreciate his concern.

I know Judd was so hurt by this, Sheryl told us. He was also furious. I am so angrywe dont deserve this. We were guaranteed that they took our sons name out of their database shortly after he died.

Not what it seems?

Although the letter is signed by Mary Jean Eisenhower — and refers to her famous grandfather — it did not come from the non-profit People to People International based in Kansas City, Missouri.

The postmark and address on the letter go to the for-profit Ambassadors Group, Inc., a publicly traded company (EPAX) based in Spokane, Washington. That company markets the educational trips for students using People to Peoples letterhead and handles all the travel arrangements.

Some of the programs the company promotes include:

• People To People Student Ambassador Programs;
• People To People Sports Ambassador Programs;
• People To People Leadership Programs; and
• People to People Citizen Ambassador Programs.

During a previous interview with ConsumerAffairs.com, Eisenhower told us her organization has partnered with the Ambassador Group since 1963: Weve had a long, legitimate relationship with them, she said. Theyre more than a travel agency. They do all our logistics.

The Ambassador Group also puts money in People To People Internationals coffers. Revenue generated from the trips it markets goes into People To People Internationals operating budget.

Jeffery D. Thomas is president and CEO of Ambassadors Group, Inc. We contacted him about the People to People letter that uses Tyler Hills name. He did not return our call. ConsumerAffairs.com also contacted Mary Jean Eisenhower about the letter that uses Tylers names. A spokeswoman for People to People International referred us to attorney, Don Lolli. He did not return our call, either.

Not the first time

This isnt the first time consumers have complained about the marketing tactics used by People to People. In recent years, ConsumerAffairs.com has repeatedly exposed how People to People used misleading marketing tactics to recruit students for its expensive, overseas trips.

Our stories revealed:

• The organization came under fire in 2005 by the Iowa Attorney General's office for sending a letter to a mother, which stated her son was named for a Student Ambassador trip overseas. Her son, however, had died in 1993. He was seven weeks old. Iowa officials did not take legal action against People to People. The organization later donated $5,000 to Iowa's SIDS Foundation and $20,000 to Blank Children's Hospital in Des Moines;

• The organization has twice in recent years sent recruitment letters for its overseas programs to the parents of a deceased baby girl in Florida. The couple's daughter died from multiple birth defects in 1992. She was 18 days old. People to People said it was "absolutely devastated" this happened and blamed the company that compiled its mailing lists for the errors;

• In 2006, the organization sent a recruitment letter to the parents of an Earl Gray in Arkansas. Earl Gray, however, was the couple's white, one-eyed, cat. He died ten years earlier and is buried in the family's back yard. He was 14-years- old;

ConsumerAffairs.com has also heard from scores of parents nationwide who say the organizations letters — which arrive in official looking envelopes that hype People to Peoples ties to eight former presidents — duped their children into believing they were specially chosen for these trips, which cost an average of $5,000.

My bright, artistic, 4th grade daughter (9 1/2 years old) came home from school very proud one day, says Dena L. of Verona, Pennsylvania. Her teacher told her that she was choosing my daughter out of the whole school and that we would get information about it in the mail.

Well, today, the teacher sent home the letter she received from People to People, asking her to nominate her best students. At first read, my heart swelled. I thought, my little girl has been picked for something very special.

On closer examination, though, Dena discovered this wasnt the honor it appeared.

Some text of the letter, supposedly from Eisenhower's granddaughter states: I am pleased to invite you to nominate your most outstanding students to attend the People to People World Leadership Forum in the 2009-2010 academic year, Dena told us. After reading a second time, I thought, students? If it were truly selective, multiple nominations wouldn't be offered to the teacher.

Dena researched People to People and learned its letters have deceived many parents — and their children.

At the end of the day, I am totally honored that my daughter's teacher thought so much of her to nominate her for what she thought was an adventure, Dena says. (But) the application will go in the trash and I will let my daughter's teacher know that P2P isn't what they claim to be.

She added: The whole thing breaks my heart. It is a crying shame that Presidents' names are on this letter disgusting! After reading that P2P doesn't even run the trips, (it) makes me sick. This isn't a harmless nomination scam like Whos Who in high school. This has a real potential for misleading parents and children.

People to People acknowledges that all students its contacts arent specially chosen for the trips. The organization admits its uses list service companies that compile and sell the names of students nationwide.

Eisenhower has also told us the organization gets names from parents and teachers who nominate students. Other nominations, she said, come from those whove traveled with the organization. Private individuals can also nominate students on the organizations Web site.

But ConsumerAffairs.com discovered People To Peoples Web site doesnt ask for any supporting information about the studentor their qualifications for the program.

Not even human

It also doesnt do background checks on the nominees to verify theyre even human.

Consider the 13-year-old, who recently told us she nominated her brothers pet iguana for one of People to Peoples trips. The lizard later received a letter from People to People stating he had achieved academic excellence and been nominated by a teacher.

This goes to show that there is not even a basic check on names submitted to this organization, the student told us. It is a complete scam.

Some parents also say People to People refused to refund their money — even when they had to cancel their childs trips for medical reasons. Thats what happened to Donna T. of Lawrenceville, Georgia. Her son, Nick, couldnt go on his People to People trip because of serious health issues.

I called the 800-number (for People to People) today to find out about receiving my down-payment refund and I was told that he would only receive $155 of the $400 back, she told us. When I asked about the other $245, I was told by Annette that the $245 was for insurance. Insurance for whom? My son isn't attending.

Donna is furious that People to People wont issue refunds when students cant take the trips for medical reasons.

I was trying to get my son to Europe, an opportunity that he may never get, and because of his health issues, he cannot attend, she says. Now, this really sounds like a racket. I am mad. I am a single mother whose child has taken a drastic turn for the worse (unexpectedly) in his health. I wanted to give him this and now he can't go, through no fault of our own."

She adds: I will be very curious to find out how many people have been taken in by this scam. I will not stop until this is stopped — and I get my entire $400 back. Furthermore, when I called this morning and talked to Annette and explained to her that my son might be dying, she basically laughed and said too bad, I signed a document and I'm only going to get the $155 back.

But medical issues apparently arent worrisome to People to People, which continues to brag about its health and safety record, even in the wake of Tyler Hills death.

For over 50 years, People to People Ambassador Programs has helped more than 400,000 program participants travel to seven continents while maintaining an extraordinary track record of safety, the organization states on its Web site.

People to People also continues to tout its ties to former President Eisenhower, claiming he founded the organization. Mary Jean Eisenhower reiterated that claim in the marketing letter that uses Tyler Hills name.

Through this experience, students can enhance their academic achievements while fulfilling the vision my grandfather, President Dwight D. Eisenhower, had for promoting peace through understanding when he founded People to People International in 1956, she writes.

Founding documents

But President Eisenhowers name is not listed on the incorporation records filed with the Missouri Secretary of States office for a non-profit organization called People to People.

The purpose of that organization, founded on October 31, 1961, is to encourage and promote in every way possible contacts between citizens of the United States and people of other lands, that will increase understanding to the end that there may be a lasting and enduring peace. This non-profit People to People organization was incorporated by Alfred Frankfurter, Franklin Murphy, and Joyce C. Hall, according to records with the Missouri Secretary of States Office.

A New York Times story dated June 10, 1958, states the People to People Foundation was formed to "implement a 1956 proposal by President Eisenhower to promote international understanding. That non-profit foundation, the paper wrote, was organized in 1957 and President Eisenhower served as its honorary chairman. The 1958 Times article also stated that the People to People Foundation had recently dissolved because it had served its purpose.

Back in Minnesota, the Hills have contacted postal authorities about People to Peoples marketing letter that uses their sons name without their permission.

ConsumerAffairs.com has also learned the Hills recently reached a confidential agreement with People to People International in the wrongful death lawsuit they filed in connection with their sons death.

Litigation, however, is still pending against the other parties named in that action: The Ambassadors Group, Inc., People to People Student Ambassador Programs, a United Kingdom organization called docleaf Limited, and the delegation leaders on Tyler's trip. A trial date is set for July in that case.

More about People to People

The Federal Trade Commission is conducting a review of its "negative option" rules, a process that could lead to tougher regulations on the practice that critics say often turns "no" into "yes."

Simply put, negative option turns the sales transaction around. Instead of the merchant having to "sell" you a product or service, it starts with the assumption that you've already bought it. It's up to you, the consumer, to contact the merchant and cancel the order if you don't want to complete the transaction.

The Columbia Record Club and various "book-of-the-month" clubs were pioneers of negative option marketing. The hook was an offer of five or ten books or records for free or at a heavily discounted price.

By accepting the offer, the consumer agreed to "join" the club and receive regular shipments of other books or records at the full price, unless the consumer took the "negative option," telling the company it did not want to receive that month's offering. As you might expect, negative option has been abused as its use has become more prevalent.

