Current Events in November 2009

November 9, 2009
Maclaren USA is recalling about 1 million strollers following several reports of infants' fingertips being amputated by the hinge mechanism when the stroller is being unfolded.

The firm has received 15 reports of children placing their finger in the stroller's hinge mechanism, resulting in 12 reports of fingertip amputations in the United States. Consumers have also complained to ConsumerAffairs.com about other problems with the expensive strollers, most notably the wheels breaking off unexpectedly.

This recall involves all Maclaren single and double umbrella strollers. The word 'Maclaren' is printed on the stroller. The affected models included Volo, Triumph, Quest Sport, Quest Mod, Techno XT, TechnoXLR, Twin Triumph, Twin Techno and Easy Traveller.

The strollers were sold at Babies'R'Us, Target and other juvenile product and mass merchandise retailers nationwide from 1999 through November 2009 for between $100 and $360. They were made in China.

Consumers should immediately stop using these recalled strollers and contact Maclaren USA to receive a free repair kit.

For additional information, contact Maclaren USA toll-free at (877) 688-2326 between 8 a.m. and 5 p.m. ET Monday through Friday or visit the firm's Web site at www.maclaren.us/recall.

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

Florida has plenty of sunshine for taking long walks, but it also has the worst record in the nation when it comes to pedestrian accidents.

A new report by Transportation For America (T4), a coalition of transportation policy groups, has found that the Orlando, Tampa, Miami and Jacksonville metro areas are the top four most dangerous cities for walking. Memphis, Tenn., is number five.

Using federal statistics, the report says that in the last 15 years, more than 76,000 Americans have been killed while crossing or walking along a street in their community. More than 43,000 Americans -- including 3,906 children under 16 -- have been killed this decade alone.

"This is the equivalent of a jumbo jet going down roughly every month, yet it receives nothing like the kind of attention that would surely follow such a disaster," the authors write.

Children, the elderly, and ethnic minorities are disproportionately represented in this figure, but people of all ages and all walks of life have been struck down in the simple act of walking, the report states.

While most of these incidents are officially listed as accidents, T4 said it sees a pattern in the overwhelming majority of these deaths.

Dangerous by design

"They occurred along roadways that were dangerous by design, streets that were engineered for speeding cars and made little or no provision for people on foot, in wheelchairs or on a bicycle," the report said.

Nine of the 10 most dangerous cities for pedestrians are in the south, and T4 says that drives home the point that design is a factor. Most of these cities developed following World War II, and their street and highway design facilitated the use of automobiles, not foot traffic.

While it is still unnecessarily dangerous for pedestrians to walk, health experts are making the case that it can be just as deadly not to walk. Even as these preventable deaths mount, there has been a growing recognition that walking and bicycling -- what many now refer to as "active transportation" are critical to increasing levels of healthy exercise and reducing obesity and heart disease.

T4 says it has become increasingly clear that these clean, human-powered modes of transportation are an essential part of efforts to limit the negative impacts of traffic congestion, oil dependency and climate change. In recent years, it notes, community after community has begun to retrofit poorly designed roads to become complete streets, adding sidewalks and bicycle lanes, reducing crossing distances and installing trees and crosswalks to make walking and biking safer and more inviting. The resulting safer streets have saved the lives of both pedestrians and motorists even as they promote health by leading many residents to become more physically active.

"There still is a long way to go to repair the damage done to communities in the past, even as we begin to shift policies and design philosophy to build streets that are safer for pedestrians and motorists alike," the authors write. "However, there are a growing number of excellent models to build on and thousands of communities eager to move forward."

The coalition says the upcoming rewrite of the nation's transportation policy presents a "once-in-a-generation opportunity" to create safer streets that will be critical to keeping our neighborhoods livable, our population more fit and our nation less dependent on foreign oil.

From the very beginning, the social networking site Tagged.com rubbed a lot of people the wrong way, reading users' email address books and sending out promotional email to their lists of contact.

It not only angered consumers but drew the attention of New York Attorney General Andrew Cuomo, who says his office has stopped the company from misappropriating the contacts lists and identities of its members and from sending out millions of deceptive and unsolicited promotional emails.

Through an agreement with Cuomo's office, the company must pay $500,000 in penalties and costs to the state and adopt industry-leading measures regarding the access and use of its members' personal information.

"Unsuspecting users had no idea that Tagged had hijacked the email addresses of their colleagues, families and friends for the purpose of blasting them with spam," Cuomo said. "This agreement holds the company accountable for its invasion of privacy and puts the proper safeguards in place to keep it from happening again."

In June, Cuomo announced his notice of intent to sue the company for deceptive acts after his office became aware that Tagged had sent more than 60 million misleading emails to unsuspecting recipients stating that Tagged members had posted private photos online for their friends to view.

