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    Consumer Complaints Up, But Resources To Help Are Down

    Debt collection is fastest growing complaint in latest consumer agency survey

    A new survey of state and local consumer agencies conducted by the Consumer Federation of America (CFA), the National Association of Consumer Agency Administrators (NACAA) and the North American Consumer Protection Investigators (NACPI) shows that while consumer complaints have gone up, the resources to help resolve them went down.

    The survey of 34 state, county, and city agencies from 19 states across America provides a national snapshot of the challenges faced by consumers and government consumer protectors in 2008.

    • Sixty-two percent of the agencies reported that they received more complaints last year than in the previous year.

    • Nearly half (47 percent) of the agencies suffered budget cuts just prior to or during the survey period; one was recently eliminated entirely.

    • Half of the agencies said that they noticed a trend toward receiving more complaints involving small amounts of money last year than before.

    • Debt collection topped the list of the fastest growing complaints.

    • Mortgage-related complaints, especially foreclosure rescue scams, were most frequently cited as the worst complaints.

    • Inadequate budgets and staffing was the biggest challenge most agencies faced.

    "It's ironic that at the same time that more people are asking state and local consumer agencies for help, their budgets are shrinking," said Susan Grant, CFA Director of Consumer Protection. "They deserve public support so they can continue to protect consumers from losing their hard-earned cash and ensure that the marketplace is fair for legitimate businesses."

    Grant noted the prevalence of complaints related to credit and debt in response to many of the survey questions. "A federal agency that would focus on financial safety would help consumers and state and local consumer agencies by setting minimum standards that would not preempt state laws," Grant said.

    Complaints related to the nation's economic situation

    When the agencies were asked what kinds of complaints they received last year that were particularly related to the worsening economy, the responses included:

    • Aggressive debt collection tactics;

    • False promises to help consumers repair bad credit, modify loans, settle debts and forestall foreclosure;

    • High-cost payday loans and bogus offers for loans with upfront fees;

    • Fraudulent work-at-home and business opportunities;

    • Business closings resulting in lost deposits, unused gift cards, undelivered products or services, and unfulfilled warranty repairs;

    • False advertising and billing and cancellation issues;

    • Tenant problems stemming from foreclosed rental properties;

    • Unfinished construction projects;

    • Cheating consumers on the price, quantity or quality of gasoline and home heating oil.

    "During economic hard times, consumers are even more vulnerable to phony promises to loan them money, save their homes from foreclosure, or help them make money," said Anna Huddleston-Aycock, a justice analyst with the Pinellas County Florida Department of Justice and Consumer Services and President of NACPI. "Another big problem is sudden business closings, which can leave consumers without their money or the goods and services they paid for."

    The agencies that responded to the survey handled a total of more than a quarter million complaints and obtained nearly $250 million in restitution or savings for consumers last year.

    "State and local agencies help to resolve problems that directly affect people's lives and their wallets," said Jim Rabbitt, Director of the Wisconsin Bureau of Consumer Protection and President of NACAA.

    The survey showed that the most common complaints last year involved basic necessities such as cars, homes and credit. Following are the complaint categories that most frequently appeared in the agencies' top ten lists. Their ranking in the top ten in 2007 is noted in parenthesis.

    Top Consumer Complaints for 2008:

    1. Auto: (1) Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes

    2. Home Improvement/Construction: (2) Shoddy work, failure to start or complete the job

    3. Credit/Debt Collection: (3) Billing and fee disputes, mortgage-related fraud, credit repair, debt settlement, predatory lending, illegal or abusive collection tactics

    4. Utilities: (5) Service problems, billing disputes with phone, cable, satellite, Internet, electric and gas services

    5. Retail Sales: (4) False advertising, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, nondelivery

    6. Services: (9) Misrepresentations, shoddy work, failure to have required licenses, failure to perform

    7. Household Goods: (6) Major appliances and furniture, problems with nondelivery, misrepresentations, faulty repairs

    8. Landlord/Tenant: (10) Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics

    9. (tie) Internet Sales: (7) Misrepresentations, nondelivery in online purchases; Home Solicitations: (8) Misrepresentations, nondelivery in door-to-door, telemarketing and mail solicitations, do-not-call violations

    10. Health Products and Services: (not in top 10 in 2007) misleading claims, failure to deliver

    Real-life examples of cases from state and local agencies' files are used to illustrate the top, lasting-growing, and worst complaints, and the report provides tips on how consumers can protect themselves in those situations. It also describes new types of complaints that the agencies received last year, how they help consumers in disaster situations, and their biggest challenges and achievements.

    When asked what new laws were needed to protect consumers, the agencies made many suggestions, including outlawing debt settlement companies that take fees before providing any services, prohibiting overdraft protection unless consumers affirmatively agree to it and restricting unreasonable fees for such protection, strengthening consumers' rights to cancel contracts and prohibiting mandatory binding arbitration requirements for contract disputes, barring the use of devices and the fraudulent leasing of telephone numbers that allow telemarketers and identity thieves to "spoof" their identities by showing a different name or number on Caller ID, and prohibiting sub-contractors from placing liens on consumers' property when they are not paid by the contractors.

    Eight ways that consumers can protect themselves

    1. Look at the track record. Before you buy from unfamiliar companies, check with your state or local consumer agency, the Better Business Bureau, and online complaint forums to see if other people have reported serious problems.

    2. Hire licensed professionals. When you're hiring home improvement contractors or other professionals, ask your state or local consumer agency if they must be licensed or registered and how you can check to confirm that they are.

    3. Pay the safest way. When you buy goods or services that will be delivered later, pay with a credit card so you can dispute the charges if they don't arrive or aren't what you were promised.

    4. Don't pay in full upfront. If you are asked for a deposit for home improvement or other services, pay a small amount, never the full price upfront.

    5. Recognize the danger signs of fraud. Be suspicious of any requests to wire money; scare tactics or pressure to act immediately; promises that you can borrow, win or make money easily if you pay a fee in advance; and any situation in which someone gives you a check or money order and asks you to send money somewhere in return.

    6. Get all promises in writing. Verbal agreements are hard to prove. Carefully read contracts or finance agreements and make sure you understand them before you sign.

    7. Seek help for financial problems from legitimate sources. If you're having trouble paying your bills, consult your local nonprofit consumer credit counseling service.

    8. When in doubt, check it out. If you're not sure what your rights are or you think something might be fishy, ask your state or local consumer agency for advice.

    Consumer Complaints Up, But Resources To Help Are Down...
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    White House: "Cash For Clunkers" Still Running

    More funds being sought for wildly popular program

    The White House this morning quickly denied published reports that the wildly popular Cash For Clunkers program had broken down, within days of starting up.

    White House economic advisor Christina Romer, interviewed on the business cable network CNBC, said she could confirm that the program remains viable and operating. She said the White House would support Congressional efforts to pump an additional $2 billion into the program.

    Car dealers were thrown into a panic late Thursday when it looked like the program had run its course before many dealers got ramped up. National Automobile Dealers Association spokesman Bailey Wood said Thursday that the group had been told by Transportation Department officials of plans to suspend the program after just six days.

    But Congressional leaders have said they will propose tripling the number for the program and Romer said the White House supports that effort.

    The clunkers program has been the most successful of the economic stimulus progams thus far -- and the one that's most likely to have an immediate effect on Main Street USA, observers noted. Sales of new cars not only pump money into dealers' pockets but also produce big tax proceeds for cash-strapped state and local governments.

    The Car Allowances Rebate System -- more popularly known as "Cash For Clunkers" -- where buyers could trade in their old gas-guzzler for a $3,500 or $4,500 voucher towards a more eco-friendly car, was described as suspended last night, and less than a week and roughly 250,000 cars had been sold.

    Under the original bill, the funding only covered 250,000 cars, but it was estimated that it would be at least October before than many were sold.

    The program certified 22,782 car trades since Monday, according to the National Highway Traffic Safety Administration (NHTSA), but a survey of dealers found that there was a backlog of 25,000 trades still awaiting clearance. The agency also rejected many claims due to illegible or incomplete paperwork, according to theDetroit Free Press.

    Many auto dealers around the country were reporting brisk business as a result of the program, while others were claiming the procedure for approval was too difficult and was leaving them unable to make transactions.

    Processing the remaining transactions would have drained the program of its remaining funds due to the high demand, sources said. The sources said the Obama administration had suspended the program, though the White House now says that was never the intention.

    The program was criticized on a number of fronts, with Republicans and some Democrats claiming the cost would be too high and provide too little stimulation to the economy. Environmental activists claimed the program actually favored purchasing of SUVs and "crossover" vehicles, due to inconsistencies in the Environmental Protection Agency (EPA)'s mileage standards.

    And it wasn't long before the program was announced that a proliferation of scam operations appeared, looking to take advantage of the expected flurry of business in the auto market.

    White House: Cash For Clunkers Still Running...
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    Fed Suggests Recession Nearing An End

    Recovery may be "sluggish and uneven"

    The White House this week ridiculed Newsweek Magazine's cover that declared The Recession is Over, but the Federal Reserve reported Wednesday that, if the recession isn't over, it's getting close.

    In its so-called Beige Book, the Fed concluded that the economy is no longer in a free-fall, and in fact, some regions of the country are starting to show signs of stabilization. The report is based on data collected from businesses across the country.

    The recession is nearing its end. But that doesn?t mean that every sector has turned the corner, said Joel Naroff, chief economist for Naroff Economic Advisors, in Holland, Pa. Some industries are starting to see some pick-up in demand but others will have to wait. In addition, any improvement is likely to be uneven and sluggish.

    The beige book covered the six-week period since the last book on June 10 and was prepared in advance of the August 11 and 12 meeting of the Federal Open Market Committee, which sets interest rates.

    Analysts say they don't expect the FMOC to make any changes, keeping a key interest rate close to zero. The Fed may also buy billions of dollars in government and mortgage-related debt to try and keep mortgage rates low.

    While the beige book pointed to hopeful signs, it also contained a number of sobering observations. Commercial lending is still drying up, foot traffic in stores is slow and fewer business people are traveling.

    However, a separate report Wednesday suggested business spending on big ticket items is staging something of a comeback. The Commerce Department reported that orders for durable goods, fell sharply because of lower sales of cars and airplanes. But when that volatile sector is excluded, new orders rose a surprising 1.1 percent.

    There were solid increases in demand for primary metals, machinery and electrical equipment, Naroff said. The best measure of corporate spending, nondefense, nonaircraft capital goods orders, rose solidly for the second consecutive month. Yes, there was some weakness in computers, communications equipment, motor vehicles and fabricated metals, but even in some of those sectors there is hope.

    Naroff said as Chrysler and GM begin to move on from bankruptcy, the economy is likely to see production pick up as the new models are assembled. For the past few months, he says, there has been little activity as the firms have tried to reduce inventory.

    Fed Suggests Recession Nearing An End...
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      Domestic Air Fares Drop In First Quarter

      Highest fare in Huntsville, lowest at Long Beach

      Average domestic air fares dropped 9.1 percent in the first quarter of 2009 from the fourth quarter of 2008, the biggest quarter-to-quarter drop on record, according to the U.S. Department of Transportation's Bureau of Transportation Statistics.

      The average first-quarter fare of $315 was down 5.9 percent from the first quarter of 2008 and down 12.5 percent from the record high average fare of $360 in the third quarter of 2008. First quarter 2008 fares were also 9.4 percent below the pre-9/11 first quarter high of $348 in 2001.

      The $315 first-quarter 2009 average fare represented a lower rate of increase than inflation both from the first quarter of 1995, the first year of BTS records and from the previous high for first-quarter fares set in 2001.

      In the 15 years from 1995, air fares rose 6.1 percent compared with a 40.5 percent inflation rate. From 2001, when the previous first-quarter high was set, fares declined 9.4 percent compared with a 20.7 percent inflation rate.

      Since 2005, average fares have risen less than the inflation rate. First-quarter 2009 average fares rose 4.5 percent from the post-9/11 first-quarter low of $301 in 2005; the inflation rate was 10.0 percent.

      Of the top 100 airports based on 2008 originating passengers, the highest first-quarter average fares were in Huntsville, AL followed by Cincinnati, OH; Grand Rapids, MI; Savannah, GA; and Des Moines, IA.

      The lowest fares in the top 100 airports were at Long Beach, CA followed by Oakland, CA; Burbank, CA; Dallas Love and Las Vegas.

      The largest year-to-year average fare increase for the first quarter among the 100 largest airports ranked by originating passengers was 10.0 percent in Dallas Love followed by Houston Hobby; Lubbock, TX; Oklahoma City, OK and Memphis, TN.

      The biggest year-to-year average decrease was 16.8 percent in Cincinnati, OH, followed by Madison, WI; Richmond, VA; Long Beach, CA and San Francisco.

      A separate measure of fares, the BTS Air Travel Price Index dropped 8.5 percent in the first quarter of 2009 from its fourth quarter 2008 level.

      Average fare calculations and the ATPI, while similar, measure air fares in two different ways and may produce different results. ATPI measures the rise in air fares, while average fares show the increased use of lower fares. The varying results reflect trends in the airline industry that have resulted in more passengers using lower air fares even though fare levels continue to rise. Three of these trends follow.

      • First, low-cost carriers, which generally offer lower fares, now carry about 40 percent of all domestic enplaned passengers, up from about 14 percent in 1995.

      • Second, network carriers have been forced to match some of the low-cost carrier relaxed fare rules, such as eliminating the "Saturday Night Stay Rule", which has allowed more passengers to purchase lower fares.

      • Third, use of the Internet allows almost instant price comparisons that give the customer the opportunity for unprecedented low-fare shopping.

      Excluding Alaska, Hawaii, and Puerto Rico, the largest year-to-year fare index increase for the first quarter among the 85 largest airline markets, ranked by passengers, was 3.7 percent in Islip, NY followed by Reno, NV; Ontario/San Bernardino, CA; San Diego, CA and Portland, OR.

      The largest year-to-year ATPI decrease was 14.5 percent in Richmond, VA followed by Dayton, OH; Rochester, NY; Boston and Philadelphia.

      Domestic Air Fares Drop In First Quarter...
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      Sprint To Purchase Virgin Mobile

      $483 million deal built on potential for prepaid phones

      Third-place wireless carrier Sprint Nextel announced yesterday that it would purchase prepaid phone service Virgin Mobile at $5.50 a share, a deal estimated at $483 million.

      Sprint Nextel, which already owned a 13.1 percent stake in the mobile virtual network operator (MVNO), promised to retire the company's estimated $205 million debt when the deal closes in late 2009 or early 2010. The deal is alleged to have netted Virgin CEO Sir Richard Branson an estimated $250 million.

      The post-merger Virgin Mobile will be headed by current Virgin Mobile CEO Dan Schulman, reporting to Sprint CEO Dan Hesse. The Virgin Mobile brand will coexist alongside Boost Mobile, Sprint's current prepaid phone offering.

      In a statement, Hesse said the buyout was designed to give Sprint more leverage in the burgeoning prepaid mobile arena.

      "The acquisition of Virgin Mobile USA positions Sprint for even greater success in the prepaid wireless segment," Hesse said. "Prepaid is growing at an unprecedented rate with consumers keenly focused on value. Virgin Mobile is an iconic brand in the marketplace that will complement our Boost Mobile brand."

      As the recession drags on and consumers look to downsize any way they can, prepaid wireless services--where the user buys blocks of minutes and pays only for those, rather than unlimited "all-you-can-eat" plans--can be an attractive alternative. The Virgin Mobile purchase also gives Sprint a dominant leg up in the MVNO market, where carriers lease their networks from other carriers. Virgin Mobile had previously bought MVNO operator Helio.

      The deal may also reflect Sprint's struggles to right itself after losing ground to competitors AT&T and Verizon Wireless in the last several years, hampered by problems stemming from its acquisition of Nextel in 2005, and continual bleeding of customers to rival providers.

      Although prepaid cell phone plans can save customers both time and money, and Virgin Mobile has scored high in customer satisfaction among prepaid wireless carriers, regularly receives complaints about both Virgin Mobile and its new parent Sprint.

      "On 6/22/2009, I made payment of $150 on my cellular service. Per Sprint, they applied the payment to my ex-husband's account without my knowledge or consent," said Pamela of Phoenix, Arizona. "They now refuse to transfer the payment to my account and have turned off service, although they are continuing to charge me for service."

      Sprint To Purchase Virgin Mobile...
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      FDA Warns Against Bodybuilding Products Containing Steroids

      Several products affected by FDA's advisory

      The Food and Drug Administration (FDA) is warning consumers to stop using any body building products that are represented to contain steroids or steroid-like substances.

      While many of these products are marketed as dietary supplements, the FDA says they are NOT dietary supplements, but instead are unapproved and misbranded drugs.

      The advisory was issued along with a warning letter sent to American Cellular Laboratories Inc. for marketing and distributing the products, which FDA says contain synthetic steroid substances.

      These products are sold online and in retail stores and are promoted as hormone products and/or as alternatives to anabolic steroids for increasing muscle mass and strength. Many are labeled as dietary supplements and make claims about the ability of the active ingredients to enhance or diminish androgen, estrogen, or progestin-like effects in the body. The FDA warns that these products are potentially harmful and that it has not approved them nor reviewed their safety before marketing.

      These body-building products are often marketed as being anabolic (promoting muscle building) and/or being similar to anabolic steroids (such as testosterone). The product names and ingredients listed in the warning letter to American Cellular Laboratories Inc. are:

      • TREN-Xtreme: 19-Norandrosta-4,9-diene-3,17 dione, marketed as "similar to Trenbolone"

      • MASS Xtreme: 17a-methyl-etioallocholan-2-ene-17b-ol, marketed as "similar to Methyl Testosterone"

      • ESTRO Xtreme: 4-hydroxyandrostenedione (4-OHA)

      • AH-89-Xtreme: 5a-androstano[3,2-c]pyrazole-3-one-17-ol-THP-ether, marketed as "similar to Stanozolol"

      • HMG Xtreme: 2a,3a-epithio-17a-methyl-17-hydroxy-5a-etioallocholane

      • MMA-3 Xtreme: Androsta-1,4-dien-3,17-dione, marketed as "similar to Boldenone (Equipoise)"

      • VNS-9 Xtreme: 17a-methyl-4-chloro-androsta-1,4-diene-3,17-diol, marketed as "similar to Turinabol"

      • TT-40-Xtreme: 1-androsterone, marketed as "very similar to 1-Testosterone" and "converts to 1-Testosterone"

      FDA says adverse events associated with these products involve men ages 22-55 and include cases of serious liver injury, stroke, kidney failure and pulmonary embolism (blockage of an artery in the lung). Acute liver injury is known to be a possible harmful effect of using anabolic steroid-containing products.

      In addition, anabolic steroids may cause other serious long-term adverse health consequences in men, women, and children. These include shrinkage of the testes and male infertility, masculinization of women, breast enlargement in males, short stature in children, adverse effects on blood lipid levels, and increased risk of heart attack and stroke.

      FDA says these products are NOT dietary supplements because they contain synthetic steroid or steroid-like active ingredients. These products are unapproved new drugs because they are not generally recognized as safe and effective. In fact, they are potentially harmful. In addition, the products are misbranded because the labeling is misleading and does not provide adequate directions for use.

      Due to the potential serious health risks, FDA recommends that consumers immediately stop using these products. They should also consult their health care professional if they are experiencing symptoms possibly associated with these products, particularly nausea, weakness or fatigue, fever, abdominal pain, chest pain, shortness of breath, yellowing of the skin or whites of the eyes, or brown/discolored urine.

      FDA Warns Against Bodybuilding Products Containing Steroids...
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      Dirty Water Produces More Summer Beach Closings

      Closing days top 20,000 for fourth consecutive year

      By James Limbach

      July 29, 2009
      Summertime means sun surf and sand at the beach, right? Not so fast says the Natural Resources Defense Council (NRDC).

      In its 19th annual beachwater quality report, the environmental group says the water at American beaches was seriously polluted and jeopardized the health of swimmers last year with the number of closing and advisory days at ocean, bay and Great Lakes beaches reaching more than 20,000 for the fourth consecutive year.

      "Pollution from dirty stormwater runoff and sewage overflows continues to make its way to our beaches. This not only makes swimmers sick -- it hurts coastal economies," said Nancy Stoner, NRDC Water Program Co-Director. "Americans should not suffer the consequences of contaminated beachwater. From contracting the flu or pink eye, to jeopardizing millions of jobs and billions of dollars that rely on clean coasts, there are serious costs to inaction."

      Using data from the U.S. Environmental Protection Agency, NRDC's report, Testing the Waters: A Guide to Water Quality at Vacation Beaches, confirms that our nation's beachwaters continue to suffer from serious contamination -- including human and animal waste -- that can make people sick.

      The report also provides a 5-star rating guide for 200 of the nation's most popular beaches, based on indicators of beachwater quality, monitoring frequency, and public notification of contamination.

      Five-star beaches included:

      • Gulf Shores Public Beach (AL),

      • Laguna Beach-Main Beach (CA),

      • Bolsa Chica State Beach in Huntington Beach (CA),

      • Newport Beach (CA),

      • Ocean City (MD),

      • Park Point-Community Club Beach in Duluth (MN) and

      • Hampton Beach State Park in Hampton (NH).

      Some of the lowest ranking beaches (1-star) were:

      • Zach's Bay at Jones Beach State Park in Wantagh (NY),

      • Ocean Beach Park in New London (CT),

      • Venice Public Beach (FL) and

      • Central Beach in Point Pleasant (NJ).

      While the report found a 10 percent decrease in closing and advisory days at beaches nationwide from 2007, it reveals this drop was the result of dry conditions in many parts of the country and decreased funding for water monitoring in some states last year, rather than a sign of large-scale improvement.

      The decline follows two years of record-high closing and advisory days and the primary pollution source, stormwater runoff after heavy rains, continues to be a serious problem that has not been addressed.

      "When the rains return," Stoner said, "so will pollution, forcing beaches to issue more closings and advisory days."

      Nationally, 7 percent of beachwater samples violated health standards -- indicating the presence of human or animal waste -- showing no improvement from 2007 or 2006. The highest level of contamination was found in the Great Lakes, where 13 percent of beachwater samples violated public health standards. In fact, from 2005-2008, the Great Lakes consistently tested the dirtiest, while the Southeast and Delmarva Peninsula proved relatively cleaner than other regions.

      States with the highest percentage of samples exceeding health standards in 2008 were Louisiana (29 percent), Ohio (19 percent), Indiana (18 percent) and Illinois (15 percent). Those with the lowest percent of water samples exceeding health standards last year were Delaware, New Hampshire and Virginia (all with 1 percent).

      Beachwater pollution makes swimmers vulnerable to a range of waterborne illnesses including stomach flu, skin rashes, pinkeye, ear, nose and throat problems, dysentery, hepatitis, respiratory ailments, neurological disorders and other serious health problems. For senior citizens, small children and people with weak immune systems, the results can be fatal.

      "Nobody wants their trip to the beach to send them to the bathroom or, worse, the emergency room," said Stoner. "It is vitally important to remember that if it has recently rained - or you see or smell a pipe discharging onto the beach - keep your head above water or avoid swimming altogether."

      Dirty Water Produces More Summer Beach Closings: Summertime means sun surf and sand at the beach, right? Not so fast says the Natural Resources Defense Cou...
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      New Insight into Cell Phone Use and Driving Distraction

      Study separates fact from myth

      Several large-scale, naturalistic driving studies (using sophisticated cameras and instrumentation in participants' personal vehicles) by the Virginia Tech Transportation Institute (VTTI) provide a clear picture of driver distraction and cell phone use under real-world driving conditions.

      And it's not very reassuring.

      "Given recent catastrophic crash events and disturbing trends, there is an alarming amount of misinformation and confusion regarding cell phone and texting use while behind the wheel of a vhicle," says says Dr. Tom Dingus, director of the Virginia Tech Transportation Institute. "The findings from our research at VTTI can help begin to clear up these misconceptions as it is based on real-world driving data. We conduct transportation safety research in an effort to equip the public with information that can save lives."

      In VTTI's studies that included light vehicle drivers and truck drivers, manual manipulation of phones such as dialing and texting of the cell phone lead to a substantial increase in the risk of bein involved in a safety-critical event (e.g., crash or near crash). However, talking or listening increased risk much less for light vehicles and not at all for trucks. Text messaging on a cell phone was associated with the highest risk of all cell phone related tasks.

      Several recent high visibility trucking and transit crashes have been directly linked to texting from a cell phone. VTTI's research showed that text messaging, which had the highest risk of over 20 times worse than driving while not using a phone, also had the longest duration of eyes off road time (4.6 seconds over a 6-second interval). This equates to a driver traveling the length of a football field at 55 mph without looking at the roadway. Talking/listening to a cell phone allowed drivers to maintain eyes on the road and were not associated with an increased safety risk to nearly the same degree.

      Recent results from other researchers using driving simulators suggest that talking and listening is as dangerous as visually distracting cell phone tasks. The results from VTTI's naturalistic driving studies clearly indicate that this is not the case.

      For example, talking and listening to a cell phone is not nearly as risky as driving while drunk at the legal limit of alcohol. Recent comparisons made in the literature greatly exaggerate the cell phone risk relative to the very serious effects of alcool use, which increases the risk of a fatal crash approximately seven times that of sober driving.

      Using simple fatal crash and phone use statistics, if talking on cell phones was as risky as driving while drunk, the number of fatal crashes would have increased roughly 50% in the last decade instead of remaining largely unchanged.

