Current Events in June 2009

It was billed as the perfect antidote to long airport waits for busy flyers — simply pay $200 a year, submit some personal information, and you could be whisked to the front of the line for flights from many major airports. That was the promise of the "Clear" airport program, largest of the "Registered Traveler" priority-passenger programs.

But subscribers to the program were in for a shock yesterday, as the company abruptly ceased operations, its Web site replaced with a brief note saying it was closing down due to a dispute with its creditors.

"At the present time, because of its financial condition, Verified Identity Pass, Inc. cannot issue refunds," the Web site stated. The company's parent, later updated the site to add that it would take "appropriate steps" to delete the passenger data it had gathered.

The "Clear" program and its siblings were designed to circumvent higher security and longer lines imposed on airports in the wake of the September 11, 2001 terrorist attacks. The premise was that business travelers would submit extensive personal data — including biometric verification — to the Transportation Security Authority (TSA), which would vet the applicant and grant them permission to use "Clear," or other services.

Users of "Clear" would get a clear plastic ID card that could be used at any participating airport, or with competitors' terminals, in an effort to speed business travelers on their way while other passengers endured long lines, byzantine rules, and humiliating searches.

Many analysts blamed the program's shutdown on the economy, claiming that tight business budgets and high unemployment meant less air travel, and consequently less need for a fast-registration program.

Although "Clear" had the imprimatur of its founder and former CEO, media magnate Stephen Brill, and over $50 million in venture capital funding backing it, critics charged that programs like "Clear" did not offer any real security, as any potential terrorist or saboteur would find a way to forge their credentials and get past the system.

Privacy advocates also noted that the information gathered by Clear was not actually held by the TSA, but by the private companies backing the venture, such as Lockheed Martin.

"Now my personal information is within a database controlled by Lockheed Martin along with my biometrics," Greg of Centerville, Virginia told ConsumerAffairs.Com. "I don't know where it's going to end up or sold to in the future. The representatives told me they were just following instruction, but by who?"

The TSA temporarily shut down "Clear" in August of 2008 after a laptop was stolen from San Francisco International Airport containing personal data on 33,000 new applicants for the program.

Angry customers complained on various news sites that Clear had been charging them for renewals right up until the company's sudden shutdown, and demanded that Boston-based investor Spark Capital refund their payments.

One by one, the state of Massachusetts is targeting firms that claim they can "rescue" distressed homeowners from impending foreclosure. The Massachusetts Attorney Generals office has obtained a preliminary injunction against defendants H.O.P.E. Alliance, Inc., (H.O.P.E. Alliance), Law & Associates, LLC and Thomas E. Law, II.

The preliminary injunction prohibits the defendants from publishing advertisements concerning foreclosure-related services, contacting Massachusetts consumers regarding foreclosures or mortgages, and taking and/or soliciting advance fees from consumers. The preliminary injunction follows a temporary restraining order granted against the defendants in early June.

In a complaint centers on the all-too-common practice of soliciting unlawful advance fees for foreclosure-related services, and unnecessarily delayed negotiations regarding loan modifications. The two together, says Massachusetts Attorney General Martha Coakley, usually pushes homeowners further into debt.

The complaint also alleges that H.O.P.E. Alliance, with the help of co-defendants Law & Associates, LLC, and Thomas E. Law, II, solicited homeowners facing foreclosure by sending letters that directed them to a toll-free number and to the website www.helpnowalliance.org.

The website states that it is an alliance of nonprofit organizations and housing counselors that can assist homeowners in obtaining a loan modification or stopping foreclosure. The website also states that it is a 501 (c) (3) non-profit organization.

"H.O.P.E. Alliance is not registered with the IRS or the Attorney General's Office as a non-profit," Coakley said. The Attorney General's complaint also asserts that in its letter to homeowners, H.O.P.E. Alliance deceptively used a similar name to the government-sponsored non-profit organization, HOPE NOW Alliance.

During telephone calls with consumers, defendants apparently attempted to skirt the law by asking for a "donation" instead of a fee, but Coakley says the request is still an unlawful fee. Defendants also allegedly promised to obtain loan modifications for consumers, and then after months of delay either failed to provide any services or only provided inadequate assistance to homeowners.

The pitch speaks the language of faith and appeals to the budget. "There's no cost to your church. It may even make money to use for good works.

Its a win-win situation, right? Maybe not. In fact, its probably a scam. That right, scammers are not beneath ripping off a church, something they seem to be doing more lately.