The commission's rule currently regulates this rather traditional type of negative option marketing -- so-called prenotification negative option plans for the delivery of merchandise. In this type of negative option marketing, consumers receive periodic announcements that merchandise will be delivered unless they decline the items within a set time.

But negative option marketing is also how consumers end up enrolled in memberships that get charged to their credit cards, often without their knowledge or consent. These transactions don't always fall under existing FTC rules.

Previous crackdowns

In 2001, the Federal Trade Commission cracked down on negative option abuses, suing nine companies for charging customers' credit cards for products or services without gaining their express approval.

The new rule that's currently open for public comment would require sellers to clearly and conspicuously disclose the material terms of a prenotification negative option plan to consumers before they subscribe and to follow certain procedures in operating the plan. The rule enumerates seven material terms that sellers must disclose clearly and conspicuously.

In addition, the rule requires sellers to follow certain procedures, including:

• abiding by particular time periods during which sellers must send introductory merchandise and announcements identifying merchandise the seller plans to send;

• giving consumers a specified time period to respond to announcements;

• providing instructions for rejecting merchandise in announcements; and honoring promptly written requests to cancel from consumers who have met any minimum purchase requirements.

The FTC's notice asks standard rule review questions, including whether there is a continuing need for the rule, its benefits and costs, and what modifications, if any, should be made to account for changes in market-relevant technology or economic conditions.

In addition, the notice solicits comments on whether the Commission should expand the Rule to address additional types of negative option marketing. The notice contains information about how the public can submit comments, which are due by July 27, 2009.

The proposed rule and instructions on how to comment are available online.

Read more: "Negative Option: When No Means Yes"

May 12, 2009
The marketers of a work-at-home scam who led consumers to believe they could earn $500 or more per week processing medical bills and would receive training and access to customers have agreed to settle Federal Trade Commission charges that their deceptive claims violated federal law. The settlements bar future violations and require them to pay more than $15,000 in consumer redress.

The FTC sued the defendants in February 2005 as part of a crackdown on deceptive business opportunity and work-at-home schemes. The defendants agreed to a court order that barred them from further violations and froze their assets. Subsequently, the defendants were found to be in contempt for violating the order.

The settlement with Chris Taylor and Medical Billers Network Inc. (MBN) bars them from misrepresenting material facts in any medical billing employment opportunity, work-at-home opportunity, or business venture, and from making earnings claims without a reasonable basis and supporting materials.

Taylor and MBN are also barred from misrepresenting material facts in the sale of any goods or services, such as the total cost; any restrictions, limitations, or conditions; and the nature or terms of a refund, cancellation, exchange, or repurchase policy. They are also prohibited from violating the Telemarketing Sales Rule, including failing to disclose any refund, no-refund, cancellation, exchange, or repurchase policy before a customer pays.

The settlement with Wilson Jose Caceres and Caceres Quality Distribution Inc. (CQD) permanently bans Caceres from marketing or selling any medical billing employment opportunity, work-at-home opportunity, or business venture. In addition, Caceres and CQD are prohibited from misrepresenting material facts in the sale of any goods or services, violating the Telemarketing Sales Rule, and failing to disclose any refund, no-refund, cancellation, exchange, or repurchase policy before a customer pays.

The settlement with Taylor and MBN imposes a $4 million judgment against them and a $840,000 judgment against relief defendant Knarek Kalantaryan. The settlement with Caceres and CQD also imposes a $4 million judgment. The judgments are suspended based on the defendants inability to pay. The full judgments will be imposed if they are found to have misrepresented their financial condition. Under the settlements, Taylor and Caceres must pay the FTC about $15,000 in ill-gotten gains.

The settlements bar the defendants from selling or otherwise disclosing personal information about anyone who paid them. The settlements also contain record-keeping and reporting provisions to allow the FTC to monitor compliance with the orders.

By Truman Lewis
ConsumerAffairs.com

May 12, 2009
For years, cigarette smokers have paid a whopping "sin tax" each time they buy a pack of coffin nails. Now the Senate is savoring the notion of doing something similar with soft drinks and other sugary confections. Proceeds would help finance comprehensive health care.

The Senate Finace Committee has a session scheduled today to hear varying proposals from experts who've been looking for ways to help finance President Obama's proposed universal health care plan, expected to cost $1.2 trillion.

Among the leading proponents of the idea is the Center for Science in the Public Interest (CSPI), a longtime crusader for less sugar, salt and other harmful food additives. It advocates a federal excise tax on sugary sodas as well as energy and sports drinks and sweetened tea drinks. Diet sodas would get a free ride.

Current thinking is that a tax of three cents per 12-ounce drink would generate about $24 billion over the next four years. That's a mere drop in the health-care bucket but CSPI founder Michael Jacobson says it's long overdue.

He calls soda "one of the most harmful products in the food supply" and thinks the tax would discourage consumers from slugging down so much of the stuff. Jacobson notes that sugary drinks contribute to obesity, diabetes and other modern scourges. He says at least a dozen states already tax sweetened drinks.

There's general agreement among researchers that liquid calories are a bigger health risk than those that come from solid foods. A study just last month found that sugary beverages had a stronger impact on weight than solid calorie intake. A study in the journal Pediatrics in 2006 showed a direct correlation between weight gain in teenagers and the consumption of soda and other sugary drinks.

Also in 2006, researchers at the Harvard School of Public Health reviewed the most credible scientific nutrition studies conducted over the last 40 years and found that one-third of all carbohydrate calories in the American diet come from added sweeteners. Of that total, the study claims, beverages account for about half those calories.

Research reported at a national meeting of the American Chemical Society in 2007 found that soft drinks sweetened with high-fructose corn syrup may contribute to the development of diabetes, particularly in children.

The beverage industry, not surprisingly, isn't sweet on the idea. The American Beverage Association argues that a tax won't teach children how to have a healthy lifestyle and claims the tax would unfairly target lower-income Americans.

The idea may not go down well with voters either. New York recently backed off a proposal to levy an 18 percent tax on sugary drinks despite experts' ringing endorsement of the idea.

Yale obesity expert Kelly Brownell and New York Health Commissioner Thomas R. Frieden were both among the supporters of New York's proposed penny-per-ounce tax, which they argued could reduce consumption by more than ten percent and raise $1.2 billion a year in New York state alone.

May 11, 2009
A New York City-based get-rich-quick promoter has been shown the door in Iowa. Attorney General Tom Miller said the company claimed customers could make $25,000 in two weeks.

What caught our eye was that the so-called World Wealth Syndicate was using a Beaver Avenue address in Des Moines to market its deceptive schemes all over the country, said Miller. It was nothing but a mail drop-box but the Des Moines address might wrongly induce some consumers to think the operation was firmly planted in the heartland, and to let down their guard.

An Iowa judge issued an order permanently prohibiting Christopher Lamparello of New York, NY, from marketing any of his programs in Iowa, and from using an Iowa mailing address or implying any connection to Iowa that does not exist.

Lamparello operated as World Wealth Syndicate, Publishing Company, Inc., and Pridemore Publishing Company, Inc.

The get-rich-quick programs usually sold for about $25-$30. They were marketed under names such as Big Cash Flier, How I made $99 an Hour, God Wants You to Be Rich, and $1,000 a Day! Miller said his office is aware of more than 150 Iowans who ordered Lamparellos programs.

The so-called money-making opportunities didnt cost a huge amount, but they didnt hold a prayer of success either, Miller said. They probably preyed on people who were least likely to afford any loss -- people who are desperate and vulnerable in tough economic times.

The judge also ordered Lamparello to make full refunds to any Iowa customer who requested one in writing to the Attorney Generals Consumer Protection Division, Hoover Bldg., 1305 East Walnut St., Des Moines, IA 50319. (Call 515-281-5926, or 888-777-4590.)

May 11, 2009
The rise in Aprils unemployment rate to 8.9 percent was greeted in some quarters as less bad news because the number of newly unemployed actually went down. But a closer look at the numbers reveals some grim news for baby boomers nearing retirement.

A breakdown of the Labor Department report shows the unemployment rate for older workers -- those age 55 and older -- hit an all-time record last month. According to the report, nearly 1.85 million older workers were unemployed in April, an unemployment rate in that group of 6.4 percent.

Besides losing their income, AARP says older workers are also losing health insurance coverage, at a time in their lives when they really need it.

Speaking at the Senate Finance Committees roundtable on expanding health care coverage, AARP President Jennie Chin Hansen said there are now more than 7 million Americans between the ages of 50 and 64 who lack health coverage.

Comprehensive reform to provide affordable coverage to all Americans could not be more urgent, as coverage losses are snowballing in our current economy, she said. One recent report estimated that 4 million Americans have lost coverage since the recession began, and as many as 14,000 may be losing coverage every day. This is on top of 46 million who lacked coverage in 2007.