      These results show conclusively that a real key to significantly improving safety is keeping your eyes on the road. In contrast, cognitively intense tasks (e.g., emotional conversations, books-on-tape, etc.) can have a measurable effect in the laboratory, but the actual driving risks are much lower in comparison.

      Based on findings from research studies, VTTI recommends:

      • A ban on texting in moving vehicles for all drivers. This activity has the potential to create a true crash epidemic if texting-type tasks continue to grow in popularity and the generation of frequent text message senders reach driving age in large number.

      • Banning cell phone use for newly licensed teen drivers. VTTI's research has shown that teens tend to engage in cell phone tasks much more frequently, and in much more risky situations, than adults. Thus, the studies indicate that teens are four times more likely to get into a related crash or near crash event than their adult conterparts.

      The researchers say it is important to keep in mind that a driving simulator is not actual driving. Driving simulators engage participants in tracking tasks in a laboratory. As such, researchers that conduct simulator studies must be cautious when suggesting that conclusions based on simulator studies are aplicable to actual driving.

      With the introduction of naturalistic driving studies that record drivers (through continuous video and kinematic sensors) in actual driving situations, researchers now have a scientific method to study driver behavior in real-world driving conditions in the presence of real-world daily pressures.

      As such, if the point of transportation safety research is to understand driver behavior in the real-world (e.g., increase crash risk due to cell phone use), and when conflicting findings occur between naturalistic studies and simulator studies, findings from the real-world, and not the simulator-world, must be considered the gold standard.

      New Insight into Cell Phone Use and Driving Distraction...
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      Denny's Hit With Lawsuit Over Alleged Unsafe Sodium Levels

      Suit claims chain's meals promote heart disease, stroke, risk of early death

      Most Denny's meals are dangerously high in sodium, putting the restaurant chain's customers at greater risk of high blood pressure, heart attack and stroke, according to a class action lawsuit filed by a New Jersey man with the support of the Center for Science in the Public Interest (CSPI).

      The lawsuit seeks to compel the restaurant chain to disclose on menus the amount of sodium in each of its meals and to place a notice on its menus warning about high sodium levels.

      Guidelines from the Centers for Disease Control and Prevention (CDC) recommend that most people consume no more than 1,500 milligrams of sodium per day. But at Denny's, the great majority of its meals contain more, and in some cases, several times more.

      Some meals at Denny's provide more than 4,000 or 5,000 mg of sodium -- more than most adults should consume in three days. Diets high in sodium are a major cause of high blood pressure, which in turn is a major cause of heart disease and stroke, the first- and third-leading causes of death in the United States.

      "Denny's is slowly sickening its customers," said CSPI executive director Michael F. Jacobson. "For those Americans who should be most careful about limiting their sodium, such as people middle-aged and older, African-Americans, or people with existing high blood pressure, it's dangerous to eat at Denny's. Denny's customers deserve to be warned about the considerable health risk posed by many of these meals."

      The plaintiff, Nick DeBenedetto, is a 48-year-old resident of Tinton Falls, NJ, who has eaten for many years at Denny's restaurants in East Brunswick and Brick, NJ. He takes a prescription medication to control his high blood pressure and at home does not cook with salt or use the salt shaker.

      Some of his favorite Denny's items, such as Moons Over My Hammy or the Super Bird turkey sandwich, contain far more than 1,500 mg of sodium -- even without soup, salad, fried onion rings, or other side dishes.

      "I was astonished -- I mean, literally floored -- to find that these simple sandwiches have more salt than someone in my condition should have in a whole day," DeBenedetto said. "It's as if Denny's is stacking the deck against people like me. I never would have selected those items had I known."

      Moons Over My Hammy, a ham, egg, and cheese sandwich, has 2,580 mg of sodium by itself -- more than even a healthy young person should consume in a day. It's served with hash browns (adding 650 mg of sodium) or grits (an additional 840 mg).

      The Super Bird sandwich, served with regular French fries, has 2,610 mg of sodium -- more than twice what someone with high blood pressure should consume in a day.

      Denny's Meat Lover's Scramble, which has two eggs with chopped bacon, diced ham, crumbled sausage, Cheddar cheese, plus two bacon strips, two sausage links, hash browns, and two pancakes has 5,690 mg sodium, or 379 percent of the advised daily limit.

      A full meal at Denny's consisting of a bowl of clam chowder, a Spicy Buffalo Chicken Melt, and a side of seasoned fries contains an alarmingly high 6,700 mg of sodium. It's a big meal, to be sure, with about 1,700 calories. But that's more sodium than what 70 percent of Americans should consume in four and a half days.

      Even many of the smaller meals advertised for children and seniors have inappropriately high sodium levels.

      Many health experts consider high dietary sodium levels to be one of the nation's top health threats. Dr. Stephen Havas, adjunct professor of preventive medicine at Northwestern University's Feinberg School of Medicine, says that reducing the sodium content of packaged and restaurant foods by half would save at least 150,000 lives per year.

      For some people, particularly Denny's elderly patrons, getting several days' worth of sodium in a single meal might be enough to trigger congestive heart failure.

      "As a physician, I have grave concerns about the sodium levels at Denny's, and grave concerns about an elderly person or someone with hypertension eating even one such meal," Havas said. "The body can have a hard time getting rid of that much salt, potentially leading to fluid retention and accumulation in the lungs. Consuming that much sodium can have severe consequences."

      Denny's describes itself as the largest full-service family restaurant in the United States, with more than 1,500 restaurants and annual sales of $2.4 billion.

      "By concealing an important material fact about its products -- namely, that that these foods have disease-promoting levels of sodium -- Denny's is failing its responsibility to its customers and is in violation of the laws of New Jersey and several other states," said CSPI litigation director Steve Gardner.

      Denny's and CSPI had been in private negotiations over sodium, but those talks ended earlier this year. Shortly thereafter, the chain made small sodium reductions in a handful of items, like cheese sauce, shrimp skewers and kids' meals, but the chain did not make the kind of broad sodium reductions or menu disclosures urged by CSPI.

      The lawsuit filed against Denny's is CSPI's first sodium-related lawsuit against a food company. Separately, CSPI has petitioned the Food and Drug Administration (FDA) to regulate salt as a food additive and to restrict sodium levels in various categories of food.

      Denny's Hit With Lawsuit Over Alleged Unsafe Sodium Levels...
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      New York Targets Toy Gun Manufacturers

      Retailers warned about selling realistic toys

      New York Attorney General Andrew M. Cuomo has sent cease-and-desist letters to over 100 companies demanding that they immediately stop selling imitation toy guns that are easily confused with real weapons in New York State. The state's law prohibits the sale of imitation guns without proper markings that distinguish them as toys.

      "Realistic toy guns are a tragedy waiting to happen," Cuomo said. "Every day, these imitation weapons put the lives of both law enforcement and civilians at risk. This is a public safety matter, plain and simple, and we will not permit these companies to profit by making our streets more dangerous."

      According to the letters, the companies must immediately cease the sale of imitation or toy guns that do not have the requisite markings. Cuomo also reserved the right to take additional legal action against the companies should they fail to comply with the order to cease-and-desist.

      Letters were sent to manufacturers, distributors, and retail companies. The following companies received cease-and-desist letters: Big Lots, Dollar General, Dollar Tree, Gander Mountain, and over 100 local retailers who purchased illegal toy guns from Rhode Island Novelty Co. Big Lots, Dollar General, and Dollar Tree are national retailers that, collectively, have hundreds of stores throughout New York State.

      Federal law prohibits the sale of look-alike or imitation firearms unless they have a blaze orange plug in the barrel. New York State law takes the toy gun safety restrictions further.

      New York's General Business Law prohibits the sale of any imitation gun made of plastic, wood, or metal, or any material that substantially duplicates or can reasonably be perceived as an actual firearm, unless the toy gun (i) is a color other than black, blue, silver, or aluminum; (ii) is marked with a non-removable orange stripe that is at least one inch in width and runs the entire length of the barrel on each side and the front end of the barrel; and (iii) has a barrel at least one inch in diameter that is closed for a distance of not less than one-half inch from the front end of its barrel with the same material of which the toy gun is made. The Attorney General's investigation was conducted throughout the state in dozens of locations, and toy guns that plainly violated these requirements were purchased from the vast majority of locations.

      Just this past week, Cuomo said, two men in Saranac Lake were arrested for attempted armed robbery after allegedly using a fake gun to hold up and attack a man in a parking lot.

      New York Attorney General Andrew M. Cuomo has sent cease-and-desist letters to over 100 companies demanding that they immediately stop selling imitation to...
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      Fees For Unauthorized Overdraft Loans Keep Going Up

      Consumers need better protections to safeguard bank accounts

      A new survey of overdraft fees charged by the nation's largest banks reveals bankers are hiking fees, adding new fees, and shortening time limits to trigger fees when banks pay overdrafts and extend credit to families struggling to make ends meet.

      According to the Consumer Federation of America (CFA), the Federal Reserve has failed to protect consumers from unauthorized bank overdraft loans and, as a result of this inaction, fees for these extremely expensive loans are escalating and multiplying.

      Testifying before Congress recently in support of President Obama's proposed Consumer Financial Protection Agency, the CFA noted that regulatory inaction in just this one area is costing hard-pressed consumers over $17.5 billion during the worst economic downturn since the Depression.

      In a typical overdraft loan program, banks unilaterally lend money to consumers without the consumer's knowledge or consent by paying or authorizing checks, debit card purchases, ATM withdrawals and preauthorized electronic payments when there is insufficient money in the account to cover the transaction.

      Banks charge a flat fee per overdraft, taking funds directly from the next deposit into a consumer's bank account to repay the overdraft and cover the fee. A growing number of large banks charge additional fees when consumers are unable to repay the overdraft and fees within just a few days, diverting funds from consumers to their banks.

      "For years, consumer advocates have complained about these anti-consumer practices and urged the Federal Reserve to force banks to comply with the Truth in Lending Act and get their customers' consent to use this extremely expensive form of credit, but the agency has turned a deaf ear to those requests," stated Jean Ann Fox, CFA's director of financial services. "Instead, the agency has continued to allow banks to collect billions of dollars in overdraft loan fees for credit extended without the customers' consent, and without providing either information on the cost to borrow or affordable repayment schedules."

      CFA, along with many consumer and community groups, has voiced support for creation of the Consumer Financial Protection Agency to make consumer protection the top priority for an independent federal agency. The group also supports Rep. Carolyn Maloney's bill (H.R. 1456) to give consumers control over overdraft loans, and Sen. Dick Durbin and Rep. Jackie Speier's bills (S. 500, H.R. 1608) to extend the 36 percent annual rate cap on credit set by Congress to protect Service members to all Americans.

      In July CFA updated its findings from a survey of the largest banks for comments to the Federal Reserve in March 2009. All of the largest banks unilaterally authorize payment of overdrafts at the bank's discretion and charge per-overdraft fees without advance consent or on-the-spot warning to customers. They also process withdrawals largest first, or retain the right to do so, a practice that optimizes the number of transactions that will trigger an overdraft fee when consumers live paycheck to paycheck -- maximizing the cost to consumers and the income to banks.

      Key findings from the survey of the top sixteen banks' fee schedules and practices:

      • The median overdraft fee is $35. The highest overdraft fee is $39, charged by Citizens Bank for the third overdraft in a year. Fourteen of the sixteen largest banks charge $35 or more per overdraft, either initially or after a few overdrafts in a year.

      • For example, Regions Bank in Tennessee charges $26 for the first overdraft, $35 for the second, and $37 each for three or more. Fifth Third Bank switched to tiered fees and now charges $25 for the first, $33 for the second to fourth, and $37 for five or more overdrafts in a year. In February, Bank of America dropped its initial $25 fee and now charges $35 for every overdraft over $5 total overdrawn in one day (those tiny less-than-$5 total overdrafts still cost a $10 fee).

      • Over 60 percent of the largest banks charge "sustained overdraft" fees when consumers are unable to repay the overdraft and fee in a few days. As of August 1, BB&T will impose its $30 extra fee after only five days, down from seven days. In June, Bank of America started charging a $35 sustained overdraft fee when its customers are unable to repay within five business days. Citizens Bank charges two sustained overdraft fees if its customers are unable to repay the overdraft and fees within ten days.

      • The total cost of a single overdraft at the banks' highest fee if unpaid after seven days ranges from $74 at Citizens, $72 at SunTrust, and $70 at Bank of America to $34 at CitiBank and WaMu, neither of which charges a sustained or tiered overdraft fee. If unpaid after ten days, Citizens Bank charges $109 for a single overdraft.

      • Ten of the largest banks set no limits on the number of overdraft fees charged per day. And the banks that set limits provide little relief for cash strapped customers. This year Bank of America doubled its limit to ten overdraft fees per day, the same that Wells Fargo Bank sets. Both TD Bank and US Bank charge up to six overdraft and six insufficient funds fees per day.

      • In the last year, overdraft fees have gone up at half the surveyed banks. Citibank's fee jumped from $30 to $34. Fifth Third Bank dropped its flat $33 fee and now charges tiered fees up to $37. PNC increased its sustained overdraft fee by a dollar to $7 per day and SunTrust upped its fees from $35 to $36 for both an initial and sustained overdraft.

      Since March, Regions Bank added a dollar or two to each tiered fee while TD Bank added a $20 sustained fee after an overdraft is unpaid nine days.

      • The cost to borrow $100 via overdraft for seven days, if computed as a closed-end one week payday loan, ranges from 1,768 percent APR at CitiBank and WaMu to 3,848 percent APR at Citizens Bank. A Bank of America $100 overdraft repaid in one week costs $70 or 3,640 percent APR.

      "Inaction by bank regulators to protect struggling consumers against astronomically expensive unauthorized overdraft loans illustrates why American consumers need the Consumer Financial Protection Agency to put consumer protection first," Fox stated. "Even now, after banks that brought the global economy to the brink of collapse have received billions in taxpayer bailouts, bank regulators appear to care more about protecting bankers' bottom lines than they do about protecting consumers' checking accounts and family budgets."

      Fees For Unauthorized Overdraft Loans Keep Going Up...
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      Amazon Faces Kindle Class Action

      Student lost notes attached to deleted "1984"

      A high school student is suing, claiming that George Orwell's iconic novel 1984 was deleted from his Kindle. Worse, the plaintiff lost the notes he made in the margins of the virtual book.

      According to the suit, 17-year-old plaintiff Justin Gawronski bought and was reading 1984 as part of a summer assignment for school. Amazon deleted the book while he was reading it, causing him to see the text disappear before the eyes as he was reading.

      Gawronski had taken advantage of the Kindle feature that allows consumers to attach personal notes to specific sections of the book. Once the text disappeared, he still had the notes -- but they were rendered worthless since he couldn't match them to the correct section of the book.

      Amazon says it deleted the book because it had been sold without a proper license.

      Although Amazon provided Gawronski with a refund for the novel, he claims damages for the time he spent creating the now-useless annotations. The suit also emphasizes that Amazon didn't clearly tell consumers that improperly licensed works could end up being deleted. Indeed, the Kindle's terms of service grant [y]ou the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times.

      The suit alleges actions in trespass -- comparing Amazon's actions to that of a bookseller who sneaks into homes and steals books, leaving a check on the table -- and Washington state consumer protection laws.

      The action is being brought on behalf of three distinct classes. The first is made up of consumers whose Kindles' resale values have dropped out of fear that Amazon will pull additional works from the machines. The latter two classes consist of those who lost a digital work and those who, like Gawronski, lost a work that they had already spent time annotating.

      The first class of plaintiffs -- owners whose machines have lost value due to the threatened loss of a text -- may already have been rendered moot by Amazon itself. Amazon CEO Jeff Bezos was quick to apologize for the deletions, and the company has already promised that works sold without a license will be handled differently in the future, and won't be deleted from owners' devices.

      The suit is the second Kindle-related class action in a month. Earlier this month, Amazon was slapped with a suit from a plaintiff whose Kindle cracked around the edges, where the cover attaches with metal clips. The crack appeared despite the fact that lead plaintiff Alisa Brodkowitz opted for the $30 protective cover.

      As a result of the cracks, the screen froze and the Kindle stopped working altogether. According to Brodkowitz, Amazon covered the screen freeze under its warranty, but not the cracks, claiming that they were caused by Brodkowitz having improperly bent the cover backwards. The company charged $200 to repair the cracks.

      Brodkowitz, who vehemently denies having bent the cover, filed suit in Seattle, contending that scores, if not hundreds of consumers were in the same boat.

      Amazon Faces Kindle Class Action...
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      National Consumers League Warns Of Recession-Fueled Fraud

      New statistics underscore call for increased federal fraud fighting

      The National Consumers League (NCL) warns that frauds linked to the bad economy are on the rise and is calling upon federal fraud cops to "vigorously enforce existing anti-fraud statutes and regulations" and redouble their efforts to educate consumers about the growing threat of recession-fueled fraud.

      In testimony before a senate subcommittee, NCL said consumers' thinly stretched pocketbooks have "increased their vulnerability to fraudsters offering promises of extra income.

      The consumer group also warned that nearly one in three consumers could be at risk for fraudulent work-at-home schemes and that fake check complaints involving phony sweepstakes and bogus "mystery shopper" jobs continue to increase.

      "Consumers face a double bind. The economic crisis has made them increasingly vulnerable to fraud while local agencies that investigate scams and enforce the laws are shutting their doors, leaving consumers with fewer avenues to protect their interests," said Greenberg. "Absent increased action at the federal level to investigate and prosecute scam artists, consumers will be caught between the proverbial rock and a hard place."

      In support of Greenberg's testimony, NCL's Fraud Center released its semi-annual ranking of the top telemarketing and Internet scams plaguing consumers so far in 2009, with fake check scams continuing to top the list. For the first six months of 2009, fake check scams made up more than 44 percent of the total complaints NCL received, with more than half of these complaints (55 percent) involving a fraudulent mystery shopper job or phony sweepstakes winnings. Average losses per victim were more than $3,000.

      Phony business opportunity scams, which include fake franchises and distributorships, were not among the most commonly reported scams to the Fraud Center in 2008. However, in the first six months of 2009, they have risen into the top ten most-reported scams.

      Earlier this year, an NCL-commissioned survey found that 31 percent of respondents were more likely to consider starting a home-based business due to the current economic climate. NCL contents that this is a reflection of a weak economy, loss of jobs, and consumers' eagerness to find viable employment.

      "The worsening economy has clearly had an impact on consumers' vulnerability to fraud." said John Breyault, NCL Vice President for Public Policy, Telecommunications and Fraud. "Consumers should be wary that scammers are eager to prey on those in greatest financial need."

      National Consumers League Warns Of Recession-Fueled Fraud...
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      TJX Pays $9.75 Million To Settle Data Breach

      Customers exposed to potential identity theft

      Retailer TJX Companies, Inc., has reached a $9.75 million consumer protection settlement with 41 states, stemming from a breach of sensitive data about thousands of customers.

      The company is the parent of the T.J. Maxx and Marshalls discount clothing chains and HomeGoods stores.

      "This multi-state investigation was triggered by the largest computer security breach ever reported," said Pennsylvania Attorney General Tom Corbett. "Every time someone swiped a credit card or debit card at a store operated by TJX, their information was funneled directly to hackers, compromising the accounts of millions of consumers."

      Corbett said the settlement resolves allegations that TJX ignored flaws in the configuration of its computer network and failed to take sufficient steps to protect customer information--allowing hackers to access its unsecured network and operate undetected for more than a year, leaving tens of millions of consumers vulnerable to identity theft.

      Additionally, Corbett said the settlement requires TJX to upgrade and carefully test its security systems and to regularly report the results of their security testing to Attorneys General across the country.

      "Identity theft is crime that impacts millions of consumers every year, robbing people of their credit and their sense of financial security," Corbett said. "Businesses have an obligation to make every possible effort to protect customer information, so that consumers are not left to struggle with fraud and theft simply because they made a purchase."

      States participating in the agreement include Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and the District of Columbia.

      TJX Pays $9.75 Million To Settle Data Breach...
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      Job Relocation Rate Hits Three-Year High

      Desperate job seekers take more risks

      As employers continue to cut jobs and with few signs of a hiring resurgence on the horizon, new job-search statistics reveal an increased willingness among out-of-work Americans to pull up stakes and relocate to wherever positions are available.

      If the still-budding upward trend continues, it could help re-ignite home sales in some areas of the country, particularly those with more job opportunities.

      According to the new data, 18.2 percent of job seekers finding employment in the second quarter relocated for the position, compared with 14.3 percent in the previous quarter and 11.4 percent in the second quarter of 2008. It is, in fact, the highest job-seeker relocation rate since the second quarter 2006, when it also reached 18.2 percent.

      The latest job search statistics were released by global outplacement consultancy Challenger, Gray & Christmas, Inc. and are based on data collected from among approximately 3,000 job seekers at all levels in a wide variety of industries nationwide.

      "Job seekers had been extremely reluctant to relocate up until this most recent quarter," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "The reluctance was almost certainly related to the inability to sell one's current home without incurring significant losses. There was also the fear that, with the job market so unstable, it was too risky to relocate for a job that might not last."

      Challenger notes that while job seekers are no less likely to lose money on the sale of their home and the job market is only marginally more stable than it was six months ago, the overwhelming desire to get back to work appears to be outweighing the perceived risks.

      Between the fourth quarter of 2007 and the first quarter of 2009, the relocation rate averaged just 11.9 percent. It hit a record low of 8.9 percent in the first quarter of 2008, according to Challenger tracking that began in 1986.

      While the 18.2 percent relocation rate in the second quarter represents a significant increase from previous quarters, it pales in comparison to the level of relocation exhibited in the late 1980s and early 1990s.

      In 1986, for example, the quarterly relocation rate averaged 42 percent. In 1993, it averaged 35 percent over the year, but reached a record high of 49.2 percent in the second quarter. After 1993, however, job seekers appear to be more averse to relocation, with the quarterly average sinking to 22 percent from 1994 through 2000.

      "Around 2001, the annual average for relocation fell below 20 percent for the first time, despite the fact that expanding one's job search greatly increases the odds of finding a position. What made the decline in relocation even more surprising is that it came at a time when the Internet made it easier than ever to search for out-of-town jobs," said Challenger.

      "Several factors probably contributed to the decline in relocation," he added. "The country experienced a period of phenomenal growth, with many cities and states diversifying their economies. This made it less necessary to relocate to find work in specialized occupational categories. In other words, you no longer had to relocate to Silicon Valley if you wanted to find a technology job.

      Challenger speculates that another factor that has contributed to the fall in relocation is the fact that the same Internet technology that makes out-of-town job seeking so easy also makes it easier for people to work from anywhere. Faster and cheaper Internet connections, coupled with relatively low air-travels costs, made it possible for job seekers to gain out-of-town employment without actually moving out of town.

      In May, that latest month for which local area unemployment data from the Bureau of Labor Statistics was available, there were about 200 metropolitan areas with unemployment rates below the national average, which stood at 9.1 percent at that time. Remarkably, about 20 metro areas had unemployment rates below 5.0 percent, including Bismarck, North Dakota, which had the lowest jobless rate in the country, at 3.5 percent.

      Some of the other cities enjoying low unemployment rates are Iowa City, 3.7 percent; Ames, Iowa, 3.8 percent; Lincoln, Nebraska, 4.2 percent; and Manhattan, Kansas, 4.4 percent.

      New job-search statistics reveal an increased willingness among out-of-work Americans to pull up stakes and relocate to wherever positions are available....
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      AGs Worry About Cash For Clunkers Scams

      Scammers already taking advantage of popular government program

      The U.S. Government's "Cash for Clunkers" program is going to be trouble. The nation's attorneys general feel it in their bones.

      Formally known as the Car Allowance Rebate System, the $1 billion program offers consumers up to $4,500 for trading in certain gas guzzlers for more fuel-efficient cars. The program has captured the public imagination, making it a perfect vehicle for scammers to trap consumers who aren't aware of how the program actually works.

      "Scammers often try to piggyback on new programs or trends, and this is no exception," Ohio Attorney General Richard Cordray said.

      In Illinois, Attorney General Lisa Madigan is warning consumers to beware of identity-theft scams related to the new program.

      "Before this program even officially launched, we were seeing scams pop up online, trying to falsely convince consumers that they must first pre-register and provide their Social Security numbers and other identifying information in order to participate," Madigan said. "That is absolutely not true. Consumers don't need to register or provide any personal information to an outside source before taking advantage of the trade-in credit with a qualified auto dealer."

      The program offers $3,500 or $4,500 credits through auto dealers to consumers who trade in less fuel-efficient cars and purchase or lease a new vehicle. The $1 billion initiative is designed to help boost auto sales and put more fuel-efficient cars on the nation's roads.

      Madigan said unofficial Web sites have begun to appear online, using similarly named URLs and names, and falsely stating that consumers must first register for the program and asking for consumers' personal information such as a Social Security number or home address. Other sites claim to connect consumers with authorized auto dealers in their local community.

      According to the National Highway Traffic Safety Administration, consumers do not need to register or obtain a voucher to benefit from the program. Instead, the auto dealers will apply a credit at the time of purchase.

      "Consumers should be wary of anything on the web that isn't," said Karen Aldana, a spokeswoman for the NHTSA, which maintains the government's official website for the program.

      Aldana said consumers who suspect they've come across a Cash for Clunkers scam should report it to the Office of the Inspector General at the U.S. Department of Transportation at 800-424-9071 or by e-mail at

      To be eligible for the credit, consumers must provide a one-year proof of insurance, registration and a clear title, free of any liens. In addition, the vehicle must have been manufactured within the last 25 years.

