Current Events in August 2009

By Mark Huffman
ConsumerAffairs.com

August 24, 2009
The first phase of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 went into effect last week, with the rest of the rule changes taking effect in February. Congress changed the law to help consumers, but like many of Congress's actions, this one is producing unintended consequences.

True, the new law addresses some of the industry's long-standing abuses. It prevents lenders from raising rates on existing balances. Payments must be applied first to the part of your balance that has the highest interest rate. And universal default raising your rate because you happen to be late paying some other, unrelated bill will be a thing of the past.

But banks will still make profits, and if they don't get your money one way, they'll try to do it another way that isn't impacted by the new law. In fact, that process has already started. with credit card companies using the time between last May's passage of CARD and the effective date to do all the things they will soon be prevented from doing.

Many consumers who considered themselves good credit card customers have had their accounts unilaterally closed by the lender. Others have had their rates hiked substantially. Still others have seen their minimum monthly payments almost double.

Now, some consumers will be charged for the privilege of carrying a credit card. Citigroup announced last week that it will begin imposing an annual fee on account holders. Other banks are expected to follow suit.

To keep the credit you have and avoid new fees, there are a number of steps consumers should take.

First, if you have credit, use it. Most of us have one or two credit cards we like to use and tend to ignore the rest. In the new credit environment, banks will be quick to close accounts that lie dormant. An open credit line is an element of risk for a bank. If it's not providing revenue, the bank sees no reason to keep it open.

To prevent the lender from closing your account, try to use each card for a small purchase once every three months. When the bank reviews your account, it will see some activity and will be less likely to close it.

Second, don't add to your balances. In fact, pay them down if possible. Banks have been reducing credit limits and have targeted consumers with high debt to credit ratios.

Personal finance experts suggest a debt to credit ratio of 10 percent is ideal. If you don't carry a balance on the card paying it off in full each month you have almost nothing to worry about in that regard.

Third, look around for lower interest rate alternatives if you're carrying a balance on a major bank card. Almost all credit card issuers are raising rates to make up for the fact that delinquencies are on the rise.

That said, it will be very hard to find an interest rate below 10 percent in this new environment, even with stellar credit. But one often overlooked credit source is a credit union. By joining a credit union you should be able to get a credit card with a lower than average rate.

Finally, make sure you pay your credit card bill on time. The penalty for not doing so is steep, and will likely get steeper. Not only will you pay a late fee, the penalty rate for a missed payment could be in excess of 30 percent.

As the credit environment changes, consumers will have to stay alert. That means reading every communication that comes from your lender. It could contain important changes to your account, and not acting on the information could result in needlessly higher fees and interest rates in the new credit universe.

States continue to reign in companies in the foreclosure rescue business, most of which take money from desperate homeowners and provide little or nothing return. Florida Attorney General Bill McCollum has sued a Kissimmee-based company over allegations it targeted Hispanics in a foreclosure rescue fraud scheme.

JPB Consulting Inc. and its president, Juan P. Bordali, allegedly charged up front fees of more than $1,000 per customer to homeowners about to lose their homes, but never performed any services. Charging fees up front before completing foreclosure rescue services is a direct violation of Floridas Foreclosure Rescue Fraud Prevention Act.

Preying on people about to lose their homes and tricking them into believing that genuine help is being offered is cause for outrage McCollum said.

An investigation conducted by members of the Attorney Generals Economic Crimes Division, working as part of the Attorney Generals Mortgage Fraud Task Force, determined that JPB Consulting and Bordali marketed the companys services primarily to those in the Hispanic community using posters and signs in neighborhood stores and flyers handed out on sidewalks and street corners. The company also used radio and TV ads to solicit clients.

According to the lawsuit, unsuspecting consumers were charged up front fees ranging from over $1,000 to $3,500 and were promised foreclosure relief. The complaint says the company performed no services for its clients.

The Attorney General's investigation further revealed the company was advised by a law firm in February that it was acting in violation of the law, but the company continued to collect the illegal up-front fees.

The Attorney Generals Office knows of over 30 victims, but believes the company may have hundreds of clients. JPB Consulting, Inc. is also known as JB Consulting, which sometimes does business under the name "Mortgage Modification Solutions."

The Attorney General's lawsuit asks that the company be shut down and requests the defendants be permanently barred from charging up-front fees and failing to provide services. The lawsuit also seeks civil penalties of $15,000 per violation, full victim restitution, and reimbursement for the cost of the states investigation and litigation.

Today's kids' menus are so last year.

Mintel Menu Insights, which tracks restaurant menu trends, says the average kids' menu doesn't offer enough variety or healthy food, even as parents, kids and chefs alike call out for better options.

In an analysis of kids' menus from 2005 to the present, Mintel found the same clichd foods repeated year after year. Chicken fingers steadily account for ten percent of kids' menu items, followed by grilled cheese sandwiches, macaroni & cheese, and burgers. Despite increasing health and obesity concerns, other top kids' menu items include hot dogs, pizza and corn dogs.

Do kids and parents really never tire of the same old thing? Not at all, says Maria Caranfa, RD and director of Mintel Menu Insights. "Our research shows parents want more nutritious options for their kids, and children are open to fruits, veggies and healthier versions of standard fare. The generic kids' menu really doesn't meet the needs and desires of today's families."

Only three in ten parents say their children eat healthfully at restaurants. But Mintel found kids would eat fruits and veggies. More than three in four children (77 percent) are open to ordering foods with vegetables, and six in seven (86 percent) would order fruit-containing items.

Some restaurants have started toying with healthier menus for kids. Though french fries are still the most common side (offered with 66 percent of kids' menu items), fruits and vegetables have risen in popularity (now at 43 and 39 percent, respectively). Even rice and salad (18 percent each) are showing up as kids' side options.

Additionally, more restaurants now use menu descriptors to quantify health. "Fresh" is the top marketing claim on kids' menus, appearing on 17 percent of items during the second quarter of 2009. In the same quarter of 2005, only eight percent t of kids' menu items carried the "fresh" claim.

"Restaurants dabble in healthier menus for kids, but there's still significant work to be done," said Caranfa. "Health and obesity issues, the popularity of ethnic foods and increased media coverage are creating pressure for revamped kids' menus. Soon, health and menu variety will be the new standards in kids' dining."

Caranfa points out recent innovations in healthier kids' menu items:

• Bob Evans: grilled chicken strips with a fresh garden salad

• Burger King: fresh apple fries

• Elephant Bar Restaurant: tropical citrus salad with chicken

Karen Cullen, Associate Professor of Pediatrics at the Baylor College of Medicine, tells ConsumerAffairs.com that offerings such as those mentioned above are a step in the right direction. She notes that a lot of what restaurants offer is a function of the marketplace.

"Whether or not they ultimately serve these healthy foods depends on how many parents and children purchase them," Cullen said. "If a restaurant wants to capture some of the audience looking for this fresh food for their children, the could easily market some of those things in a more aggressive manner and advertise those things and maybe that will pull more of those parents into those restaurants, making it profitable to sell those items."