Con artists with similar pitches are targeting black churches with so-called opportunity scams. Emphasizing a shared faith, culture, or concern for the community to win your trust, they offer the opportunity to use equipment or services that supposedly wont cost the church a thing.

Their goal? To get access to your churchs bank account, either by lifting account information from a check or by persuading you to sign up to have payments automatically deducted from the account. Once they have access, they can make oversize withdrawals or completely clean out the account.

Recently, scammers offered computer equipment to the staff of several churches, claiming the cost would be covered by a "sponsor." The church staff simply had to sign an agreement to lease the equipment, make a regular payment, and deposit checks from the sponsor to cover the checks the church staff had written.

But in the end, the equipment didnt work, the sponsor checks started bouncing, and the churches had thousands of dollars taken out of their accounts.

How can you avoid a potential church opportunity scam? The Federal Trade Commission, the nation's consumer protection agency, recommends remembering:

• A contract is a commitment. Before you sign a contract — like a lease — make sure you understand what it's saying. Don't rely on the person making the pitch to sum up the details. They may gloss over obligations outlined in the agreement that can cost your organization a lot.

• If a contract says you're financially responsible, take it seriously. A special payment arrangement where a third party reimburses you for payments you make is a sign of a scam. Dont take someones word that the language in the contract is "standard" or a "technicality."

• Scammers may look legitimate. They may direct you to websites theyve created, or they may say they are working with other churches in your area. Dont be swayed by an appearance of legitimacy. Do research on an organization before you do business with it.

• Never wire back money. In some schemes, scammers send a generous check, asking you to deposit it and wire back a portion or to make a payment right away. Days later when the bogus check bounces, the scammer will have made off with your money.

A court ruled Friday that publisher Simon & Schuster violated federal telecommunications laws when it sent out an unsolicited — and, in most cases, unwelcome — text message promoting Stephen King's latest book, conveniently titled "Cell."

The suit, brought in 2006 by Laci Satterfield of New York, alleged that such unsolicited text messages violated the Telephone Consumer Protection Act of 1991. That Act prohibits the use of automatic dialing systems, prerecorded or artificial voices, or the use of fax machines to send unsolicited ads.

The decision, rendered by the Ninth Circuit Court of Appeals, reversed a ruling from the United States District Court for the Northern District of California, which held that the texts were not covered under the TCPA. Specifically, the lower court held that text messages did not constitute an "automatic telephone dialing system" as defined by the statute.

Given the TCPA's relative age and the rapid technological advances made in the last two decades, the seemingly straightforward case presented a number of nuanced issues. The TCPA has, to date, targeted mostly telemarketers and other business that use "robo-calls" or faxes to promote their products and services.

How did Satterfield end up in court in the first place? Her initial story might sound familiar. Caving to her six-year-old son's nagging, Satterfield visited Nextone's website to download a free ringtone. To complete the process, Satterfield had to click through a number of sign-in pages. Eventually, she checked a box next to the words "Yes! I would like to receive promotions from Nextones affiliates and brands. Please note, that by declining you may not be eligible for our FREE content."

Nextone argued that the words "and its affiliates" give it license to give the customer's phone number out to any related campaign. And, sure enough, about a year after downloading her "free" ringtone, Satterfield received a text on her phone advertising horror writer Stephen King's latest book, "Cell."

TCPA provisions can be waived if the consumer has given express prior consent. The lower court had held that Satterfield's act of clicking the box next to the boilerplate provided such express consent, defeating her claims. However, the Ninth Circuit reversed summary judgment on this issue, ruling that there were genuine questions of fact as to whether Satterfield really knew what she was agreeing to.

The court noted that express consent must be "clearly and unmistakably stated," which was not the case here, given that Satterfield really only agreed to receive promotions from Nextones, not Simon & Schuster. The court's refusal to let Simon & Schuster off the hook on this point demonstrates that marketers cannot use vaguely-worded agreements as an excuse to bombard consumers with unsolicited texts or other advertisements.

Since the Ninth Circuit merely reversed a summary judgment holding — rather than ruling outright in Satterfield's favor — the case will now go back to the Northern District for further consideration.

The case has broad implications for modern interpretations of the TCPA, as robo-calls and faxes ride into the sunset and online communities and networking sites pop up around the globe. Only time will tell which activities fall under the umbrellas of "solicitation" and "consent."

More Scam Alerts ...