      Just to add to the confusion, Chrysler is offering $3,500 or $4,500 rebates, or zero-percent, 72-month financing, on most 2009 models -- in effect doubling the government's rebate.

      Smart consumers

      Consumers need to shop wisely to get the full benefit of the program.

      "It's important that consumers get full value for their trade-in," Jessica Caldwell at in Santa Monica, California, told To that end, the Web site is making available a vehicle value calculator. It can be accessed by clicking the "cash for clunkers" icon.

      The formula for all of this gets a little complicated. The car you're unloading must get 18 miles per gallon or less to qualify. If the car you buy gets 4-mpg- to-9-mpg better mileage than your trade-in, you get $3,500. An improvement of 10-miles-per- gallon nets you $4,500.

      In the case of light trucks, the new vehicle will have to get at least 18 mpg. There's a $3,500 credit for a 2-mpg-to-5-mpg improvement, $4,500 for 5 mpg or more.

      In addition, your trade-in has to be drivable, and you have to have proof that it has been insured and registered for the past year.

      As you might expect, the program has brought forth an army of scamsters trying to make a quick buck off the bill.

      AGs Worry About Cash For Clunkers Scams...
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      American Teens Go Missing on People to People Trips

      Parents outraged at mishaps; company disclaims responsibility

      Three American teenagers traveling abroad on People to People Student Ambassador trips have -- in the past few weeks -- gone missing or been unaccounted for for an unknown period of time, has learned.

      All the students returned unharmed, but the cases have sparked concerns by parents and an advocacy group for exchange students about why the travel organization that touts its extraordinary safety record isnt keeping a closer eye on children who are thousands of miles from home.

      They (People to People) are supposed to watch the kids like a hawk, said Danielle Grijalva, director of the Committee for Safety of Foreign Exchange Students. That is their responsibility. They should be watching to see if there are enough leaders to properly supervise the group so students do not wander off. The onus is on them (People to People) to be more diligent.

      These missing students reports are the latest in a serious of troubling events facing the student travel organization.

      Earlier this month, a securities class action lawsuit was filed against the company that markets People to Peoples student trips and handles all the travel arrangements, The Ambassadors Group (EPAX). The lawsuit alleges the organizations directors issued misleading and overly optimistic statements about the company's financial future.

      And just last month, the parties involved in the wrongful death lawsuit of a Minnesota teenager who died on a 2007 People to People trip to Japan reached a confidential settlement in the case. The lawsuit alleged that People to Peoples Student Ambassador Group and its delegation leaders refused to get 16-year-old Tyler Hill the medical attention he requested -- and charged that his June 29, 2007, death in Tokyo was the result of their negligence.

      These latest worrisome cases involve a 15-year-old California girl who went missing for at least 24 hours in Paris and a 14-year-old Missouri boy and teenage girl from Iowa who wandered off from a July 4th People to People-sponsored BBQ in England and were unsupervised for an unknown amount of time.

      The Missouri boys mom is outraged that People to Peoples delegation leaders did not notice the teenagers absence.

      These are kids who are 13 to 15 years old and they were able to leave this event and go to an unsupervised location, says the mom, who did not want to be identified because of fear of retribution by People to People and its delegation leaders. They went to another classroom in the school and we still dont know how long they were unaccounted for. But nobody noticed they were gone or when they returned.

      The boys mom acknowledged that her son -- who just turned 14 -- shouldnt have left the group and agrees he should be held accountable for his actions.

      I have no problem with there being reasonable consequences to my child's behavior, she told us. However, the fact that two children were able to separate from the group and to remain unsupervised for an undetermined amount of time is very disturbing.

      Its also disturbing, she says, that eight days passed before People to Peoples delegation leaders learned that her son and the other teenager left the event.

      One of the delegation leaders called me on July 12th to tell me my son had violated People to Peoples policies, the mom says. Someone ratted the kids out and what happened got back to the delegation leaders. But had it not gotten back to them, no one would have known they had gone missing.

      When the boys mom followed up with People to Peoples national office in Spokane, Washington, a company representative told her the organization shouldnt be expected to keep tabs on students all the time. She said that People to Peoples representative, Wanda Lashbrook, also said the four delegation leaders on the trip couldnt watch the 40 students in the group every second.

      Ms. Lashbrook (said) that People to People believes I should not expect them to know the whereabouts of children under their care at all times during trips to foreign countries, the mom told us. And when confronted with such an occurrence will vehemently deny any wrongdoing on the part of People to People or delegate leaders.

      The mom adds: What incensed me the most was when Ms. Lashbrook said you send your son to school everyday and he is not supervised. I told her he is supervised and if this had happened at school I would be up in arms. I also told her thats irrelevant because Im not paying seven-grand for promises of safety.

      No apologies

      People to Peoples defensiveness about the situation -- and the moms concerns -- didnt stop there. The mom says Lashbrook also told her:

      • Students are free to go to the restroom on their own and her son could have sneaked off without a supervisor noticing he was gone. But I was assured the students were not allowed to go to the bathroom by themselves, the mom says.

      • Students are required to sign a contract which states they understand the behavior policies of People to People. That means any misbehavior by students on the trip is their fault and not the responsibility of the delegation leaders.

      My son is 14 years old, so signing a contract does not release the leaders from responsibility and liability for actions the delegates may engage in while under their care, the mom says. If all it took was a contract to regulate the behavior of an unsupervised minor, adolescence would be a very easy period of time for parents and I would not have needed to pay People to People for adult supervision during this trip.

      People to Peoples representative even blamed the 14-year-olds decision to leave the BBQ on poor parenting skills.

      Ms. Lashbrook said that given that fact that my son violated a People to People rule, my parenting skills should be questioned -- not their ability to supervise children, the mom told us. My son is a Scholastic and Citizenship Honor Roll student. He knows these behaviors are not tolerated and hes never engaged in these types of behaviors before. These behaviors happened oversees while he was under someone elses watch.

      The Missouri mom says shell never trust People to People -- or its delegation leaders with her children again. I wouldnt risk it.

      And now that shes learned how poorly the organization supervised her son, she regrets sending him on the 19-day European adventure.

      I would have never sent my son on a trip overseas if I knew that People to People did not take responsibility for their supervision at all times, she says. After all, how long does it take for a child to experience harm if they are on their own in a foreign country? What amount of time is acceptable for People to People to not provide for the protection and supervision of my child?

      People to People, however, did an excellent job supervising her son on a previous trip he took with the organization to Australia. Thats why his European journey is so disturbing, she says.

      The reason I sent my son on this trip was that he had such a wonderful experience on his first People to People trip two years ago to Australia. But this trip was definitely different than his previous People to People trip. It had a whole different flavor.

      I should have seen some of the reds flags, she adds. This trip was just so disorganized. When we got to the airport, they maybe did one head count of the kids. The kids were much less prepared and the delegation leaders did not seem vested in the kids or put the kids as their top priority.

      Another case

      Earlier this month, another teenager went missing on a People to People trip to Paris, France. That case involved 15-year-old Alexis Brown of Vacaville, California.

      She went missing on July 10 and was missing for at least 24 hours, Sgt. Ian Schmutzler with the Vacaville Police Department told us. Alexis had apparently left the group on two separate occasions and she was chastised by the chaperones for doing so.

      Surveillance cameras videotaped Alexis leaving the hotel by herself and police discovered her ATM card was used after her disappearance.

      Shortly after she was discovered missing, the groups leaders contacted Paris authorities and Alexis parents in Vacaville, Sgt. Schmutzler said. The parents made a missing persons report through the Vacaville Police Department as French authorities began searching for her.

      Alexis, who had been in Europe for five days prior to her disappearance, was found unharmed on July 11, police said. But Sgt. Schmutzler said he did not know where Alexis went during the time she was missing. contacted People to People about the missing students. The company did not respond to our inquiry. also contacted Danielle Grijalva with Committee for Safety of Foreign Exchange Students about the missing students. Those cases, she said, raise serious concerns about People to Peoples ability to supervise the students on its trips.

      It appears that People to People recognizes and openly admits to the problem of it being impossible to supervise 40 kids at a time. So theyve recognized a problem and failed to come up with a solution.

      She adds: People to People needs to make it so that this is no longer an impossibility or a problem. After all, were talking about children. And its very common for there to be instances in which children wander off or even instances in which they (students) become victimized.

      Misplaced blame

      Its also inexcusable, she said, for People to People to blame a parent for the companys lack of supervision.

      To attack a moms parenting skills is irrelevant. They accepted that moms money -- they took her money -- and they entered in an agreement. To later question her parenting skills is wrong and irrelevant," she said. But its so common for many in the student exchange industry to constantly blame anyone besides themselves.

      Grijalva and other advocates for students involved in travel and exchange programs say parents who have concerns about People to People or similar organizations should contact the attorney general of their state, the Better Business Bureau (BBB), and the Federal Bureau of Investigation (FBI).

      Im hopeful parents will get mad enough to come forward and play an active role to prohibit things like these from happening again, Grijalva said.

      Back in Missouri, the 14-year-olds mom vows to hold People to People accountable for its lack of supervision on her sons trip. Shes already filed a complaint with the BBB and now plans to contact the states attorney general.

      The safety of children -- especially those traveling overseas -- should never be taken lightly, she says.

      After Tyler Hills death, I wonder why more parents are not up in arms about this organization. The kids are these trips are not kids whove been in trouble before. But the people who are supposed to be watching them are not keeping an eye on them.

      People to People talks about how these kids are ambassadors for the United States, but (these recent cases of student missing) do not represent the adults of the United States very well.

      More about People to People

      American Teens Go Missing on People to People Trips...
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      Rising Cost of Health Insurance at Center of Debate

      Congress delays action til after August recess

      The rising cost of health insurance is at the center of Congress' debate over health care reform. The question for lawmakers, however, is what reform actually lowers costs without adding to the deficit or impacting quality of care.

      Thursday's announcement by Senate Majority Leader Harry Reid (D-Nev.) that the issue will not come up for a vote before the month-long recess was seen by some as a stumbling block -- but others said that lawmakers will get an earful from their constituents as they make the obligatory round of fairs, picnics and festivals in their home districts.

      The cost of insuring a family of four with an employer-sponsored health plan in the United States averaged $12,298 in 2008, according to the latest News and Numbers from the Agency for Healthcare Research and Quality. In most cases, employers and employees shared the cost. Another study found that small businesses are being crushed by health care costs.

      The federal agency's new data for private industry further showed that the annual premium for covering an employee and one family member, known as an "employee-plus-one" plan, averaged $8,535, while the annual premium for a plan that only covered the employee averaged $4,386.

      Almost 20 million of the 62.5 million workers enrolled in employer-based insurance in 2008 had family plans, while about 11 million had employee-plus-one plans. The 31.5 million remaining workers had single-coverage plans.

      AHRQ's 2008 private-industry data also showed that:

      • Nationally, workers enrolled in family plans last year contributed an average of $3,394 toward the cost of their premiums, compared with $2,303 for an employee-plus-one policy and $882 for a single-coverage plan.

      • Across all states, workers in Florida contributed the most for a family plan ($4,412) while Indiana workers contributed the least ($2,472); for employee-plus one plans New Hampshire workers contributed the most and Idaho workers the least ($3,005 and $1,736 respectively); and for single coverage, New Hampshire workers again contributed the most ($1,264), and workers in Hawaii contributed the least ($451).

      • For about 22 percent of workers with single-coverage plans, their employers paid the entire premium amount. In contrast, employers paid the entire premiums for just 11 percent of workers with family plans and 9 percent of those with employee-plus-one plans.

      Small business

      It's not just individuals who are likely to be buttonholing their Congressional representatives in August. Small business owners are being crushed by rising health care costs, and feel left out of the current health care debate in Washington, according to a new report released by U.S. Public Interest Research Group.

      "In this economy," said U.S. PIRG's Health Care Advocate, Larry McNeely, "health care costs are killing small business owners. But instead of leading on this important issue, the national Chamber of Commerce and other inside-the-beltway groups are playing politics with a crucial issue and actively impeding reform efforts."

      The new report, The Small Business Dilemma, which surveyed hundreds of small business owners and managers across the country, makes clear that small business owners want and need health care reform.

      Mike Brey, owner of the Hobby Works hobby stores located in communities around Washington, is one of those small businessmen, and he is eager to speak out on the issue.

      "We are creating a greater downward spiral," Brey said about the current health care system and its rising costs.

      U.S. PIRG surveyed 309 small business owners and managers around the country for the snapshot survey. The data collected found that the costs and administrative hassles associated with offering insurance weigh particularly heavily on small businesses.

      According to the 14-page report:

      • Small businesses value health insurance as a key to business success because it allows them to attract better employees.

      • 78% of small business owners surveyed who do not offer coverage would like to do so.

      • 80% of those who would like to offer coverage cite the expense of coverage as a reason why they don't.

      William Dennis, a senior research fellow with the National Federation of Independent Business Research Foundation tells that the U.S. PIRG findings complement what his surveys show. "Health care," he says, "is a major cost item" for small business.

      Dennis agrees that small business has traditionally been left out of the health care debate, but notes that "this time it's much better. At least we're getting some consideration."

      Recent analysis by MIT Professor Jonathan Gruber, commissioned by the Small Business Majority, found that health reform would save up to 128,000 small business jobs that would otherwise be lost due to high health care costs.

      Achieving these benefits will require ensuring that health reform legislation has a mix of policies that work for small businesses, according to the study, including health insurance exchanges, ending discrimination in issuance, renewal, and pricing of coverage plans based on health history, small business tax credits, and a comprehensive push to reduce the growth in overall health care spending.

      As Dennis puts it, "Everyone agrees that change is needed. The big question is 'how do you do it?'"

      Rising Cost of Health Insurance at Center of Debate...
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      Scammers With Falsely Promising "Guaranteed" Government Grants

      Court halts operators' deceptive pitches for grant writing book and services

      A federal judge has stopped an operation from falsely claiming that it could help consumers secure a "$25,000 Grant" -- guaranteed -- from the U.S. government.

      The case is part of a Federal Trade Commission crackdown on scammers trying to capitalize on the economic downturn by targeting people facing financial hardship.

      In the complaint the FTC, jointly with the attorneys general of Kansas, Minnesota, and North Carolina, charged that Grant Writers Institute, LLC and its related entities (together, GWI) falsely told consumers that they were eligible for grants as part of the recently announced economic stimulus package.

      According to the complaint, the false and deceptive claims by GWI violate federal law, state consumer protection laws, and the FTC's Telemarketing Sales Rule. The complaint seeks a court order permanently stopping the defendants' illegal conduct and forcing them to return money to consumers injured by the scheme.

      "Stamping out grant fraud and other types of schemes that take advantage of consumers in dire financial shape continues to be one of the Federal Trade Commission's highest priorities," said David Vladeck, Director of the Bureau of Consumer Protection. "There is no such thing as a guaranteed grant. But to consumers in financial trouble, the chance for extra income -- guaranteed or otherwise -- can unfortunately be a huge draw."

      The FTC says since at least 2007, GWI has mass mailed postcards to consumers across the country falsely claiming that the consumers "are Guaranteed a $25,000 Grant from the U.S. Government." Consumers who call the number are pitched a $59 book titled "Professional Grant Writer 'The Definitive Guide to Grant Writing Success.'"

      The company's telemarketers falsely claim that the book will explain how to get government grants -- including the "guaranteed" $25,000 grant. GWI and its North Carolina-based telemarketers, also named as defendants in the complaint, then call consumers who have bought the book, trying to get them to pay hundreds of dollars or more for grant research, writing, or coaching services, falsely claiming a 70 percent success rate in securing grant funding.

      In reality, few, if any consumers ever receive any grant money.

      The Commission contends that in addition to falsely claiming consumers were "guaranteed" to receive grants, GWI used the current government stimulus package to make its pitch. For example, when consumers called the number on the mass-mailed postcard, they heard a recording that said, "If you've been reading the papers you know that recently our government released $700 billion into the private sector. What you probably don't know is that there is another $300 billion that must be given away this year to people just like you."

      The recording continues, "And if you're one of the lucky few who knows how to find and apply for these grants, you will receive a check for $25,000 or more, and we guarantee it . . . If you don't get a check for $25,000 or more, you pay nothing."

      The following were named as defendants:

      • Affiliate Strategies, Inc.;

      • Landmark Publishing Group, LLC (d/b/a G.F. Institute and Grant Funding Institute);

      • Grant Writers Institute, LLC;

      • Answer Customers, LLC;

      • Apex Holdings International, LLC;

      • Brett Blackman, individually and as an officer, manager, and/or member of Affiliate Strategies, Inc., Landmark Publishing Group, LLC, Grant Writers Institute, LLC, Answer Customers, LLC, and Apex Holdings International, LLC;

      • Jordan Sevy, individually and as a manager of Landmark Publishing Group, LLC;

      • James Rulison, individually and as president of Answer Customers, LLC, all located in Kansas.

      The complaint also names the following North Carolina entities as defendants:

      • Real Estate Buyers Financial Network LLC (d/b/a Grant Writers Research Network);

      • Martin Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC; and

      • Alicia Nossov, individually and as a manager and member of Real Estate Buyers Financial Network LLC.

      Scammers With Falsely Promising "Guaranteed" Government Grants: Court halts operators' deceptive pitches for grant writing book and services....
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      Bank Of America Doles Out Countrywide Settlement

      Homeowners in 40 states eligible

      Various states this week began notifying consumers that money is now available from the $150 million settlement negotiated with subprime lender Countrywide Financial last year. The company is now part of Bank of America.

      Bank of America said today that letters are being mailed to borrowers who may be eligible for the foreclosure relief program included in an agreement with state Attorneys General announced last October. Up to $150 million is allocated nationally to provide assistance for certain borrowers who experienced a foreclosure, short sale or deed-in-lieu of foreclosure on their mortgage originated by Countrywide. Participating states may have additional eligibility criteria.

      The funds are part of a settlement Attorneys General negotiated as a result of questionable lending practices exercised by employees of Countrywide, including predatory lending.

      "Countrywide took advantage of families trying to achieve the American dream," said Michigan Attorney General Mike Cox. "Through this settlement, families across Michigan will receive a helping hand."

      In order to be eligible for the settlement, borrowers had to receive a Countrywide Financial loan between January 2004 and December 2007. The borrower's home had to be foreclosed on between January 2004 and December 2008. Those eligible received sub-prime loans or pay option loans (e.g. adjustable rate mortgages) and later lost their homes. Eligible borrowers will receive a letter from their state attorney general, claim forms, and postage-paid return envelopes.

      Forty states are participating in the program and have been allocated funds. Borrowers will be notified by letter from their state if they are eligible to receive a settlement payment. Payment amounts will vary.

      Eligible borrowers have until October 22, 2009 to return the claim form to Countrywide Financial's settlement administrator. It is expected that the eligible borrowers will receive payment from Countrywide in early 2010.

      Bank Of America Doles Out Countrywide Settlement...
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      Florida Sues Four Foreclosure Rescuers

      States' crackdown on mortgage fraud continues

      Florida remains one of the nation's hardest hit foreclosure regions, making it ripe for so-called foreclosure rescue operations that take advantage of distressed homeowners.

      In a crackdown on such operations, Florida Attorney General Bill McCollum has filed a lawsuit against four related South Florida companies that allegedly charge up-front fees for loan modification services to homeowners facing foreclosure.

      FHA All Day.Com and owner Jason Vitulano, as well as three other affiliated companies, purportedly collect up to $1 million in up-front fees on a monthly basis. The companies were allegedly soliciting hundreds of consumers nationwide via the internet and though telemarketing robo-calls which illegally used President Obama's voice.

      An investigation conducted by members of the Attorney General's Economic Crimes Division, working as part of the Attorney General's Mortgage Fraud Task Force, found evidence that Vitulano and his companies were charging up-front fees as high as $5,000 for foreclosure-related loan modification services. Vitulano also allegedly claimed to have an attorney on staff available to assist homeowners, but investigators believe no attorneys are currently working on any of the loan modification files.

      Consumers who complained to the Attorney General's Office also reported that the companies have not performed the promised services and that they were unable to contact the companies or get refunds. The Attorney General's Office has received over 300 complaints about Vitulano and his related companies.

      The Attorney General's lawsuit seeks a permanent injunction prohibiting the defendants from charging up-front fees, restitution on behalf of all victimized consumers, civil penalties of $15,000 for each violation of the Foreclosure Fraud Prevention Act, and reimbursement for fees and costs related to the investigation. The companies are currently located in Deerfield Beach, Florida, but were previously located in Boca Raton and Delray Beach, Florida.

      Florida Sues Four Foreclosure Rescuers...
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      Texas Curbs Acai Berry Supplement Maker

      Firm accused of abusing negative option marketing

      A Texas company selling acai berry supplements has agreed to end a number of consumer abuses, following an investigation by Texas Attorney General Greg Abbott.

      Under the settlement,, based in Arlington, Texas, agreed to stop shipping unauthorized orders to customers, refrain from making false health claims, and clearly disclose its terms of service to future purchasers. The online vendor also agreed to provide refunds to customers that it overcharged for its products.

      Distributor Austin Hilton widely advertised the "acai berry" supplement as reducing the risk of heart attack, Alzheimer's disease and cancers. His advertising materials also claimed the product could limit premature aging.

      Web advertisements indicated that the Acai Berry Maxx product was "naturally potent in antioxidants" and could flush up to 30 pounds of waste and toxins from the body. Hilton's claims are not backed by sound scientific studies, and they have not been approved by the U.S. Food and Drug Administration.

      When customers clicked on the or advertising links, they were informed that they would have four minutes to place their orders before the free trial of the Acai Berry Maxx product expired. Customers who completed orders were asked to pay a $5.95 shipping and handling fee. To make the required payment, purchasers had to provide their credit or debit card numbers.

      The attorney general's investigation found that this transaction led customers to a "terms and conditions" page that failed to clearly disclose several problematic provisions. By accepting the "free" 15-day supply valued at $65, Abbott said customers unwittingly entered into a "negative option" plan with the company. Under this scheme, would automatically "renew" orders after the 14-day trial period expired without customers' express authorization to continue. The renewal forced customers to pay $80 for one-month supplies of Acai Berry Maxx, even after customers demanded cancellation.

      According to state investigators, the negative option language embedded within the "terms and conditions" violated state law. Under the Texas Deceptive Trade Practices Act, terms providing for ongoing contractual obligations must be disclosed clearly and conspicuously on the contract.

      Investigators also discovered that FXsupplements failed to promptly ship orders. As a result, customers did not receive their free products until the free-trial had nearly expired. This gave customers little time to try the products without obligation and decide whether to order additional products. Meanwhile, Hilton and his companies automatically put customers onto a revolving shipment of prepaid products after the trial period ended without customers' knowledge or consent.

      While Hilton touted Acai Berry Maxx as a remedy or cure for diseases, FXsupplements' "terms and conditions" contained fine-print language acknowledging that the products were not intended to diagnose, treat, cure or prevent any disorders and diseases. Importantly, the FDA has not approved Acai Berry Maxx as a drug with the curative properties claimed by Hilton.

      Hilton and the defendant companies, which also includes Hilton HG, Ltd., agreed to numerous corrective measures and penalties, including customer restitution and Web page modifications. The agreed final judgment prohibits Hilton and FXsupplements from relying upon false advertising or deceptive schemes to sell the products. Under the agreement, material information cannot be obscured within the purchase agreements' "terms and conditions."

      If the defendants employ the "negative option" billing plan in the future, they must clearly disclose the steps customers can take to discontinue their contract. Additionally, customers who are wrongly charged for unwanted products must receive prompt refunds. Hilton and his companies must also provide reliable telephone customer service in order for customers to contact the company.

      Texas Curbs Acai Berry Supplement Maker...
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      West Virginia Sues Ohio Collection Agency

      Company specializes in calling consumers at work

      Consumers often make the mistake of paying a firm that says it can stop bill collectors from harassing them. It's usually a waste of money. They would be better off calling their state attorney general, who in most cases will take on these bullies for free.

      In West Virginia, a woman authorized an Ohio collection agency to charge $5,000.00 to her credit card because the company was threatening to have her daughter arrested at work. The same collection agency told another consumer that his daughter would be "arrested for fraud of the federal government" unless she made an immediate payment of $5,000.00 toward a student loan.

      Such strong-arm collection tactics are effective, but much like holding a gun to someone's head, they are illegal.

      It is precisely this type of conduct that West Virginia Attorney General Darrell McGraw says he seeks to stop by filing a lawsuit against the company that allegedly made these threats to several West Virginians, National Enterprise Systems, Inc. ("NES") of Solon, Ohio.

      McGraw's complaint alleged a wide range of other unlawful conduct, including adding unlawful collection fees to tuition owed by students to West Virginia colleges and universities. The suit asks the court to order NES to cease its abusive practices, to pay civil penalties to the state, and to award restitution to consumers who were victimized.

      The firm, it turns out, targets consumers nationwide. Rachael, or Norwalk, California, says she received harassing phone calls at work, where she is not permitted to accept personal phone calls.

      "Dispite my many request for this company not to call me, they continue to do so," she told "When I explaine to them that I can't have these phone calls, they are always rude and aggressive."

      "Failure to pay a debt is not a crime and companies that make such false threats have violated both state and federal debt collection law.," McGraw said. "My office will not tolerate abuse and harassment of consumers who may be in debt through no fault of their own. The Legislature has authorized my office to enforce the laws that prohibit such conduct, and we intend to do so, particularly when the unlawful conduct is as extreme as has been alleged against National Enterprise Systems."