In reality, no such photos existed and the email was not from their friends. When recipients of these fraudulent emails tried to access the photos, they were told that they had to sign up for Tagged.com. The company would then deceptively gain access to the new members' personal email contacts to send out more fraudulent invitations.

The invitations were constructed to appear as if they had been sent directly from members' personal email accounts instead of from Tagged.com. The emails falsely stated that "[name] sent you photos on Tagged."

If a member had added a personal image to the website, Tagged also included that picture in these fraudulent email solicitations. Many consumers had no idea that Tagged had accessed their email contact lists or used their photos until they were told by family, friends and business contacts that the company had sent out invitations in the consumers' names.

As a result of the settlement with the company, Tagged must adopt a series of stringent reforms designed to set an industry standard for how social networking sites send out invitation emails. Tagged must provide clear and conspicuous disclosures when asking for access to a new user's email contacts and will no longer access those contacts or send messages on behalf of a Tagged member without that member's informed permission. Before sending out email invitations, the company must also verify the emails with new members to make sure they do not inadvertently invite everyone on their contact lists.

By Jon Hood
ConsumerAffairs.com

November 9, 2009
Kellogg is facing a class action suit over its claim that Cocoa Krispies help boost children's immunity to illness. The suit is the latest in a series involving allegedly dubious claims about everyday food products, particularly cereals.

The suit, filed in federal court in California, says that Kellogg makes false and misleading statements about the chocolatey, sweetened rice cereal. Kellogg claims that eating just three-fourths of a cup of Cocoa Krispies will boost a family's immunity to illness. The company also boasts via TV ads, the internet, and the cereal box itself that the cereal provides 25 percent of of needed antioxidants and nutrients, and is an excellent source of vitamins A, B, C, and E.

The class counters that Kellogg has no scientific basis for its claim that eating Cocoa Krispies will help fight illness or otherwise promote good health. It says that Kellogg's sole motive is to attract consumers looking for functional foods those that provide some health benefit besides merely providing nutrition. Because Kellogg's claims are not backed up by clinical trials or other reliable evidence, the plaintiffs say the company has prioritized profits ahead of its customers.

The suit essentially accuses Kellogg of throwing a couple of antioxidants into Cocoa Krispies so it can then claim that the cereal is providing indispensable nutrients. The plaintiffs also say that any possible benefits are likely canceled out by the cereal's sugar, chocolate, high-fructose corn syrup and/or partially-hydrogenated oils. Indeed, the plaintiffs suggest, these ingredients may actually negatively affect consumers' health.

Cocoa Krispies aren't likely the first thing that come to mind when parents think of a healthy cereal. Introduced in 1958, the product is basically standard Rice Krispies injected with chocolate. The cereal is perhaps best known for its ability to rapidly turn standard-issue milk into chocolate milk. And, even if it does provide some health benefit, the cereal is a full 40 percent sugar by weight. One serving three-fourths of a cup contains 10.5 grams of sugar, and less than a gram of fiber.

By contrast, a one-cup serving of Wheaties provides only 4.2 grams of sugar and a full three grams of fiber. Frosted Mini Wheats, another Kellogg product, may be sugar laden at nearly 12 grams per serving, but they also provide almost six grams of fiber 25 percent of the daily requirement.

The plaintiffs say that Kellogg's immune-boosting claim is particularly egregious in light of the current H1N1 ('swine') flu epidemic in California and the rest of the nation. They are seeking an injunction and restitution for cereal purchased in reliance on Kellogg's claims.

The class isn't alone in crying foul over Kellogg's campaign. Last week, San Francisco City Attorney Dennis Herrera wrote a letter to the company's CEO, asking for proof of Kellogg's claims. A spokesman for Herrera told SFWeekly.com that the content and prominence of Kellogg's claims is a significant departure from normal marketing-speak.

The suit comes on the heels of a similar action filed against General Mills regarding its claim that eating Cheerios reduces cholesterol and thus helps fight heart disease. There, the Food & Drug Administration (FDA) warned General Mills that it was promoting Cheerios as if the cereal were a drug, intended for use in the prevention, mitigation, and treatment of disease. That case is pending in a New Jersey federal court.

In an effort to more strictly enforce the flavored cigarette ban provision of the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act), the Food and Drug Administration (FDA) has sent out several warning letters to companies continuing to sell illegal flavored cigarettes to consumers in the United States through their Web sites.

The letters direct the companies to cease the marketing and sale of these products immediately or to take other appropriate action to bring the products into compliance with the law. Failure to do so may result in additional regulatory actions such as seizure or injunction. In addition, FDA requested a written response from each of the companies within 15 days outlining the corrective actions taken.