Chinn said Americans between ages 50-64 are especially vulnerable, since they are not yet eligible for Medicare. The problem is made worse, she said, by growing unemployment.

People in this age range who lose job-based coverage often find it impossible to get affordable individual coverage because insurers consider age and pre-existing conditions when setting rates and most Americans in this age range have one if not several such conditions, Hansen said.

Chinn said AARP is seeking a policy that would make coverage affordable for everyone by:

• Guaranteeing that all individuals and groups wishing to purchase or renew coverage can do so regardless of age or pre-existing conditions;

• Prohibit charging higher premiums because of health status or claims experience;

• Providing a choice of qualified plans through an Exchange or Connector;

• Providing subsidies based on income so coverage is affordable for everyone;

• Addressing costs system-wide through prevention and wellness, care coordination, fighting fraud, waste, and abuse, and revising incentives to reward quality rather than quantity of care; and

• Ensuring that any cost-sharing obligations do not create barriers to needed care.

Older Americans who draw Social Security benefits are getting an extra $250 payment from the government. But if they fall for the latest Social Security scam, they stand to lose a lot more.

The $250 checks are part of the governments recently-passed economic stimulus program. Retirees are getting the extra payment to help cope with the economic downturn and, hopefully, spur the economy by making some extra purchases. About 52 million people are scheduled to receive the checks.

But the Social Security Administration is warning that scammers have been sending out spam email, promising urgent news about the stimulus payment.

If recipients click on the link in the email, they will go to a Web site that, in all appearances, looks like a government site. However, its really the scammers site, designed to elicit sensitive information such as Social Security numbers, bank account numbers and date of birth.

With that information, scammers can clean out victims bank accounts or open new lines of credit in their names, without their knowledge.

AARP says some of the problem stems from the fact that the government has changed the way that retirees receive their stimulus money. Last year, only those people who filed a tax return received a rebate check. If Social Security recipients did not file a return, they didnt receive a payment.

This year you dont have to file a return to collect a check. The check will be sent automatically. Instead of coming from the IRS, the way it did last year, this years payment will come from the Social Security Administration. This change, AARP says, is part of the reason for the confusion.

Social Security recipients should be highly suspicious of anyone who claims they can help them secure their stimulus payment usually in exchange for a fee. The Social Security Administration says no assistance is necessary the check will be mailed directly to the consumer.

The Federal Trade Commission has charged a home mortgage lender and its owner with violating federal law by charging Hispanic consumers higher prices for mortgage loans than non-Hispanic white consumers — price disparities that cannot be explained by the applicants credit characteristics or underwriting risk.

The FTC seeks to bar future violations by Golden Empire Mortgage, Inc., of Bakersfield, Calif., and obtain redress for consumers.

Mortgage lenders must ensure that pricing discretion does not lead to illegal pricing discrimination, FTC Chairman Jon Leibowitz said. The FTC will continue to enforce the fair lending laws so that American borrowers are treated equally based on their credit — not their race, national origin, or gender.

According to the FTCs complaint, Golden Empire violated the Equal Credit Opportunity Act (ECOA) in pricing mortgage loans. They allegedly gave loan officers and branch managers wide discretion to charge, in addition to the risk-based price, overages through higher interest rates and higher up-front charges. The defendants allegedly paid loan officers a percentage of the overages as a commission and failed to monitor whether Hispanic consumers were paying higher overages than non-Hispanic white borrowers.

The complaint alleged that the companys policy and practice of allowing loan officers to charge discretionary overages resulted in Hispanics being charged higher prices because of their national origin price disparities that are substantial, statistically significant, and cannot be explained by factors related to underwriting risk or credit characteristics of the applicants.

The ECOA and its implementing Regulation B bar creditors from discriminating against applicants for credit on the basis of race, color, religion, national origin, sex, marital status, age, or the fact that an applicants income is derived from public assistance.

More information about consumers rights under the ECOA is available online.

Los Angeles-based Total Call International, Inc. can no longer charge "hidden and deceptive" fees for its pre-paid calling cards, according to California Attorney General Edmund G. Brown Jr.

"Total Call International has raked in profits by advertising bargain basement prices then charging exorbitant fees when their cards were used. This new agreement," said Brown, safeguards consumers "by forcing this company to fully disclose hidden and deceptive calling card fees."

Brown charged that Total Call International advertised low per-minute base rates on its calling cards and then charged steep, undisclosed add-on fees and surcharges when consumers used their cards, Brown said. This significantly reduced the amount of calling time available.

Brown and the California Public Utilities Commission launched an investigation and prepared a lawsuit contending that Total Call International violated a California law that specifically requires disclosure of pre-paid calling card fees, as well as California's false advertising and unfair competition laws.

The stipulated judgment resolving the case requires Total Call International to:

• Disclose all fees, add-ons, and surcharges in a clear and conspicuous manner and include those charges in the marketing of its per-minute rate.

• Maintain records and allow the Attorney General's office to monitor its activities to determine if Total Call International is in compliance with the settlement and California Law.

• Pay civil penalties of $300,000.

During the course of the investigation, Total Call International agreed to stop charging a "real-time rate surcharges," costing the company $1.5 million in profits. Total Call International did not admit any wrongdoing.

Calling cards, often sold at newsstands and grocery stores, are meant to be a convenient, affordable tool for users that make frequent international calls and may not have regular access to telephone service.

Brown says calling card users should take the following steps to protect themselves:

1. Make sure you're getting what you pay for — buy a card for a small denomination first to test out the service.

2. Check with family and friends to find out their experience with calling cards.

3. Ask retailers if they stand behind the card if the telephone service is unsatisfactory. It's important to remember that the store where the card is purchased doesn't control the quality of the service.

4. Remember that very low rates, particularly for international calls, may indicate poor customer service, or a sign that hidden fees and surcharges apply.

5. Always look for disclosures about surcharges, monthly fees, per-call access, in addition to advertised rate-per-minute.

6. Check the expiration date. Some cards expire after a certain amount of time.

7. Make sure the card comes in a sealed envelope or has a sticker covering the PIN. Otherwise, anyone who copies the PIN can use the phone time you've already paid for.

May 8, 2009
Authorities in New Jersey have charged a Monmouth County financial advisor with defrauding investment clients out of millions of dollars through a Ponzi scheme.

Maxwell B. Smith III of Fair Haven, New Jersey, was charged by summons complaint with first-degree money laundering, second-degree securities fraud and second-degree theft by deception. The charges, filed in Superior Court in Morris County, resulted from an investigation by the Division of Criminal Justice Major Crimes Bureau.

According to a certification filed in court, Smith allegedly defrauded at least 13 mostly elderly investors out of approximately $10 million between 1992 and 2009 by selling them fraudulent investments. Smith allegedly laundered the stolen investor funds through bank accounts he controlled and used the funds for his personal expenses.

"This defendant ruthlessly preyed on elderly investors, targeting longtime clients who trusted him to look out for their interests," said Attorney General Anne Milgram. "Instead, Smith deceived them and stole their money, in some instances depriving retired investors of their life savings."

Since 1974, Smith has been a registered agent and investment representative with numerous broker dealer firms licensed to sell investment products in New Jersey. Smith worked for an investment firm based in Tinton Falls from January 2005 to April 2009, when the firm fired him and reported his alleged fraudulent conduct to securities regulators, Milgram said.

Since 1992, Smith marketed investments he called "Health Care Financial Partnership Direct Municipal Loans." He represented that Health Care Financial was an entity that made investments involving the financing and refinancing of health care facilities such as nursing homes and continuing care retirement centers for the elderly.

Milgram said Smith represented that the investments were safe and free from federal income tax, and he promised semi-annual interest payments of 7.5 percent to 9 percent. In fact, she says, the investments did not exist. They were part of a Ponzi scheme by which Smith misappropriated approximately $10 million in investor funds.

The investigation revealed that the victims were instructed by Smith to make their investment checks payable to "Merrill Lynch" and send them to Health Care Financial at an address he provided in New York, which was actually a Mail Boxes Etc. mail drop leased by Smith.

Smith allegedly deposited the investor funds into a Merrill Lynch bank account in his name. Instead of investing the funds for the investors, Smith allegedly laundered the funds through a series of financial transactions to other bank accounts he controlled, using a small portion of the victims' own funds to pay them interest on the bogus investments. The interest payments provided a false impression to the victims that their investment with Smith was bonafide.

The investigation also revealed that Smith created a false "Summary of Essential Information" prospectus for the Health Care Financial investment which he provided to the victims, as well as false investment confirmation letters sent to them after they invested their funds.

First-degree money laundering carries a maximum sentence of 20 years in state prison and a $500,000 fine, while second-degree crimes carry a maximum sentence of 10 years in prison and a $150,000 fine.

Charging that they offer consumers "false hope" while charging "tremendous fees," New York Attorney General Mario Cuomo has launched a nationwide investigation of debt settlement companies, which he said too often prey on consumers who have fallen onto financial hard times.