      West Virginia Sues Ohio Collection Agency...
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      Chase Continues To Tighten Consumer Credit

      Former WAMU customers finding their accounts are closed

      Last month JP Morgan Chase targeted its low-interest credit card holders with a big hike in minimum monthly payments, setting off howls of protests. This month Chase appears to have launched a campaign to close some accounts altogether.

      David, of Gilbert, Arizona, said his Chase account was closed and he only found out when he tried to use the card.

      "I tried to charge $25 to the card and it was denied. When I called Chase they said it was due to my credit report," he told

      Tavis, of Alexandria, Virginia received a letter saying Chase is closing her account. She said she was told it was due to high balances and low available credit.

      "This was a WAMU account that I've had for over three years," she told It was never late and I always paid over the minimum."

      In fact, many of the complaints to about Chase closing credit accounts appear to come from former Washington Mutual customers, who became Chase cardholders when Chase acquired WAMU.

      Many consumers also are upset about the way they find out their credit card accounts have been closed. They say they learn about Chase's action when they try to use the card and it doesn't work.

      "I don't have a letter, I don't have a packet that indicates that they have the right to shut off our accounts without our knowledge," said Susan, of Santa Clara, California. "They are okay with us being embarrassed by our cards being declined in stores or wherever we shop."

      Denise, of Broadway Heights, Ohio, thinks her account closing has something to do with the fact that it's a former WAMU account, and sees a pattern with other complaints.

      "They said they sent a letter over a week ago and I have not received it as of yet," she said. "I always paid my card off in full every month. Never left an outstanding balance. Also, customer service said the same thing about a credit agency report on me. I was also a customer of WAMU."

      In fact, all credit card companies are taking action - some more aggressive than others--to reduce their portfolios. Customers that have the slightest credit blemish are being weeded out, or hit with a large interest rate increase. Even cardholders with good credit are being lumped in with more questionable customers.

      Credit card companies say they are only protecting themselves. With rising default rates, they must prepare for the worst. Left unsaid is the fact that new credit card reforms take effect in February, which will restrict their ability to use these tactics--so they're getting as much revenue as they can while the getting is good.

      Chase Continues To Tighten Consumer Credit...
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      Polaris Recalls 2009 ATVs

      July 22, 2009

      Polaris Industries is recalling about 4,700 2009-model ATVs. The valve assembly can fail in freezing temperatures, causing oil to leak into the exhaust system. This could pose a fire and burn hazard to the rider.

      The firm has received six reports of the valve assembly failing in freezing temperatures, resulting in three small fires. Minor fire damage to air boxes, ignition coils and the seat were reported.

      This recall involves the Polaris ATVs with model year 2009. The ATVs were sold under market names Sportsman ESP XP 850 and Sportsman XP 850 ATVs. The model and serial number identification decal is located on the left side of the machine on the frame rail below the front fender. The following models are being recalled:

      Market NameModel NumberMarket NameModel Number
      Sportsman ESP XP 850A09ZX85AGSportsman XP 850A09ZN85AL
      Sportsman ESP XP 850A09ZX85ALSportsman XP 850A09ZN85AQ
      Sportsman ESP XP 850A09ZX85AQSportsman XP 850A09ZN85AS
      Sportsman ESP XP 850A09ZX85ARSportsman XP 850A09ZN85AT
      Sportsman ESP XP 850A09ZX85ASSportsman XP 850A09ZN85AX
      Sportsman ESP XP 850A09ZX85AXSportsman XP 850A09ZN8XAL
      Sportsman ESP XP 850A09ZX8XAGSportsman XP 850A09ZN8XAQ
      Sportsman ESP XP 850A09ZX8XALSportsman XP 850A09ZN8XAS
      Sportsman ESP XP 850A09ZX8XAQSportsman XP 850A09ZN8XAX
      Sportsman ESP XP 850A09ZX8XAR
      Sportsman ESP XP 850A09ZX8XAS
      Sportsman ESP XP 850A09ZX8XAX

      Polaris dealers nationwide sold the ATVs from September 2008 through June 2009 for about $9000.

      Consumers should immediately stop using the ATV in sub-freezing temperatures and contact their local Polaris dealer to schedule a free repair. Registered owners have received direct mail notification of this recall if they are likely to experience consistently sub-freezing temperatures.

      For additional information, contact Polaris toll-free at (888) 704-5290 between 8 a.m. and 5 p.m. CT Monday through Friday, or visit the firms Web site at

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

      Polaris Recalls 2009 ATVs...
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      Emerson College To Reimburse Students Over Loan Advice

      Probe found college failed to provide affordable loans

      July 22, 2009
      An investigation by the states of Massachusetts and New York found Boston-based Emerson College unfairly steered students to borrow from certain lenders that gave inducements to Emerson's financial aid staff.

      In many instances, these lenders failed to provide Emerson's students with competitive loan terms, the investigation found.

      The settlement is the first student lending resolution to directly reimburse students for the extra costs they incurred by following their school's misleading lending advice. Under the terms of the settlement, Emerson will pay $775,859 to students who took Stafford loans from either Citizens Bank or JP Morgan Chase & Company during academic years 2004-2005, 2005-2006, or 2006-2007.

      The probe determined that between 2004 and 2007, Emerson designated Citizens Bank and Chase as "preferred" lenders and led students to borrow from these lenders even though Citizens and Chase provided more expensive Stafford loans than other lenders. Over 4,000 present and former undergraduate and graduate students will receive payments ranging from $50 to $839.

      "Our investigation into the student loan industry has revealed some troubling practices that increased the cost of borrowing for students," said Massachusetts Attorney General Coakley. "Our office will continue to hold accountable schools that exploit students' trust by needlessly steering students into expensive loans. We are very pleased that Emerson cooperated with our investigation and that it is the first Massachusetts school to enter into a settlement that compensates borrowers."

      "When we began our investigation into Emerson College, a list of the activities that were carried out by their financial aid office and former director could have served as a list of exactly what a school should not do," said New York Attorney General Andrew Cuomo. "Their financial aid office put personal preferences for expense-paid trips and free giveaways over the best financial interests of their students. The director of financial aid was even getting paid thousands of dollars from one of the lenders the college was recommending to students. With this agreement, Emerson has changed its practices to better serve its students, and I am pleased to resolve this investigation."

      In addition to paying restitution, Emerson has agreed to conduct reforms aimed at preventing conflicts of interest, bringing transparency to the student loan process, and preserving students' ability to use the lender of their choice. Among other things, the conduct reforms require Emerson to put the financial interests of its students first when choosing to recommend a lender and prohibit Emerson's financial aid employees from accepting anything of value from lending institutions, joining lender advisory boards, or entering into joint ventures or consulting agreements with lenders.

      As part of its investigation, the two states took testimony from Emerson's financial aid employees and reviewed emails, contracts, and other documents. The Attorney General's investigation found that:

      Emerson failed to prevent the gifts, gratuities, free and discounted services that Emerson and its financial aid staff received from influencing Emerson's decision making process in choosing its "preferred" lenders.

      Emerson made inaccurate statements to students regarding the advantages of using its "preferred" Stafford lenders.

      Emerson created a Stafford loan process that made it difficult for students to choose lenders that Emerson did not recommend as "preferred," failed to provide students with information as to how to select a non-preferred Stafford lender, and actively discouraged students from using non-preferred lenders.

      In certain years, Emerson assigned students who did not designate a "preferred" lender to Citizens Bank, even though Citizens offered a more expensive loan than Emerson's other "preferred" Stafford lender at that time.

      Between 2001 and 2003, Emerson purported to operate a financial aid hotline that was actually staffed and operated by national lending giant Sallie Mae. At the time Sallie Mae operated the "Emerson" hotline, Sallie Mae was dictating the loan terms and repayment benefits that Citizens and Chase offered to Emerson borrowers and purchasing the loans that Citizens and Chase made to Emerson borrowers.

      The investigation also confirmed previously public information that Emerson employee Daniel Pinch received consulting fees from "preferred lender" Collegiate Funding Services and that Emerson received revenue sharing payments from its "preferred lender" EFP.

      Emerson's Vice President for Communications Andy Tiedemann said the college's acceptance of the agreements "does not constitute an admission by Emerson of any fact or noncompliance with any state or federal law, rule, or regulation." He noted that the college cooperated fully in the investigations and has implemented all of the program changes that the Attorneys General have recommended, including adoption of a strict code of conduct governing the activities of its student financial aid staff.

      Emerson College To Reimburse Students Over Loan Advice...
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      Tablet Splitting: A Risky Practice

      Consumers could run into a variety of problems

      Some pharmacists have reported that patients have changed the way they take medications because of the downturn in the economy, according to a recent survey by the American Pharmacists Association. This includes skipping doses and splitting tablets in an effort to save money.

      Regarding the practice of splitting tablets, the Food and Drug Administration (FDA), the American Medical Association, and other medical organizations advise against it unless it's specified in the drug's labeling.

      Tablet splitting often involves buying higher strength tablets and then breaking the tablets in half or quarter doses as a way to lower drug costs. For instance, a 30 mg tablet may cost the same amount as the 15 mg tablet. So a patient may try to save money by buying the 30 mg tablets and splitting them all in half. This might seem like a smart money-saving strategy, but the practice can be risky.

      Mansoor Khan, Ph.D., director of the Division of Product Quality Research in FDA's Office of Pharmaceutical Science, tells that splitting "could affect the quality of the drugs." He points out that some medications have a special coding and that splitting the tablet could affect the distribution of the medication it contains.

      There are other reasons why splitting tablets is risky:

      • You might get confused about the correct dose. There have been cases when people have purchased higher strength tablets intending to split them, but then they forgot to split them. Instead, they took the whole tablet. This led to accidentally taking too much medicine.

      • Some tablets are hard to split. Some tablets are too small to split, may have an unusual shape that makes them hard to split, or may crumble more easily when split. Also, some people may not be able to split tablets correctly. These factors make it difficult to accurately split a tablet.

      • Not all pills are safe to split. Patients may mistakenly think that any pill can be split. But some pills, such as capsules and time-released drugs, should always be taken whole. For example, some tablets are coated with a substance that helps to release the medicine slowly. Splitting these tablets destroys the coating, which means you might absorb the medicine too fast or not at all.

      If you still want to split a tablet, the FDA has approved drugs where that is part of the manufacturer's drug application. "If the tablet is approved for splitting," says Khan, "the information will be provided in the drug's professional prescribing information."

      He adds that FDA does not encourage the practice of tablet splitting unless it's specified in the drug's professional prescribing information. "If a patient is considering splitting a tablet, FDA recommends that the patient get advice directly from his or her doctor or pharmacist to determine whether it is appropriate or not for a particular drug," Khan concluded.

      Tablet Splitting: A Risky Practice...
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      Inspector General Wants Better TARP Accounting

      Raps Treasury Dept. for ignoring proposals

      Taxpayers have shoveled billions of dollars in bailout funds to banks since last October in hopes of preventing a credit system collapse and, someday, getting the money back. But how do we know that some of that money isn't slipping through the cracks?

      We don't know, says Neil Barofsky, who is the Special Inspector General for the Troubled Asset Relief Program. In a report, Barofsky said he has made plenty of proposals for better oversight of the money, but so far, he says, the proposals have been routinely ignored.

      Barofsky singled out the Treasury Department for much of his criticism. He has asked Treasury to require TARP funds recipients to track exactly how they are spending the money. As of now, no such requirement has been imposed.

      He says his suggestion of a "firewall," to prevent insiders from taking advantage of their knowledge, has also been ignored.

      "Although Treasury has taken some steps towards improving transparency in TARP programs, it has repeatedly failed to adopt recommendations that SIGTARP believes are essential to providing basic transparency and fulfill Treasury's stated commitment to implement TARP 'with the highest degree of accountability and transparency possible,' " Barofsky said in his report.

      Barofsky repeated much of his complaints in prepared testimony Tuesday morning before a House Oversight panel.

      Congress insisted on establishing a Special Inspector General when it approved the first $700 billion bailout last fall--a sum that, at the time, seemed quite large. Since then, Barofsky's office has launched 35 criminal and civil investigations into a range of allegations from accounting and securities fraud to insider trading and public corruption.

      Barofsky said some of the investigations have already led to charges against some accused of fraud in the administration of the government's bailout program.

      In advance of his testimony, Baroksky said the U.S. taxpayers have now spent--or have committed to spend--more than $23 trillion to prop up institutions and individuals caught up in the worst of the recession.

      A Treasury Department official calls Barofsky's figures "inflated," noting they contain funding that has already been repaid. In fact, in one instance, Treasury officials say the government earned $4 million in interest.

      Barofsky's main complaint seems to be what he sees as a lack of transparency in the administration of the TARP funds. He said banks have all said they intend to use TARP funds to shore up their balance sheets, but there is no requirement for banks to show what they have done with the funds.

      Inspector General Wants Better TARP Accounting...
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      Fraud Is Fraud, Even on the Internet

      Faces fall as New York prosecutes 'astroturfing' by facelift clinics

      It's often said that the Internet is where information just wants to be free. That may be, but it's also where -- just as in print and on the air -- commercial information had better be factual. Fraud is fraud, even on the Internet, as New York Attorney General Andrew Cuomo has reminded the cyberworld.

      Cuomo is slicing $300,000 out of the hide of Lifestyle Lift for posting phony reviews on Internet sites. The case is thought to be the first of its kind involving the growing problem of "astroturfing" -- and it is causing consternation throughout the "reputation management" business, which uses tricks and deception to counter legitimate consumer reviews.

      In the New York case, Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories.

      Actual reviews from consumers are much less laudatory. "J" of Elkridge, Md. told in a recent complaint that she was told by a Lifestyle Lift doctor that her facelift would be a "minor one-hour procedure" involving "two small incisions." In fact, it turned into much more than that, she said.

      "I was given approximately 15-20 shots in my face ... and was horrified to realize I was being cut from the front of each ear to the back. I later learned that what I was given was an entire lower facelift without anesthesia!" J said. "I had NO IDEA that I would have my earlobes cut off my face and sewn back on. I had no idea that I would suffer with extreme pain and numbness for up to nine months later. I didn't know that there was a possibility that I would suffer with numbness on both sides of my face and itching that becomes unbearable, one and a half years after the procedure.

      J also said she was shown a video presentation which included supposed news reports from Fox, NBC and other news outlets extolling the virtues of the procedure.

      A health-oriented site,, carries negative comments from doctors as well as consumers.

      "The advertisements show pictures of patients who have achieved excellent results. From the patients I have seen who have had LSL procedures, these results are not at all typical," said Brent Moelleken, MD, a plastic surgeon in Bevely Hills, Calif.

      "When a facelift is performed with minimal undermining (as with a LSL), the skin does not advance properly. You haven't reached the tissues to pull on them. Instead, you are pulling on adjacent tissues, and the force to the target tissues (i.e. loose skin of the jowl area) is reduced. Surgically speaking, you're not there yet," Moelleken said.

      In 2008, Lifestyle Lift sued alleging trademark infringement. The suit ended in a confidential settlement. A similar suit against -- no longer active on the Internet -- was dismissed by a Detroit court.

      Among the more disgruntled consumers who have complained to is Brian of Chicago. He had the Lifestyle Lift procedure performed in 2003 and said it left a visible scar that he has not been able to hide with sideburns, as his Lifestyle doctor, Robert Schaeffer, originally suggested.

      "During my follow-up visit Dr Schaeffer suggested I wear large earrings!," said Brian who, as his name suggests, is a man. He rejected the notion.

      FTC probe

      Cuomo said the tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law. While Cuomo's action is the first on the state level, the Federal Trade Commission (FTC) has also been investigating the use of word-of-mouth marketing online and may issue new or revised rules on the practice.

      For more than 30 years, the FTC has regulated the use of endorsements and testimonials in advertising. While phony reviews are not traditional paid advertisements, they may be targeted by prosecutors if any goods, services or money changes hands in enticing customers, employees and paid agents to create marketing content they know to be false.

      Those who are compensated to promote or review a product using these techniques are not exempt from the laws of governing truthful advertising, said Richard Cleland, assistant director, division of advertising practices at the FTC, in a statement.

      Cuomo's action won support from legitimate marketing industry organizations. The Direct Marketing Association said Cuomo's action was supported by ethical business best-practices. According to the association's guidelines, Testimonials and endorsements should be used only if they are: Authorized by the person quoted; Genuine and related to the experience of the person giving them both at the time made and at the time of the promotion and; Not taken out of context so as to distort the endorser's opinion or experience with the product.

      Other marketing gurus agreed. "Having a company force its workers to anonymously blog about its products, regardless of whether they use them or like them, and attack others is pathetic," said Edward Barrera, editor of ADOTAS, a newsletter focused on Internet advertising.

      But at, an anything-goes forum where shady practices such as "search engine optimization" are discussed and debated, the reaction was more mixed.

      "I think the overall message here is that reputation management needs to be an at-arms-length transaction with an unconnected third party rather than an in-house campaign," said one posted. "Yes, absolutely, and bank robbers need to wear masks," shot back another.

      Lifestyle Lift Company president Gordon Quick said in a statement that Cuomo's complaints "stem from a period prior to the present management team's leadership" and that all existing Web content meets acceptable business standards. The company also characterized some of the reviews as "representative of patient testimonials and comments rather than actual verbatim comments."

      "Reputation management"

      Besides posting phony rave reviews, reputation management companies often promise businesses that they can remove or somehow modify negative comments on third-party sites.

      SERM Internet, LLC, advertises that it can "remove" negative comments appearing on "Removing complaints involves search engine marketing and optimization," the company's Web site claims.

      Another company, Reputation Armor, claims that it can remove complaints appearing on from Google, Yahoo and other search engines. The company says its "average fee" is $995-$2500.

      The "removal" process usually consists of producing large numbers of pages designed to crowd out legitimate reviews form the search engine indexes -- similar to the Lifestyle techniques Cuomo objected to.

      Lifestyle Lift, which has more than 40 locations across the U.S., engaged in a concerted effort to bombard Internet message boards with positive stories about themselves, Cuomo said. Lifestyle Lifts president believed that negative Internet postings had significantly hurt the companys reputation and thought the success of the company hinged on controlling messages posted online.

      Company employees were directed to create accounts with various Internet message boards and pose as satisfied customers of Lifestyle Lift. Employees also attacked legitimate message board posters who criticized Lifestyle Lift and tried to get those posts removed from message boards.

      Internal emails uncovered in Cuomos investigation show that Lifestyle Lift employees were given specific instructions to engage in this illegal activity.

      One e-mail to employees said: Friday is going to be a slow day - I need you to devote the day to doing more postings on the web as a satisfied client. Another internal email directed a Lifestyle Lift employee to Put your wig and skirt on and tell them about the great experience you had.

      In addition to posting on various Internet message board services, Lifestyle Lift also registered and created stand-alone Web sites, such as, designed to appear as if they were created by independent and satisfied customers of Lifestyle Lift. The sites offered positive narratives about the Lifestyle Lift experience.

      Some of these sites purported to offer forums for users to add their own comments about Lifestyle Lift. In reality, however, Lifestyle Lift either provided all the user comments themselves, or closely monitored and edited third-party comments to skew the discussion in favor of Lifestyle Lift.

      According to the Attorney Generals settlement, Lifestyle Lift employees will no longer pose as consumers when publishing on the Internet. The company will not promote Lifestyle Lifts services on the Internet without clearly and conspicuously disclosing that they are responsible for the content. The company will also pay $300,000 in penalties and costs to New York State.

      Cuomo is slicing $300,000 out of the hide of Lifestyle Lift for posting phony reviews on Internet sites. The case is thought to be the first of its kind....
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      Judge OKs Price-Fixing Suit Against Babies "R" Us

      Class action charges company squashed cost-cutting by competitors

      In a 50-page opinion, a federal judge has certified a class action consumer suit that charges Babies "R" Us and several high-end manufacturers illegally conspired to fix prices by squeezing out Internet competitors who had been undercutting the retail giant.

      It's one of the few class actions to be certified after recent decisions by the Supreme Court and an appeal courts set more rigorous standards for certifying class actions in price-fixing cases. The case is a companion to an antitrust case filed by BabyAge and BabyClub, two Internet retailers who said their efforts to gain a foothold in the market were squashed by the alleged conspiracy between Babies "R" Us and manufacturers including Britax, Perego, Medela, Maclaren, Kids Line and Baby Bjorn.

      The manufacturers allegedly implemented new policies targeting Internet retailers in response to pressure from Babies "R" Us and its parent company, Toys "R" Us.

      Plaintiffs attorney Elizabeth Fegan said consumers who bought more than $500 million in strollers, high chairs, car seats, breast pumps and other baby products were overcharged by Babies "R" Us between 2001 and 2006 because of the alleged minimum pricing agreements.

      Attorneys for the companies argued that the plaintiffs could not prove their allegations through but U.S. District Court Judge Anita Brody said the plaintiffs have already begun to collect evidence that supports their contention.

      "The evidence indicates that BRU pressured the manufacturers to prevent internet discounting, they responded by curtailing specific retailers or implementing distribution policies targeting internet retailers, and this response benefitted BRU but harmed the manufacturers," Brody wrote.

      A marketing professor quotedf by The Wall Street Journal said that consumers may have paid as much as $100 million more for the baby products than they would have without the alleged price-fixing agreements. Greg Gundlach of the University of North Florida said he based his estimated on U.S. Justice Department studies.

      The court is expected to set a trial date in 2010.

      Judge OKs Price-Fixing Suit Against Babies 'R' Us...
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      2001 Honda Accord, Civic Recall

      July 20, 2009
      Honda is recalling 2001 Civic and Accord models. The driver's airbag could produce excessive internal pressure, possibly causing the inflator to rupture. If this happens, metal fragments could pass through the air bag cushion material, possibly injuring vehicle occupants.

      Dealers will replace the airbag inflator free of charge.

      For more information, owners may contact Honda at 1-800-999-1009.

      Consumers may contact the National Highway Traffic Safety Administration (NHTSA) at 1-888-327-4236 (TTY: 1-800-424-9153) or at

      2001 Honda Accord, Civic Recall...
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      People to People Parent Company Faces Securities Class Action

      Complaint alleges overly optimistic outlook

      The Ambassador's Group, which is affiliated with the controversial student-travel organization People to People, is facing a securities class action brought on behalf of its stockholders.

      The complaint alleges that Ambassador's directors issued misleading and overly optimistic statements about the company's financial future. Among other things, the suit alleges that the directors failed to disclose a drop in travel participants and that fewer people who signed up for informational sessions went on to actually book trips. As a result of these deceptions, the stock was allegedly sold at artificially inflated prices.

      Indeed, on October 22, 2007, when the directors announced financial results for the third quarter of that year, they conceded that the company's net enrolled participants for 2008 were 26,200, a sharp drop from the 37,300 that had signed up for the same period in 2007. The directors also admitted that this decrease would negatively impact [Ambassador's] 2008 earnings. After the announcement, Ambassador's Group stock fell 44%, to around $21 per share.

      The complaint alleges violations of the Securities Exchange Act of 1934, the statute that regulates secondary trading of securities markets.

      People to People, an organization that purportedly provides scholarships and travel opportunities to students, has spent the past several years embroiled in scandal.

      People to People is known for sending travel invitations to long-dead children, upsetting parents and raising questions about the organization's recruiting and selection process. In 2006, Eugene and Margaret Beil received a letter inviting their daughter Katherine to join the group's trip to Europe. A nice gesture, except that Katherine died 14 years earlier, at 18 days of age. Just in case that wasn't egregious enough, in 2007 the organization invited Katherine on a trip to China during the summer of 2008. Katherine's mother Margaret said that the repeated promotions just re-open the whole death all over again.

      Prison term

      People to People further burnished its reputation in March 2007, when its former financial director was sentenced to 20 months in prison for stealing $148,144 from the organization. In a plea agreement, David E. Schlotzhauer conceded that, between 2001 and 2003, he embezzled money from People to People's checking account and used its credit card for personal expenses.

      Perhaps most infamously, the company faced a wrongful death lawsuit after Tyler Hill, a 16-year old with diabetes and serious migraine headaches, died on People to People's excursion to Tokyo. Tyler's parents had worried about sending him on the trip in the first place, but were comforted by People to People's 24-hour medical response team and the organization's repeated assurances that Tyler would be in good hands.

      Hill, an athletic history buff who had dominated his Type 1 diabetes from an early age, left the U.S. standing at 6'2 and 215 pounds. Two weeks later, he was braindead in a Tokyo hospital bead, his organs rotting and his eyes lifeless. His devastated parents decided to release him from life support. Although Hill wanted to be an organ donor, only his corneas were in good enough condition to be harvested.

      Only later did the Hills learn the full details of their son's death. Tyler had become sick no less than three times before he was finally taken to a hospital. People to People refused Tyler's request to be taken to a hospital after he suffered altitude sickness during a hike up Mount Fuji. Only after he became unconscious did the leadership cave and give him the medical attention he desperately needed, court documents indicated.

      The Hills and People to People settled the wrongful death action last month. The terms of the settlement are confidential and were not disclosed.

      Not much change

      The steady stream of scandal and litigation doesn't seem to have shamed People to People into cleaning up its act. still receives a regular stream of complaints from consumers who say they have been misled by the organization. Many consumers pay People to People thousands of dollars to send their children on a trip, only to have their children's names removed from the travel list.

      Colleen of Riverhead, NY, writes that, We paid over $2,000 and assumed final payment could be made closer to the trip. We attended all of the delegation meetings including a service project. Approximately two weeks ago, the delegation leader called to tell me my daughter was taken off the roster.