Enforcement of the flavored cigarette ban is FDA's effort to remove cigarettes that contain certain candy or fruit flavors from the marketplace. The agency believes removing these products from the market will assist in the prevention of children and adolescents from starting to smoke and in the reduction in death and disease caused by smoking.

"FDA takes the enforcement of this flavored cigarette ban seriously," said Lawrence R. Deyton, M.S.P.H, M.D., director of FDA's Center for Tobacco Products. "These actions should send a clear message to those who continue to break the law that FDA will take necessary actions to protect our children from initiating tobacco use."

The Tobacco Control Act, which was passed by Congress and signed by the president in June 2009, specifically called for a ban on cigarettes containing certain characterizing flavors. On Sept. 14, 2009, FDA sent a letter to regulated industry reminding them that the ban would go into effect on Sept. 22, 2009. FDA also stated in the letter that any company that continued to sell such products after the Sept. 22, 2009, effective date might be subject to FDA enforcement actions.

Since the effective date of the ban, FDA has examined products offered for import and searched the Internet to identify illegal products. As a result, the agency issued several warning letters to companies and Web sites that continued to market and sell these illegal products over the Internet to consumers in the United States. The warning letters were the result of Internet searches conducted by FDA's Office of Enforcement and the Center for Tobacco Products.

A California man has filed suit against Pacific Gas & Electric Company (PG&E), alleging that the company's SmartMeter program consistently overcharges him for gas and electric services. Pete Flores, of Bakersfield, says the problem is so out of hand that he now pays more for utilities than he does for his mortgage.

SmartMeter is PG&E's automated meter reading program, a technology employed by many large energy companies. Automated meter reading allows utility providers to collect consumption data remotely, from a central location. Automated meters recoup the time, money, and manpower needed to make physical trips to manually read each customer's meter. The first automated meter reading program, Metertek, was launched in 1977.

PG&E rolled out the SmartMeter in early 2007, starting in Bakersfield, with the eventual goal of implementing a pricing system that varies depending on the time of day and season.

The suit has been brewing for some time. PG&E has received so many complaints of overcharges that the utilities behemoth established an answer center in its Bakersfield office, where consumers can go to discuss questions or concerns regarding their SmartMeters. Last month, over 200 PG&E customers descended on a public hearing to protest that their meters were malfunctioning and causing their astronomical energy charges.

Michael Kelly, of Kirtland & Packard, LLP, is representing the class. He said the firm received several complaints from area residents with abnormally large utility bills.

In addition to PG&E, the suit names as a defendant Wellington Energy, which installed the SmartMeters. Wellington, a subsidiary of Pittsburgh-based Wellington Power, is so proud of the SmartMeter that it boasts about the device on its homepage, which describes the automated meter reading program as the largest of its kind in North America. Wellington says that the meter allows PG&E to measure consumers' energy use frequently one a day for gas and once an hour for electric. The site says that SmartMeters enhanc[e] environmental sustainability while maintaining high levels of electric reliability.

The suit charges PG&E with fraud, false advertising, unfair competition, and negligence. Flores says that PG&E has been less than honest about the meters' accuracy, has been unresponsive to complaints, and has covered up SmartMeter-related rate increases. Kelly accuses PG&E of whistling past the graveyard, saying the company has taken the position that there is absolutely no problem here at all.

Indeed, PG&E spokesman Denny Boyles said in a statement that the allegations in the lawsuit are untrue and have no merit. The company plans to hire hire an independent party to review the meters' accuracy, which it believes will confirm that the meters are working properly.

State Senator Dean Florez, who convened the hearing of frustrated consumers, asked PG&E and the California Public Utilities Commission (PUC) about the SmartMeter complaints, but was basically blown off. He told a local news affiliate that news of the suit doesn't come as a shock. PG&Es case to the PUC for smart meters was so shot with bias against consumers that it doesnt surprise me that PG&E is being taken to court, Florez said.

By Mark Huffman
ConsumerAffairs.com

November 6, 2009
The number of people officially out of work went over the 10 percent mark in October, as the Labor Department put the unemployment rate at 10.2 percent, the highest in 26 years.

The U.S. economy lost another 190,000 jobs during the month. Some economists believe the actual rate is much higher, since some people may have given up looking for a job. Even more previously fulltime employees are now working only part time.

According to the October report, the largest job losses came in retailing, construction and manufacturing. While not many sectors added to their job rolls, health care was an exception, with 29,000 new employees.

The numbers took no one by surprise, as an increase to a double-digit jobless rate has been anticipated for some time. The question, however, is when Americans can expect an improvement. Economists commenting in various media reports suggest a recovery in the labor market will be a long time in coming.

"We may be looking at very high (unemployment)levels, barring a policy response, for several years into the future," Dean Baker, a director for the Center for Economic and Policy Research, told the New York Times.