The parties involved in the wrongful death lawsuit involving a Minnesota teenager who died on a 2007 People to People trip to Japan have settled the case, ConsumerAffairs.com confirmed today.

The terms of the settlement in the case Sheryl and Allen Hill filed after their 16-year-old, Tyler, died on the People to People Student Ambassador trip are confidential and must be approved by the judge hearing the matter in Minnesotas Hennepin County District Court. The familys attorney, Charles Hvass, declined to comment. The Hills could not be reached for comment.

The Hills' lawsuit alleged that People to Peoples Student Ambassador group and its delegation leaders refused to get Tyler the medical attention he requested and charged that his June 29, 2007, death in Tokyo was the result of their negligence. Tyler suffered from Type 1 diabetes and complex migraine headaches — conditions his family disclosed before he went on the overseas journey.

But the travel organization that touts its ties to President Dwight D. Eisenhower convinced the family that it had a solid safety record and a 24-hour response team that could handle any medical emergency. That promise laid the foundation for the lawsuit, which alleged that no one with the organization responded to Tylers pleas for medical attention when he became sick after hiking Mount Fuji.

After that climb, the Hills alleged, Tyler asked his delegation leaders to take him to the hospital. He said he had altitude sickness. But People to People's delegation leaders refused his request for medical treatment, told him to "work through it," and sent him to his hotel room with water, according to the familys lawsuit.

The lawsuit also stated that People to People failed to contact the Hills about Tyler's illness.

Sometime around 4 a.m. on June 27, 2007, Tyler's condition deteriorated and he started vomiting blood. Around 7 that morning, People to People's four delegation leaders learned about Tyler's failing health. But they again refused to seek any medical treatment — even though he requested that attention "because he had been vomiting blood since four o'clock in the morning."

The delegation leaders also failed again to contact Tyler's parents, the lawsuit alleged.

For the next ten hours — from 7 a.m. to 5 p.m. — People to People's delegation leaders allegedly left Tyler alone in his room without any medical attention. According to the lawsuit, People to People did not seek any medical attention for Tyler until he was found unconscious in his hotel room — sometime around 6 p.m. on June 27, 2007.

A few hours later, one of the delegation leaders notified the Hills that Tyler was in the Japanese Red Cross Medical Center. The delegation leader also told the family that Tyler's heart had stopped beating for more than an hour, that he was then resuscitated and had been put on dialysis.

Tyler died two days later.

"They killed him, Sheryl Hill told ConsumerAffairs.com when her family filed the wrongful death lawsuit. This was involuntary manslaughter, neglect, and abandonment."

The Hills filed their lawsuit against Ambassadors Group, Inc., People to People Student Ambassador Programs, People to People International, a United Kingdom organization called docleaf Limited, two of its employees — Larry McGonnell and Dr. David Perl — and the four delegation leaders on Tyler's trip: Susan Stahr, Pat Veum-Smith, Josh Aberle, and Angela Hanson.

Earlier this year, the Hills reached a confidential agreement with the non-profit People to People International, based in Kansas City, Missouri. The remaining parties in the case reached a confidential agreement during a mediation hearing earlier this month, according to the Hills' attorney.

In a statement released today, Jeff Thomas, president and chief executive officer of Ambassadors Group, Inc., said his organization accepted some responsibility for Tylers death.

Through hindsight we can see that there are steps that all of the leaders should have taken that could have prevented Tyler's death on June 29, 2007, during a trip to Tokyo, Japan, and regret that they were not taken, said Thomas, who is also chief executive officer of Ambassador Programs, Inc. We are very sorry for Tyler's death and the Hill Family's loss and the impact it has had on many. We continue to review all policies surrounding students with pre-existing conditions, including diabetes protocols, to refine our procedures.

More about People to People

When fast food restaurants begin posting calorie content next to food items, some consumers are likely to be in for a shock. A news study by researchers at the University of Arkansas indicates that many consumers have a poor understanding of the calorie, fat and sodium content of quick-service restaurant meals.

In fact, the less healthful the food, the more consumers seem to underestimate its calorie and fat content.

The researchers — Scot Burton and Elizabeth "Betsy" Howlett, marketing professors in the Sam M. Walton College of Business, and graduate student Andrea Tangari — found that as the calorie content of a meal increased, so did the extent to which calorie, fat and sodium levels were underestimated. In other words, although most consumers expected a large cheeseburger and fries to be high in calories, few realized just how unhealthy that meal was.