      In a strikingly similar account, Susan of Mooreshead, NJ, writes, Placed 400.00 deposit on trip, intending to charge the full payment balance on my credit card closer to departure date (8 months later). Days before I went to place the full payment, I was told that my daughter was no longer on the trip and that I was entitled to no refund (although I was originally told verbally by the company that I would be able to obtain a full refund minus a fee of less than 100.00).

      Invitations for non-existent children don't seem to have abated, either. Roberta of Brockton, MA, writes, I received an invite for my daughter to participate in a 'one time only opportunity' to travel to Japan this summer. I don't have a daughter, nor a son. Where are these people getting these names and why are they allowed to continue this marketing ploy?

      People to People's website touts it as the worlds most recognized and respected educational travel provider and claims the organization was originally founded by President Dwight Eisenhower, though his name does not appear in any of the original incorporation documents.

      As is customary for securities suit, the action was brought on behalf of the nominal company against its board of directors. The action covers anyone who purchased Ambassador's stock between February 8, 2007 and October 23, 2007.

      Ambassador's, headquartered in Spokane, Washington, prides itself as a socially conscious education company, according to its website. In addition to People to People, the organization runs World Adventures Unlimited, another program that purportedly helps students travel abroad; and BookRags, a research site that provides study guides and other research tools.

      More about People to People

      People to People Parent Company Faces Securities Class Action...
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      Dangerous Chinese Drywall Shows Up In Mississippi

      Likely used during Katrina repairs

      A large shipment of that dangerous drywall from China apparently ended up in Mississippi. Mississippi Attorney General Jim Hood says his office has received multiple complaints and said he wants to alert more residents of his state to the problem.

      "Our office has received several complaints on Chinese drywall," said Hood. "We are investigating these complaints, and encourage other consumers who may be victims to call us. We have been working with the federal government, other states, and other Mississippi agencies to collect more information on this issue."

      In recent months, the U.S. Consumer Product Safety Commission has received numerous reports from people in 19 states and the District of Columbia involving problems they blame on imported drywall.

      "Most drywall used by American homebuilders is made in the United States, but shortages in recent years spurred imports from China," said Hood. "Hurricane Katrina may have lead some homebuilders to used the imported drywall. Some signs of such drywall may include a rotten egg smell, or constant electrical problems."

      The problem with the imported drywall first surfaced in Florida, another state hard hit by hurricanes in recent years, requiring extensive rebuilding. An investigation showed the drywall may be emitting sulfuric odors, potentially exposing homeowners to respiratory health problems. The emissions can also corrode air conditioning coils and wiring, posing a potential risk of electrical fire.

      Although a number of drywall manufacturers may be implicated, the most commonly-cited is Knauf Plasterboard Tianjin Co., Ltd. (KPT), a China-based producer. The company regularly prints its name on the back of its drywall, making it the most easily identifiable potential culprit.

      "Anyone who believes they have imported drywall in their home should notify both the Mississippi Department of Health and our office," Hood said.

      Dangerous Chinese Drywall Shows Up In Mississippi...
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      States Take Aim At Free Gas Promotions

      Pitches had too many strings attached

      When marketers promise free gas as sales promotions, it might be wise to view their promises with a bit of skepticism. New York Attorney General Andrew M. Cuomo is suing a Florida-based marketing company for employing a deceptive promotion involving free gasoline cards that actually was a rebate scheme with nearly impossible conditions.

      Cuomos Office is suing Tidewater Marketing Global Consultants, Inc., headquartered in Clearwater, Florida, and President Crystal M. Clark for repeatedly deceiving consumers through a promotional free gas gift card program in order to generate business for several New York-based companies.

      The Attorney Generals office began investigating the company earlier this year after Cuomo put a stop to similar deceptive promotions being run by Tidewater at a Skaneateles auto dealership. The Attorney Generals lawsuit seeks to bar Tidewater from operating in New York State, restitution for wronged consumers, and penalties and costs to the state.

      This company chose to disregard important consumer protections that exist in New York and instead engage in a deliberately deceptive scheme, Cuomo said. Consumers who thought they were taking part in a free promotion instead ended up shelling out hundreds of dollars in order to get their free gas.

      Since at least February of 2008, Tidewater Marketing, which also does business as Free Gas Central,,, and, touted itself as a redemption center for various marketing programs, including vacation packages, rebate offers and -- most notably -- gas gift card programs on behalf of various businesses across the country. These businesses -- primarily car dealerships -- offered gasoline certificates to customers as marketing tools, supposedly allowing the customer to redeem the certificate for free gasoline gift cards.

      In reality, many consumers never received the cards despite repeated inquiries to the company. Cuomo said the rebate program also had unreasonable conditions that were nearly impossible to meet.

      For example, for a consumer to fully redeem a $500 gasoline redemption certificate through Tidewater, a consumer would have to spend at least $2,000 at a local gas station over the course of 20 months in order to fully redeem a $500 gasoline redemption certificate through Tidewater (the redemption would be in the form of 20 $25 gas gift cards).

      In West Virginia this month, Attorney General Darrell McGraw has taken action against two car dealers, winning their agreement to make good on promises of free gas they made to consumers. Both had placed requirements on the consumers to get the free gas.

      "It is unlawful to advise consumers that they will receive a free gift and tie any other requirements to the receipt of the gift," McGraw said. "All the hoops consumers had to jump through to get their free gas were stated in the fine print a clear violation of the West Virginia Consumer Credit and Protection Act.

      New York Attorney General Andrew M. Cuomo is suing a Florida-based marketing company for employing a deceptive promotion involving free gasoline cards. ...
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      Chicago Cemetery Accused of Desecrating Bodies

      Class actions claim bodies were moved, stacked and even destroyed

      Chicago politicians used to live and die by the graveyard vote, but the dead no longer get much respect in the Land of Lincoln.

      Hundreds of grieving and outraged families are being represented in class action lawsuits against an Illinois cemetery accused of illegally interring remains and altering grave sites in the name of profit.

      Employees of the Burr Oak Cemetery in Chicago allegedly stacked and disposed of bodies in an attempt to create space at the graveyard in order to maximize their income. They also allegedly desecrated and destroyed bodies in order to resell the plots on which they were buried.

      Between 200 and 300 grave sites are believed to have been disturbed. Additional remains were found on Friday, prompting Cook County Sheriff Tom Dart to declare the entire cemetery a crime scene. Dart predicted that the crime scene is going to continue to grow, adding that, we do not have an end in sight.

      The alleged ringleader of the scheme, Carolyn Towns, previously served as the cemetery's manager. Neighbors and friends expressed the requisite shock and disbelief that she could be involved in such a heinous plot.

      At least six lawsuits have been filed since the gruesome discovery.

      A representative action, filed by Kevin Majors and Edward Strickland, charges Burr Oak with breach of contract, fraud, and breach of contract. At least one suit alleges intentional infliction of emotional distress, a relatively rare cause of action.

      To prevail on this allegation, a plaintiff must show that the defendant's conduct was either intentional or reckless, and that it was extreme and outrageous. The plaintiff must also show severe emotional distress, and a causal link between such distress and the defendant's conduct. Intentional infliction of emotional distress is generally a difficult allegation to prove; in this case, however, Burr Oak's purported actions are so egregious that the plaintiffs likely have at least a fighting chance.

      The sheer size of the cemetery presents investigators with a daunting challenge. The graveyard spans 150 acres and includes over 100,000 grave sites. Dart said that examining the entire property is like trying to read hieroglyphics.

      Towns's financial history indicates that she was having financial trouble. She has filed for bankruptcy twice since 2001, and has several tax liens against her. Those close to her told local media outlets that her husband has held several jobs in the past few years.

      Towns and three other employees are being held at the Cook County jail, each charged with one felony count of dismembering a body.

      African-American landmark

      Burr Oak was the Midwest's first African-American cemetery, and is the final resting place of Emmett Till, whose murder in 1955 helped accelerate the civil rights movement. Even Till's memory wasn't spared from the scheme; his original casket, which was supposed to be preserved for a memorial, was found rusted out in a cemetery shack.

      Other notables at Burr Oak include musicians Willie Dixon, Dinah Washington, and Otis Spann; and Negro Leagues Baseball players Jimmie Crutchfield and John Donaldson, according to

      The incident is the latest reminder that scandal and greed can affect even the most sacred contracts. In 2002, over 200 bodies were found at a Georgia crematorium, shocking families who thought the bodies had long ago been cremated. In 2006, six funeral homes in Brooklyn were found to be illegally harvesting organs from bodies stored at the facilities.

      Because the crime scene in Chicago is rapidly expanding, family members will have to wait until at least Thursday to enter the cemetery grounds. Those with questions can contact the Cook County sheriff at 800-942-1950.

      Chicago Cemetery Accused of Desecrating Bodies: Chicago politicians used to live and die by the graveyard vote, but the dead no longer get much respect in ...
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      California Sues Dozens Of Mortgage Rescue Scammers

      21 individuals, 14 companies targeted by Attorney General's office

      As part of a massive federal-state crackdown on loan modification scams, Attorney General Edmund G. Brown Jr. at a press conference today announced the filing of legal action against 21 individuals and 14 companies who ripped off thousands of homeowners desperately seeking mortgage relief.

      Brown is demanding millions in civil penalties, restitution for victims and permanent injunctions to keep the companies and defendants from offering mortgage-relief services.

      "The loan modification industry is teeming with confidence men and charlatans, who rip off desperate homeowners facing foreclosure," Brown said. "Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn't provide an ounce of relief."

      Brown filed five lawsuits as part of "Operation Loan Lies," a nationwide sweep of sham loan modification consultants, which he conducted with the Federal Trade Commission, the U.S. Attorney's office and 22 other federal and state agencies. In total, 189 suits and orders to stop doing business were filed across the country.

      Following the housing collapse, hundreds of loan modification and foreclosure-prevention companies have cropped up, charging thousands of dollars in upfront fees and claiming that they can reduce mortgage payments. Yet, loan modifications are rarely, if ever, obtained. Less than 1 percent of homeowners nationwide have received principal reductions of any kind.

      Brown has been leading the fight against fraudulent loan modification companies. He has sought court orders to shut down several companies including First Gov and Foreclosure Freedom and has brought criminal charges and obtained lengthy prison sentences for deceptive loan modification consultants.

      Brown's office filed the following lawsuits in Orange County and U.S. District Court for the Central District (Los Angeles):

      • U.S. Homeowners Assistance, based in Irvine;

      • U.S. Foreclosure Relief Corp and its legal affiliate Adrian Pomery, based in the City of Orange;

      • Home Relief Services, LLC, with offices in Irvine, Newport Beach and Anaheim, and its legal affiliate, the Diener Law Firm;

      • RMR Group Loss Mitigation, LLC and its legal affiliates Shippey & Associates and Arthur Aldridge. RMR Group has offices in Newport Beach, City of Orange, Huntington Beach, Corona, and Fresno;

      • United First, Inc, and its lawyer affiliate Mitchell Roth, based in Los Angeles.

      U.S. Homeowners Assistance

      Brown on Monday sued U.S. Homeowners Assistance, and its executives--Hakimullah "Sean" Sarpas and Zulmai Nazarzai--for bilking dozens of homeowners out of thousands of dollars each.

      U.S. Homeowners Assistance claimed to be a government agency with a 98 percent success rate in aiding homeowners. In reality, the company was not a government agency and was never certified as an approved housing counselor by the U.S. Department of Housing and Urban Development. None of U.S. Homeowners Assistance's known victims received loan modifications despite paying upfront fees ranging from $1,200 to $3,500.

      US Foreclosure Relief Corporation

      Brown last week sued US Foreclosure Relief Corporation, H.E. Service Company, their executives--George Escalante and Cesar Lopez--as well as their legal affiliate Adrian Pomery for running a scam promising homeowners reductions in their principal and interest rates as low as 4 percent. Brown was joined in this suit by the Federal Trade Commission and the State of Missouri.

      Using aggressive telemarketing tactics, the defendants solicited desperate homeowners and charged an upfront fee ranging from $1,800 to $2,800 for loan modification services. During one nine-month period alone, consumers paid defendants in excess of $4.4 million. Yet, in most instances, defendants failed to provide the mortgage-relief services. Once consumers paid the fee, the defendants avoided responding to consumers' inquiries.

      In response to a large number of consumer complaints, several government agencies directed the defendants to stop their illegal practices. Instead, they changed their business name and continued their operations--using six different business aliases in the past eight months alone.

      Home Relief Services, LLC

      Brown Monday sued Home Relief Services, LLC., its executives Terence Green Sr. and Stefano Marrero, the Diener Law Firm and its principal attorney Christopher L. Diener for bilking thousands of homeowners out of thousands of dollars each.

      Home Relief Services charged homeowners over $4,000 in upfront fees, promised to lower interest rates to 4 percent, convert adjustable-rate mortgages to low fixed-rate loans and reduce principal up to 50 percent within 30 to 60 days. None of the known victims received a modification with the assistance of the defendants.

      In some cases, these companies also sought to be the lenders' agent in the short-sale of their clients' homes. In doing so, the defendants attempted to use their customers' personal financial information for their own benefit.

      Home Relief Services and the Diener Law Firm directed homeowners to stop contacting their lender because the defendants would act as their sole agent and negotiator.

      RMR Group Loss Mitigation Group

      Brown Monday sued RMR Group Loss Mitigation and its executives Michael Scott Armendariz of Huntington Beach, Ruben Curiel of Lancaster, and Ricardo Haag of Corona; Living Water Lending, Inc.; and attorney Arthur Steven Aldridge of Westlake Village as well as the law firm of Shippey & Associates and its principal attorney Karla C. Shippey of Yorba Linda - for bilking over 500 victims out of nearly $1 million.

      The company solicited homeowners through telephone calls and in-person home visits. Employees claimed a 98 percent success rate and a money-back guarantee. None of the known victims received any refunds or modifications with the assistance of defendants.

      For example, in July 2008, a 71-year old victim learned his monthly mortgage payments would increase from $2,470 to $3,295. He paid $2,995, yet received no loan modification and no refund.

      Additionally, RMR insisted that homeowners refrain from contacting their lenders because the defendants would act as their agents.

      United First, Inc.

      On July 6, 2009, Brown sued a foreclosure consultant and an attorney--Paul Noe Jr. and Mitchell Roth--who conned 2,000 desperate homeowners into paying exorbitant fees for "phony lawsuits" to forestall foreclosure proceedings.

      These lawsuits were filed and abandoned, even though homeowners were charged $1,800 in upfront fees, at least $1,200 per month and contingency fees of up to 80 percent of their home's value.

      Noe convinced more than 2,000 homeowners to sign "joint venture" agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.

      After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

      United First charged homeowners approximately $1,800 in upfront fees, plus at least $1,200 per month. If the case was settled, homeowners were required to pay 50 percent of the cash value of the settlement. For example, if United First won a $100,000 reduction of the mortgage debt, the homeowner would have to pay United First a fee of $50,000. If United First completely eliminated the homeowner's debt, the homeowner would be required to pay the company 80 percent of the value of the home.

      Tips for Homeowners

      Brown's office issued these tips for homeowners to avoid becoming a victim:

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

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

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

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

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

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

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

      If you believe you have been the victim of a mortgage-relief scam in California, please contact the Attorney General's Public Inquiry Unit at

      California Sues Dozens Of Mortgage Rescue Scammers...
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      Surplus Goods Business Opportunity Scammers Settle With FTC

      Project Biz Op Flop targets work-at-home schemes

      Scammers who duped consumers into paying more than $30 million for bogus business opportunities have settled Federal Trade Commission (FTC) charges that their deceptive claims violated federal law.

      The settlements prohibit future violations by the defendants, who promised consumers that they would receive access to overstocked merchandise, expert training in the surplus goods industry, and substantial income.

      Among those who settled with the FTC are Sheldon and Judith Takala Fidler and nine companies they controlled: World Traders Association, Inc., United Traders Association, Inc., International Merchandise Group, Inc., Trans-Global Connections, Inc., Musketeer Partners, Inc., Fulfillment Options, Inc., International Associates Worldwide, Inc., Magna Delta, LLC, and Office Options, LLC.

      The FTC filed suit in February 2005 as part of "Project Biz Opp Flop," a crackdown on deceptive business opportunity and work-at-home schemes. The settlements entered last April ban the defendants from the business opportunity and franchise industries and prohibit them from misrepresenting any goods or services.

      The settlement orders also bar the defendants from selling or otherwise benefiting from personal information about customers who paid them before the orders were entered. In addition, the orders impose a $30.7 million judgment, which is suspended based on the defendants' inability to pay.

      In March 2007, in a related criminal proceeding instituted by the United States Attorneys Office for the Central District of California, Sheldon Fidler pleaded guilty to two counts of mail fraud and received a 60-month prison sentence; he is currently in jail. Judith Fidler pleaded guilty to one count of criminal contempt and received two years of probation.

      Surplus Goods Business Opportunity Scammers Settle With FTC...
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      Brookstone Pharmaceuticals Recalls Concentrated Acetaminophen Drops

      July 15, 2009
      Brookstone Pharmaceuticals is recalling all lots of Concentrated Acetaminophen Drops (NDC#42192-504-16) in 16 ounce (473 ml) bulk containers.

      This 16oz container is comparable to the size generally used to package regular strength acetaminophen liquid preparations. This aspect of the product coupled with the absence of an integrated dosage delivery device is a contributing factor to possible dosing errors, especially inadvertent overdosing. Brookstone has distributed 344 bottles nationally and has donated 5301 bottles to charity for international distribution.

      Over dosage of acetaminophen may result in liver toxicity, kidney damage, and blood disorders. FDA is aware of several medication error reports that document life-threatening or fatal adverse events in children less than three years of age, due to confusion associated with the concentrated versus regular strength acetaminophen liquid. Also, in a recent FDA advisory panel, it was recommended that one of the two strengths of acetaminophen should be removed from the market due to possible confusion which could result in overdosing.

      Brookstones concentrated acetaminophen contains acetaminophen 80 mg/0.8 mL. Regular strength acetaminophen elixir contains 160 mg/5 ml. The firm is recalling its product to the consumer level as a cautionary measure to minimize any confusion and potential risk to patients from dosing errors.

      Brookstone Pharmaceuticals has notified customers that it has voluntarily stopped manufacturing and shipping Concentrated Acetaminophen Drops in bulk containers and has also advised customers (wholesalers and hospitals) to quarantine and hold the product for return to Brookstone Pharmaceuticals for a full refund. Customers with questions about the recall may contact Brookstone Pharmaceuticals, LLC at 1-800-541-4802, option 2. Brookstone has not received any adverse events associated with this product but due to recent advisory panel concerns, Brookstone has taken voluntary action.

      Customers who have this product in their possession should stop using it immediately. Any adverse events that may be related to the use of this product should be reported to the FDA's MedWatch Program by phone at 1-800-FDA-1088 or by fax at 1-800-FDA-0178 or by mail at MedWatch, HF-2, FDA, 5600 Fishers Lane, Rockville, MD 20852-9787.

      Brookstone Pharmaceuticals Recalls Concentrated Acetaminophen Drops...
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      Class Action Lawsuit against DirecTV Can Proceed

      Customers sue over unpermitted "termination fees"

      A class action lawsuit alleging that DirecTV imposes early "termination fees" of up to $480 on customers who cancel the service--often charging the customer's bank account or credit card directly without their permission--has been cleared to proceed by a California Superior Court judge.

      The complaint, filed in Los Angeles Superior Court in September 2008 by Los Angeles resident Kathy Grenier, claims that when Grenier cancelled her DirecTV contract due to a malfunctioning receiver, she was hit with a $240 termination fee, withdrawn directly from her checking account. Grenier's suit was later consolidated with another suit brought by fellow California residents Amy Imburgia and Marlene Mecca.

      That suit, Imburgia, et. al, v. DirecTV, Inc., alleges that DirecTV failed to disclose that it had mandatory contract "terms of service," and that cancelling the service ahead of time would incur termination fees. DirecTV, much like cell phone companies, would also use instances of replacing equipment or making changes to the service to automatically extend the customer's contract. The suit alleges that the practices were not disclosed to customers beforehand.

      "This is a major step forward in our mission to obtain justice for California consumers cheated by DirecTV," said Consumer Watchdog founder Harvey Rosenfield, who, along with Litigation Director Pamela Pressley, is one of the attorneys in the case.

      "California consumers who continue to have their bank accounts plundered without their consent by DIRECTV deserve their day in court, and the court's recent ruling will allow the plaintiffs to move forward with uncovering and exposing the extent of DirecTV's deceptive practices," said Ms. Pressley.

      According to Consumer Watchdog, DirecTV had requested that the California case be stayed while federal cases against DirecTV, filed in both California and other states, were considered. Under the tactic of preemption, companies will often prefer to fight battles on the federal level in order to block stronger state laws from taking effect.

      DirecTV imposes early "termination fees" of up to $480 on customers who cancel the service often charging the customer's bank account or credit card direct...
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      Financial Illiteracy Puts Consumers At Banks' Mercy, Group Says

      Banks count on customers triggering overdraft charges

      It's hard to believe the nation's banks could be in such rocky financial condition, considering the amount of money they collect from their customers in the form of fees.

      Charles, of Cary, North Carolina, says he's been a customer of a local bank for five years, and claims to have spent more than $3,000 per year on overdraft fees.

      "My last overdraft, which I ran 29 cents over in the account, cost me $200," Charles told This is highway robbery and they know it and I know it. It's a shame no one has not put a stop to this."

      If someone were to put a stop to it, banks might be even less profitable since they clearly count on customers overdrawing their accounts and triggering overdraft fees. And those $35 fees can add up to some pretty sizable sums.

      In fact, data from the federal government estimates that U.S. banks will collect more than $38 billion in fees this year from consumers who overdraw their checking accounts. Banks will collect billions more from other account penalties, including credit card late fees.

      Moebs Services, which collected the information, reports that the average overdraft fee has risen to $27.50 this year, up from $25 last year. A 2008 study from the Federal Deposit Insurance Corp. found that insufficient funds and overdraft fees account for 74 percent of consumer bank service charges.

      A 2008 study from showed an increase of 2.5 percent in bounced check fees from the year before, up to nearly $30. Consumers also pay more at the ATM machine, with the average ATM fee now nearly $2, an increase of more than 10 percent in one year.

      With all of these changes, consumers are feeling the pinch and the Federal Reserve is looking at additional regulations and Congress is considering new legislation. The Center for Economic and Entrepreneurial Literacy reminds consumers that financial forethought can help lessen the sting.

      "Economic illiteracy is at the heart of our current economic crisis," said James Bowers, managing director for CEEL. "As banks continue to raise account and overdraft fees, it is more important than ever to read the fine print, create and stick to a family budget and learn all the facts before taking on new financial burdens, like opening a credit card account or purchasing a car. Unfortunately, CEEL's recent survey shows that many Americans don't understand basic facts about economics and many don't have the tools to manage their personal finances."

      A December 2008 study from CEEL highlights the need for increased education on personal finance and economic issues. The national survey showed what the group calls a disturbing number of Americans are unable to answer simple questions about borrowing, interest rates and even basic math. Many respondents also admitted to making poor decisions with their own finances.

      Highlights from the survey include:

      • 54 percent of respondents could not identify what a subprime mortgage was.

      • 56 percent of respondents could not identify FICO score as the most important factor in getting a loan.

      • 65 percent of respondents could not identify what would remain if you subtracted 25 percent from 8. One in three respondents could not identify what 1 percent of 50,000 was.

      • 75 percent did not know that when in need of short-term emergency cash, bouncing a check costs more than wire transfers, credit card advances, and short-term payday loans.

      • Half of respondents have overdrafted their checking account at one time, while a third of respondents have paid a bill late in the past year.

      "It is clear that we need to increase personal finance education at all ages so we have better informed employees, borrowers, and voters," Bowers said.

      Financial Illiteracy Puts Consumers At Banks' Mercy, Group Says...
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      New York Settles Astroturfing Charges With Plastic Surgeon

      Employees posted bogus reviews online

      There are laws against false advertising, even on the Internet. In New York, Attorney General Andrew Cuomo has reached a settlement with a plastic surgeon over fake consumer reviews published online.

      Under the settlement, the cosmetic surgery company Lifestyle Lift will stop publishing anonymous positive reviews about the company to Internet message boards and other Web sites, and will pay $300,000 in penalties and costs to the State of New York. The case is believed to be the first in the nation aimed at combating "astroturfing," a growing problem on the Internet.

      According to Cuomo, Lifestyle Lift employees published positive reviews and comments about the company to trick Web-browsing consumers into believing that satisfied customers were posting their own stories.

      "These tactics constitute deceptive commercial practices, false advertising, and fraudulent and illegal conduct under New York and federal consumer protection law," Cuomo said.

      He says the settlement marks a strike against the growing practice of "astroturfing," in which employees pose as independent consumers to post positive reviews and commentary to Web sites and Internet message boards about their own company.

      "This company's attempt to generate business by duping consumers was cynical, manipulative, and illegal," said Cuomo. "My office has and will continue to be on the forefront in protecting consumers against emerging fraud and deception, including astroturfing, on the Internet."

      Lifestyle Lift has more than 40 locations across the U.S. The company engaged in a concerted effort to bombard Internet message boards with positive stories about themselves.

      According to the complaint, Lifestyle Lift's president believed that negative Internet postings had significantly hurt the companys reputation and thought the success of the company hinged on controlling messages posted online. Company employees were allegedly directed to create accounts with various Internet message boards and pose as satisfied customers of Lifestyle Lift. Employees also reportedly attacked legitimate message board posters who criticized Lifestyle Lift and tried to get those posts removed from message boards.