While joblessness continues to rise, U.S. companies appear to have regained their economic footing. The third quarter earnings season has been marketed with better than expected earnings, helping the stock market continue its rally. However. A number of these companies have said their return to profitability was aided by cutting overhead, including jobs.

On Thursday members of Congress overwhelming voted to extend unemployment benefits for up to 20 weeks, a sign lawmakers also expect a long, slow recovery in the jobs market.

The Food and Drug Administration (FDA) warns pet owners not to give their pets beef hooves or pig ears made by a California company because of possible salmonella contamination.

FDA officials late Thursday cautioned pet owners about the potentially-tainted products, made by Pet Carousel of Sanger, California, and distributed in bulk and retail packaging to stores nationwide.

Pet Carousel made the products under conditions that facilitate cross-contamination within batches or lots, the FDA said. No illnesses are linked to these products, but the FDA advised pet owners not to handle these items or give them to their pets.

FDA officials said this alert covers pig ear products with the brand names Doggie Delight and Pet Carousel and beef hooves that have the brand names Choo Hooves, Dentleys, Doggie Delight, and Pet Carousel. All sizes and lots of these products made by Pet Carousel are included in this warning.

FDA officials in September tested pig ears made by Pet Carousel and discovered the products contained salmonella.

Those findings prompted FDA officials to inspect Pet Carousels manufacturing facilities. During that inspection, the agency took additional pet treat samples and found salmonella present in beef hooves, pig ears, and in the manufacturing environment, the FDA said.

Dentley Beef Hoof

The agencys warning comes on the heels of a national recall issued by PetSmart of two Dentley Beef Hoof products because of possible salmonella contamination.

Those recalled products are:

• Dentley's Bulk Cattle Hoof UPC# 73725703323, use by date of 10/14/2012;

• Dentley's 10 Pack Beef Hooves UPC# 73725736055, use by date of 10/14/2012.

Pet Carousel shipped the recalled hooves from its California plant to three PetSmart distribution centers in Ottawa, Illinois, Groveport, Ohio, and Newnan, Georgia.

Some PetSmart stores -- not all -- received the recalled products. The national pet retailer, however, recalled all the items from all its U.S. stores as a precaution earlier this week. PetSmart also put a register block to prevent the sale of the recalled hooves in its stores, removed the items from the PetSmart.com Web site, and notified PetPerks customers who purchased the products.

Salmonella is a type of bacteria that can cause health problems in humans and animals, the FDA said. People handling dry pet food or pet treats can become infected with salmonella, especially if they do not thoroughly wash their hands after handling the products.

Healthy people infected with salmonella may experience nausea, vomiting, diarrhea or bloody diarrhea, abdominal cramping and fever. In some cases, salmonella can cause arterial infections, endocarditis (inflammation of the lining of the heart), arthritis, muscle pain, eye irritation, and urinary tract symptoms.

Pet owners who have any of those symptoms after handling these pet products should immediately contact their doctor.

Pets with salmonella infections may become lethargic and have diarrhea or bloody diarrhea, fever and vomiting, the FDA said. Some pets may only experience a decrease in their appetites, fever, and abdominal pain. Pets that have any of those symptoms should be seen by a veterinarian.

Easily spread

The FDA also warned that infected pets can spread the bacteria to other animals or humans.

Pet owners who purchased the recalled products should immediately discontinue use and return the hooves for a full refund.

More information about the recall is available on the companys Web site . Pet owners can also contact PetSmarts Customer Service at 1-888-839-9638.

In the meantime, the FDA said it will continue to investigate this matter to determine the source of the salmonella contamination.

Consumers with complaints about these or other FDA-regulated pet treats or food can call the FDA consumer complaint coordinator in their area.

Chances are you've never heard of a drug called Armour Thyroid. However, if you suffer from a thyroid condition, chances are good you not only know about it, but have spent the last few months in a vain attempt to find it.

"I was told today that I would no longer be able to get my prescription of Armour Thyroid filled due to a shortage in the product," Catherine, of Farmersville, Texas, told ConsumerAffairs.com. "How can a company have a shortage of a product that millions of Americans depend on for their very lives? My mother passed away when I was 15 from an untreated thyroid problem. I myself have already had a heart attack due to complications from my thyroid.

"I am unable to take the synthetic thyroid meds, due to allergic reactions. I sit here now, looking at my own daughter and grieving the thought of not being alive to see her graduate, get married, have children, all due to the fact that I can't get my medication."

Catherine, and hundreds more thyroid patients, have contacted ConsumerAffairs.com since April, when the product began to fall into short supply. Many are distraught that the drug is not available, saying it has been the only thing that has helped their thyroid condition and allow them to live a normal life.