A lawyer who represents an industry trade group said Cuomo was engaging in "a P.R. stunt."

Today, millions of hardworking Americans are finding themselves imprisoned by debt. In response, a rogue industry has stepped in, offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation, Cuomo said. Our mission is clear: to hold unscrupulous businesses accountable; to rein in a renegade industry; and to ensure that people are not victimized when faced with financial hardship.

Cuomo said he has issued subpoenas to 14 debt settlement companies and one law firm: American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm.

The subpoenas include requests designed to uncover the companies fee structures, how many people have benefitted from the companies services, and what kind of relief the companies are actually providing.

Cuomo is also currently investigating Nationwide Asset Services, Inc., based in Phoenix, Arizona, and Credit Solutions of America, Inc., based in Addison, Texas.

Debt settlement companies typically promise to negotiate with credit card companies and other lenders on consumers' behalf. Most charge an initial fee of 15 percent or more of the initial debt.

But Cuomo said the debt settlement plans are often "inherently flawed" and he said that, based upon consumer complaints, it appears that many consumers are being misled regarding the nature of the services offered by these companies. For example, he said that some companies falsely represent that they can reduce consumers credit card debt by as much as 75 percent through negotiations with creditors.

The debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the companys fees and any negotiated settlement are to be made. Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation, Cuomo charged.

Some of the companies also urge consumers to seek additional sources of funds through means such as selling their blood plasma, mowing lawns, cutting down on car insurance, and borrowing from their neighbors and church. Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts, Cuomo said. As a result, many consumers find themselves worse off financially because of these debt settlement plans.

Consumer advocates say that many consumers would benefit more from working directly with their creditors, seeking credit counseling, or consulting an attorney about filing for bankruptcy. Additionally, even when enrolled in a debt settlement plan, consumers are often still subjected to collection efforts and lawsuits filed by their creditors. Consumers are even told not to discuss their debt situation with creditors.

On April 14, 2009, Cuomo arrested the owner of Long Island-based American Legal Process for allegedly providing sewer service to thousands of New Yorkers owing debt. According to the Attorney Generals criminal complaint and civil suit, this company failed to properly notify individuals that they faced debt-related lawsuits. As a result, individuals would unknowingly default and have judgments entered against them, without the chance to defend themselves.

Reader reviews of debt settlement services

By the time it was finally announced, there was little suspense: the 19 major banks subjected to the federal government's "stress test" got a passing grade. Federal Reserve Chairman Ben Bernanke, in announcing the results, said all the banks are solvent and should resume lending.

The idea of a stress test was the government's way of determining which of the large, "too-big-to-fail" banks had enough assets to remain solvent, even if the recession gets worse. All had received "bailout" money from the government, though some, like JPMorgan Chase, said they want to return the money because they dont need it.

However, even though they were deemed solvent, ten large banks were told they need to add to their capital reserves. Ten of the 19 banks have been ordered to raise a total of $74.6 billion within the next six months. In addition, some may be forced to "sell" more stock to the government, which in turn could dictate changes in management.

While it was known that banks like Citigroup and Bank of America were certain to need more cash, the list contained a few surprises, including Wells Fargo and Morgan Stanley. Wells Fargo said it would raise $6 billion by selling stock to the public. Morgan Stanley said it plans to sell stocks and bonds to raise $5 billion.

But nearly all banks, the Fed said, should be able to raise the additional capital on their own. Only one bank, GMAC, is likely to need additional help from the taxpayers.

Banks are required by law to maintain a certain percentage of assets to balance their loans and liabilities. Prior to the economic meltdown, most large banks had invested billions of dollars in mortgage backed securities, which lost most of their value as the subprime mortgage market collapsed and took real estate down with it.

Those "toxic" assets precipitated last fall's credit crunch, as banks could not lend money. The idea behind the stress test was to restore confidence in the banking system so that lending will resume.

For the average consumer, the stress test doesn't mean much, other than improved confidence in banks should help the overall economy recover faster. Those with a stock portfolio may regain some of the value they lost if Wall Street, as expected, responds favorably to the results.

Consumers shouldn't be concerned that their bank was deemed to need more money. Even if a bank failed, deposits of up to $250,000 are insured by the Federal Deposit Insurance Corporation. Besides, the whole idea behind the stress test was to make sure than none of the 19 banks fail.

And don't expect your credit card rates to go down anytime soon. Banks may be on the road to improved health, but they still need cash. Higher rates on consumer credit — especially on any credit that could be considered risky — are likely here to stay.

Its that time of year when consumers need to be wary of deceptive door-to-door magazine salespeople, who often claim theyre raising money for college, charity, or class trips.

The Better Business Bureau says it has received 1,100 complaints in the past year from consumers nationwide who say they lost money in fraudulent door-to-door magazine sales schemes.

The companies behind these schemes often hire high-school or college-age students and send them to neighborhoods nationwide to peddle magazines door-to-door. In many cases, these salespeople do not have the licenses required to sell products door-to-door. Some also use high pressure sales tactics or make misleading statement to convince consumer to buy the magazines.

According to the BBB, some salespeople claim theyre raising money to get their lives back in order. Others say the money from the magazine subscriptions will help a charity, pay for a school trip, or support the troops in Iraq.

Many consumers whove fallen for these ploys say theyve never received their promised and paid for magazines.

Because sales representatives are typically high school or college-age, victims readily believe the potentially fictitious sales pitch and often pay several hundred dollars for the subscriptions by personal check given directly to the sales reps, said Steve Cox, BBB spokesperson. Most complaints against such companies allege that sales reps took their check and the magazines never arrived, however, some complainants also allege being subjected to high-pressure and misleading sales tactics.

The BBB says it has received complaints about more than 50 companies selling magazines door-to-door. Consumers said those companies often failed to deliver the magazines consumers purchased. They also said salespeople made such misleading comments as: they wouldnt get to eat that day if they didnt sell a magazine subscription, they were neighborhood kids trying to raise money for a class trip, or the magazines consumers purchased would be sent to the troops serving in Iraq.

One consumer even called the police because she felt threatened by a salesperson who allegedly became angry when she wouldnt buy a magazine.

Salespeople victimized

The BBB says consumers arent the only ones duped in these door-to-door magazine schemes.

The young salespeople are also potentially being taken advantage of by their employers and forced to work long hours, endure substandard living conditions and have their wages withheld from them, Cox said.

Consumers can protect themselves from getting taken in a door-to-door magazine scheme by:

• Making sure the company selling the magazines doesnt have any complaints on file with the BBB, or other consumer protection groups;
• Never letting any salesperson high pressure them into buying a product;
• Asking the salesperson if theyre licensed and demanding to see a copy of that license.

Under the Federal Trade Commissions Three-Day Cooling-Off Rule, consumers have three days to cancel orders totaling more than $25 if those purchases were made in their home -- or at a location that is not the sellers permanent place of business. The salesperson should give consumers a copy of their receipt and a completed cancellation form they can send to the company. The law stipulates that companies must give customers a refund within 10 days of receiving the cancellation notice.

Consumers whove lost money in fraudulent magazine sales schemes can file complaints with their local law enforcement agencies, their states attorney generals office, and the Better Business Bureau.

By Jon Hood
ConsumerAffairs.com

May 7, 2009
A group of MacBook and MacBookPro owners have filed suit in federal court in California, claiming that Apples MagSafe power connectors have a dangerous design flaw that could cause a break or even start a fire.

The suit, filed in U.S. District Court in San Jose, alleges that the MagSafe connector dangerously frays, sparks, and prematurely fails to work under ordinary conditions and that the adapters are flawed and dangerous and present fire hazards.

The suit covers 85- and 60-watt versions of the power connectors. According to the complaint, the adapters wires eventually fray, negatively affecting performance and posing a fire hazard. Tim Broad, one of the named plaintiffs, says that the adapter almost burned my hand when I brushed it accidentally, and that it could have started a fire in his house had he not known about the problem and been vigilant in keeping an eye on it.

This is not the first time Apple has dealt with such problems; the company pulled the 85-watt versions from store shelves in October 2007, after reports that those connectors too were overheating, and in some cases smoking and sparking.

Apple also settled another class action in May 2008, which involved earlier versions of the MacBook and MacBookPro adapters. That suit alleged that Apple covered up the problem even after becoming aware of its existence. The settlement provided for reimbursement of between $25 and $79 for every person who owned one of the adapters.

The complaint accuses Apple of being negligent in designing the adapters, and says that Apple has not taken action to remedy the defects. The suit alleges breaches of consumer of express and implied warranties and California business codes. The plaintiffs are seeking money for replacement adapters, reimbursement for consumers who already bought new units, and punitive damages.

Plaintiffs Tim Broad, Naotaka Kitagawa and Jesse Reisman have all had to buy replacement adapters at one time or another, meaning they had to fork over about $80 of their hard-earned money.