      Internal emails discovered by Cuomo's investigation show that Lifestyle Lift employees were given specific instructions to engage in this illegal activity. One e-mail to employees said: "Friday is going to be a slow day--I need you to devote the day to doing more postings on the web as a satisfied client." Another internal email directed a Lifestyle Lift employee to "Put your wig and skirt on and tell them about the great experience you had."

      In addition to posting on various Internet message board services, Cuomo said Lifestyle Lift also registered and created stand-alone Web sites, such as, designed to appear as if they were created by independent and satisfied customers of Lifestyle Lift.

      The sites offered positive narratives about the Lifestyle Lift experience. Some of these sites purported to offer forums for users to add their own comments about Lifestyle Lift. In reality, however, Cuomo says Lifestyle Lift either provided all the "user comments" themselves, or closely monitored and edited third-party comments to skew the discussion in favor of Lifestyle Lift.

      Under the terms of the settlement, Lifestyle Lift employees will no longer pose as consumers when publishing on the Internet. The company will not promote Lifestyle Lift's services on the Internet without clearly and conspicuously disclosing that they are responsible for the content. The company will also pay $300,000 in penalties and costs to New York State.

      New York Settles Astroturfing Charges With Plastic Surgeon...
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      Pre-Paid Card May Be Useful Anti-Fraud Weapon

      A few fees may turn out to be a bargain

      Ordering a product advertised in an infomercial, or pitched by a telemarketer, can be risky business. Time after time consumers who thought they were getting something free, or at low cost, were outraged to discover their credit cards had been charged for products and services they didn't ask for.

      Vicky, of Glendale, Arizona, discovered that sad fact when she agreed to pay $3.95 "shipping and handling" for a CD that she thought would show her how to land all sorts of government grants.

      "Little did I know that would continue to bill my credit card $74.95 per month for the rest of my life," Vicky told

      Ellice, of Derby, Kansas, said she had a similar experience when she ordered one Video Professor CD for $6.95.

      "There wasn't an invoice, statement or anything else in the first box to know what was coming or if I needed to cancel," she said. "I received two and thought, how nice, but didn't order them. Sure enough on my next Discover bill I was charged $6.95 and $189.91 twice! How can infomercials get away with this?"

      It's a never-ending story. The kinds of companies that pitch their products on infomercials and in Internet pop-up ads seem predisposed to abusing their customers. Not content selling the consumer the inexpensive item that they want, these marketers upsell more expensive items, hiding details of the transaction in fine print - or make it up altogether.

      Once a marketer has a consumer's credit card information, they can place as many charges on the account as they think they can get away with. For every consumer who jumps through all the hoops to get their money back, 50 more give up in frustration or simply let it slide.

      But there is a way to prevent this--aside from not ordering this stuff in the first place. If you feel you must have the gadget being hawked on late night cable, consider paying for it with a pre-paid debit card.

      Pre-paid debit cards are designed for people with poor or no credit and many come laden with fees of one sort or another. It's certainly not the kind of card you want to use on a day to day basis if you don't have to, but in cases where safety is an issue, it might be worth paying a small fee or two.

      The one advantage prepaid debit cards have over bank debit cards is a limit to what can be purchased with them. With a bank debit card (which should never, ever be used in online or telemarketer transactions), the bank will honor any purchase, and if you don't have enough money in your account, it charges a hefty fee. It also expects you to give back the money it "loaned" you.

      Most prepaid debit cards don't work that way. If the amount of your purchase exceeds the money on your card, the purchase is denied.

      If you bought the advertised widget for $19.95 with your card that only had $40 on it, and the next month the company tried to say you purchased something for $79.95 and tried to put that on your card, the transaction would be cancelled.

      That said, pre-paid debit cards can be very expensive once you start adding up all the fees, but every card is different, so it pays to shop around. Look for a card that does not have a monthly fee (many cards charge between $5-$9 each month).

      "The best thing for a consumer to do when considering a pre-paid card is to compare the fee structures of many of the leading cards in the market and determine which structure best fits the way they plan to use the card," Ben Woolsey, director of marketing and consumer research at, told

      The card issuer has to make money some way, so look for a card that charges fees for activities you don't plan to use very much. For example, if you're not going to use it at ATMs, it's OK to get a card that charges a big fee for ATM transactions.

      There is usually a fee associated with putting money on the card and many charge a small transaction fee, but that might be acceptable if you think you'll use the card just once a month. By using a pre-paid debit card for "risky" transactions, those fees might seem very small indeed.

      Pre-Paid Card May Be Useful Anti-Fraud Weapon...
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      Class Action Filed Against Intel Over "Inflated" Battery Estimates

      Says Intel profited off simple test

      A class action lawsuit filed against Intel claims that the chip maker artificially inflated laptop battery lifespans, fraudulently enticing consumers to buy machines equipped with Intel chips.

      The suit was filed late last month in California by veteran class action firm Girard Gibbs. and claims that Intel cited a test known as MobileMark2007 to inflate battery life estimates and entice consumers to pay more for their laptops. Some consumers have found their battery life to be as little as half the amount advertised. The suit charges that Intel "wrongly increased its profits from the sale of laptops with Intel processors."

      MobileMark came into widespread use several years ago. It measures battery life while a machine is performing a number of tasks, including playing a DVD or creating a spreadsheet. The test was developed by the Business Applications Performance Corporation (BAPCo), a nonprofit trade group whose membership is made up mostly of laptop and chip manufacturers. Indeed, BAPCo counts among its members Intel, one of the very companies who would stand to profit from the use of the MobileMark test.

      Critics contend that the test treats battery life as a one-size-fits-all proposition. MobileMark, among other things, assumes that the user has his or her screen brightness set to extremely low levels--20% as bright as the average consumer's--and that accessories like Bluetooth aren't running. The test does include a "productivity" portion, in which a robot uses programs like Excel and e-mail. That test, however, doesn't include some of the most energy-draining applications, like iTunes and Windows Media Player.

      Advanced Micro Devices (AMD), a well-known manufacturer of processors and other technology, started the ball rolling when it suggested that laptop batteries often don't live up to their advertised lifespan. The company contends that tests used to provide the estimates--including MobileMark--don't account for the length or intensity of use while the machine is unplugged. AMD also complained that, when using the MobileMark test, Intel-equipped computers invariably have longer battery lives than machines containing AMD processors.

      Some, including AMD, have suggested that computer manufacturers perform two separate tests: one for "resting time," when the computer is turned on but not in use, and one for "active time," when the machine is being engaged by its owner. This would allow active laptop users to adjust their expectations based on how much they use their machine. Such user-specific statistics are hardly without precedent; for years, car manufacturers have provided both highway and city estimates for fuel consumption, allowing drivers to base predictions on their own pattern of behavior.

      Although the suit has already been filed, Girard Gibbs is still looking for consumers affected by unexpectedly short battery lives. Affected consumers can contact the firm via their Web site.

      Class Action Filed Against Intel Over "Inflated" Battery Estimates: The suit charges that Intel "wrongly increased its profits from the sale of laptops wit...
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      Illinois Broker Accused Of Running $10 Million Ponzi Scheme

      Targeted Hispanic investors, state charges

      July 12, 2009
      Illinois Attorney General Lisa Madigan has secured the indictment of a former Chicago resident who allegedly operated a Ponzi scheme that defrauded 67 investors out of more than $10 million.

      "Our office is committed to protecting the financial safety of Illinoisans," said Madigan. "It is imperative that we expose and penalize criminals who would seek to destroy the livelihood of so many hard-working members of our community."

      According to the indictment, Raul Marrero, 37, advertised fabricated investment opportunities, including real estate ventures involving commercial strip malls, on Spanish language radio shows.

      Beginning in 2005 and continuing until at least January 2008, Marrero allegedly solicited more than $10 million through his three Oak Brook Terrace, Ill.-based companies, Reeden Capital Group, Multi-Family Three LLC, and Reeden Real Estate. Marrero allegedly used the investment funds to pay off other investors and cover business and personal expenses.

      He also allegedly secured an estimated $1.9 million for his own personal profit.

      The grand jury indicted Marrero on five counts of theft of over $100,000, a Class One felony, three counts of theft of over $10,000, a Class Two felony, and nine counts of securities fraud, a Class Two felony.

      The highest charge, Class One felony theft, carries a maximum penalty of 15 years served in the Illinois Department of Corrections.

      Illinois Broker Accused Of Running $10 Million Ponzi Scheme...
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      More Charges Filed, Pit Bulls Rescued In Dogfighting Busts

      Feds charge seven with promoting illegal activities

      By Lisa Wade McCormick

      July 10, 2009
      Federal authorities have filed additional charges--and rescued hundreds of more dogs--in connection with Wednesday's multistate busts of dog fighting rings.

      Gruesome details of these barbaric contests and the treatment of the dogs continue to surface in this investigation, which the Humane Society of the United States (HSUS) calls the "largest simultaneous raid of multiple dogfighting operations" in the country's history.

      In this massive crackdown--triggered by a Humane Society of Missouri investigation--authorities have now charged 26 people for their roles in conspiracy to promote and participate in illegal dog fights and rescued more than 350 dogs in Missouri, Illinois, Iowa, Texas, Oklahoma and Arkansas.

      Most of the dogs rescued from this vicious blood sport are Pit Bull Terriers.

      "Dog fighting inflicts serious injuries and death upon dogs that are bred and trained to be dangerously aggressive," said Matt Whitworth, Acting United States Attorney for the Western District of Missouri.

      "Like many dog owners, I am appalled that such a cruel and inhumane activity occurs in our state. We will vigorously prosecute those who illegally practice this so-called sport."

      The latest defendants charged in this investigation -- which included assistance from various federal and state law enforcement agencies -- were named in an indictment unsealed on Wednesday in the Western District of Missouri.

      In that action, federal authorities charged seven people from Missouri, Iowa, and Nebraska, for their involvement in dog fighting operations and illegal gambling and bookmaking activities:

      • Rick P. Hihath, 55, of St. Joseph, Missouri, who works for a state school for the handicapped;

      • Cris E. Bottcher, 48, of Gilman City, Missouri, a registered nurse at Harrison County Community Hospital in Bethany, Missouri;

      • Julio Reyes, 28, of Tecumseh, Nebraska;

      • Jill D. Makstaller, 43, of Perry, Iowa;

      • Zachary R. Connelly, 32, of Ogden, Iowa;

      • Kevin P. Tasler, 51, of Jefferson, Iowa;

      • Ryan J. Tasler, 42, of Woodward, Iowa, who works for the Madrid Community School District

      The indictment alleges that from January 15 to May 8, 2009, the defendants participated in a conspiracy to travel across state lines to sponsor a dog in an animal fighting venture and participated in illegal gambling and bookmaking activities.

      According to the indictment, the defendants "acquired, bred, and trained" Pit Bull Terriers for the purpose of entering them in animal fighting ventures, and then denied the dogs adequate and humane medical treatment for the injuries they suffered during the fights.

      The indictment further alleges the defendants "routinely and inhumanely" destroyed dogs that became severely injured during the fights by shooting them in the head. The defendants then threw the carcasses in the river or burned them in a barrel, authorities allege.

      The indictment also charges Hihath and Bottcher with two counts of sponsoring or exhibiting a Pit Bull Terrier in an animal fighting venture.

      In addition, Makstaller, Reyes, Zachary Connelly, Ryan Tasler and Kevin Tasler are each charged with one count of transporting animals for participation in a dog fight.

      In painstaking detail, the indictment cites dog fights that allegedly took place at Bottcher's farm in Gilman City, Missouri:

      Two fights allegedly occurred on February, 28, 2009. Hihath fought a dog "Black Sheep" and Bottcher entered a dog named "Pope Joe" in the match fight. According to the indictment, Bottcher and Hihath built the dog fighting pit for the contest. Hihath refereed the match when Bottcher fought "Pope Joe." The two men also placed bets on the fight, the indictment alleges. Three dog fighters from central Iowa allegedly attended this fight: Kevin Tasler, Ryan Tasler and Connelly. The indictment also states that Ryan Tasler was the spongeman, meaning he provided sponges to the dogs handlers to wipe blood off the animals or cool them down during the fights;

      On April 25, 2009, 12 roll fights allegedly occurred at Bottcher's farm. These are shorter fight between two dogs and are used to build the dogs' confidence and expose the animals to a variety of fighting styles, authorities said. Roll fights are viewed as a way to test younger dogs and usually dont involve gambling. According to the indictment, Bottcher held those fights in an outbuilding on the farm. Hihath allegedly promoted the fight and had at least two dogs in the contest. The indictment states that several dog fighters from Iowa attended and participated in the fight, including Kevin Tasler and Makstaller. Reyes, a dog fighter from Nebraska, also attended the fights and transported two dogs to participate in the contests. Hihath allegedly handled a dog in five of the 12 rolls, while Bottcher allegedly handled a dog in four of the rolls, the indictment states. At the end of the fight, Bottcher allegedly used a .22-caliber rifle to shoot and kill two dogs that fought in roll fights that night but did not perform to the owners expectations. According to the indictment, Bottcher shot each animal twice in the head and then placed the carcasses in plastic containers outside of the garage;

      On May 8, 2009, two dog fights allegedly occurred. According to the indictment, Bottcher held the fights in an outbuilding and was the handler for his dog, "Pope Joe," for the first fight of the night. Hihath allegedly promoted the fights, handled the bet monies, and refereed the second fight. Bottcher and Hihath allegedly built the pit for the dog fight. Authorities said more than 13 dogs were seen on the Bottcher's property. Four dog fighters from Iowa--Connelly, Ryan Tasler, Kevin Tasler and Makstaller--attended the fights, according to the indictment. Connelly allegedly handled his dog, "Tommy," in the second fight that night. Markstaller refereed the first fight, the indictment states, and was the timekeeper for the second fight. Tasler was the timekeeper and spongeman for the first fight, according to the indictment. Reyes allegedly brought his dog from Nebraska and was the spongeman for the second fight. Bottcher, Hihath, Ryan Tasler, Kevin Tasler, Reyes, Connelly, and Makstaller allegedly placed bets during that fights.

      These charges coincide with legal action authorities in the Eastern District Court of Missouri took on Wednesday against five men for their involvement in illegal dog fighting ventures.

      "Forcing a dog to fight to its death is not a sport," said John V. Gillies, Special Agent in Charge of the St. Louis office of the Federal Bureau of Investigation (FBI). "There is nothing respectable about encouraging two animals to torture and dismember each other. Individuals who participate in dog fighting claim to care for the animals, but they don't hesitate to electrocute their helpless dog once it loses a fight and can no longer provide any financial benefit."

      If convicted, each of the defendants name in both cases face a maximum penalty of five years in prison and fines of up to $250,000 for each count.

      Federal authorities also filed motions seeking legal ownership of all the dogs rescued and placing the animals in the care and custody of the Humane Society of Missouri.

      "The Humane Society of Missouri provided initial information that led to this investigation," said Acting United States Attorney Michael Reap. "During the course of the investigation they also cared for animals involved when possible, and they are presently designated to provide continuing care for the seized dogs."

      Animal behavior experts with the Humane Society of Missouri and other organizations will also evaluate each of the dogs rescued to see if they can be adopted.

      Organized dogfighting is now a felony in all 50 states, according to the HSUS. But an estimated 40,000 people, HSUS officials said, still follow the barbaric dogfighting circuits across the U.S.--and an additional 100,000 meet on neighborhood streets, alleys and hideaways.

      More about pets ...

      More Charges Filed, Pit Bulls Rescued In Dogfighting Busts...
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      Texas Sues "Credit Repair" Firm

      Promises made and broken, state says

      Another so-called credit repair operation has drawn the ire of law enforcement officials. In Texas, Attorney General Greg Abbott has charged a Houston-based credit repair firm with violating the Texas Deceptive Trade Practices Act.

      The state's enforcement action names Jubilee Financial Solutions LP, also known as The Credit Card Solution (TCCS)--a self-proclaimed "debt invalidation" business--its parent company, Jubilee Financial Management LLC, and the companies' owner, Robert Mitchell Lindsey.

      Court documents filed by the attorney general requested an asset freeze, which was granted by a Harris County district judge. The state sought the asset freeze because investigators believe the defendants are improperly withholding $500,000 in customers' payments that should have been applied to debt relief services.

      Through various Web sites--including defendants claimed they could eliminate credit card and other debts by helping customers fight credit reporting agencies, dispute debts and sue debt collectors. The defendants also promised access to legal services, which they claimed could yield monetary damages from lawsuits against debt collectors.

      Marketing materials obtained by state investigators shows the defendants claimed their "debt invalidation" program can eliminate customers' debt in as little as 12 to 18 months by relying upon federal consumer protection laws. In videos on the defendants' Web site, Lindsey claims that TCCS has "gotten rid of $150 million of credit card debt."

      According to the state's enforcement action, the defendants are unlawfully operating an unregistered credit services organization (CSO). Under the Texas Credit Services Organization Act, CSOs must register with the Secretary of State and obtain a surety bond or surety account. The defendants have done neither.

      TCCS also offers an Affiliate Information Package online, which gives interested individuals the opportunity to market and sell the defendants' services. However, court documents filed by the state indicate the defendants' affiliate program is subject to the Texas Business Opportunity Act, which requires vendors to register with the Secretary of State and obtain surety bonds or surety accounts. The states enforcement action charges TCCS with failing to comply with those requirements.

      The states enforcement action also charges the defendants with multiple Texas Deceptive Trade Practices Act (DTPA) violations, including not providing services as advertised and withholding information about goods or services when entering into a transaction.

      The state seeks penalties of up to $20,000 per violation of the DTPA, restitution for Texans harmed by the defendants' business practices, and attorneys' fees.

      In Texas, Attorney General Greg Abbott has charged a Houston-based credit repair firm with violating the Texas Deceptive Trade Practices Act. ...
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      Synthetic "Plugs" May Be Viable Replacement For Knee Cartilage

      Treatment may offer alternative to surgery

      Knee replacement surgeries have increased rapidly as the population has aged, creating backlogs, in some cases, at orthopedic clinics. But soon many of these surgeries might not be necessary.

      Investigators from Hospital for Special Surgery say they have shown that a biodegradable scaffold or plug can be used to treat patients with damaged knee cartilage. The study is unique in that it used serial magnetic resonance imaging (MRI) and newer quantitative T2 mapping to examine how the plug incorporated itself into the knee.

      "The data has been encouraging to support further evaluation of this synthetic scaffold as a cartilage repair technique," said Asheesh Bedi, M.D., a fellow in sports medicine and shoulder surgery at Hospital for Special Surgery who was involved with the study.

      Bedi performed analysis of MRI scans of patients primarily treated by Riley Williams, M.D., director of the Institute for Cartilage Repair at Hospital for Special Surgery.

      "The Trufit plug has been designed to have mechanical properties that are similar to cartilage and bone," Bedi said.

      Damage to so-called articular cartilage can occur in various ways, ranging from direct trauma in a motor vehicle accident to a non-contact, pivoting event on the soccer field.

      "Articular cartilage lacks the intrinsic properties of healingyou are essentially born with the articular cartilage that you have," Bedi said.

      Bedi and other surgeons at Hospital for Special Surgery are involved in ongoing studies to investigate the efficacy of the TruFit plug in treating primary cartilage defects as well.

      "What is unique about this study is that we have serial MRI with T2 mapping at various time points after surgery which allows us to really examine the natural history of plug incorporation," Bedi said.

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      FDA Approves Lung Cancer Drug

      Offers new approach to treatment

      The Food and Drug Administration (FDA) has approved Alimta (pemetrexed), the first drug available for maintenance therapy of advanced or metastatic lung cancer.

      Patients with cancer often receive maintenance therapy to prevent the disease from progressing after their tumor has shrunk or the disease has stabilized in response to chemotherapy. Alimta disrupts metabolic processes that are dependent on the B-vitamin folate, a necessary ingredient for cell reproduction.

      "This drug represents a new approach in the treatment of advanced non-small cell lung cancer," said Richard Pazdur, M.D., director, Office of Oncology Drug Products in the FDA's Center for Drug Evaluation and Research. "Typically, patients whose tumors respond to chemotherapy do not receive further treatment after four-to-six chemotherapy cycles. This study demonstrates an advantage in overall survival in certain patients who received Alimta for maintenance therapy.

      Non-small cell lung cancer has several subtypes, including squamous cell, large cell, adenocarcinoma and mixed histology cancers. In a 600-patient clinical trial, people with predominantly squamous cell cancer did not benefit from Alimta.

      But those with other subtypes of non-small lung cancer survived an average 15.5 months following treatment compared with 10.3 months for patients who received an inactive substance (placebo). All patients in the study received standard medical care.

      Reported adverse events included damage to blood cells, fatigue, nausea, loss of appetite, tingling or numbness in the hands and feet, and skin rash.

      Alimta initially was approved in 2004 for the treatment of patients with mesothelioma, a cancer frequently related to asbestos exposure. It was later approved for the treatment of patients with non-small cell lung cancer whose disease worsened on prior chemotherapy drugs and also as an initial therapy for advanced non-small cell lung cancer.

      Alimta is manufactured by Eli Lilly & Co. of Indianapolis.

      FDA Approves Lung Cancer Drug...
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      Feds Rescue 150 Pit Bulls in Dogfighting Raids

      Five Missouri men charged in multi-state investigation

      By Lisa Wade McCormick

      July 9, 2009
      Federal authorities today charged five Missouri men for their involvement in illegal dogfighting ventures and seized more than 150 Pit Bull Terriers in what the Humane Society of the United States (HSUS) calls the "largest simultaneous raid of multiple dogfighting operations" in the country's history.

      The action comes on the heels of an investigation triggered by the Humane Society of Missouri, which worked closely with several federal and state law enforcement agencies.

      HSUS officials said today's unprecedented raids and arrests in Missouri, Illinois, Iowa, Texas, Oklahoma and Arkansas put a dent in the vicious blood sport of dogfighting--an illegal industry that "thrives off the pain and suffering of dogs."

      "This intervention is a momentous victory in our ongoing battle to end the cruel, criminal dogfighting industry," said Wayne Pacelle, president and CEO of the HSUS. "With each raid we get one step closer to ending this cruel blood sport."

      Today's indictment--filed in the Eastern District Court of Missouri--charges the following five defendants:

      • Michael Morgan, a/k/a Missouri Mike, 38, Hannibal, Missouri, with two felony counts of conspiracy to commit federal offenses and one felony count of prohibitions against animal fighting ventures;

      • Robert Hackman, 55, Foley, Missouri, with two felony counts of conspiracy to commit federal offenses and two felony counts of prohibitions against animal fighting ventures;

      • Teddy Kiriakidis, a/k/a Teddy Bogart, 50, Leasburg, Missouri, with one felony count of conspiracy to commit federal offenses;

      • Ronald Creach, 34, Leslie, Missouri, with one felony count of conspiracy to commit federal offenses;

      • Jack Ruppel, 35, Eldon, Missouri, with two felony counts of conspiracy to commit federal offenses and two felony counts of prohibitions against animal fighting ventures.

      According to the indictment, the defendants established and ran various kennel operations to purchase, breed, train, condition, and develop Pit Bull Terriers for participation in illegal dogfighting competitions. Specifically, authorities allege that Hackman operated "Shake Rattle and Roll Kennel," Jack Ruppel operated "Ozark Hillbillys Kennel," Michael Morgan a/k/a "Missouri Mike" operated "Cannibal Kennel," and Ronald Creach operated "Hard Goodbye Kennel."

      The indictment also alleges that between January 2008 and June 2009 the defendants routinely and inhumanely abandoned, destroyed, and otherwise disposed of Pit Bull Terriers that lost fighting competitions, did not perform aggressively enough, or became injured, wounded, or disabled during these illegal contests.

      "Forcing a dog to fight to its death is not a sport," said John V. Gillies, Special Agent in Charge of the St. Louis office of the Federal Bureau of Investigation (FBI). "There is nothing respectable about encouraging two animals to torture and dismember each other. Individuals who participate in dog fighting claim to care for the animals, but they don't hesitate to electrocute their helpless dog once it loses a fight and can no longer provide any financial benefit."

      If convicted, the defendants face a maximum penalty of five years in prison and/or fines of up to $250,000 for each count.

      Federal authorities also filed motions seeking legal ownership of the dogs rescued and placing the animals in the care and custody of the Humane Society of Missouri.

      "The Humane Society of Missouri provided initial information that led to this investigation," said Acting United States Attorney Michael Reap. "During the course of the investigation they also cared for animals involved when possible, and they are presently designated to provide continuing care for the seized dogs."

      Animal behavior experts with the Humane Society of Missouri and other organizations will also evaluate each of the dogs rescued to see if they can be adopted.

      Organized dogfighting is now a felony in all 50 states, according to the HSUS. But an estimated 40,000 people, HSUS officials said, still follow the barbaric dogfighting circuits across the U.S.--and an additional 100,000 meet on neighborhood streets, alleys, and hideaways.

      Among the disturbing statistics reported by the HSUS about dogfights, which the organization calls a "sadistic contest:"

      • More than 250,000 dogs are placed in dogfighting pits each year;

      • Young children are sometimes present at these events, which can promote insensitivity to animal suffering, enthusiasm for violence, and a lack of respect for the law;

      • Illegal gambling is the norm at dogfights. Dog owners and spectators wager thousands of dollars on their favorites animals;

      • Authorities have found firearms and other weapons at dogfights because of the large amounts of cash present;

      • Dogfighting has been connected to other types of violence, including homicides. A Chicago Police Department study also showed that 65 percent of people charged with animal abuse crime--including dogfighting --were also charged with violent crimes against people.