Armour Thyroid is a "natural" hormone replacement therapy because the thyroid glands are collected from pigs. The thyroids are processed, dried, powdered, and compounded to produce Armour Thyroid tablets.

Armour Thyroid is produced by a pharmaceutical firm called Forest Laboratories. In a statement on its Web site, the company has apologized for the supply interruption. It also has some good news.

"A supply of powdered Thyroid gland, the active ingredient of Armour Thyroid, has been made available to Forest by its supplier," the company said. "Forest has produced and shipped a limited supply of 1 grain, also known as 60 mg. We understand that this limited distribution will not meet the current anticipated demand for the product, and we continue to work diligently to meet demand. Although Forest is addressing the backlog of Armour Thyroid as quickly as possible, we are not prepared at this time to give a definitive date by which the product will be fully restocked."

Why the shortage?

The mystery remains about the reason for the sudden shortage. The Internet has been rife with rumors about possible causes - everything from the government diverting ingredients for swine flu vaccine to an FDA determined to phase out the drug.

The problem for many thyroid patients, they contend, is the synthetic replacement for Armour Thyroid not only doesn't work, but comes with nasty side effects.

"Throughout the years I've tried three different times to switch (to synthetics) and it made me feel so bad I'd rather go without anything than to use it and I take 180 mg/day," Susan, of Vallejo, Calif., told ConsumerAffairs.com. "My heart raced and my pounded, I had trouble swallowing and felt shaky to the point my hands would visibly shake and I couldn't concentrate. My hair was falling out to the point the shower drain would get clogged."

The nation's automotive safety watchdog has taken the unusual step of correcting what it calls "misleading" information from a car manufacturer, in this case, Toyota.

In a statement, the National Highway Traffic Safety Administration said it was correcting what it called "inaccurate and misleading" information in a Toyota press release, concerning its recent recall of 3.8 million Toyota and Lexus models.

In late September, Toyota recalled 3.8 million Lexus and Toyota models because the floor mats can slide onto the accelerator, potentially causing uncontrolled acceleration. Owners of the affected models were told to remove the floor mats until they can be replaced with a safer version.

This week Toyota issued a press release stating that NHTSA had reached a conclusion "that no defect exists in vehicles in which the driver's floor mat is compatible with the vehicle and properly secured." Not so, the agency said.

Must Address Design Flaw

"NHTSA has told Toyota and consumers that removing the recalled floor mats is the most immediate way to address the safety risk and avoid the possibility of the accelerator becoming stuck. But it is simply an interim measure," NHTSA said in a statement. "This remedy does not correct the underlying defect in the vehicles involving the potential for entrapment of the accelerator by floor mats, which is related to accelerator and floor pan design."

In other words, Toyota can't resolve the problem simply by removing the floor mats. They must address what safety researchers see as a design flaw.

"Safety is the number one priority for NHTSA and this is why officials are working with Toyota to find the right way to fix this very dangerous problem," the agency said. "This matter is not closed until Toyota has effectively addressed the defect by providing a suitable vehicle based solution."

Toyota issued a statement Wednesday saying it did not intend to offer misleading information. Toyota and Lexus vehicles affected are:

2007-2010 Camry

2005-2010 Avalon

2004-2009 Prius

2005-2010 Tacoma

2007-2010 Tundra

2007-2010 ES 350

2006-2010 IS 250 and IS350

Toyota recalled 55,000 Camry and Lexus models in September 2007 following complaints of runaway acceleration. Owners of the popular Prius had also complained of the problem but were not included in that recall, though Prius models are included in the most recent recall.

Toyota said earlier that a fatal crash involving a Lexus ES350 in San Diego had been preliminarily blamed on an all-weather floor mat interfering with the accelerator pedal. 20070-2008 ES350 models were included in the 2007 recall.

Millions of American homeowners are "underwater" on their mortgages -- owing more than the value of their homes. A University of Arizona law professor is rocking a few boats in the mortgage world by suggesting they would be better off walking away.

Brent White, whose article will be published in this month's issue of Arizona Legal Studies, says fear, guilt and shame are what keep many homeowners from making what he calls rational economic decisions.

"These emotional constraints are deliberately cultivated by the government and lenders who self-servingly tell borrowers that they have a moral and social obligation to pay their underwater mortgages," said White, an associate professor at UA's James E. Rogers College of Law. "Meanwhile, lenders ruthlessly seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility."

White calls this a double standard, one that has resulted in "distributional inequalities."

He argues that while irresponsible lenders have received government bailouts, responsible homeowners "who just happened to buy at the wrong time continue to bear a disproportionate burden of the housing collapse."

In his article, White cited figures finding that, in the second quarter of this year, more than 15 percent of homeowners had negative equity that was more than 20 percent of the value of their homes. Also, more than 22 percent had negative equity that amounted to at least 10 percent of the value of their homes.