Cullen says many restaurants already offer healthy choices: low-fat milk or 100 percent fruit just instead of a soft drink, or apple slices and carrot sticks instead of french fries. "If these items are selected," she says, "they'll stay on the menu."

A class action lawsuit is proceeding against Metropolitan Money Store (MMS), the foreclosure consultation company that scammed hundreds of troubled Washington, D.C.-area homeowners out of money by promising to help them keep their homes and improve their credit.

From September 2004 until June 2007, MMS employees preyed on consumers who had considerable equity in their homes but struggled to keep up with monthly payments. MMS representatives approached these homeowners promising to help them avert foreclosure and improve their credit scores. As the central part of its scheme, MMS asked homeowners to release title of their property to a third party for one year.

The third party -- or straw buyers, as they are referred to in the indictments -- were supposed to withdraw equity from the consumers' homes and use it to pay off mortgages and other expenses, and to generally improve homeowners' credit. Instead, the straw buyers withdrew as much equity from the homes as they could, while applying for mortgage loans vastly exceeding the value of the house. The buyers then paid off the homeowners' original mortgage and converted the rest for their own use.

According to the complaint, MMS engaged in a massive advertising campaign on a number of fronts, targeting homeowners with financial problems and African-Americans.

The suit was brought on behalf of three families, all of whom reside in Maryland. In addition to MMS, the suit names as defendants Joy Jackson, Kurt Fordham, Jennifer McCall, and Clifford McCall, all of whom were indicted in June 2008 for conspiracy to commit mail fraud and wire fraud, as well as money laundering. All four defendants designed and participated in the MMS scheme, and Jennifer McCall went so far as to act as a straw buyer in several transactions.

All have since pleaded guilty to the charges against them, along with six other defendants. The charges carry a maximum sentence of 30 years in prison; Fordham was sentenced to 10 years last month.

Prosecutors say case is one of the largest mortgage fraud schemes in Maryland history. While the scam has had a devastating effect on the more than 200 consumers who fell for it, even homeowners not directly affected may take a hit. The lawsuit predicts that entire neighborhoods will lose millions of dollars in home values as a result of the high number of foreclosures that have occurred, or are just around the corner.

The complaint notes that the FBI has already identified the Washington, D.C. Metropolitan area as a 'hotspot' for mortgage fraud, and predicts that the MMS scam will likely move it to the highest possible ranking.

The complaint alleges violations of the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), the Real Estate Settlement Procedures Act (RESPA), and a Maryland fraud statute. The court said that, if the case goes to trial, it will begin early next year.

By James Limbach
ConsumerAffairs.com

August 21, 2009
A U.S. district court has halted a phony job placement operation that allegedly stole money from job seekers by promising them full-time work, with benefits, that never materialized.

The court shut down the job placement operation, Career Hotline, Inc., and its principal, Susan Bright, who also does business as Unique Flowers, until a hearing on a preliminary injunction can be held, and froze its assets. According to a complaint filed by the Federal Trade Commission, the scam took out ads in local newspapers around the United States.

The ads urged job seekers to call an 800 number, where they got a pitch from telemarketers urging them to provide information about their work histories and to pay a placement fee that ranged from $89 to $195.

The FTC complaint charges that the defendants misled consumers by guaranteeing that they would land jobs making at least $25,000 a year if they paid the placement fee and provided the work history information.

Consumers who did this did not get the promised jobs, however. Their repeated efforts to follow up with the defendants or ask for a refund were fruitless.

ConsumerAffairs.com recently reported on a warning from Pennsylvania Attorney General Tom Corbett that Internet job scams are on the rise. He warned "falling for these schemes will not only leave you unemployed, but victims can also lose thousands of dollars and find themselves targeted by identity thieves."

These kinds of scams, and variations thereof, are fairly common, if the complaints received by ConsumerAffairs.com are any indication:

• Tommy from Gonzales, California, says he was offered a job and schooling, made a deposit of $150, but was never contacted about job placement by Hunter business school of academics. He says after calling and being put on hold for as log as four hours, "I just realized they are a scam and getting sued by the state so I am in desperate need of getting my refund back."

• Richard of Las Vegas, Nevada, tells ConsumerAffairs.com, "I graduated in 2005 from ITT Technical Institute with highest honors and they promised to have lifetime job placement when you graduate from their school, which they did not do that with me and I have over $80,000 worth of student loans that I need to pay back but can not due to the fact of not getting a job like they promised."

• Angela of Brooklyn, New York, says she attended Katharine Gibbs of New York from 2001-2003 and has not been able to find employment in the field in which she majored. "As I was told in the beginning," she said, "Gibbs GUARANTEED a lifetime of job placement. All it turned out to be was some lame internships at start up companies that would never hire and would not even pay a minimal fee. When I confronted someone at the job placement department, they basically told me that I was not their responsibility of what kind of jobs they placed people in, their job was to simply provide a job ad and that they did not guarantee the actual job or pay."

Susan Grant, Director of Consumer Protection at the Consumer Federation of America, says that given the state of the economy and the labor situation, "solicitations to help you find a job are probably more attractive that ever."

Grant says the real tip-off that a job placement offer may be a scam is the request for an up-front fee. She says, "That's not something legitimate employment agencies do." Grant says placement agencies should tell you what services they will be offering. "If that's not clear," she concludes, "I would stay away from it."

A coalition of consumer groups is calling on the U.S. Department of Transportation (DOT) to ensure, as the agency winds down the Cash for Clunkers program, that dealers are not "double-dipping" and getting paid twice -- once by their customers and again by the government.

During the past several weeks, the rejection rate for Cash for Clunkers transactions has hovered around 80 percent. Many dealers jumped the gun and entered into a high volume of contracts in July, before the rules governing the program were issued and before any deals were approved. Since then, the program has been overwhelmed, causing delays in payments to dealers.

As a result, many dealers are on the hook for tens of thousands of dollars. Experiencing cash flow problems and under pressure from lenders, some dealers have resorted to pressuring their customers to make up the difference. The program is now scheduled to end Monday, Aug. 24.

Some dealer associations even provide standardized "contingency agreements" for their dealer members that shift all the risks for rejected deals from the dealers to car buyers. Whether they signed the agreements or not, car buyers across the country are complaining that they are being pressured to give the dealers $3,500 or $4,500 extra in cash or sign a new contract agreeing to pay more, typically under threat of losing their new car or having the dealer report it stolen.

Dealers, of course, see it differently. Many have not yet seen their first check from the government and, in a business that relies on fast, upfront payments, that's causing some sleepless nights in autoland. Nissan is the latest automaker to say it will front money to dealers who are waiting for their clunker payments from Uncle Sam. Toyota and Volkswagen are also offering financial aid to cash-strapped dealers, as is General Motors.

Some dealers -- including Auto Nation, the largest U.S. auto retailer -- said it stopped making clunker rebate sales Friday night to make sure it had time to submit all of the deals for approval before Monday night. Auto Nation said it is owed about $45 million in taxpayer-finaned rebates.

President Obama denies there have been "extraordinary delays" in the processing of dealers' cash-for-clunkers claims and said the government has to be scrupulous in reviewing them to avoid fraud, Automotive News reported.