According to the suit, the issue affects at least thousands and potentially hundreds of thousands of consumers, meaning that any eventual settlement would likely be in the millions. The suit envisions a class of plaintiffs made up of any consumer with an affected MacBook.

AppleInsider, a popular Mac-centric site, notes that Apple began redesigning the adapters after the October 2007 recall, but that any improvements havent been enough to solve the problem: customers have reported issues with fraying wires as recently as March 2009, long after the new adapters were on shelves.

Scammers have been quick to prey on consumer fears about swine flu, and Indiana Attorney General Greg Zoeller says he has already seen evidence of that in his state.

Telephone solicitors reportedly have called Indiana residents in an effort to sell "mandatory swine flu kits," claiming that the U.S. Centers for Disease Control and Prevention or the U.S. Department of Homeland Security are requiring their purchase.

Such claims, of course, are false and fraudulent. No level of government is requiring the purchase of a safety kit for the North American Influenza A (H1N1) outbreak. Moreover, a medical diagnosis should be left to a medical professional.

"Not only are these telephone solicitors cynically exploiting people's fears in order to commit fraud, but they also may be violating Indiana's telephone privacy laws," Zoeller said. "Depending on who was contacted, this scam may violate Indiana's Do Not Call statute; and if an unauthorized prerecorded message is used, it would violate Indiana's Auto-Dialer statute as well. In either event, consumers who receive such calls should keep the number, if possible, so that our office can investigate."

The Indiana State Department of Health (ISDH) is encouraging consumers to maintain good hygiene practices, such as washing their hands often, and avoiding those who might be ill. The Attorney General issued the consumer advisory after county emergency management agencies notified the Indiana Department of Homeland Security (IDHS) of the fraudulent calls to businesses in their communities.

"In outbreak situations, scam artists are often ready to take advantage of public concern," Indiana Department of Homeland Security Executive Director Joe Wainscott said. "People should be especially alert for solicitors who speak on behalf of state and federal agencies."

Find out everything you need to know about swine flu.

Illinois Attorney General Lisa Madigan warned consumers facing significant credit card debt about the risks of debt settlement offers as she announced two lawsuits filed against debt settlement firms.

Madigan's lawsuits allege that the companies — SDS West Corporation, Aliso Viejo, Calif. and Debt Relief USA, Inc., Addison, Texas — engage in deceptive marketing practices, charge excessive fees and do little or nothing to improve consumers' financial standing.

"Too many people who find themselves under a mountain of credit card debt are tempted to turn to debt settlement companies that often worsen their financial problems," Madigan said. "After being enticed by these companies promises to reduce debt, consumers too often end up owing more than their original credit card debt."

Madigan said her office has seen an increase in advertisements for debt settlement companies that promise to significantly reduce consumers credit card debt and provide them with an alternative to bankruptcy protection. Typically, after consumers enroll in debt settlement programs, the companies charge excessive upfront fees and advise consumers to stop paying their credit card bills.

Despite this advice, the debt settlement companies fail to begin negotiations with consumers credit card companies for several months. As a result, credit card companies add fees and penalties to consumers credit card balances and often even begin collection efforts to recoup the debt, all of which puts the consumers in a worse financial situation.

In many instances, while consumers were enrolled in debt settlement programs, credit card companies have sued the consumers to collect the balance on the consumers accounts.

The lawsuits filed by Madigan name:

• SDS West Corporation, an Aliso Viejo, Calif.-based debt settlement agency; Bruce Hood, the Chief Operating Officer of SDS West; SDS West's Chief Executive Officer, Raymond Dorso; Nationwide Support Services, Inc., an Irvine, Calif.-based debt settlement servicer; and Joanne Garneau, President of Nationwide Support Services; and

• Debt Relief USA, Inc., a debt settlement firm based in Addison, Texas and Kelly E. Reilly, the President of Debt Relief USA.

SDS West

According to Madigan s complaint, SDS West and its business partner Nationwide Support Services inform consumers that their debt mediation services will help to reduce consumers debt by nearly 50 percent and that consumers will be debt-free in 12 to 36 months.

SDS West primarily markets the business partnership s debt settlement services, while Nationwide Support Services allegedly conducts the settlement negotiations with creditors. Madigan's complaint alleges that most consumers are unaware that Nationwide, not SDS West, performs the actual negotiations on their behalf.

The defendants tout their services as universally better than credit counseling and bankruptcy protection, and they allegedly promise consumers that they will contact all the consumers credit card companies and negotiate substantially reduced settlements of the outstanding credit card balances. From 2006 to the present, hundreds of Illinois consumers have enrolled in the defendants debt settlement program.

When consumers enroll in the program, they allegedly are instructed to stop making payments to the credit card companies and, instead, make monthly payments to the defendants program in order to build up a lump sum for use by Nationwide Support Services in negotiating a settlement with the credit card companies.

However, the first payments go toward a substantial fee of approximately 15 percent of the consumers total credit card debt. Consumers also are charged a monthly $50 maintenance fee. Madigan s complaint alleges that consumers did not understand (1) that their monthly payments would be used to pay fees before any performance of services on their behalf, and (2) that it takes several months to accumulate a lump sum payment to begin negotiating a payoff with the credit card companies.

Debt Relief USA

In the second lawsuit, Madigan alleges that Debt Relief USA promised consumers that its services would help reduce credit card debt by 40 to 60 percent and that consumers could be debt-free in as little as 36 months.

However, according to the complaint, Debt Relief USA failed to negotiate substantial reductions on most consumers accounts. Madigan s complaint alleges that most Illinois consumers dropped out of the program before Debt Relief USA settled any debt on their behalf, but after the consumers paid Debt Relief USA s nonrefundable fees.

From 2005 to 2008, at least 470 Illinois consumers enrolled in the Debt Relief USA program. When consumers enroll in the Debt Relief USA program, the defendants allegedly instruct consumers to stop paying their credit card bills and, instead, pay a monthly fee to Debt Relief USA based on how much they owe.

The defendants allegedly apply the first several monthly payments toward Debt Relief USA s upfront fee of up to 10 percent of the consumer s credit card debt. The defendants also apply each monthly payment toward Debt Relief USA s monthly maintenance fee of $29.95 to $39.95. The remainder of the monthly payment goes into an escrow account until enough money accrues to make a settlement offer to the credit card company, which often takes several months.

During this time, the complaint alleges, Debt Relief USA fails to attempt to settle any debts on consumers behalf. In addition, when Debt Relief USA reaches a settlement on one of the consumer s accounts, the company charges the consumer a settlement fee that is equal to 13 percent of the amount by which Debt Relief USA was able to reduce the consumer s debt through settlement negotiations.

In both cases, Madigan s complaints allege that the defendants have violated the Illinois Consumer Fraud and Deceptive Business Practices Act by misrepresenting the services they can provide to consumers and the impact that those services will have on consumers credit. Each complaint asks the court to enter a permanent injunction barring the defendants from engaging in debt settlement in Illinois and to order the defendants to pay restitution for aggrieved consumers, civil penalties of $50,000 for violating the Consumer Fraud Act, and an additional $50,000 for each violation committed with the intent to defraud.

Credit counseling

Madigan encouraged consumers in financial trouble to consider credit counseling instead of debt settlement services. The Attorney General advised consumers to look for credit counseling services that charge modest fees and provide true financial and budget counseling based on a consumer's personal circumstances.

In some instances, credit counselors may recommend that a consumer consult a debt management service, which will set up a debt payment plan based on the consumer s income, expenses, and debts. The consumer then makes one monthly payment which the debt management service provider then distributes to the consumer's creditors.

The real estate market may be showing faint signs of life, but other statistics reveal many homeowners have lost significant value in their homes and are in a negative equity position. Nearly 22 percent of homeowners currently owe more on their mortgage than their home is worth, according to the real estate Web site Zillow.com.

The first quarter of 2009 saw a continued decline of home values with the Zillow Home Value Index dropping 14.2 percent on a year-over-year basis to a value of $182,378. From its peak in the second quarter of 2006, U.S. real estate values have dropped a total of 21.8 percent after nine consecutive quarters of year-over-year declines.

That loss of value has left 21.9 percent of all U.S. homeowners "under water" at the end of March 2009. Many of those homeowners put little or no money down when they purchased their homes, but others have seen plunging home values erode much or all of their down payments.

"The sharp drops across the country have left eight regions — including the Modesto, Calif., Stockton, Calif. and Fort Myers, Fla. — with median values that are less than half those at their peak," said Zillow vice president of data and analytics Stan Humphries in his blog. "In 85 of the 161 markets covered this quarter, the annualized change over the past five years is negative or flat. For the first time in the data series stretching back to 1996, the five-year annualized appreciation for the United States overall is flat. Ten-year annualized appreciation is 4.7 percent."