Problem concentrated in a few states

This situation is exaggerated in a number of states, including California, Florida, Nevada and Arizona. Cities that have reached the 60 percent threshold, including Miami Beach, Fla.; Las Vegas, Nev.; Bakersfield, Calif.; and Phoenix, Mesa and Scottsdale. Numerous cities in California also make the list, including Fresno, Madera and Yuba City.

"The government, lenders, and credit-counseling agencies bombard homeowners with moral and fear-laden messages that overstate the consequences of foreclosure," said White. "Moreover, as a way of enforcing the double moral standard, lenders hold borrowers' credit scores as collateral and will trash it in retaliation for the borrower's exercise of their contractual option to default. Lenders don't want these houses and, with the government's help, do what they can to scare and shame borrowers into making what is in many cases a bad financial decision to stay in their home."

But White, whose article is already gaining attention across the nation, said he is not advocating that people walk away from their mortgages.

Instead, he is simply pointing out that there is a double standard: lenders are expected to minimize their economic loses regardless of moral concerns, while homeowners are expected to behave in "morally responsible" ways regardless of the economic costs.

No moral expectations for lenders

"To the contrary, walking away may be the most financially responsible choice if it allows one to meet one's unsecured credit obligations or provide for the future economic stability of one's family," he said.

White also suggested limiting the ability of lenders to report mortgage defaults to credit reporting agencies and, at a minimum, housing counseling agencies should give homeowners accurate information about both the advantages and disadvantages of letting go of their homes -- rather than simply telling them that foreclosure should be avoided at all cost.

"The current housing bust should be viewed for what it is: a failure to regulate -- not a moral failure on the part of American homeowners," White said. "That being the case, it is time to take morals out of the picture and search for an equitable solution to the negative equity problem."

By Lisa Wade McCormick
ConsumerAffairs.com

November 5, 2009
Iowa health officials have confirmed the first official case of the 2009 H1NI influenza virus in a cat.

The Iowa Department of Public Health (IDPH) on Tuesday said a 13-year-old indoor cat had contracted the virus from someone in its household.

This was a human-to-feline transfer of the virus, thats what we believe happened, IDPH veterinarian, Dr. Ann Garvey, told ConsumerAffairs.com today. There were two people in the household with symptoms of the virus.

It is not common for cats to get the influenza A virus, she added. (But) this is not completely unexpected, as other strains of influenza have been found in cats in the past. There have been cases of cats getting the H5N1 Avian strain. And in those cases, there was no evidence that the cats transferred the virus back to humans. The cats became a dead-end host.

The Iowa cat and its owners have recovered from their illnesses, Dr. Garvey said, and there are no signs the feline passed the virus to other people or animals.

Before this diagnosis, however, health officials had confirmed the 2009 H1N1 influenza virus in ferrets, pigs, and birds.

Dr. Garvey said the Iowa cat had symptoms that are similar to humans with the H1NI virus: malaise, loss of appetite, and respiratory issues. The cat, however, did not have a fever, she said.

The cats owners took the feline to the Lloyd Veterinary Medical Center at Iowa State Universitys College of Veterinary Medicine, where it tested positive for the H1N1 virus.

The test results came back late last week, Garvey said, adding veterinarians gave the feline supportive care and made sure it did not become dehydrated. Those tests were confirmed earlier this week.

To protect your familys pets from contracting the H1N1 virus, Dr. Garvey recommended the same common sense measures used to prevent exposure of the illness in humans:

• Wash your hands frequently;

• Cover your mouth when you cough and your nose when you sneeze;

• Minimize your contact with your dogs, cats, or other household pets if you have any flu-like symptoms

Pet owners who notice any signs of respiratory illness or other influenza-like symptoms in their animals should contact their veterinarians, Dr. Garvey said.

Meanwhile, the American Veterinary Medical Association is now tracking all cases of H1N1 in animals and will post updates on its Web site.

According to the plaintiffs, ACCS has spent the past few years fraudulently telling consumers they were in danger of prosecution for writing bad checks, and offering to clear up the problem in return for a fee. The company's letters were designed to look like they were sent by a Pennsylvania District Attorney's office, and told consumers who bounced checks that they were required to pay fees and attend a "financial accountability class." In many cases, the letter indicated that the class itself cost nearly $200.

The letters were misleading and manipulative, according to Donald Driscoll, an attorney for the plaintiffs. Driscoll, of the Pittsburgh-based Community Justice Project, said that consumers who bounce checks are only subject to prosecution if the act was intentional.

American Corrective Counseling Services (ACCS) admits no wrongdoing under the agreement.