"This is actually a high-class problem to have -- that we're selling too many cars too quickly, and there's some backlog in the application process," Obama said in a radio interview released by the White House.

Acknowledging the consumer groups' complaints, DOT posted information on its Web site to advise car buyers that they do not need to sign the contingency agreements. However, many car buyers are unaware of that information. Having surrendered their "clunker" and dependent on their new car for transportation, they are vulnerable to being pressured, even if they did not sign the agreement.

Car buyers have no way to know if the dealer is being paid by the government, making it easy for auto dealers to game the system by collecting the $3,500 or $4,500 from the car buyers and collecting that amount from the government.

To protect taxpayers and reduce the risk of fraud and abuse, the groups are calling upon the DOT to require auto dealers to certify in writing that they have not already collected the amount of the incentive from the car buyer or reconfigured the deal in a subsequent contract.

They also say DOT should send a notice to the car buyers informing them that the deal was approved and the dealer was paid either $3,500 or $4.500. DOT is also urged to provide a simple pre-addressed form with prepaid postage for the car buyers to mail to the National Highway Traffic Safety Administration if they have paid that amount to the dealer themselves, or if they entered into an amended contract to buy the same vehicle. "Unless the DOT takes these simple steps, it will have no way to know whether the dealers are gaming the system," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety (CARS).

Joe Ridout, consumer services manager of Consumer Action, says, "By including these simple safeguards, the Department of Transportation can both protect consumers and verify that the taxpayers' investment in this program has not been misused."

DOT spokesman Bill Adams tells ConsumerAffairs.com that as the program begins to wind down, the department has three shifts working across the country to make sure dealers get their reimbursements. Adams adds says DOT "will continue to be diligent about the potential of fraudulent activity by all who are involved in the transactions."

He emphasizes, "Consumers are not required to sign contingency agreements to pay back the dealer should the cars credit be rejected." But he said nothing about the consumer groups' calls for notifying car buyers that that the deal was approved and the dealer was paid.

Last week, CARS and Consumer Action wrote to Secretary LaHood urging DOT to prohibit dealers from luring or pressuring car buyers into signing the contingency agreements and to survey car buyers to find out the full extent of the problem.

Ends Monday

The "Cash for Clunkers" program ends next Monday night (Aug. 24) at 8 p.m.

Because of a large number of pending transactions, no one is sure just how many vehicles have been sold and, therefore, no one knows exactly how much money has been spent. Congress allocated $3 billion for the program and the auto dealers' trade group suspects that every cent -- and then some -- is already spoken for. Federal officials have expressed confidence there's enough money to cover all the deals that have been made.

The Transportation Department said that as of Thursday, dealers have turned in applications for $1.9 billion in rebates for voucher payments made to customers.

GM said its sales over the past two months have exceeded internal forecasts by more than 60,000 vehicles, largely because of the clunkers program. New vehicle sales overall are expected to exceed 1 million in August, the first time that's happened in at least a year, according to J.D. Power and Associates.

Consumers stew

It's not just car dealers who are frustrated with the program. Would-be car buyers are also complaining of just about every type of snafu imaginable.

Many consumers have found dealers unwilling to hand over their new car until the dealer gets reimbursed by the feds.

"I signed a purchase agreement and loan agreement to purchase a new 2009 Chevy Impala under the cash for clunker program," said Mike of Howell, Mich. "The new vehicle is suppose to be handed over at time of deal. Dealer has held new car for 3 weeks now and refuses to hand it over until they get reimbursement from the government of $3,500."

Fred of Longmeadow, Mass., not only didn't get his new vehicle -- his old one nearly went into the crusher.

"We purchased a new 2009 Chevy Silverado at Balise Chevrolet on 8/13/09. We had agreed on a price of $11900 with a $4500 cash for clunkers rebate," he told ConsumerAffairs.com. "They looked up the trade in vehicle and told us it qualified for a $4500 rebate."

Fred said he took out a loan to cover the agreed-upon price. When he went to pick up the new truck, "They took my old truck and wrote clunker on it and towed it away. The man who was delivering the car then informed us our truck did not qualify for the clunker rebate," he said.

"We could not afford to pay anymore for the truck so we had to cancel the deal and wait for an hour and a half to get our truck back. They blamed the cash for clunkers government website for the problem. I than had to go back to my bank and try to cancel the loan for the truck.," he said.

Nancy of Manchester, N.J. said she spoke with the Internet sales department at Pinebelt Chevy and was told there were two trucks of the type she wanted sitting on the dealer's lot. So she had her trade-in towed in, only to be disappointed.

"When I got there the salesman was rude, told me the truck was sold and they only had trucks with 6' beds when we needed a 8'. ... This was a bait and switch situation," said Nancy, who had to have her trade-in towed to another dealer.

The passengers were trapped in the small plane for six and a half hours with nothing but pretzels to eat. After its initial investigation, DOT said the crew of the airliner acted properly.

"We have determined that the ExpressJet crew was not at fault. In fact, the flight crew repeatedly tried to get permission to deplane the passengers at the airport or obtain a bus for them," Transportation Secretary Ray LaHood said.

"The local representative of Mesaba Airlines improperly refused the requests of the captain to let her passengers off the plane," LaHood said. "The representative incorrectly said that the airport was closed to passengers for security reasons, which led to this nightmare for those stuck on the plane."

The 50-seat commuter jet took off at 9:30 pm August 7 from Houston, bound for Minneapolis. However, after a two-hour flight, it was diverted to Rochester, Minnesota because of severe weather.

ExpressJet, the carrier operating the plane for Continental, told a Minneapolis TV station that the planes crew had reached the limit on its flying time. That required locating another crew and flying it to Rochester.

Meanwhile, the passengers of flight 2816 had to stay on the plane. The airline told the station they were not allowed to deplane the passengers because off because of security. The TSA screeners had already gone home for the night so, if the passengers deplaned, the airline could not legally allow them to get back on. At least, that's what the plane's flight crew was told. As it turns out, it wasn't the case.

The representative of Mesaba - the only carrier able to assist Continental at the airport - said that the airport was closed to passengers, apparently because there was no one from the Transportation Security Administration available to screen passengers. In fact, TSA procedures allow passengers to get off the plane, enter the terminal and re-board without being screened again as long as they remain in a sterile area.

Passengers remained on the plane overnight, finally getting off at 6:30 am, once security personnel had returned to their posts. But Rochester airport officials say the passengers were needlessly inconvenienced.

"They wouldn't have had to go through security. They could have come into the airport," airport manager Steve Legve told the Rochester Post-Bulletin. That was confirmed by the DOT investigation.

"There was a complete lack of common sense here," LaHood said. "It's no wonder the flying public is so angry and frustrated."

LaHood said the Aviation Enforcement Office is considering the appropriate action to take against Mesaba as it completes the investigation, which it expects to conclude within a few weeks.

Mesaba is a wholly owned subsidiary of Northwest Airlines, which is a wholly owned subsidiary of Delta Air Lines.

When talk show host Oprah Winfrey raved about the weight loss properties of the acai berry, supplement makers were quick to cite her endorsement in advertising for all sorts of related products.