Zillow estimates U.S. homes lost $704 billion in value during the first quarter of 2009, but despite that bad news, there were a few markets that started to show the first tentative signs of improvement. Markets such as Los Angeles, San Diego, Modesto and Merced — all which went into decline early and have sustained large declines — have now seen two or more consecutive quarters of smaller year-over-year declines in home values than in the previous quarter, Zillow reports.

Specifically, in the Los Angeles metro area, the Zillow Home Value Index fell 18.9 percent year-over-year, a smaller decline than the 20.8 percent and 20.7 percent declines seen in the third and fourth quarters of 2008, respectively.

In San Diego, home values fell 18 percent year-over-year, after falling 19.1 percent and 18.9 percent in the third and fourth quarters of last year. Both markets have been hard-hit by the housing downturn.

Los Angeles home values have fallen 33.6 percent since the peak of the market in the first quarter of 2006, and San Diego's have fallen 35.4 percent since that markets peak in the third quarter of 2005.

"It's quite a statement of current market conditions when the good news is that the bad news isn't getting worse," Humphries said.

If Rep. Barney Frank (D-MA) has his way, Congress will vote to overturn the long-standing ban on Internet gambling. Frank said Tuesday he will introduce a bill to allow licensed gambling operators to accept bets from U.S. gamblers.

The measure has the backing of the Safe and Secure Internet Gambling Initiative, a group that supports legal online betting. The group estimates than Americans bet over $100 billion a year using offshore gaming sites. Use of those sites is currently against U.S. law.

Meanwhile, the measure has its opponents. University of Illinois professor and national gambling critic John W. Kindt claims legal gambling would make addictions worse and sink an already sputtering economy.

Kindt says supporters of a renewed push to lift the ban, which started with Attorney General Robert F. Kennedy's wire act against organized crime, are betting that online gambling will pay off in easy new tax dollars, but he contends the stakes are too high.

"The revenue they would get is miniscule compared to the devastation it would bring to financial systems, stock markets, national security and people's lives," said Kindt, a professor of business and legal policy.

Frank's bill would overturn the 2006 Unlawful Internet Gambling Enforcement Act, which strengthened the existing ban. Frank, Chairman of the House Financial Services Committee, also sought repeal but failed in 2007, just a year after the measure was passed and signed into law.

"It's outrageous that he's trying again," said Kindt, who has studied gambling for more than two decades. "This law was the result of 10 years of congressional hearings, where expert after expert warned of the dangers of gambling on the Internet."

Kindt, who testified in support of the law, says online gambling would inflame problems already linked to casinos. He says research shows bankruptcies increase 18 to 42 percent in areas with casinos, crime jumps 10 percent and rates for new addicted gamblers double.

But business and banking organizations have long complained about the gambling ban, saying it creates a burden on the financial services sector by requiring banks to identify and block illegal gambling transactions.

The Safe and Secure Internet Gambling Initiative says the tax revenue from online gaming is far from insignificant, saying it could total more than $60 billion over 10 years.

With college costs escalating as fast as health care, the Texas State Senate has approved a bill that would limit tuition and fee hikes to five percent at the state's largest universities.

Colleges in Texas, as in many other states, have escalated tuition increases for the last few years as state support has dwindled. The state's colleges and university raised tuition by 89 percent over the last six years.

In Texas, the legislature once dictated tuition rates for state institutions of higher learning. But in the early part of the decade, as the legislature cut the amount of state support for these institutions, it freed universities to raise tuition to make up the difference.

Critics say what happened was inevitable. With the freedom to set rates, colleges pushed tuition costs ever higher, presenting many incoming freshmen and their parents with sticker shock.

The Senate measure would not take full tuition-setting control back from all universities. Only those institutions whose tuition and fees were above the state median would be set by the state. Those below the threshold would be free to continue under their present policies.

The problem of skyrocketing college costs is not just a Texas problems. The College Board reports its figures show most students and their families can expect to pay, on average, from $108 to $1,398 more than last year for this year's tuition and fees, depending on the type of college. The tuition and fees at the average four-year state school is now $6585, up 6.4 percent from a year ago.

Private universities, of course, are much more expensive. The Baltimore Sun reports the total costs of attending Johns Hopkins, including room and board, is $53,390, up from $27,040 in the 1994-95 school years.

This summer, more families will likely be trading restaurant meals for home-cooked suppers. And for those who like to grill, there's good news: Consumer Reports' latest report on gas grills found five CR Best Buys for $500 or less. Additionally Consumer Reports notes that consumers will see less stainless steel on many grills as manufacturers instead add painted-steel carts and shelves or stainless-steel trim as a way to maintain prices.

Consumer Reports found that while some manufacturers are using vibrant colors in their designs, others are adding features, like the top-rated large Fiesta Blue Ember iQue FGQ65079-U403 ($900), which has a touch-screen display and controls and claims to use sonar to gauge the amount of propane in the tank, or the Nexgrill 720-0665 ($860) which has a minifridge that can hold a number of beverages and condiments.

Although gas grills have been more popular in the market over the past 14 years, sales of charcoal grills are making a comeback, according to the Hearth, Patio & Barbecue Association. Nearly 41 percent of the 16.7 million grills shipped in the U.S. last year were charcoal. To find out whether gas or charcoal serves up more appetizing food, Consumer Reports ran taste tests on a gas and a charcoal model. Tasters said that gas-grilled foods had a cleaner taste, and that while charcoal-grilled food had added flavor, the charcoal cooking didn't necessarily enhance the taste.

Five CR Best Buys

Consumer Reports found that lower-cost grills can deliver performance that matches or beats that of big-budget models. Cooking and safety tests of 40 grills produced five CR Best Buys:

• The Fiesta Blue Ember FG50069-U409, $450, available at Home Depot, surpassed the $1400 Napoleon Prestige II PT450RBI for overall performance. The Fiesta Blue Ember also comes with a rotisserie.

• The Char-Broil Red 463250509, available at Home Depot for $450 scored Excellent for evenness, and Very Good for low-temperature grilling, convenience and features. It provides lots of shelf space, and has a lifetime warranty on its three burners.

• For even less money, the Kenmore 16641 ($350), is a good value considering the price, and also comes with a 10 year burner warranty.

• The Char-Broil Commercial Series 463268008, available at Lowe's is also a good value at $300, and comes with a lifetime burner warrantee. It scored Very Good for evenness and Excellent for low-temperature grilling.

• The Char-Broil Commercial Quantum 463247209, available at Lowe's, $500, is a quality large grill that is mostly stainless.

How to Choose

Given the state of the economy, sales might be more abundant this year. Look for Memorial Day and July Fourth specials, as well as coupons and rebates. Keep in mind that many retailers assemble grills free but charge $40 to $100 for delivery. Beyond price, consider these factors when shopping for a grill:

Size up the cooking area: While manufacturers might account for warming racks when measuring size, Consumer Reports categorizes grills in three sizes based on cooking area: small/portable, which typically have one to two burners (cooking area 340 square inches or smaller); medium grills, which have two to four burners (340 to 490 square inches); and large (more than 490 square inches), which have three to six burners. Remember, cooking in batches is a simple solution if you have a small grill but are having a large gathering.

Don't be dazzled by Btu: A grill that has a higher Btu/hr (British thermal units per hour) rating won't necessarily deliver faster heating or higher grilling temperatures. The figure merely indicates how much gas a grill uses and usually tracks with the number of burners it has and the size of the grill.

Focus on features: Sometimes grills in a company's line are the same except for a feature or two. Side burners, rotisseries and minifridges are nice extras, but may not be worth the money. Check to see whether the manufacturer sells accessories separately, like rotisserie motors and spits, which can add about $60 to $180 to the price of a grill. When it comes to grates, Consumer Reports recommends stainless-steel or porcelain-coated cast iron cooking surfaces, which should last longer and sear better.

Inspect the units: A simple inspection of a grill before purchase can prevent any safety issues. A gentle nudge of the model from several angles will ensure the grill is sturdy, while the grill handles should be far away from the hot lid. Also check for sharp corners and edges on the cart, firebox, lid, and shelves. For stainless steel parts, take a magnet to the store with you. Lower grades of stainless steel are magnetic. Higher grades aren't and should fight corrosion better.

By Truman Lewis
ConsumerAffairs.com

May 4, 2009
NUTRO Products, Inc. says it is pulling its Greenies line of pet dental chews from supermarkets and other mass markets. Beginning in June, the Greenies — which have been blamed for illness and deaths in some dogs and cats — will be distributed only through veterinary hospitals and pet specialty retailers.

We believe that pet medical professionals at veterinary hospitals and well-trained, knowledgeable staff at pet specialty stores are best equipped to answer pet owners questions about our products and to make the right recommendation, said Carolyn Hanigan, vice president of marketing for Nashville, Tenn.-based NUTRO.