The Pennsylvania settlement is only the latest in a series of lawsuits concerning the company's scheme. Public Citizen, another consumer advocacy group, has brought similar suits against ACCS in Florida, California, and Indiana. Deepak Gupta, a Public Citizen attorney, called the company's practices "a misuse of public authority" and "a scam." He said ACCS is, for all intents and purposes, "renting out the name and authority of the prosecutor."

In fact, the company did contract with District Attorney's offices in a number of states, with DAs receiving a portion of fees collected by ACCS. These kickbacks added up -- Los Angeles alone has collected $1 million in the past four years.

A contract between ACCS and the San Bernadino, California, District Attorney, provides that ACCS will oversee the diversion seminars, and provide counseling services and administrative assistance to the DA. The contract goes on to state, however, that the DA retains its full prosecutorial discretion, and must approve in advance any mailings sent out regarding fees or the diversion program. ACCS's actions appear to be in direct contravention of that contract.

Gupta said he doesn't think District Attorneys were aware of the company's wrongdoing. "There have been prosecutors who've looked into this and realized what's going on and dropped it," he said.

ACCS sent out about 2 million letters per year, threatening cash-strapped consumers with prison and considerable fines unless they complied with the letter's orders. Many letters contained the bold, all-caps heading, "Official Notice -- Immediate Action Required," and went on to detail the sobering consequences of a failure to pay up.

A sample letter to a Florida consumer warns that "a felony conviction under this statute [for writing bad checks] is punishable by up to five (5) years in prison and/or a fine of up to $5,000. Misdemeanor crimes are punishable by up to sixty (60) days in jail and/or $1,000 in fines." The letter goes on to promise that "[the District Attorney's Office] will not initiate prosecution proceedings against individuals who comply with the diversion program."

ACCS, based in California, filed for Chapter 11 bankruptcy in January, likely in response to the lawsuits. The company has since reorganized as the National Collective Group, under which, according to Gupta, it continues its scam unfazed. ACCS's insolvency means that any settlement funds will come from the company's insurer.

A memo leaked from Verizon Wireless confirms that the company is increasing its early contract cancellation fees to as high as $350 for what it calls its "advanced devices."

The memo, obtained by tech blog The Boy Genius Report, states that an "advanced device"'s cancellation fee will drop by $10 for each month completed under contract.

Though the company did not specify what it meant by "advanced devices," Boy Genius Report's Andrew Munchbach speculated it was targeted at high-end smartphones like the recently announced DROID, which runs the open-source Android platform and was built by Motorola, and is scheduled to debut November 15.

"Anyone considering abandoning plans to buy the DROID after hearing this news, or are you just going to get yours before November 15th?" Munchbach asked. "Or will you actually be an honest person and actually honor the contract you sign?"

Wireless termination fees are not only a bane for customers, but a frequent target of criticism from Congress and policy advocates. The telecom industry claims the fees are necessary to recoup the costs of producing, selling, and marketing the handsets.

Critics say the fees are designed to keep customers from shopping around for the best provider, by locking them into a contract with steep charges.

Free Press' Josh Levy said the move was "outrageous." "Early termination fees are universal across the industry, and they're universally detested by consumers," Levy said.

"In fact, the average subsidy of a wireless handset in 2008 was $14.33," he said, "so a $175 fee is already more than 10 times the average subsidy. So what justification could there be for doubling the fee?"

Under threat of increased regulation from Congress, all four of the major wireless carriers in America voluntarily began prorating their termination fees over the life of an average two-year contract.

Numerous state courts have also ruled that the fees are "unconscionable" under state law, and carriers have settled many other lawsuits to avoid a ruling against them, preferring to lobby Washington for weaker federal laws that would usurp the state consumer protections.

Verizon Wireless recently announced that it would end its exclusivity agreement on its handsets, enabling smaller carriers to sell them six months after release.

The move was largely considered symbolic, as it only applied to carriers with 500,000 customers or less -- and 90 percent of the market is controlled by the same four carriers, including AT&T, Sprint, T-Mobile, and Verizon Wireless itself.

By Mark Huffman
ConsumerAffairs.com

November 4, 2009
Facebook users are being warned about another phishing scam. This one has the objective of tricking users into providing their email address and password, then hijacking it to make unauthorized posts.

For example, if a victim provides their login information, the virus executes a program that posts 25 messages on the walls of the user's friends. If the user tries to delete the wall posts, the program automatically posts more messages.

The victims are tricked into executing the virus by clicking on a link, preceded by the questions, "Hi, is this you?"

It's not known if this latest scam is related to another phishing scheme that surfaced last week that appears to be more sinister in nature. It also tries to steal user names and passwords by claiming to be a message from Facebook about enhanced security. It purportedly takes users to a site where they can update their security.