For example, sodium levels from these purchased meals provided more than 75 percent of the daily-recommended level of 2300 milligrams, and consumers underestimated the amount of sodium in their meals by roughly 1,000 milligrams.

Results also showed that when nutrition information was worse than expected, consumers product evaluations were much more negative.

"Our findings provide potential insight into why frequent restaurant diners may have difficulty maintaining or losing weight," said Howlett. "On average, frequent diners unknowingly consumed 900 extra calories a week from restaurant meals. This degree of underestimation appears capable of causing significant weight gain over the long term."

Within the context of the national obesity problem and possible legislation mandating disclosure of calorie and nutrient information on menus, the researchers conducted three studies to determine how accurately consumers estimate calorie, fat and sodium content of quick-service restaurant meals. Of particular interest was how objective nutrition information interacted with prior expectations to influence product evaluations, purchase intentions and perceptions of diet-related disease risks.

"Our results suggest that when obligated to disclose nutrition information, quick-service restaurants with signature items that are substantially higher in calories than consumers' expect may find their firms in a relatively less favorable position," Burton said. "These restaurants may wish to improve their portfolio of healthy items by either introducing new products or improving the nutrition profile of foods on their current menu by switching to lower calorie ingredients."

An example of this strategy has been demonstrated recently by KFC, which recently introduced a grilled (unfried) chicken meal that is healthier than a fried-chicken meal.

Fast food patrons are likely to get calorie information in the near future. Consumer advocates and the restaurant industry are backing a compromise menu labeling bill that is currently making its way through Congress, and is considered likely to pass.

By Jon Hood
ConsumerAffairs.com

June 19, 2009
A group of New York mothers is suing the manufacturer of an infallibly accurate fetus gender test, claiming that the product doesn't live up to its hype.

The Baby Gender Mentor is advertised as giving 99.9% accurate results as early as five weeks into a mother's pregnancy.

According to the lawsuit, Acu-Gen Biolab, which manufactures the kit, referred to it in ads as the gold standard for prenatal gender detection. A website devoted to the test, www.babygendermentor.com, claims that the early prenatal gender detection test is based on established qPCR technology that, when properly administered by a qualified laboratory, has been proven highly accurate in detecting targeted DNA markers.

An attempt to click through to the site's Total Advantage section, which purports to explain why the test is a safe, quick, and easy way to find out the gender of your baby, resulted in an error message. It is unclear whether this page's absence is due to the lawsuit.

Barry Gainey, the plaintiffs' attorney, told the New York Post that Acu-Gen has already admitted that as many as 20% of consumers sought a refund from the company because their tests had given inaccurate results. It's not surprising that disgruntled new parents — already spending entire paychecks on diapers and disposable baby bottles — would be upset about a defective kit with a retail price of $275.

Expectant mothers complete the test by pricking their fingers with a provided lancet, and then mailing in three drops of blood to the manufacturer. The kit's procedures warn customers not to take the test in the vicinity of male humans, claiming that their presence could contaminate the results. Whether this will be raised by Acu-Gen as a defense — or whether it is even true — is one of many issues yet to be determined.

At least one mother suffered damages far overshadowing any economic loss.

One of the named plaintiffs used the kit during her second pregnancy, when she and her husband, already the parents of a son, hoped for a girl. The test confirmed their hopes, which were subsequently crushed when a sonogram reported that a second son was on the way after all. The couple has since abandoned their marriage, in part due to the stress and resentment caused by the erroneous test results.

Not the first time

This is not the first time the controversial test has raised eyebrows. In 2006, a number of customers claimed that Acu-Gen reneged on its 200% money-back guarantee, instead telling mothers that they needed to provide birth certificates, fingerprints, and other hard-to-produce evidence. The company also claimed that many of the affected mothers had conceived a vanishing twin — one that dies in the uterus and is essentially absorbed into the surviving fetus.

The test has also been criticized by a number of medical experts. In a 2006 interview with National Public Radio, Diana Bianchi, a fetal DNA expert at Tufts University, said that she was concerned whether the test is accurate or not. I think it's caveat emptor. Let the buyer beware. Some have also raised concerns that the test could be used for gender selection, leading mothers to terminate pregnancies unless their fetus was a certain gender.

The suit names as defendants both Acu-Gen and certain companies involved in the test's marketing. The action alleges counts in negligence and fraud.

The fake check scam is nothing new, and all kinds of consumers have been burned by it over the years. But now a new group of people have become its target - lawyers.