The only problem is, Winfrey was talking about the berry, not supplements. Now the talk queen is fighting back.

Chicago-based Harpo, Inc., producers of "The Oprah Winfrey Show," and "Dr. Oz" has joined forces with Illinois Attorney General Lisa Madigan to alert consumers to the numerous complaints about acai berry supplement marketers.

Winfrey and her company have filed trademark infringement suits against 40 Internet marketers of dietary supplements and Madigan has sued three companies in particular - Advanced Wellness Research, Crush LLC and Amirouche & Norton, LLC - over their business practices.

The Attorney General's Office and representatives from Harpo coordinated an investigation of consumer complaints - many provided to the Attorney General's Office by Harpo - revealing the alleged deceptive practices of these companies. Neither. Winfrey nor Oz has ever sponsored or endorsed any acai berry or dietary supplement product.

"The acai berry supplement sales programs are among the most aggressive that we have seen using misleading sales tactics to scam consumers," Madigan said. "Consumers should always be skeptical and educate themselves instead of blindly believing any endorsement claims. Also, consumers need to be very wary of weight loss and health claims that sound too good to be true."

Madigan sued the three promoters for consumer fraud, charging that the companies lure customers with free trial offers - through aggressive Internet marketing techniques - and then charge customers' credit cards prematurely, do not always supply the product and make it nearly impossible to cancel.

"For thousands of dieters, the quest for a miracle product has become a nightmare," said Madigan. "Far too often, consumers end up losing their money - not weight - in these deals."

ConsumerAffairs.com has also received hundreds of complaints about companies selling acai berry supplements, including some named in the suit. This complaint, from Sherri in in Brentwood, Tennessee, is typical:

"I ordered the Acai berry product off of an AOL advertisement for $6.99," she told ConsumerAffairs.com. "I started receiving a bottle monthly, I did not realize for a couple of months that they were charging me $83.80 per bottle. I sent numerous emails, and called them three times, to cancel order and give me credit for two returned bottles, and that I needed to return another bottle. When I tell them I do not want it to cancel they reply that they will get back with me in 72 hours."

The complaints against the suppliers allege that these companies engage in a very similar scam to market and sell acai berry supplements. According to the complaints, the companies offer consumers a "free trial" to entice them to sign up by providing a credit card number for shipping and handling charges.

The companies use the "free trial" period to hook the consumers into a continuity sales program, where consumers are often unaware that they have agreed to buy a monthly supply of acai berry supplements (or other health supplement products) for $29 to $89 per month unless they cancel their orders within 14 days. Many consumers do not even receive shipment of the trial supplements before they are billed for the first monthly installment shipment.

As part of this scam, Madigan says consumers then find it very difficult to cancel future orders. The companies often bill consumers' credit cards for a few months supply before the consumers are able to cancel the orders or cancel their credit card payments.

Madigan's three suits ask the court to enter a permanent injunction barring the defendants from selling dietary supplements or continuing with misleading marketing schemes that impact Illinois consumers. The lawsuits also ask the court to order the defendants to pay restitution for consumers who have lost money and civil penalties of $50,000 for violating the Illinois Consumer Fraud and Deceptive Business Practices Act.

A New Jersey court affirmed the dismissal of a class action against the manufacturer of the drug Relacore last week, agreeing with the trial judge that attorneys for the plaintiffs had not satisfied the prerequisites for granting class certification to the case.

The suit, filed by lead plaintiff Melissa Lee in November 2004, alleged that the Carter-Reed Company fraudulently advertised the drug as reducing belly fat. Despite Carter-Reed's claims, Lee actually gained weight while on the recommended 90-day regimen. In addition to common law and statutory fraud claims, Lee's suit also included counts for unjust enrichment and breach of implied and express warranty.

The court ruled that too many factual and legal issues varied from plaintiff to plaintiff, defeating one of the main justifications for bringing a class action suit. Under federal court rules, class actions must involve issues of fact or law common to every class member.

Specifically, the appellate judges endorsed trial Judge Catherine Dupuis's finding that 14 fraud-related factors would require a hearing for every member of the class. These factors included which advertisements consumers saw, whether these advertisements induced them to buy the product, the amount they paid for the drug, and whether they asked for a refund after discovering Relacore's ineffectiveness.

Lee's lawsuit had defined a class of all New Jersey consumers who bought Relacore since it was first introduced in 2002. The suit had originally sought certification of a nationwide class, but Lee's attorneys narrowed it to New Jersey in 2006.

The decision by the Appellate Division apparently leaves the case in limbo, at least for the moment. Lee's attorneys have not announced whether they plan to appeal to the New Jersey Supreme Court. If they don't, Relacore buyers may be out of luck; the appellate judges noted that individual damages, ranging from $40 to $120, are not high enough to make it worth consumers' while to spend time and money bringing individual cases.

The case attracted the attention of at least one consumer rights group. In an amicus curiae brief filed with the court, Public Citizen, a non-profit consumer advocacy organization, said its goal was to ensure that consumers are protected from "fraudulent mass media advertising campaigns."

Relacore's website tells consumers that "It may take more than diet and exercise to fight stress-related belly fat." Relacore claims to work by triggering stress-reducing compounds, which in turn lower the level of cortisol produced by the body. Cortisol is a hormone produced when a person is stressed, and, according to Relacore, "is associated with stubborn stress-related abdominal fat."

Like many weight loss supplements, Relacore is not approved by the FDA. In 2006, the Federal Trade Commission (FTC) warned manufacturers of diet supplements that advertisements containing unsubstantiated claims could violate consumer laws. After that announcement, Relacore modified commercials to say that Relacore is a drug that may reduce stress levels and indirectly lead to weight loss. The company no longer promises that Relacore will lead directly to a better body.

"This program has been a lifeline to the automobile industry," Transportation Secretary Ray LaHood said in a statement today as he announced the cut-off time for the program.

Because of a large number of pending transactions, no one is sure just how many vehicles have been sold and, therefore, no one knows exactly how much money has been spent. Congress allocated $3 billion for the program and the auto dealers' trade group suspects that every cent -- and then some -- is already spoken for. Federal officials have expressed confidence there's enough money to cover all the deals that have been made.

The Transportation Department said that as of today dealers have turned in applications for $1.9 billion in rebates for voucher payments made to customers.

"I know dealers are frustrated, but they're going to get paid," LaHood said earlier. Dealers have been complaining that the clunker program paperwork is too complex, that too many applications are rejected and that the processing time is excessive.

The National Automobile Dealers Association (NADA) yesterday formally asked the government to suspend the clunkers program because a survey by the group found that the $3 billion fund has been exhausted. General Motors, thrilled with the boost in sales, said it would provide cash advances to dealers to cover the outstanding rebates.

Ford and Chrysler didn't immediately respond to GM's offer to advance cash to cover dealers' outstanding rebate payments. GM said it will deposit the money in a dealer's open account and then retrieve it after 30 days if a payment had been received from the federal government.

GM said its sales over the past two months have exceeded internal forecasts by more than 60,000 vehicles, largely because of the clunkers program. New vehicle sales overall are expected to exceed 1 million in August, the first time that's happened in at least a year, according to J.D. Power and Associates.