      • Illegal drugs are often sold and used at dogfights.

      The HSUS now offers up to $5,000 for information leading to the arrest and conviction of anyone involved in animal fighting.

      More about pets ...

      Federal authorities today charged five Missouri men for their involvement in illegal dogfighting ventures and seized more than 150 Pit Bull Terriers....
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      Not a Scam, Insists

      Feds advise consumers to rely only on official government site for clunker voucher information

      Even before President Obama had signed the "cash for clunkers" bill, car dealers were jubilantly proclaiming the measure amounted to "cash on the hood" and consumer advocates were warning potential car buyers not to be taken in by fast-talking car salesmen -- or slickly-designed, official-looking Websites, which were already sprouting like weeds.

      Alarmed by the profusion of sites designed to collect consumers' identity and/or cash, the National Highway Traffic Safety Administration (NHTSA) issued a warning that consumers should not be deceived by official-seeming sites such as "Cash For Clunkers Headquarters," which claim to offer information on how to trade in your car. Sites that ask for personal information or offer a pre-registration opportunity should not be trusted, the agency said.

      "There's only one official site for the government, and that's NHTSA's website," said NHTSA press officer Eric Bolton. "Folks should go there and not rely on "cash for clunkers" sites on the internet as they are not official."

      This did not set well with the proprietors of, whose publicists were soon burning up the phone lines, basically insisting that NHTSA must be mistaken.

      "For some reason, consumer affairs (sic) published that our website may be one of these 'scam' sites and that is absolutely incorrect," emailed Erin Miller, an employee of HL Group, a New York public relations firm. Miller had been told before submitting the statement that a NHTSA spokesman had used the site her firm represents as an example of sites that consumers should be wary of -- and that that was the reason the site was named in the story.

      "Were seeing a lot of 'cash for clunkers' sites sprouting up around the WWW," said NHTSA's Bolton in a June 23 email to "Some want a lot of personal information, and talk about consumers being able to pre-register. Check out, for example. See the pre-register button."

      One entire column of the CashForClunkersHeadquarters site home page is devoted to gathering consumers' personal information.

      Generally-accepted practice in the publishing industry is to identify advertising and marketing content as such. While the "clunkers" site notes that it is not affiliated with the federal government, it presents itself as a site that works on behalf of consumers, when its apparent purpose is to gather, and presumably sell, "leads" to car dealers.

      In her statement and an earlier telephone conversation, Miller insisted that the "headquarters" site was working in conjunction with NHTSA and was a "legitimate consumer site."

      "Our organization contacted the NHTSA weeks before the launch of their website to offer our assistance to help inform the visitors of our website about where they can go to get more information. When the NHTSA launched their website we directed our visitors there to get more information. Since then we have continued to inform the public about new developments and we help them connect with retailers who can give them pricing information over the internet," she said.

      The site is operated by Level 5 Advertising, an advertising agency located in Dulles, Va. The agency's Web site consists of a single page and provides no further information about the company.

      The official site, Car Allowance Rebate System (CARS) is the latest iteration of the plan to stimulate the auto industry through convincing buyers to trade in their Humvees for eco-friendly models. The Congressional Budget Office (CBO) has said the bill could jumpstart sales of up to 150,000 cars.

      Not a Scam, Insists...
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      New Credit Rules Bring Unintended Consequences

      Credit card companies adapting, but so are consumers

      In the last two weeks credit card customers--from Chase to Bank of America to Capital One--have complained loudly about sudden changes in terms. Some have seen interest rates go from eight percent to 18 percent and higher. Others have been told their minimum monthly payments will more than double.

      Much of this is occurring in advance of the effective date of the Credit Card Holders Bill of Rights, signed into law in May. This legislation, aimed at curbing long-standing abuses, appears to be the catalyst for sudden credit industry changes, according to both consumer groups and banking industry insiders.

      "You've seen a lot of credit card companies already starting to raise their interest rates," said Ken Lin, founder and CEO of Credit Karma, a provider of credit reports and scores. "With default rates over 10 percent, credit card companies are trying to get ahead of the curve before the Credit Card Act takes effect."

      Lin says credit card companies likely would have eventually taken a number of these steps to protect themselves in the new economic environment, but the Credit Card Act prompted them to act more quickly. He points to a number of what he calls "unintended consequences."

      Under the new law, creditors can't raise interest rates on an existing balance unless a person is more than 60 days late on a payment. Creditors can only increase your APR on purchases made after that. But, he says, theres an unintended consequence.

      "Since there isn't a limit on interest rates, creditors can quadruple your existing APR for the future purchases if they notify you in advance about a change to the account terms," Lin told

      Also under the new law, credit companies cannot issue credit cards to people under the age of 21 unless they can prove that they have the means to repay the debt, or can get a co-signer.

      So people under 21, Lin says, will use prepaid cards or secured credit cards to buy things. In the short term that might be healthy, he says, but over time it will reduce their ability to build a credit history.

      The Credit Card Holders' Bill of Rights also requires creditors to provide a grace period for payments even if the person takes advantage of a promotional rate balance or deferred interest rate balance. The unintended result, he says is that consumers could see higher annual fees and increased minimum payments.

      Over the years consumers have complained bitterly about "universal default," the practice of credit card companies raising a consumer's rate--not because they are late paying their credit card bill--but late on another, totally unrelated bill.

      Consumers said that was unfair and Congress agreed, basically outlawing universal default. Lin calls that the Act's biggest, most far-reaching impact.

      "People with marginal credit simply arent going to get access to credit any more and everyone else is going to be paying a little bit more," Lin said. "I know people are annoyed by this, but statistics bear out that if youre defaulting on one credit card, youll probably be defaulting on another one soon."

      Even people with good credit often feel like they are being jerked around by their credit card company. Many a complaint to begins with the words "I have never been late on a payment..." Lin says if you have a low interest rate, having good credit and a clean payment record might not matter.

      "There's a segment of consumers whose rates are being raised simply because of the environment we're in," he said. "Credit card companies are looking at an average default rate of 10 and a half percent. If you've got an interest rate lower than 10 percent, and just the average defaulted, that whole portfolio would be losing money for the credit card company."

      What's a credit card customer to do in this new environment? Lin says pain is likely to be felt at every level for a while, but that there are some things consumers can do to put themselves in a better position.

      "Practically speaking, we've always urged consumers to have several cards--not a lot, but three or four," Lin said. "When particular credit card companies are closing lines and doubling fees, its good to have options."

      In the new environment, credit may be a lot more important but harder to come by. Lin says consumers need to diversify now more than ever.

      "I really feel credit cards are going to be drying up, I think annual fees will be back and consumers with a credit score below 700 are going to be in trouble, because the lenders that have survived are going to be raising their lending standards," Lin said.

      Consumers can also protect the cards they have now by keeping them active. Use the card for a purchase every month or two and pay off the balance. Credit card companies are going to be closing inactive accounts because they are a liability," he says.

      While lenders are already changing their terms, Lin believes consumers will continue to change their habits as well, and the era of every family having maxed out credit cards could become a thing of the past.

      "I don't have a crystal ball that says people wont be revolving on their credit cards in the near future but there have been some really interesting growth trends," Lin said. "Debit and pre-paid credit cards are the fasting growing segment of the financial services industry. That, along with higher savings rates, may be suggestive of consumers going to more of a pay as you go system in the future, rather than carrying balances."

      New Credit Rules Bring Unintended Consequences...
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      Guilty Plea in Dietary Supplements Marketing Scam

      Internet businesses generated nearly $12 million with false claims

      A Michigan business owner has pleaded guilty in federal court to playing a part in a conspiracy to fraudulently market dietary supplements over the Internet with illegal claims that the products could prevent, treat or cure a number of diseases.

      Several Web sites were used to sell nearly $12 million worth of the products in 2005 and 2006, according to Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri.

      Tony T. Pham, 40, of Grand Rapids, Mich., pleaded guilty before U.S. District Judge Richard E. Dorr to charges contained in an April 2, 2009, superseding indictment. Pham owned and operated Techmedica Health, Inc., located in Grand Rapids.

      He admitted that he used Techmedica to repackage, sell, market, and distribute unapproved new drugs and misbranded drugs over the Internet. In addition to the conspiracy, Pham pleaded guilty to one count of wire fraud related to payments in the form of a wire transfers to a bank account.

      Pham also admitted that since April 6, 2004, he participated in a conspiracy to buy and sell unapproved new drugs and misbranded drugs and to defraud the United States by impeding the lawful functions of the Food and Drug Administration to prevent the introduction of unapproved new drugs and misbranded drugs in interstate commerce.

      Under federal law, a dietary supplement may not claim to treat, cure or prevent a specific disease or class of diseases. Pham claimed that six products that he sold over the Internet had been proven reliable through clinical testing for the treatment and prevention of diabetes, irritable bowel syndrome, gout, high cholesterol, high blood pressure, heartburn and diarrhea. In reality, no clinical testing had been performed.

      None of the dietary supplements are generally recognized, among experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, as safe and effective for use under any of the conditions recommended in their labeling.

      Therefore, each of these dietary supplements is a new drug. None were approved by the FDA, and their labels do not bear adequate directions for use; therefore, they are also categorized as unapproved drugs and misbranded drugs.

      The dietary supplements that were marketed as unapproved new drugs and misbranded drugs included Diabeticine (later renamed Diamaxol, and also known as Glucolex), Digestrol (also known as Digesticine), Uricinex (also known as Uricaid), Cholestasys Rx (later renamed Cholestasys), Hyperexol and Prolipamy.

      Pham sold $11,954,648 worth of those products in 2005 and 2006, using several different Web sites. Web sites used by Techmedica contained materially false testimonials, product information, and identification of medical professionals.

      Techmedica fabricated fraudulent customer identities using photographs purchased from, the complaint said. Testimonials attributed to these fraudulent identities touted the effectiveness of the unapproved new drugs and misbranded drugs.

      Techmedica also posted one of the photographs on their Web sites to fabricate a non-existent physician, Dr. Judy Hamilton, for the purpose of lending authenticity to and endorsing product claims about Diabeticine for customers with Type I and Type II diabetes.

      The person identified as Dr. Hamilton was in fact a model from California. This same model's photograph was also used by Pham on another Web site to fabricate a non-existent nurse, Bethany Hunt, RN, to tout the effectiveness of the unapproved new drugs and misbranded drugs.

      Techmedica, through Pham, in an effort to defraud the United States by impeding, obstructing, and defeating the lawful functions of the FDA, operated several Web sites using mirror image technology. The use of this technology assured that when each of these Web sites was accessed from an FDA network computer, they displayed a sanitized version of the Web site containing medical claims that attempted to comply with the federal Food, Drug, and Cosmetic Act (FDCA).

      However, when each of these Web sites was accessed from a computer whose IP address could not be traced to the FDA, they displayed claims that the dietary supplements could cure, mitigate, treat, and prevent diseases, so that these supplements were sold as unapproved new drugs and misbranded drugs.

      By pleading guilty, Pham also agreed to forfeit to the government $11,954,648, which was derived from the proceeds of the offenses, for which he and his co-defendants are jointly and severally liable.

      Under federal statutes, Pham is subject to a sentence of up to 25 years in federal prison without parole, plus a fine up to $500,000 or twice the gross gain.

      A Michigan business owner has pleaded guilty in federal court to playing a part in a conspiracy to fraudulently market dietary supplements over the Interne...
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      TicketsNow Promises Illinois It Will Curb Deceptive Tactics

      Unholy alliance between Ticketmaster, TicketsNow riles consumers, regulators

      In the latest attempt to rein in Ticketmaster, Illinois Attorney General Lisa Madigan has reached an agreement with TicketsNow, a Ticketmaster subsidiary, to curb deceptive tactics.

      The agreement is the result of Madigans investigation into TicketsNows marketing practices after receiving dozens of complaints about the high prices ticket brokers charged for Hannah Montana and Bruce Springsteen concerts and other popular events. Madigans investigation revealed that TicketsNows brokers were in the practice of creating customized Web sites where they resold tickets they had pre-purchased for high-profile events at prices significantly higher than face value while consumers believed they were buying face value tickets from the actual event operators.

      As part of the agreement, TicketsNow will cease operating any Web sites that have misleading domain names and will refrain from affiliating with any Web sites that use similarly deceptive tactics. As a result of Madigans investigation, TicketsNow has already disabled more than 100 suspect Web sites.

      Our investigation revealed that consumers who purchased concert tickets at TicketsNow Web sites often believed they were purchasing tickets from the actual event operators for their original value, Madigan said. This agreement will substantially impact how the TicketsNow online brokers market popular event tickets so that consumers clearly understand that they are making purchases from a ticket reseller at marked-up rates.

      In the course of the investigation, Madigans office determined that TicketsNow, which is based in Rolling Meadows, Ill., was operating hundreds of affiliated ticket resale Web sites with misleading domain names that incorporated into the Web site URLs unique names of local venues, sports teams or performers. The TicketsNow-affiliated Web sites failed to clearly state that they were ticket resellers and had obtained tickets from secondary sources, such as season ticket holders, event promoters and venue operators, in advance of the public sale. As a result, consumers did not realize that they were ordering marked-up tickets from a TicketsNow-affiliated reseller.

      The agreement with Madigans office also requires TicketsNow resellers to clearly and conspicuously identify themselves as ticket brokers and to expressly state that they are not affiliated with the venue and may sell tickets at above-face value. In addition, TicketsNow will no longer sell tickets to non-sporting events on any of its Web sites until after Ticketmaster makes the tickets available at face value to the general public, which will help curtail speculative ticket sales prior to the actual sale date set by Ticketmaster.

      It's the latest in a series of lawsuits and enforcement actions against Ticketmaster, its affiliates and other online ticket sellers. In February Ticketmaster settled a suit accusing it of redirecting consumers to its partner in an effort to drive up prices. In May, TicketsNow was 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, 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.

      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.

      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.

      TicketsNow Promises Illinois It Will Curb Deceptive Tactics...
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      Zicam Users File Class Action Lawsuit

      Recalled cold remedy doesn't pass sniff test

      Users of a recalled cold medicine have filed a pair of class action lawsuits, alleging that, instead of easing their sniffles, the medication permanently impaired their sense of smell.

      On June 15, the Food and Drug Administration (FDA) warned consumers to stop using two types of Zicam cold medicine, after receiving over 130 complaints from consumers whose sense of smell was wiped out or severely diminished from having taken the medication. The side effect was blamed on Zicam's use of zinc gluconate, which can damage intranasal tissue.

      In a press release, the FDA warned that the loss of smell known in medical circles as asomnia may be long-lasting or permanent. The release also stressed that asomnia can occur after taking just one dose of the medicine; indeed, many of the complaints received by the FDA were from first-time users. The FDA's Dr. Janet Woodcock warned that, Loss of sense of smell is a serious risk for people who use these products for relief from cold symptoms. Maatrix Initiatives, Inc., which manufactures Zicam, began a recall on June 24.

      While losing one's smell has obvious effects on the quality of life, it can also lead to more serious and even life-threatening problems. Those with asomnia are unable to detect dangerous odors such as smoke or gasoline. Sense of taste, closely related as it is to smell, can also be affected.

      The suits were filed in federal court in California and state court in Missouri. The California suit, led by plaintiff Barbara Sample, was brought on behalf of anyone who bought Zicam while in California, or from a manufacturer or other source in California, within the four years preceding June 23, 2009. The Missouri suit defines a class of all St. Louis County residents who bought the product in the year preceding the FDA bulletin, and is led by plaintiff Gwendoly West.

      The California suit alleges that Maatrix concealed or omitted material information regarding the safety of the nasal gel products.

      The class actions may be just the tip of the iceberg for Maatrix. The company also faces Zicam-related actions in Arizona, Illinois, Florida, Texas, Minnesota, and Wisconsin. The FDA also says that Maatrix never handed over 800 internal complaints from consumers who suffered asomnia after using Zicam.

      The recall covered both the gel and swab versions of Zicam. In a filing with the Securities and Exchange Commission (SEC), Maatrix said that it intends to vigorously defend each of the recently filed lawsuits. The corporation is barred from marketing the product until it proves to the FDA that Zicam is safe and effective.

      A statement on Zicam's website advises customers with remaining Zicam to either dispose of these two nasal Cold Remedy products [gel or swab], or return them through Zicam for one of our Cold Remedy oral products. The statement noted that [t]he other 17 Zicam-branded products (including our Oral cold remedy ) are all safe and effective and will remain on retailer shelves.

      The recalled products are:

      Zicam Cold Remedy Nasal Gel

      Zicam Cold Remedy Nasal Swabs

      Zicam Cold Remedy Swabs, Kids Size, a discontinued product

      Users of recalled cold medicine filed a pair of class action lawsuits, alleging that, instead of easing their sniffles, the medication permanently impaired...
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      Charles David Recalls Shoes Sold at Nordstrom

      July 7, 2009
      Charles David is recalling women's shoes sold at Nordstrom and Nordstrom Rack. The heel of the shoes can detach, posing a fall hazard to consumers.

      The firm has received one report of a heel detaching, resulting in minor bruising.

      The recall involves various colors and styles of Charles by Charles David brand (item #SAMPCHSHOE) and Charles David of California brand (item #SAMPCDSHOE) women's sample shoes. The shoes were sold in women's sizes 7 and 9. The item number can be located on the original receipt.

      The shoes were sold at Nordstrom stores in California and Nordstrom Rack stores nationwide from April 2009 through June 2009 for between $22 and $80. They were made in China, Spain, and Italy.

      Consumers should stop wearing the recalled shoes immediately and return them to any Nordstrom or Nordstrom Rack store for a full refund.

      For additional information, call Nordstrom at (800) 804-0806 between 7 a.m. and 1 a.m. ET Monday through Friday, e-mail Nordstrom at, or visit

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

      Charles David Recalls Shoes Sold at Nordstrom...
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      Medical Malpractice Payments Hit Record Lows

      Injured patients receiving less compensation, report claims

      Medical malpractice payments were at or near record lows in 2008, but a study released by Public Citizen suggests the decline almost certainly indicates that a lower percentage of injured patients received compensation, not that health safety has improved.

      Medical malpractice is so common, and litigation over it so rare, that between three and seven Americans die from medical errors for every one who receives a payment for any malpractice claim, according to Public Citizens analysis of medical malpractice payment data and the best available patient safety estimates.

      For the third straight year, 2008 saw the lowest number of medical malpractice payments since the federal government's National Practitioner Data Bank began tracking such data in 1990. The 11,037 payments in 2008 were 30.7 percent lower than the average number of payments recorded by the NPDB in all previous years.

      Ratios of payments per capita and per physician have fallen even lower compared with historical norms. There were 13.5 payments per million physicians in 2006 (the most recent year for which the number of physicians is available), which is 29.2 percent lower than the average in previous years

      The value of payments in 2008 (as distinct from the number of payments) was the lowest or second lowest on record, depending on the method used to adjust for inflation.

      The cost of the medical malpractice liability system -- if measured broadly by adding all malpractice insurance premiums -- fell to less than 0.6 percent of the $2.1 trillion in total national health care costs in 2006, the most recent year for which the necessary data to make such comparisons are available.

      The cost of actual malpractice payments fell to 0.18 percent -- one-fifth of 1 percent -- of all health care costs in 2006. Annual malpractice payments have subsequently fallen from $3.9 billion in 2006 to $3.6 billion in 2008, but comparative data on total health care costs are not available.

      "Any way you measure it, medical liability accounts for less than 1 percent of the country's health care costs, and the vast majority of victims receive no compensation whatsoever," said David Arkush, director of Public Citizen's Congress Watch division. "These are people who died or were left with serious permanent injuries -- out of work, with enormous medical costs for the rest of their lives -- and they and their families are getting nothing from the doctors and hospitals responsible."

      The amount paid out for medical malpractice generally goes to patients with the most serious injuries. More than 80 percent of the money paid out for medical malpractice in 2008 was for cases involving "significant permanent injuries"; "major permanent injuries"; injuries resulting in quadriplegia, brain damage or the need for permanent care; or death, according to NPDB reporting.

      Despite the hysteria surrounding debates over medical malpractice litigation, experts have repeatedly concluded that several times as many patients suffer avoidable injuries as those who sue.

      The best known such finding was included in the Institute of Medicine's (IOM) 1999 study, "To Err Is Human," which concluded that between 44,000 and 98,000 Americans die every year because of avoidable medical errors.

      Fewer than 15,000 people (including those with non-fatal outcomes) received compensation for medical malpractice that year, and in 2008, the number receiving compensation fell to just over 11,000.

      There is no evidence that there are fewer errors today. Most of the IOMs safety recommendations have been ignored. Meanwhile, various safety indicators continue to raise alarms.

      For example, the Joint Commission, which accredits hospitals, learned about 116 occasions in which surgeons operated on the wrong part of a patients body in 2008 and 71 times in which foreign objects were left inside patients bodies. Health experts call these "never events," meaning that they simply should not happen at all.

      Proposals to limit patients legal rights have sprung up in the debate over health reform. The most popular idea this year is to establish special tribunals that would theoretically offer payments to more patients but in smaller amounts.

      Policy makers who wish to cut costs should steer clear of these proposals, Arkush said. The high volume of medical errors and the current infrequency of payments to victims ensure that proposals to increase the number of payments would inevitably cost far more than the current system.

      The only economically feasible and, indeed, humane way to improve the system is to reduce the number of senseless and tragic medical errors in our hospitals. In its report, Public Citizen calls on Congress to put safety measures in place that would set the nation on course to meet the IOMs goal of cutting the number of avoidable deaths in half in five years.

      Medical Malpractice Payments Hit Record Lows...
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      FDA Orders Stronger Warning Labels on Darvon, Darvocet

      Data finds links to fatal overdoses; agency orders new safety study

      Perhaps partly satisfying its critics, the U.S. Food and Drug Administration (FDA) says it is taking several actions to reduce the risk of overdose in patients using pain medications such as Darvon and Darvocet that contain propoxyphene. The agency said the actions were taken because of data linking propoxyphene and fatal overdoses.

      The consumer group Public Citizen has been calling on the FDA to ban Darvon altogether, saying that the "old pain killer is a plain old killer."

      Instead, the agency is requiring manufacturers of propoxyphene-containing products to strengthen the label, including the boxed warning, emphasizing the potential for overdose when using these products. These manufacturers will also be required to provide a medication guide to patients stressing the importance of using the drugs as directed.

      In addition, the FDA is requiring a new safety study assessing unanswered questions about the effects of propoxyphene on the heart at higher than recommended doses. Findings from this study, as well as other data, could lead to additional regulatory action.

      Physicians need to be aware of the risk of overdose when prescribing these drugs. They should carefully review patient histories and make appropriate treatment decisions based on the warnings and directions stated within the drugs label, said Janet Woodcock, M.D, director of the FDAs Center for Drug Evaluation and Research. Prescribers and patients should be aware of propoxyphenes potential risks when used at doses higher than those recommended. Therefore, the FDA is requiring manufacturers to provide more information to help physicians and patients decide whether propoxyphene is the appropriate pain therapy.

      Sidney Wolfe, M.D., director of Public Citizens Health Research Group, testified in January before a Food and Drug Administration (FDA) advisory committee and pointed to information from the Federal Drug Abuse Warning Network (DAWN) in 2007 that found 503 deaths determined by medical examiners to be related to the use of propoxyphene.

      Public Citizen first petitioned the FDA to remove the drug from the market in 1978. The organization petitioned a second time in 2006 and, when the FDA failed to take action, Public Citizen sued the agency in 2008.

      Propoxyphene has one of the worst benefit-to-risk ratios I have ever seen for a drug, and yet it has long been one of the 25 top-selling drugs in the country, Wolfe said. Pharmacies filled 21 million prescriptions in 2007.

      In its announcement today, the FDA said that to "further evaluate the safety" of propoxyphene, the agency plans to work with several groups including the Centers for Medicare & Medicaid Services and the Veterans Health Administration to study how often the elderly are prescribed propoxyphene instead of other pain relievers and the difference in the safety profiles of propoxyphene compared to other drugs.

      Propoxyphene manufacturers are required to submit the requested safety labeling changes to the FDA within 30 days, or to provide a reason why they do not believe such changes are necessary. If they do not submit new language, or if the FDA disagrees with the language the companies propose, the Food, Drug, and Cosmetic Act provides strict timelines for discussions regarding the changes. At the end of these discussions, the FDA may issue an order directing the labeling changes as deemed appropriate to address the new safety information.

      Also today, the FDA denied a citizen petition from the public interest group Public Citizen requesting a phased withdrawal of propoxyphene.

      The agency said in its response that despite the FDAs serious concerns about propoxyphene, the benefits of using the medication for pain relief at recommended doses outweighs the safety risks at this time. The FDA also noted that it plans to further evaluate the safety of propoxyphene and will take additional regulatory action if necessary.

      Propoxyphene has been on the market since 1957. It is a widely prescribed member of a group of drugs known as opioids and is used as a treatment for mild to moderate pain. The most frequent side effects of propoxyphene include lightheadedness, dizziness, sedation, nausea, and vomiting.

      FDA Orders Stronger Warning Labels on Darvon, Darvocet...
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      Debt Collectors Settle With FTC

      Harrassed consumers in all 50 states

      The operators of a debt collection firm will pay $225,000 to settle charges with the Federal Trade Commission. The FTC accused the company of using false threats and other unlawful tactics to collect consumers' debts.