In the past, the scam has worked like this: a consumer would be contacted by email and recruited to handle money for a transaction. In some cases the scammer told victims they were collecting money for a charity, making the victim more likely to want to "help." But no matter now the scam was structured, the victim would always receive a check and be told to deposit it in his or her personal bank account. Then they would be instructed to wire a portion of the funds to the scammer.

Since the check was counterfeit, the bank would eventually discover there was no money backing it up and the victim, who had wired money to the scammer, would have to repay the bank that amount.

So, how are attorney's getting caught up in this scam? When you think about it, they make a perfect target.

Mississippi Attorney General Jim Hood says the Mississippi Bar Association has recently alerted its members to be on the lookout for an email referral from someone saying that they have a collection matter or contract dispute and need a local attorney to handle.

They will establish a relationship and after a short period of time, the client will notify the attorney that they have resolved the matter and have instructed the debtor to issue a check payable to the attorney. The attorney is instructed by the client to deposit the money into his account, take his fees and then wire the balance to the client. The scam occurs when the attorney receives the check and deposits it into his bank account. The check is bogus and comes back unpaid and the attorney is liable for the funds.

"Local attorneys and law firms are urged to use extreme caution and exercise diligence when presented with a situation similar to the one described above," said Hood. "If you encounter a similar situation, verify the names and contact information provided to you and do not disburse the deposited funds until the bank on which the cashiers check is drawn clears the check."

National consumer protection organizations are solidly behind President Obamas proposal to create a new federal Consumer Financial Protection Agency to ensure the safety, fairness and sustainability of credit.

The agency would have broad powers to ensure that credit and payment products do not have predatory or deceptive features that can harm consumers or lock them into unaffordable loans.

The international economic crisis was triggered by the failure of federal regulators to stop abusive lending, particularly in the housing sector, said Travis Plunkett, Legislative Director of the Consumer Federation of America. If the presidents proposal had been in place five years ago, this agency would have been able to better protect consumers, financial institutions, and the entire economy.

Currently, seven federal regulatory agencies are charged with protecting consumers in the financial services marketplace. Five of these agencies also oversee the soundness of financial institutions. The presidents proposal would consolidate most federal consumer protection efforts into a single agency.

Too often, captive federal banking regulators have treated consumer protection as less important or even in conflict with their supposed primary mission to ensure the safety and soundness of financial institutions, said Ed Mierzwinski, Consumer Program Director of U.S. PIRG. The presidents proposal would streamline and dramatically improve the current splintered, ineffective federal financial regulatory system because the new agency would be required to make consumer credit protection its top priority.

Under the Obama proposal, the new agency would oversee all credit and payment products, no matter what kind of financial institution offers them. It would be charged with setting high federal minimum standards, which would allow the states to impose tougher requirements if warranted.

The days of allowing financial institutions to shop around for the weakest form of regulation are over, said Pamela Banks, Senior Policy Counsel with Consumers Union. Under the presidents proposal, the only regulatory competition that would exist would be to increase consumer protections.

The plan is very similar to legislation to establish a Financial Products Safety Commission proposed by Senator Richard Durbin and Representative William Delahunt (S. 566/ H.R. 1705). Both Senate Banking Committee Chairman Christopher Dodd and House Financial Services Chairman Barney Frank have endorsed the concept as well.

"The economic crisis has caused a painful loss of confidence in financial products and institutions. It appears that no one was minding the store," said Linda Sherry of Consumer Action. "We support the creation of a new agency with powers to cut through the web of financial regulations and strengthen consumer protections. We need a watchdog to restore consumer confidence and increase the availability of innovative financial products to promote wealth building and access to capital for all communities."

We urge Congress to act quickly on the Presidents proposal so a strong, independent agency is in place to protect consumers in the financial services marketplace by next year, said David Arkush, Director of Public Citizen's Congress Watch division.

June 18, 2009
SmartSpark Energy Systems is recalling about 800 BattEQ battery equalizers. They can overheat and start a fire.

The firm has received one report of an equalizer that overheated which resulted in fire that caused damage to the equalizer and batteries. No injuries have been reported.

The recalled battery equalizers are charge balancing devices designed to increase the performance and longevity of rechargeable batteries.

The equalizers were sold by authorized distributors and retailers from July 2006 through March 2009 for about $300. They were made in the U.S.

Consumers should immediately stop using these recalled battery equalizers and contact SmartSpark for a full refund.