Consumers stew

It's not just car dealers who are frustrated with the program. Would-be car buyers are also complaining of just about every type of snafu imaginable.

Many consumers have found dealers unwilling to hand over their new car until the dealer gets reimbursed by the feds.

"I signed a purchase agreement and loan agreement to purchase a new 2009 Chevy Impala under the cash for clunker program," said Mike of Howell, Mich. "The new vehicle is suppose to be handed over at time of deal. Dealer has held new car for 3 weeks now and refuses to hand it over until they get reimbursement from the government of $3,500."

Fred of Longmeadow, Mass., not only didn't get his new vehicle -- his old one nearly went into the crusher.

"We purchased a new 2009 Chevy Silverado at Balise Chevrolet on 8/13/09. We had agreed on a price of $11900 with a $4500 cash for clunkers rebate," he told ConsumerAffairs.com. "They looked up the trade in vehicle and told us it qualified for a $4500 rebate."

Fred said he took out a loan to cover the agreed-upon price. When he went to pick up the new truck, "They took my old truck and wrote clunker on it and towed it away. The man who was delivering the car then informed us our truck did not qualify for the clunker rebate," he said.

"We could not afford to pay anymore for the truck so we had to cancel the deal and wait for an hour and a half to get our truck back. They blamed the cash for clunkers government website for the problem. I than had to go back to my bank and try to cancel the loan for the truck.," he said.

Nancy of Manchester, N.J. said she spoke with the Internet sales department at Pinebelt Chevy and was told there were two trucks of the type she wanted sitting on the dealer's lot. So she had her trade-in towed in, only to be disappointed.

"When I got there the salesman was rude, told me the truck was sold and they only had trucks with 6' beds when we needed a 8'. ... This was a bait and switch situation," said Nancy, who had to have her trade-in towed to another dealer.

Countless times each day consumers encounter sales people online, over the phone and in person, who use deception to take their money. They may appear to be salesmen, but people who deceive you for a buck are actually scammers.

Wouldn't it be nice if there were an easy way to identify a scammer? Well, there are signs you're being scammed, if you'll only be aware of them.

We often think of a conman as smooth and sophisticated, and some of the really good ones are. But more often than not, the people responsible for taking your money are nothing more than common thugs, and they behave that way.

When you are dealing with any business person, you have every right to be treated in a respectful manner and, above all, in a professional manner. A consumer recently wrote to ConsumerAffairs.com detailing her experience with a home warranty company. Things seemed fishy from the outset.

"I got a call from a gentleman, definitely using a fake voice, offering to give me a quote," she said. "At first, he seemed very helpful, but then as his fake voice kept going in and out, he started talking to someone else in his office, cussing, laughing, and making jokes."

Using profanity--not to mention a fake voice--is unprofessional behavior, and when you encounter it from someone trying to sell you something, it's a tipoff you're dealing with a scammer.

It's also unprofessional if a business person threatens you. ConsumerAffairs.com receives numerous complaints from consumers describing harassment at the hands of debt collectors. Honest debt collectors will always maintain a firm, but professional demeanor. However, consumers have reported receiving repeated calls at work, complete with threats of arrest, and even physical harm.

People making these calls are scammers and should be reported to your state attorney general. You should not give them any money.

Professionalism should extend not just to verbal communication, but written communication as well. If letters and emails are filled with misspellings, poor grammar and punctuation, and odd syntax, it's another tipoff you're could be dealing with a scammer.

Business promotions are all too often scam territory. Unfortunately, legitimate and well-meaning businesses get caught up in these schemes because they don't do their homework, and hire what turn out to be scam operations to provide enticements to their customers.

"Free gas" promotions are a recent favorite, and many have turned out to be scams. If a business offers you a "free gas" card in return for doing something like sitting through a sales pitch, chances are, you'll never get the gas.

When you suddenly find it impossible to get in touch with the sales rep who is handling your account, chances are they're a scammer. Cassie, of Liberty, Missouri, found out the hard way after paying $3500 to a company that promised to help settle her tax debt with the IRS.

"We have called for a year and left message after message for a return phone call," she told ConsumerAffairs.com. "We still haven't received that call back. They did absolutely nothing for us. We will probably never see the money they took from us. We have since worked out a deal, by ourselves."

Scams have been around forever and there's no reason to think they'll ever disappear. If you can see one coming, you improve your chances of avoiding becoming a victim.

Turns out Debt Relief USA could have used a little debt relief itself. The Texas based company is in bankruptcy, leaving hundreds of distressed clients in the lurch. Pam, of Newport, Tennessee, is one of them.

"Saw the ad on TV, called them and signed a contract," Pam told ConsumerAffairs.com. "Now I am being sued and they are closed. I need my money back to settle with my creditors."

Pam may be in luck.

Texas Attorney General Greg Abbott has taken legal action to recover $4.6 million that he says Debt Relief USA wrongly withheld from its clients in Texas and other states.

In June, Debt Relief USA Inc. of Addison filed for bankruptcy protection in the Northern District of Texas. As a result, more than 2,500 financially distressed customers did not receive the debt relief they were promised. In fact, debtors' problems were exacerbated by the bankruptcy because some of Debt Relief USA's clients received no assistance and are now being pursued by collection companies.

According to investigators with the Office of the Attorney General, the firm targeted individuals with thousands of dollars in unsecured debt, promising customers it would render them "debt-free in as little as 36 months."

Under Debt Relief USA's model, debtors stop paying their debts in order to save the money they would have paid creditors over time. Instead, they paid monthly installments to Debt Relief USA, which promised to later negotiate discounted pay-offs with creditors.

However, Abbott says his investigation concluded that the company assessed an "administration fee" of about eight percent of each customer's total debt, as well as monthly "maintenance fees" of up to $40. If the company successfully settled a debt, it then charged a "negotiation fee" of 13 percent of the amount of debt saved.

According to court documents the state filed with the bankruptcy court, Debt Relief USA collected "set-aside" funds from its customers. However, the Texas Finance Code prohibits set-aside funds unless a company is licensed or registered and has posted a bond with the Office of Consumer Credit Commissioner. Abbott says Debt Relief USA failed to meet the legally mandated registration and bond requirements.

As a result, the Attorney General has filed a proof of claim in the bankruptcy case seeking restitution for financially harmed debtors and the return of any fees paid to Debt Relief USA by current or former clients.

In addition, the Office of the Attorney General moved to protect the defendant's clients' privacy by successfully arguing that their names and confidential information be removed from the public record. Further, the Attorney General successfully moved to have the bankruptcy case converted from a Chapter 11 reorganization to a Chapter 7 liquidation with a neutral trustee appointed by the court. The trustee's duties will include liquidating the debtor and paying claims to creditors.

Investigators with the Office of the Attorney General say they found that Debt Relief USA often never contacted creditors on behalf of their "clients," which ultimately damaged its customers' credit reports and even led to debt collection lawsuits by creditors. Debt Relief USA customers risked the ongoing accruals of late fees, interest, over-limit charges and other fees associated with the creditor's account.