      According to the FTC complaint, the defendants, who had about three million consumer accounts and collected debts in every state, told consumers their nonpayment of debt would result in garnishment of consumers wages, arrest, or legal action., none of which was true.

      The FTC alleged that the defendants used illegal and abusive debt collection methods: they called consumers before 8 a.m. or after 9 p.m.; called their workplace when the collectors knew or had reason to know that the calls were inconvenient; told employers, co-workers, relatives, and neighbors about the consumers' debts; continued calling after receiving consumers written demands to stop; and used harassing and abusive tactics such as calling many times a day, calling right back after a consumer hung up, and using profane or other abusive language.

      Consumers filed hundreds of complaints with the FTC, the Metropolitan New York Better Business Bureau, various state attorneys general, and the defendants, according to the complaint. The defendants often failed to address the law violations alleged in the complaints and often dismissed complaints without significant investigation or disciplinary action against employees, the FTC said.

      Even in the face of substantial evidence of debt collection violations, the defendants collectors often went unpunished or merely received a warning, the complaint stated. The settlements prohibit the defendants from further violations of the FTC Act and the Fair Debt Collection Practices Act.

      The settlement with Oxford Collection Agency, Inc., doing business as Oxford Management Services; Richard Pinto; Peter Pinto; and Charles Harris imposes a civil penalty of $1,060,000, all but $225,000 of which will be suspended. The settlement with Salvatore Spinelli, individually, and d/b/a Salvatore Spinelli, Esq., Attorney-at-Law, also imposes a $1,060,000 civil penalty, which will be suspended based on his inability to pay.

      The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition. The settlements also contain record-keeping and reporting provisions to allow the FTC to monitor compliance with the orders.

      Debt Collectors Settle With FTC...
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      Canadian Frequent Flyer Program Faces Class Action

      Change in policy led to lost miles

      By Jon Hood

      July 6, 2009
      A group of Canadian consumers has filed a class action lawsuit against Aeroplan, a frequent-flier program spun off from Air Canada. The lawsuit concerns a policy change that resulted in thousands of consumers losing miles they had built up over years as loyal Aeroplan members.

      In late 2006, Aeroplan changed its policy, requiring consumers to either redeem or add points at least once every year. Previously, customers only had to do this at least once every three years.

      While consumers who lost points to the policy change can technically reinstate them, they must pay a $30 flat fee plus a cent for each mile restored. This means that plaintiffs looking to make long-haul transatlantic flights could end up forking over $1,000 just to use points they had already earned.

      The suit alleges that plaintiffs were not properly notified of the change in policy. The plaintiffs specifically claim that letters and e-mails sent to members didn't sufficiently stand out from other routine mailings sent by the service.

      The suit seeks reinstatement of any revoked points, $50 in compensatory damages for each affected plaintiff, and punitive damages.

      Aeroplan stands by both its policy and the adequacy of notice, stating that it will vigorously defend any class action, should one be authorized by the court.

      Aeroplan may have enacted the new policy to prevent a run on the bank of sorts, in which too many passengers try to cash in on miles at the same time, draining the airline of revenue in an already shaky economic climate.

      In May, Aeroplan posted low profits in its quarterly report, citing vastly lower consumer spending. The margin was startling, however; the company took in $23.2-million, compared to $42.1 million just a year earlier.

      Currently, Aeroplan has around five million members.

      Canadian Frequent Flyer Program Faces Class Action...
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      Researchers Find Caffeine Effective Alzheimers Treatment

      Morning cup of java may prove beneficial

      July 6, 2009
      If you happen to be a heavy coffee drinker, you might be helping your brain protect itself from Alzheimers disease.

      While a number of advanced Alzheimers drugs and treatments have been developed in recent years, University of Florida researcher Gary Arendash believes coffee drinkers -- and other caffeine consumers -- are not just protecting themselves, but actually treating symptoms that might appear.

      The study gives evidence that caffeine may be a viable treatment for established Alzheimers disease and not simply a protective strategy, Arendash said.

      Human subjects were not used in the study, only mice. But Arendash and his colleagues believe the findings offer up a lot of hope. Using mice that were bred to develop Alzheimers, the fed half of the laboratory animals a heavy diet of caffeine once they saw signs of the disease.

      In other words, they waited until after the mice had developed Alzheimers disease before beginning the treatment.

      Arendash said the research team was surprised at the results. The mice fed the caffeine performed much better on memory tests than those that didnt receive the caffeine.

      Alzheimers currently is an incurable, progressively fatal disease that affects humans as they age, robbing them of all memory functions. The researchers say the fact that they have been able to reverse the diseases effects on cognitive ability is particularly significant.

      Recent research into Alzheimers treatment has focused on the clumps that form in the brains of Alzheimers patients, interrupting normal memory function. The clumps are sometimes caused by two enzymes and heavy doses of caffeine, it appears, prevents those enzymes from forming.

      Researchers say they are eager to launch clinical trials with human subjects, believing they are close to ending a scourge of aging. They say caffeine is safe for most people and easily absorbed by the brain, and appears to directly attack the disease.

      More than five million people in the U.S. are living with Alzheimers disease, according to the Alzheimers Association. Alzheimers and dementia triple the health care costs for people age 65 and older.

      Researchers Find Caffeine Effective Alzheimers Treatment...
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      Ex-Clear Customers Mount Class Action Lawsuit

      Sudden demise of airport security program raises privacy concerns

      A group of consumers has filed a class action lawsuit against Verified Identity Pass (VIP) after the company refused to provide refunds to members of its popular Clear program, which reduced security wait times for consumers willing to pay an annual fee and undergo preemptive security screenings.

      Clear closed on June 22 after a dispute with a senior creditor. Lead plaintiff Stephen Perkins received an e-mail saying that, because of financial constraints related to the credit problem, VIP could not issue refunds to existing customers.

      The suit, filed in New York by San Francisco law firm Schneider Wallace Cottrell Brayton Konecky, alleges that VIP continued charging customers until the minute it shuttered its doors, and that it has since refused to reimburse passengers. The suit calls Clear a cut-and-run gambit, and alleges counts in conversion, fraud, breach of contract, negligence and unjust enrichment. The plaintiffs are seeking both compensatory and punitive damages.

      The program allowed passengers access to fast lanes, saving considerable time and hassle during the airport check-in process. To be eligible, passengers had to pay an annual membership fee and undergo extensive security screening, which included providing social security numbers, fingerprints, and eye scans. Since its 2005 inception, the program had been implemented at 18 airports and boasted around 250,000 members.

      VIP claimed that the program could reduce security wait times to as little as five minutes. When the program was initiated last year at Hartsfield-Jackson International Airport in Atlanta -- the nation's busiest air hub -- the average wait time fell to just ten minutes.

      The program was especially appealing to business travelers, who tend to fly often and are more willing to pay to reduce the stress of traveling. However, Clear members were never exempt from many standard-fare security procedures, like removing laptops from their cases and taking off their shoes before boarding.

      Confidentiality concerns

      The program's official website,, is adamant that any confidential information provided by Clear customers will be protected. The website maintains that any personal information would only be used for another Clear-like program that is approved by the Transportation Security Administration (TSA).

      The website doesn't say, however, whether consumers would need to provide authorization before having such information handed over. The site also says that all customers will be notified by e-mail once their information has been permanently deleted.

      VIP has reason to be overly cautious about customers' personal data. Clear was suspended last August when a laptop containing confidential information of 33,000 members was stolen from San Francisco International Airport. The computer, which contained names, addresses, and drivers' license numbers, was stolen from a locked office in the airport. After the incident, the TSA ordered VIP to take extra measures to protect customer information, including encryption of its computers. The information on the laptop was password-protected but not encrypted.

      Not surprisingly, Congress isn't willing to give VIP the benefit of the doubt this time around. Last week, the House Homeland Security committee asked the TSA to release any information it has on data still being held by VIP. The committee asked the TSA to explain what role it will take in protecting the information, and emphasized that the sale, disposal, transfer, or destruction of this type of data cannot be undertaken without safeguards designed to ensure that the information will not be compromised. The committee has asked for a response by July 8.

      Consumers looking for information or further guidance from VIP have been left in the lurch as well. Under the heading, How Can I Contact Clear? the Clear website refers consumers back to -- the website, at In case there was any confusion, the site further explains that Clears call center and customer support email service are no longer available. VIP has not yet filed bankruptcy, according to the webpage.

      Ex-Clear Customers Mount Class Action Lawsuit...
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      Keeping Your Pet Safe For July 4th

      Humane Society offers tips on animal safety

      By Lisa Wade McCormick

      July 2, 2008
      Animal shelters call them the "July 4th dogs." They're dogs who run off during Fourth of July celebrations because they're frightened by the loud noises. These scared and panicked canines are then rescued by animal control officers or Good Samaritans and taken to local shelters.

      According to the Humane Society of the United States (HSUS), animal shelters nationwide are growing accustomed to seeing these "July 4th dogs."

      But the HSUS says there are some simple steps pet owners can take to protect their canines — and ensure they don't become one of those lost pets.

      "With a little bit of planning and forethought, you can enjoy the excitement of the Fourth of July and know that your animal companion is safe, sound, and enjoying a little peace and quiet," said Nancy Peterson, an issues specialist with The Humane Society if the United States.

      Advice from HSUS

      To protect your pets this Independence Day, the HSUS offers the following advice:

      • Never use fireworks near or around your pets;

      • Avoid taking pets to fireworks displays;

      • Keep pets indoors at home in a sheltered, quiet area. Some animals become destructive when frightened. Remove any items that pets can destroy or that could be harmful if chewed. Leave the television or radio on if you leave home;

      • If your pet is distressed by loud noises like thunder, talk to your veterinarian before July 4th about ways to alleviate any fears or problems that may arise during fireworks displays;

      • Never leave pets outside unattended — even in a fenced yard or on a chain. When they're scared, pets who normally wouldn't leave the yard may escape and become lost; others could get tangled in their chain;

      • Make sure your pets are wearing their identification tags. That way they can be returned if they escape and become lost. Animals found running loose should be taken to a local animal shelter so they can reunited with their owners;

      Never leave your pets in the car. In just a few short minutes, pets can suffer serious health effects — or even die — from breathing the hot air inside a car. And partially opened windows do not provide enough air and could give thieves an opportunity to steal your pets.

      The American Society for the Prevention of Cruelty to Animals (ASPCA) also reminds pet owners watch their animals closely during Fourth of July picnics and other celebrations. Some party foods and drinks — and even sunscreens and grilling products — could poison to your pets.

      Advice from ASPCA

      The ASPCA also warns pet owner to never use fireworks around their animals. Other safety tips from the ASPCA's Animal Poison Control Center include:

      • Never leave alcoholic drinks unattended where pets can reach them. Alcoholic beverages can poison pets. If ingested, the animal could become intoxicated and weak, severely depressed, or go into a coma. Death from respiratory failure is also possible in severe cases;

      • Do not apply sunscreen or insect repellent products to your pet that are not specifically labeled for use on animals. Ingestion of sunscreen can result in drooling, vomiting, diarrhea, excessive thirst, and lethargy. Misuse of insect repellent that contains DEET can also lead to neurological problems in pets;

      • Keep matches and lighter fluid out of pets reach. Some matches contain chlorates, which could damage blood cells and result in difficulty breathing — or kidney disease in severe cases. Lighter fluid can irritate a pet's skin, and if ingested, can produce gastrointestinal irritation and central nervous system depression. If lighter fluid is inhaled, aspiration pneumonia and breathing problems could develop;

      • Keep your pets on their normal diet. Any change, even for one meal, can give pets severe indigestion and diarrhea. This is especially true with older animals, which have more delicate digestive systems and nutritional requirements. And remember, onions, chocolate, coffee, avocado, grapes, raisins, salt and yeast dough are potentially toxic to pets;

      • Never put glow jewelry on pets or let them play with these items. While the luminescent substance is not highly toxic, excessive drooling and gastrointestinal irritation could still result from ingestions. And intestinal blockage could occur from swallowing large pieces of the plastic containers;

      • Keep citronella candles, insect coils, and oil products out of pets reach. Ingestion of these products can cause stomach irritation or central nervous system depression. If inhaled, the oils could cause aspiration pneumonia in pets.

      "While exposure to lit fireworks can potentially result in severe burns and/or trauma to the face and paws of curious pets, even unused fireworks can pose a danger," the agency says. "Many types contain potentially toxic substances, including potassium nitrate, arsenic and other heavy metals."

      Pet owners who suspect their animals have ingested a poisonous substance can contact the ASPCAs Animal Poison Control Center at (888) 426-4435. A $60 consultation fee may apply.

      Keeping Your Pet Safe For July 4th...
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      Simplicity Drop Side Cribs Recalled

      July 2, 2009
      About 400,000 Simplicity drop side cribs are being recalled. The crib's plastic hardware can break or deform, causing the drop side to detach. When the drop side detaches, it creates space between the drop side and the crib mattress. Infants and toddlers can roll into this space and become entrapped which can lead to suffocation.

      Federal safety regulators say they are aware of one death involving an 8-month-old child from Houston, Texas who became entrapped and suffocated between the drop side and the crib mattress when a plastic connector on the drop side broke. CPSC also is aware of an additional 25 incidents involving the drop side detaching from the crib.

      In six of these incidents, the drop side detached because the plastic flexible tab deformed or broke. In four of the drop side detachment incidents, other plastic parts, including connectors or tracks, deformed or broke. In two of the incidents, two children became entrapped between the drop side and the crib mattress. There were no reported injuries.

      The cribs were imported by Simplicity Inc. and SFCA Inc. of Reading, Pa. The firms are apparently no longer in business and unable to aid in the recall, the CPSC said.

      This recall involves all drop side cribs with a different or 'newer' style of plastic hardware from those cribs recalled in September 2007. This newer style of Simplicity hardware can be identified by a flexible plastic tab at the top of the lower tracks. The recalled model numbers include but may not be limited to: 8050, 8325, 8620, 8745, 8748, 8755, 8756, 8765, 8778, 8810, and 8994, 8995, 8996.

      The cribs, made in China, were sold at department stores, children's stores, and mass merchandisers nationwide from January 2005 through June 2009 for between $150 and $300.

      Consumers should immediately stop using the recalled cribs and find an alternative, safe sleeping environment for their baby. Consumers should immediately return the crib to the place of purchase for a refund, replacement or store credit.

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

      Simplicity Drop Side Cribs Recalled...
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      Congress Fumes Over Credit Card Rate Hikes

      Lawmakers feeling heat over lenders' actions

      As consumers have been hit with huge interest rate hikes and increases in their minimum monthly payments, complaints about Americas credit card industry are reverberating through the halls of Congress.

      CitiGroup, Bank of America and Capital One have all, in recent days, began raising customers interest rates, in many cases saying it has nothing to do with the customers performance and everything to do with making up for losses before new laws and regulations tie their hands early next year.

      Chase has singled out its customers with the lowest interest rates, raising the minimum monthly payment from two percent of the balance to five percent. In many cases this action turns the credit card payment into the size of a home mortgage.

      "This is what many of us feared about a law that didn't take effect right away," Sen. Chuck Schumer (D-NY) told The Washington Post.. "It was never going to take this long for the credit card companies to get ready for the new reforms. Instead, issuers are using the delay in the effective date to wring more dollars out of their customers. It is against the spirit of the law, and it is just plain wrong."

      Rep. Carolyn Maloney (D-NY) authored the Credit Card Holder Bill of Rights legislation signed into law in May. She has been besieged with complaints from angry consumers.

      Rate hikes on existing balances being reported by news media and consumers, even when consumers pay on time and follow the rules, are unfair and deceptive and must be stopped, she said. Capricious actions like these are why Congress overwhelmingly passed, and President Obama signed, my credit card reform bill: to level the playing field on behalf of consumers.

      Maloneys protests not withstanding, Congress is pretty much powerless to stop credit card companies from raising rates and adjusting minimum payments, because they are allowed to do so under current laws and regulations. The changes do not take effect until February 2010.

      Maloney notes that in another few weeks, one new rule will take effect requiring banks to provide a 45-day notice of any rate hikes. She and other Democrats on the Hill are using the consumer outcry over credit card company behavior to press for still more legislation.

      All of this flurry of news is another example of why we need President Obamas Consumer Financial Products Safety Commission-- which the House will be considering in the weeks ahead, Maloney said.

      In the Senate, Banking Committee Chairman Christopher Dodd (D-CT) also threw his support behind creation of the Consumer Financial Products Safety Commission.

      The Administration is addressing the colossal failures that led to the economic crisis with a bold and aggressive plan, said Dodd. Creating an independent agency whose sole focus is protecting consumers - be it credit card holders, anyone with a bank account, or families with mortgages or student loans is really the key to creating the foundations for a stronger economy.

      Dodd said banks that harm consumers with their policies do so at their own peril.

      It is unbelievable that some of the same irresponsible actors that helped create the current financial mess would argue that we are doing too much for consumers, he said. Dont they realize that they need a healthy customer base if they want to continue to be successful?

      But he American Bankers Association essentially says I told you so, noting the passage of the Credit Card Holders Bill of Rights in May is bringing about these changes.

      The new legislation restricts the ability of credit card companies to price based on the individual risk of the customer, the ABA says in a statement. As a result, the system becomes a one-size-fits-all model, meaning that interest rates will likely increase for nearly everyone, including those with a good credit history, as those who successfully manage their credit will be subsidizing those who have not.

      In this new environment, the bankers say, card limits will be lowered since lenders will be limited in managing risk going forward. Even customers that have a good credit score or have never missed a payment will likely see less credit available to them.

      Congress Fumes Over Credit Card Rate Hikes...
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      Banks Prepare for Assault on Obama's Proposed Financial Protection Agency

      Bankers usually have their way with Congress but this year may be different

      Predicting a "huge fight," the nation's banks and mortgage lenders are circling the wagons and preparing an all-out assault on President Obama's proposed consumer financial protection agency, which would oversee credit card fees, home mortgages, payday loans and most other types of consumer credit.

      Edward Yingling, American Bankers Associaton president, sounded the alarm earlier this week and said the agency's powers would "go beyond every consumer law that has ever been enacted."

      In testimony before the House Financial Services Committee, Yingling insisted that bankers support consumer protection but don't think creating a powerful new agency is the way to do it. He also took the position that banks aren't to blame for the current economic crisis.

      "It is now widely understood that the current economic situation originated primarily in the largely unregulated non-bank sector," Yingling said. "Banks watched as mortgage brokers and others made loans to consumers that a good banker just would not make and they now face the prospect of another burdensome layer of regulation aimed primarily at their less-regulated or unregulated competitors."

      "It is simply unfair to inflict another burden on these banks that had nothing to do with the problems that were created," Yingling said. But the committee chair, Rep. Barney Frank (D-Mass.), wasn't buying it. "Anyone who thinks we're not going to create this agency is mistaken," he said.

      "The federal regulatory system has clearly failed to provide adequate protection for consumers and that failure contributed to the broader economic crisis," Frank told the Washington Post. "That is why I have made the creation of the agency one of our highest priorities."

      The banks, which have accepted billions of dollars in emergency aid from American taxpayers, admit privately that their bargaining position is a difficult one but historically, the banking industry has gotten most of what it wanted from Congress, including the punitive new bankruptcy law that penalizes consumers driven into insolvency by job loss and medical bills.

      One-stop regulation

      Currently, there are several regulatory agencies — the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) the Federal Reserve and others — that regulate specific types of financial institutions. Under Obama's plan, a single agency would take over consumer protection duties from those agencies, creating what its supporters say would be a "level playing field," applying the same standards to all financial institutions.

      The proposal has been enthusiastically received by consumer groups, who say that for too long the health of financial institutions has been put before consumers' financial well-being.

      "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.

      It's not just bankers who are worried about the measure. The trade association of the rent-to-own industry is worried about the bill's "ripple effect," said Ed Winn III, legal counsel to the Associaton of Progressive Rental Organizations. Winn said the bill could be "regulation run amok" and expressed fears it could supersede legislation currently moving through Congress that would regulate the rent-to-own business — a frequent target of bitter complaints from low-income consumers.

      Consumers paying attention

      "Banks can only operate safely and soundly if they are treating customers well," Yingling said in his committee testimony. "Banks are in the relationship business, and have an expectation to serve the same customers for years to come."

      But consumers aren't buying that argument. In years past, the bankruptcy bill and other draconian measures made their way through Congress without consumers displaying much concern. But this year, consumers have the Internet at their disposal and they are using it to compare notes, band together and make themselves heard about mortgage modification problems, unfair banking practices and harsh increases in credit card fees and terms.

      More than 1,600 customers of JPMorgan Chase have complained to recently, many of them upset about an abrupt and unexpected increase from 2% to 5% in the monthly minimum credit card payment. Chase says the higher payment is the result of the bank's need to increase its capitalization and says it will help consumers get out of debt sooner. But many consumers say the higher payment is a back-door rate increase that will force many cardholders into default.

      "We feel so betrayed and defeated by not only what Chase is doing but what the government is allowing to happen to those of us trying so hard to do the right thing," said Helen of Indian Trail, N.C. "Who do we turn to for a bailout when we face financial ruin?"

      In many complaint forums, consumers are moving beyond airing their grievances and rallying for action.

      "I have gone to and and emailed and called my state rep and senators. And lastly I have contacted 2 different law firms, both whom have started class action suits against Chase," said Theresa of Romulus, Mich. "I love the outlet of blogging, but I also feel that we ALL need to do everything I did and more ... this is no different than people complaining about whose in office when they didn't bother to vote."

      Banks Prepare for Assault on Obama's Proposed Financial Protection Agency...
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      Ohio Launches Foreclosure Rescue Crackdown

      Three firms charged with ripping off homeowners

      Ohio is among the states that is trying to put foreclosure rescue scams out of business. Ohio Attorney General Richard Cordray has filed lawsuits against three operations - 21st Century Legal Services, Foreclosure Home Assistance, LLC, and Michael Brotherton, who does business as Financial Emergency, Inc.

      "Ohio has zero tolerance for these predators," Cordray said. "They prey on Ohioans who are vulnerable and are seeking answers during desperate times. We issued warnings last month ordering them to stop their illegal practices, but they continued anyway. Now, we will work through the courts to stop them permanently."

      According to Cordray's lawsuit, Cleveland-based Foreclosure Home Assistance, LLC charged consumers $1,500 for loan modifications, forbearance plans and other foreclosure prevention services. In some cases, the company offered foreclosure protection to tenants, claiming it could transfer the property deed from the landlord to the tenant. Despite its promises, the company failed to deliver.

      Michael Brotherton, operating as Financial Emergency, Inc., offered similar foreclosure prevention services in Greene County. According to Cordray's lawsuit, Brotherton advertised his services on the Internet and through the mail. Brotherton charged consumers up to $1,269, saying he could work with lenders and creditors to negotiate debt settlements or workout agreements with mortgage holders. Brotherton failed to deliver.

      Also failing to deliver was 21st Century Legal Services, which promised to help homeowners restructure their home loans, a promised service for which they charged $1,500 to $2,600. According to the lawsuit, the company instructed consumers to stop making payments on their home loans and to stop contacting their lenders.

      Consumers were instructed to make out several post-dated checks, each approximately equal to their monthly mortgage payment, and believed 21st Century would take care of the rest.

      Cordray's lawsuits charge each company with violations of Ohio's Consumer Sales Practices Act and Debt Adjusters Act. Cordray asks the court to hold the companies responsible for reimbursing consumers and to assess a $25,000 civil penalty for each violation.

      "In all three of these cases, we believe more victims are out there," said Cordray.

      Ohio Launches Foreclosure Rescue Crackdown...
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      FTC Says Calling Card Distributor Shortchanged Consumers

      Tests showed cards had fewer minutes than advertised

      When you purchase a prepaid calling card, how closely do you measure the number of minutes? If the card is a 60-minute card, are you sure there are 60 minutes of time on it? There might not be.

      A leading distributor of prepaid calling cards has agreed to pay $1.3 million to settle Federal Trade Commission charges that the calling cards failed to deliver the number of minutes advertised.

      In tests conducted by the FTC, the calling cards on average provided less than half of the advertised calling minutes.

      The settlement resolves a lawsuit the FTC filed in April 2008 against New Jersey-based Clifton Telecard Alliance One, LLC (CTA) and its owner, Mustafa Qattous.

      The commission charged that the company misrepresented the number of calling minutes consumers would get with its calling cards, charged hidden fees, and failed to disclose that consumers cards would be charged whether or not the calls are connected.

      CTA is a major player in the multi-billion dollar prepaid calling card industry. It markets cards under a variety of brand names, including African Dream and CTA Mexico, primarily to immigrants who rely on the cards to call friends and family in other countries.

      The cards, sold through a large network of retailers, gas stations, and other outlets, come in denominations ranging from $2 to $20, and can be used to call hundreds of countries around the world. CTA also sells cards for domestic calling.

      As part of the settlement announced, the court entered a judgment of $24.4 million against CTA, suspending all but $1.3 million of that amount. The settlement also bars CTA from misrepresenting the number of minutes of talk time a consumer will receive using a prepaid calling card.

      The company is required to disclose to clearly and conspicuously any material limitations on the use of a prepaid calling card, including any fees or other charges.

      The settlement is part of a continuing crackdown on fraud in the prepaid calling card industry. In February 2009, the FTC announced that another major group of major prepaid calling card companies agreed to pay $2.25 million to settle similar charges.

      FTC Says Calling Card Distributor Shortchanged Consumers...
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