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

When you buy a wireless phone in America, the vast majority of the time, that means you have to buy into a multi-year agreement with whichever carrier has an exclusive deal to carry that phone. These "deals" really aren't deals for consumers, as they entail high fees, blocked functionality, and the inability to take the phone with you if you switch carriers.

Although legislation to enact better consumer protections has yet to become law, some members of Congress are taking another crack at cracking down on the cellular industry.

The Senate Commerce Committee held a hearing yesterday on "The Consumer Wireless Experience," exploring how "exclusive" contracts can hinder both wireless customers and companies from getting the most out of their phones.

"We have too many places in this country where wireless call quality is low and service is unreliable — places where wireless broadband is only a pipe dream. This is absolutely unacceptable to me," said committee chair John "Jay" Rockefeller (D-WV).

The hearing, which contained no testimony from consumer advocates or actual citizens, had ample representation from industry spokesmen. AT&T retail division president Paul Roth said the wireless marketplace "[encouraged] the necessary collaboration that optimizes handset performance and accelerates the delivery of next-generation features."

Hu Meena, president of U.S. Cellular South, disagreed, equating the wireless marketplace to the financial industry prior to the global economic meltdown.

"Our country's banking and finance policy mistakenly believed that free reign in the marketplace with little oversight was the best course of action and that certain institutions were simply too big to fail," Meena said. "Congress must take action now to ensure that the wireless industry remains the competitive and innovative marketplace that Congress intended for consumers to have.

Members of the committee also wrote acting FCC chairman Michael Copps on the subject of competition in the wireless marketplace, urging the agency to take another look at exclusivity in contracts.

"We ask that you examine this issue carefully and act expeditiously should you find that exclusivity agreements unfairly restrict consumer choice or adversely impact competition in the commercial wireless marketplace," the Committee wrote.

"Today, we've got a wireless marketplace where four companies account for more than 85 percent of all subscribers," committee member Sen. John Kerry (D-MA) wrote on SaveTheInternet.com's blog. "In fact, nine of the most popular ten phones are locked in a deal with one of these big wireless carriers, and are only available through one network."

At his confirmation hearing on Tuesday, incoming FCC chairman Julius Genachowski did not directly address the question of exclusivity contracts, but said more needs to be done to emphasize consumer choice and protect customer rights in the wireless marketplace.

Fans of the ultra-popular iPhone have been complaining to ConsumerAffairs.com and elsewhere that AT&T — the exclusive carrier of the iPhone — cripples the phone's functionality and has made upgrading to the new 3GS model too confusing.

"I purchased an iPhone on May 4th and they are not allowing me to exchange my 3G iphone to a 3Gs when it comes out," wrote Anthony of Lawrenceville, New Jersey. "I have discussed my problem with Apple, who has agreed AT&T is engaging in poor business practices."

There have been multiple legal challenges to exclusivity contracts in court, mostly centered around the expensive termination fees customers have to pay to switch from one carrier to another. Wireless companies say the fees are necessary to recoup the costs of the handsets, but critics charge they're designed to lock a customer in and prevent them from shopping for the best offer.

All four wireless carriers — AT&T, Sprint, T-Mobile, and Verizon Wireless — began prorating their termination fees and streamlining their customer service plans after judges in several states ruled the contracts were "unconscionable" and violated state consumer protection laws.

The House Energy & Commerce Committee unanimously passed by voice vote the "Food Safety Enhancement Act of 2009," legislation that would, if passed, overhaul the Food & Drug Administration (FDA)'s power to police food suppliers and producers for signs of contaminated product.

"A series of foodborne disease outbreaks...has not only sickened and killed American consumers, but has laid bare unacceptable gaps in our food safety laws," said committee chair Rep. Henry Waxman (D-CA). "Today the Committee will act to close those gaps — and give the Food and Drug Administration new authorities, new tools, and a new source of funding to carry out this vital mission."

Proposed powers for the FDA under the new law include:

• Creation of a registry of all food facilities and importers serving Americans, which would be updated on an annual basis. Affected parties would pay fees to be included in the registry, and would be tagged with unique identification numbers for easier tracking.

• Registered facilities would pay an annual fee of $500 to fund FDA oversight, including inspections, recalls, and certifications for export of food to the U.S.

• The FDA's powers to "quarantine" potentially unsafe food or products from entering geographic areas would be enhanced.

• The FDA would issue regulations requiring every company in a food produce chain — including manufacturers, processors, and transporters — to maintain records for the origin and distribution of the food, and ensure the records are usable and transferable in multiple formats.