Therefore, even in the event of a settlement, customers often owed significantly more on their accounts, which reduced their overall debt settlement savings. In addition, any savings realized under a settlement would be subject to taxation, since these are considered "income."

In addition to restitution, the Attorney General seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, as well as attorneys' fees.

Consumers who believe they may qualify for restitution call the Office of the Texas Attorney General's toll-free complaint line at (800) 252-8011.

August 19, 2009
About 1,500 Felt FIX Cyclocross bicycles are being recalled. The bicycles fork steerer tube can break, causing the rider to lose control and fall, posing a risk of injury.

Felt Bicycles has received six reports of the bicycle forks breaking, including two reports of minor cuts and scrapes.

The recall includes all 2007/2008 Felt F1X Cyclocross Bicycles. These bicycles are available in semimatte black and have aluminum frames with carbon fiber forks with aluminum steerer tubes.

The bicycles, made in Taiwan, were sold by bicycle specialty stores nationwide from July 2006 through April 2009 for between $1,400 and $1,500.

Consumers should immediately stop using the recalled bicycles and contact a local Felt Bicycles dealer to receive a free inspection and repair.

For additional information contact Felt Bicycles toll-free at (866) 433-5887 between 8 a.m. and 5 p.m. PT Monday through Friday, or visit the firms Web site at www.feltracing.com.

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

Four months after Litton Loan Services settled a class action accusing the company of imposing bogus late fees, complaints about Litton continue to roll into ConsumerAffairs.com. Some consumers allege that Litton failed to timely post payments to their accounts, the main issue in the class action. Still others get the run-around from the mortgage servicing company on the possibility of receiving a loan adjustment, leading to confusion and, in many cases, the threat of foreclosure.

As a loan servicer, Litton -- owned by Goldman Sachs -- handles the operational aspects of consumer loans: sending out statements, receiving and tracking payments, notifying consumers of overdue payments, and initiating foreclosure proceedings.

In April, Litton settled a class-action lawsuit alleging that the company failed to credit borrowers' mortgage payments in a timely fashion, then turned around and charged late fees for the purportedly tardy payments. In some cases, consumers' accounts were put into default. The suit covered all homeowners whose mortgage transaction was transferred or sold to Litton between October 2002 and February 2009, and who were charged erroneous late fees within 60 days of the transfer.

Litton tracks consumer payment records using a complex automated servicing platform. Known as Risk Assessment Default Analytic and Reporting (or RADAR), the system transfers information from primary lenders to Litton for processing. This procedure is known as the boarding process. According to the suit, RADAR glitches were the main cause of payments being wrongly flagged as late.

In court papers, former Litton employee Debra Murray said that [I]t was common that information regarding loan histories was improperly transferred from the prior lender during the loan boarding process. Murray further said that 95% of consumer complaints were caused by Litton's mistakes in servicing the borrowers' loans and were resolved in favor of the borrower. The bulk of these complaints alleged that Litton failed to credit consumers for payments they had already made.

Overwhelmed

Murray also said that Litton was becoming overwhelmed by the number of accounts it handled, and became increasingly careless and negligent as a result.

For example, Murray said that when a payment couldn't be matched to an account, it was placed in a catch-all payment clearing account, where it sat for months or even years. Meanwhile, the account of the consumer who sent in the payment went into default, collecting late fees and sometimes ending up in foreclosure. Murray also said that, when she found a missing payment, she was instructed to apply it as of the day it was discovered, rather than the date it was received. This, too, caused customers who sent their payments in on time to be assessed a late fee.

In July 2007, a federal judge in California certified a class of plaintiffs alleging claims under the Real Estate Settlement Procedures Act, or RESPA. The case was settled in April; as part of the agreement, Litton agreed to create a settlement fund containing $537,500, from which plaintiffs can draw up to $60 each. The narrow definition of the class and relatively small settlement amount likely left some consumers disappointed, but it at least signaled that Litton was willing to put the issue to rest.

Loan modifications

Four months after approval of the settlement, ConsumerAffairs.com continues to be bombarded with Litton complaints. An overwhelming number of homeowners report that they were promised a loan modification, only to be told months later that they did not qualify. In some cases, Litton dragged the process out by claiming they haven't received necessary paperwork or that the evaluation is taking longer than expected; in many cases the delay is so great that consumers come dangerously close to foreclosure.

In fact, it wasn't until earlier this month that Litton began officially participating in the federal government's mortgage modification program, the Home Affordable Modification Program (HAMP).

Low-income advocacy group ACORN labeled mortgage servicers that don't participate in the program as "homewreckers," but Litton and HomEq, the only other lender that had failed to participate in the program, have since announced they'll start doing so.

Litton said it has offered more than 35,000 trial modifications using terms "consistent with the Treasury program" since it was announced. Litton modified another 44,000 loans, the company said, in the 12 months before the start of the program.

"Our company has used modifications as the primary method of helping homeowners avoid foreclosure. In the 12 months prior to the announcement of the Home Affordable Modification program, we modified more than 44,000 loans, representing about 10% of our loan portfolio. As the details of the federal program emerged, we continued to modify loans, and by adopting this program, we will continue to make every effort to keep homeowners in their homes, said Larry B. Litton, Jr., Littons president and CEO.

Litton said customers who are having difficulty making their mortgage payments are encouraged to call (800) 247-9727 or visit www.littonloan.com to determine if they are eligible for a modification or other loan workout solution.

Homeowners beg to differ

But homeowners who have sought assistance from Litton say the process isn't as easy as the company claims.

Al of Empire, MI writes:

I applied for a loan modification March 4, 2009. Since that time I have sent all requested documents and forms including tax forms, proof of pension and SS income. These documents were claimed via phone conversation as "haven't been received" or "in review" or "I can't tell you" or "we'll let you know in writing. They would never commit to a process or approximate date. Now as of July 28, 2009, nothing.

Delianes of Miami, FL had a similar experience:

In December 2008 I had requested a loan modification to Litton Loan Services. I was paying my monthly payments on time but struggling in order to keep my loan current. They told me that it takes aprox 90 days. A month after I called them and they said that they never received any documents, even though I had the fax confirmation, I faxed all the documents again. A month later they sent me a letter that my request was denied because we had insufficient income.

Barbara of Bowie, MD has waited over two months for a response. Barbara writes:

I contacted Litton to receive a loan modification and sent them all the paper work. They stated they will do a worked out a plan to decrease my paments. In April 2009, I spoke with a Litton representative regarding my loan modification. It is now June 2009 and I have not heard from Litton Loan Servicing Company. I don't know if Litton really modifies loans. According to there website they help people to stay out of foreclosure.

Payments held

More disturbingly, some consumers also complain that Litton is still holding mortgage payments they sent in long ago. Missy of Northlewisburg, OH writes:

They held mortgage payments we did make for reasons I don't know. Some are still being held today. So it looks like we are behind on payments.

Mary of Vista, CA says that Litton failed to apply payments to her escrow account:

Loan modification since Oct 2008. I have had nothing but problems with this company. Paid 1,500 towards the escrow account yet they did not apply it towards the account. Now they say I owe 3,500 toward escrow account. I recently paid 900 towards escrow account they are not showing that paid.