The company said that staff education was a primary concern for the Greenies dental chew line, as each of five sizes is formulated for a corresponding weight range

It's the latest attempt to resolve highly-publicized incidents of pet deaths attributed to the popular treats. Pet owners said the treats failed to be properly digested and led to fatal intestinal obstructions.

In February 2006, the company said it would clarify the instructions on the packaging. The green-tinted treats are in the shape of a toothbrush and are promoted as an effective way to prevent gum disease in animals and promote oral health.

Reformulated

The dental chews were reformulated to be "more highly soluble and thus safer, yet effective as a daily preventive of oral disease," the company said in a November 2007 statement. Independent studies conducted by the University of Illinois confirmed the high solubility of Greenies, according to the statement, which said that the Veterinary Oral Health Council (VOHC) had awarded its Seal of Acceptance to Greenies for plaque and tartar control.

In 2005, a New York couple filed a $5 million lawsuit against Greenies' then-manufacturer, S&M NuTec, charging the treats are unsafe and inadequately labeled. The couple charged an undigested Greenie caused the death of their four-year-old Dachshund. The company was later acquired by NUTRO.

Jennifer Reiff and Michael Eastwood say their minature dachshund died two days after they fed him a petit-sized Greenie.

The couple told WCBS-TV in New York that the day after giving the dog the treat, they took him to the vet where he underwent emergency surgery for a blocked intestine. Reiff and Eastwood say it was a portion of a Greenie that caused the problem. Their pet died two days later.

KIRO-TV in Seattle reported in 2005 that the Food and Drug Administration had begun an investigation of the complaints but nothing more was ever heard of the supposed probe.

Pet owners complain

ConsumerAffairs.com has received complaints from several pet owners whose pets died or became ill after chewing the popular treats.

"We gave such a treat to our Japanese Chin on Friday and she is dead," said Mary of Sayville, N.Y. in September 2007. "The vet did an autopsy and she choked on a piece of this allegedly digestive greenie. My vet told me that a number of dogs have either choked to death or died as a result of intestinal blockages caused by Greenies."

Rose of Phenix City, Ala., said in September 2006 that her Maltese became ill after eating a Greenie: "She couldn't eat or drink. She almost died. ... My dog was sick for 2 weeks and was in the intensive care and given IVs."

Lisa of Simi Valley, Calif. was luckier.

"My Standard Poodle, Hummer, got into a bag of Greenies which had not even been opened — they were still sealed in the bag in the shipping box. He weighs around 54 pounds and ate appoximately 8oz. Later he was rushed to the pet Emergency Clinic had to spend the night and we were told to watch him carefully the next several days," she said in a 2006 complaint.

Lisa said Hummer was rushed back to the hopsital in Noctober for emergency surgery.

Developed by dog owners

Greenies were developed in the late 1990s when two dog owners, Joe and Judy Roetheli, teamed with a well-known board-certified veterinary nutritionist to develop a dog chew treat formulated to control dental tartar, plaque and gingivitis, and formulated to taste great while reducing bad breath.

NUTRO is owned by Mars, Inc., one of the world's largest producers of pet food, confectionary, beverage, food and health food. The privately-held company is headquartered in McLean, Va.

A division of the U.S. Food and Drug Administration (FDA) has denied that it is investigating NUTRO Products Inc., whose pet foods are the subject of more than 700 complaints from consumers who say their dogs and cats became ill and, in some cases, died after eating NUTRO products.

Two individuals who lured homeowners into high-cost, short-term loans secured by an additional mortgage on their homes have settled FTC charges that they violated federal law and a previous court order against them. Thomas C. Little, an attorney, also settled contempt charges based on his role in facilitating the scam. The Commission sued them and seven other defendants in February 2008 as part of an ongoing effort to crack down on businesses that prey upon homeowners facing foreclosure.

In a separate case, California Attorney General Edmund G. Brown Jr. won a guilty plea from 22-year old Anna Santos, who conned thousands of dollars from homeowners in a "cruel and sophisticated" loan scam. Santos will be formally sentenced on May 20 in Los Angeles Superior Court. She is expected to receive 2 years in prison.

In the FTC case, the defendants allegedly violated the Home Ownership and Equity Protection Act by extending credit based on the value of consumers collateral without regard to their repayment ability, by requiring balloon payments after only six months, by providing negatively amortized loans that cause consumers to owe more at the end of the loan than at the beginning, and by failing to make required disclosures.

The defendants also allegedly violated the Truth in Lending Act (TILA) by grossly understating the loans annual percent rate (APR) and finance charges. They also were charged with violating TILA and its implementing Regulation Z by failing to make timely written disclosures and by failing to disclose accurately the amount being financed, the finance charge, the APR, the payment schedule, the total payment amount, and the fact that the creditor has or will acquire a security interest in the consumers home. In addition, they allegedly violated the FTC Act by understating the APR for the loans.

The settlements with Christopher Tomasulo and Bonnie Werner (formerly Bonnie A. Harris) resolve these charges and impose judgments of $2,791,040.40 each, which will be suspended based on their inability to pay. The full judgments against them will become due immediately if they are found to have misrepresented their financial condition. The settlements also resolve charges that Tomasulos and Werners conduct was in contempt of orders entered against them in an earlier case brought by the Commission, FTC v. Bay Area Business Council, Inc. Those orders prohibit them from marketing credit-related products to consumers and ban Werner from telemarketing.

The settlements bar Tomasulo and Werner from trying to collect payments from any consumers for any credit-related product sold by any of the defendants, and from disclosing or benefitting from consumers personal information obtained by any of the defendants. Regarding any business Tomasulo and Werner own or manage, they must promptly investigate consumer complaints, monitor their sales personnel, and take corrective action when sales personnel engage in conduct prohibited by the orders. The orders also extend the period that Tomasulo and Werner must comply with provisions requiring them to report their employment status to the Commission and allow the agency to monitor their business practices.

The settlement with Thomas C. Little, an attorney who assisted the defendants, requires him to give up his earnings from the scam, $16,105. Little was named in the related civil contempt action, FTC v. Bay Area Business Council, Inc. He was legal counsel to some of the Bay Area Business Council defendants, including filing and arguing their appeals to the U.S. Court of Appeals for the Seventh Circuit in 2005.

California scams

Santos was arrested on March 12, 2009 after she used forged documents to convince victims to hand over thousands of dollars for non-existent loan modification services.

"Santos conned thousands of dollars from homeowners trying to save their homes through a cruel and sophisticated scam," Brown said. "She held out hope, but in reality did not provide an ounce of loan modification, leaving her victims unprotected and in far worse straits."

Santos obtained a fictitious business permit through the City of Los Angeles for "Payment Processing Department." She opened several bank accounts and two post office boxes under that name. She mailed flyers to vulnerable homeowners that appeared to be from victims' lenders or a government agency. 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 signing up for "loan modification services," homeowners then received what appeared to be "confirmation" that their lender had been notified. Many victims also received loan modification documents that appeared to be from their lender. These documents were all 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 Ms. Santos and deposited into the bank accounts she had opened.

Santos targeted seniors and homeowners on the verge of foreclosure. It is believed that she scammed more than 100 victims. On average, victims lost approximately $3,000, at a time when they could not afford their mortgage, let alone additional fraudulent expenses.

Since taking office, Attorney General Brown has shut down loan modification and foreclosure rescue scams and fought companies that have misled vulnerable borrowers:

• In March 2009, Brown shut down Foreclosure Freedom, a fraudulent loan modification company that continued to collect fees and mortgage payments from dozens of homeowners without ever providing any loan modification services.

• In November 2008, Brown arrested three members of First Gov after the company demanded an up-front fee, ranging from $1,500 to $5,000, to participate in a loan-modification program and never renegotiated the loans.

• In October 2008, Brown announced an $8.68 billion settlement with Countrywide Home Loans after the company deceived borrowers by misrepresenting loan terms, loan payment increases, and borrowers' ability to afford loans.

• In May 2008, Brown shut down a team of scam artists that acquired deeds to hundreds of homes in foreclosure by convincing desperate consumers to pay $10,000 to place their property in a land grant, a phony and worthless real estate document, and then tricked homeowners into signing over the deed to their home and paying the company rent.

• In March 2008, Brown shut down Lifetime Financial, Nations Mortgage, Greenleaf Lending, Virtual Escrow, Olympic Escrow and Direct Credit Solutions after the companies ran a complex predatory lending scheme using bait and switch tactics to victimize thousands of homeowners, many of whom lost their homes.

Con artists are now preying on consumers' fears about the outbreak of the H1N1 virus — aka "swine flu" — by launching Internet sites to sell products they claim will diagnose, prevent, treat, or even cure this rapidly spreading virus, federal authorities warned today.

The U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) cautioned the public to beware of any Web site or promotions for product that makes such claims about the 2009 H1N1 influenza virus.