• Enhanced safety requirements for infant formula.

• New authority to subpoena records and protect whistleblowers in case of alleged violations of the law.

The annual fee was originally set at $1,000, but was lowered to $500 after concerns were raised that small business farms and independent producers would not be able to pay the fee, while large agribusinesses and farms could do so easily.

Republicans also introduced amendments that would enable the FDA to set aside the inspection procedure on its discretion, and to limit the "quarantine" power to only the minimal amount necessary to prevent an outbreak.

Jean Halloran, director of food safety campaigns for Consumers' Union, said "The bill would go a long way towards preventing outbreaks like the ones we have seen with spinach and peanut butter. [W]e've pushed hard to require high-risk food processors to test for contaminants and tell the FDA when they find them, and we're pleased that this provision was added to the bill approved today."

The nonprofit expressed concern that language ensuring state food safety laws would not be preempted was removed from the legislation, and advocated its return in subsequent drafts of the bill.

Ami Gadhia, Consumers' Union policy counsel, said "We hope that the legislation moves to the House floor quickly and the Senate passes a strong bill so a final package can be sent to the President soon. Congress needs to act before we discover another food contamination that takes consumers' lives."

Abercrombie & Fitch is closing its Ruehl stores, a victim of the recession. The upscale retailer said the reduction in consumer spending, especially in the upscale space, made it impossible to keep the stores open.

The closings are expected to be completed by the end of the company's current fiscal year.

Abercrombie & Fitch (NYSE: ANF) today announced that its Board of Directors approved the closure of its 29 RUEHL branded stores and related direct-to-consumer operations. The Company anticipates the closure will be substantially complete by the end of the current fiscal year.

While it was encouraged by the initial performance of RUEHL, the Company has determined that, given the severe economic downturn and its impact on the retail and consumer sectors, the timing is not right to continue to pursue the further development of RUEHL.

Ruehl, a brand aimed at an older demographic, generated a pre-tax operating loss of approximately $58 million for the fiscal year ended January 31, 2009, including a non-cash impairment charge of approximately $22 million, the company said. The pre-tax operating loss included store operating results and home office and other costs directly attributable to Ruehl operations.

"It has been a difficult decision to close Ruehl, a brand we continue to believe could have been successful in different circumstances," said Mike Jeffries, CEO of Abercrombie & Fitch Co. "However, given the current economic environment, we believe it is in the best interests of the company to focus its efforts and resources on the growth opportunities afforded by our other brands, particularly internationally."

The Company operates 350 Abercrombie & Fitch stores, 210 Abercrombie stores, 507 Hollister Co. stores, 29 Ruehl stores and 16 Gilly Hicks stores in the United States.

Expedia is reeling from its second class-action loss in a month, after the Georgia Supreme Court ordered the popular travel reservations website to pay an undetermined amount to the city of Columbus, Georgia.

The suit alleged that, while Columbus hotels charged taxes based on a room's wholesale value, Expedia collected taxes calculated according to the retail price of the room, and pocketed the difference. The exact amount owed by Expedia will be determined by a trial court.

The city's argument was the same one asserted in a successful class action settled earlier this month in Washington state. There, plaintiff consumers alleged that the difference between retail- and wholesale-based taxes were disguised as part of a "service fee," included in the same billing line as the taxes themselves.

That suit was ultimately resolved when Judge Monica Benton of the King County Superior Court ordered Expedia to pay $184 million to consumers who purchased tickets between Feb. 18, 2003 and Dec. 11, 2006. The suit contained a number of embarrassing revelations for the travel conglomerate, including a 2001 e-mail predicting that the service charge would "add between $2-3 million in our net profit (the bottom line) next quarter."

Expedia is filing a motion to reconsider the Georgia ruling and, if that proves unsuccessful, has already announced that it will appeal the decision.

Even if its subsequent efforts prove successful, the company may not be out of the woods. Still pending are similar suits brought by 175 municipalities in Texas, and the Georgia cities of Atlanta and Rome. The ruling also did not address whether Expedia will be forced to pay back taxes, an issue that could come back to haunt the company in future suits. And other travel-oriented sites should think twice before deciding to rest easy; Columbus, the victor in the most recent suit, is also suing Orbitz Worldwide and Hotels.com.

Atlanta, smelling blood in the water ahead of its own suit's resolution, issued a statement calling the ruling "a very positive development." In case it wasn't clear enough, the city added that the ruling "validates the positions that [Atlanta] has taken in its lawsuit." C. Neal Pope, an attorney representing Columbus, called the ruling "a severe blow" to Expedia.