More litigation?

If Litton is again applying payments late, they are putting themselves at risk of incurring a second class action, or at least a number of individual lawsuits. While consumers covered by the first settlement agreement are unable to pursue further claims, the same is not true of homeowners who fall outside the class definition. The Supreme Court has held that class actions only bar subsequent actions if they could have been litigated during the original suit.

Litton's practices with regard to loan modification could also put it on shaky legal ground, given the strict disclosure requirements imposed by the Truth in Lending Act (TILA) and other federal legislation.

By James Limbach
ConsumerAffairs.com

August 19, 2009
With identity theft continuing to be near the top of consumer complaint lists, the Internal Revenue Service reminds consumers to avoid such scam that use the IRS name, logo or Web site in an attempt to convince taxpayers that the scam is a genuine IRS communication.

In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more.

These thieves generally use someone's personal data to steal his or her financial accounts, run up charges on the victim's existing credit cards, apply for new loans, credit cards, services or benefits in the victim's name and even file fraudulent tax returns.

The scams may take place through e-mail, fax or phone. When they take place via e-mail, they are called "phishing" scams.

The IRS urges consumers to avoid falling for the following recent schemes:

Making work pay refund

This phishing e-mail, which claims to come from the IRS, references the president and the Making Work Pay provision of the 2009 economic recovery law. It says that there is a refundable credit available to workers, consumers and retirees that can be paid into the recipient's bank account if the recipient registers their account information with the IRS. The e-mail contains links to register the account and to claim the tax refund.

In reality, most taxpayers receive their Making Work Pay tax credit, which was designed for wage earners, in their paychecks as a result of decreased tax withholding, not as a lump sum distribution from a federal fund. Additionally, consumers and retirees who are not wage earners are not eligible for this tax credit.

Inherited funds / lottery winnings / cash consignment

In this phishing scheme, recipients receive an e-mail claiming to come from the U.S. Department of the Treasury notifying them that they will receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail.

The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay ten percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees.

Form W-8BEN

In this scam, fraudsters modify a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to request detailed personal and financial information. This could include nationality, passport number, bank account and PIN numbers, spouse's name and mother's maiden name, or other personal or financial information or security measures for financial accounts. The scammers may use the genuine form number and name or may make up a new form number, such as W-4100B2.

They either e-mail or fax the form or letter. If only a letter, the letter itself contains the request for the personal and financial information. The letter, which claims to come from the IRS, states that the recipient will face additional taxes unless he or she quickly faxes the required information to the number provided by the scammer.

In reality, taxpayers file the genuine Form W-8BEN with their financial institutions, not with the IRS. Additionally, the genuine W-8BEN does not request the taxpayer's passport number, bank account number, security or similar information.

Refund scam

The bogus e-mail, which claims to come from the IRS, tells the recipient that he or she is eligible to receive a tax refund for a given amount. It instructs the recipient to click on a link contained in the e-mail to access and complete a form for the tax refund. The form requires the entry of personal and financial information. The refund scam is the most common one seen by the IRS. Several recent variations on this scam have claimed to come from the Exempt Organizations area of the IRS. Some others have included the name and purported signature of a genuine or a made-up IRS executive.

Taxpayers do not have to complete a special form to obtain a refund. Taxpayer refunds are based on the tax return they submit to the IRS.

How to spot a scam

Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:

• Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother's maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.

• Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.

• Gets the Internal Revenue Service or other federal agency names wrong.

• Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).

• Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (www.irs.gov). To see the actual link address, or URL, move the mouse over the link included in the text of the e-mail.

• What to do

The IRS does not initiate taxpayer contact via unsolicited e-mail or ask for personal identifying or financial information via e-mail. If you receive a suspicious e-mail claiming to come from the IRS, take the following steps:

• Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.

• Do not click on any links, for the same reason. Also, be aware that the links often connect to a phony IRS Web site that appears authentic and then prompts the victim for personal identifiers, bank or credit card account numbers or PINs. The phony Web sites appear legitimate because the appearance and much of the content are directly copied from an actual page on the IRS Web site and then modified by the scammers for their own purposes.

• Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you.

• Forward the suspicious e-mail or URL address to the IRS mailbox phishing@irs.gov, then delete the e-mail from your inbox.

Genuine IRS web site

The only genuine IRS Web site is IRS.gov. All IRS.gov Web page addresses begin with www.IRS.gov. Anyone wishing to access the IRS Web site should initiate contact by typing the IRS.gov address into their Internet address window, rather than clicking on a link in an e-mail.

Qwest has informed its customers that they have two months to switch to another provider, as it will be discontinuing wireless phone service by October 31st, 2009.

The Denver, Colorado-based company, which originally partnered with Sprint Nextel to provide voice and broadband services to customers in 2004, switched to Verizon Wireless last year. Qwest began transitioning its customers to Verizon Wireless in August of 2008, and the company claimed it has successfully switched "tens of thousands" of customers.

Customers were informed by Qwest that they could make the switch to Verizon Wireless within 60 days without incurring any termination or cancellation fees.

Qwest, which has customers in 14 Western and Midwestern states, attempted to profit through entering the Mobile Virtual Network Operator (MVNO) business, where a wireless carrier rebrands and resells another company's services to particular markets. The MVNO market has been seen as a growth opportunity, as cost-conscious consumers switch to prepaid plans rather than all-you-can-eat monthly plans for their services.

Qwest, however, was unsuccessful in profiting off the resale of Sprint's and Verizon's services. Of Qwest's total 763,000 wireless customers, only 185,000 were remaining with its MVNO service, said Chief Operating Officer Tom Richards during the company's quarterly earnings call on July 29.

Qwest plans to focus on its landline phone service and reselling bundled "triple-play" phone/cable/Internet offerings from other companies. Qwest also partners with DirecTV to resell its satellite television service.

Coincidentally, The Department of Justice said yesterday that it would let stand a ruling by a federal appeals court that shortened the sentence of former Qwest CEO Joe Nacchio, convicted in 2007 for insider stock trading. The court ruled that Nacchio's sentence should be reduced due to a miscalculation in how much money he had allegedly made as a result of the trades.

Times are tough for folks in the consumer advocacy business.

Recently, ConsumerAffairs.com reported on a recent Consumer Federation of America survey showing consumer complaints are up, but agency resources are down. The Commonwealth of Virginia is a prime example of the strain some states are feeling.

Elaine Lindholm of the Virginia Department of Agriculture and Consumer Services told ConsumerAffairs.com that since 2002, her agency has lost about 30 percent of its staff - going from 750 full-time employees to fewer than 500. And, she says, more cuts are in the works.

What it boils down to, Lindholm says, is "more work with fewer people."

And it isn't just the state level that's absorbing the hits. As of July 1, for example, the city of Alexandria's Office of Consumer Affairs stopped processing consumer complaints. Lindholm says those calls are now coming to her agency.