Federal authorities also warned Web site operators that have deceptive ads for these fraudulent products to quickly correct or remove them — or face enforcement action.

"Consumers who purchase products to treat the novel 2009 H1N1 virus that are not approved, cleared or authorized by the FDA for the treatment or prevention of influenza risk their health and the health of their families," said Michael Chappell, acting FDA Associate Commissioner for Regulatory Affairs. "In conjunction with the Federal Trade Commission, the FDA has developed an aggressive strategy to identify, investigate, and take regulatory or criminal action against individuals or businesses that wrongfully promote purported 2009 H1N1 influenza products in an attempt to take advantage of the current flu public health emergency."

Many deceptive products for the virus are now being sold online through illegitimate web sites, authorities said. These fraudulent "Swine Flu" products come in several varieties, including dietary supplements or other food products, or products purporting to be drugs, devices or vaccines.

These phony products, however, will not prevent the transmission of the virus or treat infections caused by the H1NI virus, federal authorities said.

"The last thing any consumer needs right now is to be conned by someone selling fraudulent flu remedies," said FTC Chairman Jon Leibowitz. "The FTC will act swiftly against companies that resort to deceptive advertising."

The only two antiviral drugs approved by the FDA for treatment of H1N1 flu are Tamiflu and Relenza, authorities said, adding there are currently no licensed vaccines approved for this virus.

More information about this outbreak and which products are approved for treatment of the virus — is available on the FDA's Web site and the Centers for Disease Control and Prevention's (CDC) Web site.

Consumers with questions about personal protective equipment to use during this health emergency can find answers on the FDA's Web site.

The FDA urged consumers to report any fraudulent products for H1N1 flu — and the names of Web sites selling these items — to http://www.fda.gov/oci/flucontact.html federal authorities.

The CDC has, as of 11 a.m. Friday, confirmed 141 cases of H1N1 flu in 19 states — and one death linked to the virus.

Find out everything you need to know about swine flu.

Moderate Democrats joined Republicans Thursday as the Senate rejected a proposal that would have allowed bankruptcy judges to change the loan terms of homeowners struggling to pay their mortgages.

Sen. Richard Durbin (D-IL), sponsor of the legislation, said that allowing judges to adjust interest rates, and even the amount of principal still owed on the loan, would head off future foreclosures, helping the housing market to recover.

But most of the financial industry opposed the bill, dubbing it a cram down measure, and lobbied hard for its defeat.

Durbin said that, while he is disappointed with the vote, he will continue to bring the issue to the floor until the Senate decides to put the interests of homeowners above the interests of bankers.

The American Bankers Association said it produced 12,450 letters from its members stating their strong opposition. In addition, the ABA said it was able to jam switchboards in senators offices and flood their inboxes with email. The measure failed on a 51-45 vote.

We have consistently maintained that allowing bankruptcy judges to arbitrarily rewrite the terms of a mortgage contract — including allowing them to reduce (cram down) the amount owed on a mortgage, change interest rates, or stretch out the terms of the loan would bring additional risk and uncertainty to an already volatile mortgage market and would make home loans more expensive and less available for consumers, said Floyd E. Stoner, the ABAs executive director, congressional relations & public policy.

Stoner said the Congress and the administration had already taken several strong steps to help troubled borrowers and get the economy back on track. Giving bankruptcy judges broad cram down authority, he said, would work against those efforts and effectively undermine the goal of stabilizing the housing market.

Durbin said that when he first proposed the legislation two years ago, nearly 2 million homeowners were at risk of losing their homes. Today, he says, that number has skyrocketed to over 8 million homes, with nearly one in six mortgages in America on the verge of foreclosure.

Weve given the bankers who got us into this crisis every opportunity to responsibly address this crisis and they have failed. Ill keep working to give homeowners every legal means to save their homes.

As health experts grapple with rising obesity, the food American consumers eat gets a lot of the blame; things like pizza, burgers and fries, and sugary soft drinks. But there could be an economic reason so many people tend to over-consume unhealthy food. It costs less than food that's good for you.

In a study published in the May 2009 issue of the Journal of the American Dietetic Association, researchers from the University of Washington compared the eating habits and food costs of a sample of 164 adults in the Seattle, Washington area.

The energy density of the diet — that is, the available energy per unit weight — is one indicator of diet quality. Lean meats, fish, low-fat dairy products and fresh vegetables and fruit provide fewer calories per unit weight than do fast foods, sweets, candy and desserts. Energy dense foods provide more calories per unit weight but tend to be nutrient-poor.

Diets of low energy density and high nutrient content have been associated with less weight gain and with lower rates of obesity, type 2 diabetes, cardiovascular disease and some forms of cancer. In other words, they're considered "healthy food.

In contrast, energy-dense diets have been linked to higher obesity rates and higher disease risk. Improving diet quality by lowering its energy density is standard advice for weight control, cancer prevention and better health, the researchers say.

The 164 participants — 103 women and 61 men — recorded their usual frequency of consumption of 152 foods and 22 beverages and indicated portion size. They also provided four-day dietary records and completed demographic and behavioral questionnaires.

For both men and women, higher dietary energy density was associated with higher intakes of total fat and saturated fat and with lower intakes of dietary fiber, potassium and vitamins A and C. Daily diet cost was slightly higher for men ($6.72/day) than women ($6.21/day), reflecting the fact that men ate more than women.

However, the difference reversed after adjusting for energy. For each 2,000 kcal of dietary energy, men spent $7.43 compared to $8.12 spent by women. Diets that were more costly in terms of calorie dollars per day were also lower in energy density and contained higher levels of nutrients.

Higher quality diets were not only more costly but were associated with higher household incomes and education of study participants. Education, rather than incomes was the dominant factor. More highly educated respondents reported higher quality and therefore more costly diets, independent of household income level.

Writing in the article, Pablo Monsivais, PhD MPH, and Adam Drewnowski, PhD, both of the University of Washington, Seattle, conclude, "The finding that higher-quality diets were consumed by women of higher socioeconomic status and more costly per calorie has implications for epidemiologic studies of diet and chronic disease."

For the first time, researchers say, they have linked nutritional status to socioeconomic status. They say the findings theyve reported raise the possibility that the higher monetary cost of nutritious diets may provide one explanation for those with more education and more income eating healthier diets.

The U.S. Food and Drug Administration is warning consumers to immediately stop using Hydroxycut products after learning of a number of serious liver injuries. Iovate Health Sciences, the manufacturer, has agreed to recall Hydroxycut products from the market.

The FDA has received 23 reports of serious health problems ranging from jaundice and elevated liver enzymes, an indicator of potential liver injury, to liver damage requiring liver transplant. One death due to liver failure has been reported to the FDA. Other health problems reported include seizures; cardiovascular disorders; and rhabdomyolysis, a type of muscle damage that can lead to other serious health problems such as kidney failure.

Liver injury, although rare, was reported by patients at the doses of Hydroxycut recommended on the bottle. Symptoms of liver injury include jaundice (yellowing of the skin or whites of the eyes) and brown urine. Other symptoms include nausea, vomiting, light-colored stools, excessive fatigue, weakness, stomach or abdominal pain, itching, and loss of appetite.

The FDA urges consumers to discontinue use of Hydroxycut products in order to avoid any undue risk. Adverse events are rare, but exist. Consumers should consult a physician or other health care professional if they are experiencing symptoms possibly associated with these products, said Linda Katz, M.D., interim chief medical officer of the FDAs Center for Food Safety and Applied Nutrition.

Hydroxycut products are dietary supplements that are marketed for weight-loss, as fat burners, as energy-enhancers, as low carb diet aids, and for water loss under the Iovate and MuscleTech brand names. The list of products being recalled by Iovate currently includes:

• Hydroxycut Regular Rapid Release Caplets
• Hydroxycut Caffeine-Free Rapid Release Caplets
• Hydroxycut Hardcore Liquid Caplets
• Hydroxycut Max Liquid Caplets
• Hydroxycut Regular Drink Packets
• Hydroxycut Caffeine-Free Drink Packets
• Hydroxycut Hardcore Drink Packets (Ignition Stix)
• Hydroxycut Max Drink Packets
• Hydroxycut Liquid Shots
• Hydroxycut Hardcore RTDs (Ready-to-Drink)
• Hydroxycut Max Aqua Shed
• Hydroxycut 24
• Hydroxycut Carb Control
• Hydroxycut Natural

Although the FDA has not received reports of serious liver-related adverse reactions for all Hydroxycut products, Iovate has agreed to recall all the products listed above. Hydroxycut Cleanse and Hoodia products are not affected by the recall. Consumers who have any of the products involved in the recall are advised to stop using them and to return them to the place of purchase.

The agency has not yet determined which ingredients, dosages, or other health-related factors may be associated with risks related to these Hydroxycut products. The products contain a variety of ingredients and herbal extracts.