Expedia, headquartered in Bellevue, Washington, was founded as part of Microsoft in 1996 and struck out on its own three years later. The company counts itself among the S&P 500 and NASDAQ 100.

The U.S. Food and Drug Administration says consumers should stop using three products marketed over-the-counter as cold remedies because they are associated with the loss of sense of smell, a condition known as anosmia. Anosmia may be long-lasting or permanent.

The products are:

• Zicam Cold Remedy Nasal Gel

• Zicam Cold Remedy Nasal Swabs

• Zicam Cold Remedy Swabs, Kids Size, a discontinued product

The FDA said it has received more than 130 reports of loss of sense of smell associated with the use of these three Zicam products. In these reports, many people who experienced a loss of smell said the condition occurred with the first dose; others reported a loss of the sense of smell after multiple uses of the products.

"Loss of sense of smell is a serious risk for people who use these products for relief from cold symptoms," said Janet Woodcock, M.D., director of the FDA's Center for Drug Evaluation and Research. "We are concerned that consumers may unknowingly use a product that could cause serious harm, and therefore we are advising them not to use these products for any reason."

People who have experienced a loss of sense of smell or other problems after use of the affected Zicam products should contact their health care professional. The loss of sense of smell can adversely affect a person's quality of life, and can limit the ability to detect the smell of gas or smoke or other signs of danger in the environment.

The FDA has issued Matrixx Initiatives, maker of these Zicam products, a warning letter telling it that these products cannot be marketed without FDA approval.

Companies have an obligation to the public to demonstrate to the FDA that their products are safe, particularly when there is evidence they may be causing serious adverse events, and they are marketed for minor, self-limiting conditions like the common cold," said Deborah M. Autor, director of CDER's Office of Compliance.

A key element of health care changes being proposed in Washington is universal coverage and coverage for pre-existing claims. House Democrats Tuesday tried to demonstrate why they think both reforms are needed.

The House Subcommittee on Oversight and Investigations convened a hearing to take testimony from people who struggled to get coverage, or had their existing coverage rescinded. Lawmakers also hauled the executives from these insurance companies before the subcommittee to explain their actions.

"Cancer is expensive and no one wants to help," said Robin Beaton, a Texas woman battling breast cancer.

She told lawmakers that her doctor had scheduled a double mastectomy but before the operation, her insurance company rescinded her health coverage. The company said it had reviewed Beaton's medical records and found discrepancies in the information she had provided. Beaton said they were unintentional.

As for the insurance executives, they said their companies rely on their clients to report complete medical histories. Being able to rescind a policy, they said, is an important tool to prevent fraud.

Don Hamm, CEO of Assurant Health, said his company rescinds policies only in cases where the withheld information would have made a material difference in the policy.

The hearing was a result to a year long investigation into abuses within the health insurance industry and a warm-up to the debate to come over health care reform.

Rep. Henry Waxman (D-CA), Chairman of the House Energy and Commerce Committee, said the results of the investigation show that the nation's health insurance system is flawed.

"One of the biggest problems is that most states allow insurance companies to deny coverage for people with preexisting conditions," Waxman said. "So if you lose your job, and you can't qualify for a government program like Medicare or Medicaid, it's nearly impossible to get health insurance if you are sick or have an illness. This creates a perverse incentive. In the United States, insurance companies compete based on who is best at avoiding people who need life-saving health care."

June 16, 2009
Starbucks is realling about 530,000 coffee bean grinders sold under the Starbucks Barista and Seattle's Best Coffee brand names.

The grinder can fail to turn off or can turn on unexpectedly, posing a laceration hazard to consumers.

The firm has received 176 reports of grinders that failed to turn off or that turned on unexpectedly, including three reports of hand lacerations that occurred when the grinders turned on unexpectedly during cleaning.

This recall includes the Starbucks Barista Blade Grinders and Seattle's Best Coffee Blade Grinders with the following colors and SKU numbers:

The grinders were sold at Starbucks and Seattle's Best Coffee stores nationwide from March 2002 through March 2009 for about $30. They were made in China.

Consumers should immediately stop using the coffee grinders and contact Starbucks to receive a free replacement grinder.

For additional information, contact Starbucks toll free at (866) 276-2950 between 9 a.m. and 9 p.m. MT or visit the company's Web site at www.starbucks.com

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