The Consumer Protection Division of the Attorney General's office in Indiana has found a way to handle the shortfall in both staff and funding. Abby Kuzma, the division's director and chief counsel, tells ConsumerAffairs.com she's turned to using volunteers from VISTA, the anti-poverty program created in the 1960s.

Kuzma says while the department has lost staff because of the recession and accompanying economic turmoil, it is not able to hire people to hire more people to handle what she says is "an increase in complaints" many of which are "financial in nature."

In particular, there's been an explosion of scamsters offering to help people stave off foreclosure and she says the VISTA volunteers are working to get out the word that pro bono attorneys are available to assist people who are in danger of losing their homes.

The situation in Utah appears to be a little different.

Jennifer Bolton, spokeswoman for the Utah Department of Commerce, which houses the Division of Consumer Protection, tells ConsumerAffairs.com that the department "has had significant budget reductions." But she adds, "Attrition in other divisions in the department thus far has allowed Consumer Protection, which already operates on a net zero budget, to escape any budget reductions." Thus, she says staffing has not been affected - so far.

Nonetheless, the number of complaints received by the Division during the period of January 1, 2009 to June 30, 2009 is 18 percent higher than the number of complaints received during the same months in 2008.

Bolton says the two most common types of scams that the Utah Division of Consumer Protection continues to receive from consumers involve fake check and phishing scams. She points out that while it's hard to say with certainty whether these scams are a reflection of the down economy, "what is apparent is that con artists seem to tailor their message to whatever is topical at the moment."

In the CFA survey of 34 state, county, and city agencies from 19 states across, 47 percent said they had budget cuts just prior to or during the 12-month survey period in 2008.

Overall complaints rose by 10 percent, it said, with all agencies surveyed saying they responded to 265,324 complaints.

New York Attorney General Andrew Cuomo is going after another Buffalo-based debt collection operation.

In June the Attorney General's Office obtained an order a nationwide collection operation that consisted of at least nine debt collection companies across Western New York, run by Buffalo resident Tobias Boyland. According to the complaint, Boyland's employees violated state and federal law by routinely posing as law enforcement officials, threatening to arrest consumers and throw them in jail unless they made arrangements to pay the company immediately.

This week Cuomo filed a lawsuit seeking to shut down another Buffalo-based debt collection operation consisting of 13 debt collection companies run by Buffalo residents Omar Smith, Narvell Benning and Keith Marshall. The announcement has a similar ring.

According to the complaint, the Benning-Smith Group's employees violated state and federal law by routinely posing as law enforcement officials and threatening to arrest or to physically harm consumers unless they made arrangements to pay the company immediately.

Additionally, the Benning-Smith Group allegedly made abuse and humiliation a trademark of their collection practices by verbally abusing consumers and, in some instances, sexually harassing them. To date, the Attorney General's Office said it has identified more than a thousand instances in which the Benning-Smith Group breached state and federal statutes.

Cuomo's lawsuit, filed Tuesday in Buffalo Supreme Court, seeks to shut down all of the Benning-Smith Group's operations in the Western New York.

"This company made lies, threats and abuse their calling cards in their efforts to manipulate and take advantage of consumers already facing tough economic times," Cuomo said. "They did everything they could to demean and humiliate their targets, stooping so low as to sexually harass and verbally abuse individuals nationwide. My Office will continue to protect consumers by making it clear that companies like this one will not be permitted to operate in the State of New York."

Cuomo said the investigation revealed that collectors regularly demanded payment for non-existent debts or substantially inflated the amount owed on an actual debt. Using their false law enforcement identities, collectors coerced and cajoled terrified consumers into agreeing to make payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, sent Western Union moneygrams and/or money orders out of fear, the complaint says.

In one instance, a Benning-Smith collector allegedly kept repeating the name of a consumer's daughter, describing various sexual things he would do to her unless the debt was paid. Another collector told a female consumer that if both she and her husband would engage in sexual acts with him, he would pay their debt himself. Collectors routinely called consumers "drunks," "scumbags," "deadbeats," and, in one instance, "a low-life piece of trash."

The federal Fair Debt Collection Practices Act, the New York State debt collection and consumer protection laws prohibit the following conduct: posing as an attorney, threatening lawsuits or other legal action which cannot be taken, saying a consumer committed a crime or will be arrested and talking with third parties except to get location information.

These statutes also bar the use of deception and harassment in collection practices. The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification.

Not all job-search methods are created equal.

In fact, a recent survey of human resources executives found that networking is the most valuable tool in the job seeker's arsenal, while going to job fairs is the leas effective.

The survey asked the hiring execs to rate the effectiveness of various job-search methods on a scale of 1 (least effective) to 5 (most effective). Networking averaged a 3.98 as about half of those asked gave networking the highest effectiveness rating of five.

The second most effective job-search tool available, according to by global outplacement consultancy Challenger, Gray & Christmas, Inc., which conducted the poll, is a relatively new one. Social/professional networking sites, such as LinkedIn, Facebook and Twitter, garnered an average rating of 3.3, with 47 percent of respondents giving it a rating of four or five.

Meanwhile, job fairs ranked as the least effective job-search method, scoring an average rating of 1.6. It was followed closely by responding to newspaper classified ads and sending resumes to employers, which each averaged 1.7 on the rating scale.

"Job fairs are particularly ineffective in recessions," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. "They are heavily attended by job seekers and lightly attended by employers. Many of the employers that do attend are seeking very low-level workers, volunteers or unpaid sales representatives/franchisees who would have to be prodigious sellers to make a living wage."

While job seekers do get to interact with a representative of the company at the job fair, Challenger says it hardly qualifies as networking. The employer representative is rarely a decision maker and simply there to administer and collect applications.

Those surveyed gave Internet job boards relatively high marks. It averaged a middle-of-the-road rating of 3.0, but 38 percent of respondents gave it a 4.0. While the Internet has the potential to be very useful for job seekers, Challenger said that it has become the primary tool for many, when it should be considered secondary to the traditional technique of networking and meeting prospective employers in person.

"It is important to remember that the job search is a multifaceted process," he said. "Those who rely on just one tool, even if it is networking, will take longer to find a position. The problem with the ease and accessibility of the Internet is that many job seekers make it their primary job search tool."

Challenger also warns that overuse of the Internet also threatens to prolong the hiring process on the employer's end, as well, by inundating employers with irrelevant resumes. Some human resource executives complain that for every qualified candidate that comes in from the Internet, there are ten to 20 who do not even come close to being a good fit.

"The more irrelevant resumes that hiring managers have to wade through in order to select the handful to bring in for interviews, the longer it takes to fill the position," he cautions. "One result of this has been the increased use of digital screening software that scans incoming resumes for keywords. Resumes without the right words are filtered out of the process. This will make it even more difficult for job seekers to get their resume in front of the hiring executive.

Challenger adds that this is not to say that the Internet has not revolutionized job searching. He points out that it has certainly made it easier for someone in San Francisco, for example, to search for job openings in Miami. In addition, the ability to conduct keyword searches has reduced the amount of time it takes to target the type of position a person is seeking.

"Job seekers must learn how to use all of the tools at their disposal, including networking, the Internet, newspapers, job fairs and even cold-calling employers," he concluded.