However, victims who follow through with the scammers' request are in for a nasty surprise. They are promoted to download an "update tool" that, in reality, is the Zeus Trojan, malware that hackers use to steal bank account information.

Computer security experts have been following the progress of the Facebook phishing campaign and describe it as widespread. AppRiver said at one point it was tracking more than one thousand spam messages per minute per domain.

Because of the increase in phishing attacks launched through social networking sites, many companies are discouraging or prohibiting employees from visiting these sites at works. According to an October study commissioned by Robert Half Technology, an IT staffing company, 54 percent of U.S. companies have told employees to stay away from social networking sites like Twitter, Facebook, LinkedIn and MySpace, while on the job.

By James Limbach
ConsumerAffairs.com

November 4, 2009
We've all seen the TV commercial featuring the guys in silly costumes singing about free credit reports. U.S. Senator Charles E. Schumer calls such ads a "long-running scam" and says he wants the Federal Trade Commission to put a stop to it.

The New York Democrat says such companies dupe millions of consumers into buying credit monitoring services by offering a so-called "free credit report" and then tacking on a costly monthly subscriptions charge that can cost hundreds of dollars a year. His plan would require any company that purports to offer a free credit report to disclose that consumers do not have to pay for their services in order to get a free credit report and disclose in their advertising that consumers are entitled to a free credit report from the government once a year.

In addition, Schumer says his plan would require these companies, when someone requests their free report, to show that report on the computer screen before the customer provides their credit card information, that way the consumer has the choice of subscribing for year round credit monitoring. Nine million people spend a total of $650 million to $700 million annually on the services, according to Carter Malloy, a Stephens Inc. analyst.

"If these companies want to say -- or sing for that matter -- that they are giving people free credit reports, then they can't charge people $15 a month, simple as that," Schumer said. "For years, these companies have said with a smile that they will provide a free credit report -- even though the government already requires a credit report be provided for free every year - and then suddenly, months later consumers get a bill in the mail for their credit monitoring services. My plan would finally bust up this scam and give consumers some honest choices."

The commercials in question can be very catchy, and they may serve as a reminder to consumers to be vigilant about monitoring their credit. However, these ads, among many others that promote similar services, Schumer says "take advantage of Americans' very real worries about identity theft in a misleading and deceptive way, by tricking them into paying for reports they are entitled to get for free."

ConsumerAffairs.com has received scores of complaints about the practices of these kinds of companies. Among them:

• James M. of Maple Grove, Minn., tells us "I requested on freecreditreport.com my annual free credit report. Before I could receive my free credit report, I was required to enter my credit card number. This month I noticed a charge of $14.95 on my credit card for my 'free' credit report. Upon inquiry, I was told that I am automatically entered into a subscription service and that I have only 7 days to cancel. This is a SCAM and a FRAUD. I did not request nor do I want this service. This a bogus scam layered over into what is supposed to be a free report."

• Kim M. of League City, Texas writes ConsumerAffairs.com, "I pulled my credit report through freecreditreport.com. A couple of months later a $15.88 charge showed up on my card account from them. I called them and they said that when I pulled my credit I was enrolled in a credit-monitoring program that was free for the first couple of months and because I didn't cancel it they started charging me. I didn't even know I was enrolled. This is a scam!"

In 2003, Congress passed the Fair and Accurate Credit Transactions Act, which required that all Americans be allowed to access one free credit report annually from each of the three credit reporting bureaus, including the company that produces the FreeCreditReport.com commercials. In 2009, Congress added a requirement that the FTC issue new rules to prevent deceptive advertising. The FTC is currently considering proposals pursuant to that requirement.

Schumer is calling on the FTC to implement two important changes as part of its rulemaking. First, he asked the FTC to impose new regulations requiring that television advertisements include the exact same disclosure that is already present on websites and print mailings to inform consumers that they are entitled to a free credit report annually from the government, and that any offer that comes with strings attached is entirely unrelated to the website www.annualcreditreport.com. Consumers who still wish to enroll in credit monitoring services may do so, but they won't be fooled into thinking that they need to pay a subscription service for access to their credit reports.

He also asked the FTC to require those companies that continue to advertise free credit reports to provide consumers with their credit reports before they turn over their credit card information to sign up for the service. This way, consumers can actually get the free credit report that is advertised without being locked in to paying a monthly fee.

Schumer says if the FTC can't impose these rules through regulation, he will propose additional legislation.

Consumers have become more choosy about whom and how much to tip at the holidays, according to a new survey conducted by the Consumer Reports National Research Center.

How much and whom to top to has always been a tricky decision, one that may get harder in these tough economic times. During the 2008 holidays fewer people than in the previous year tipped their newspaper carrier, barber, mail carrier, hairdresser, manicurist, and garbage collector.

The poll of more than 1,800 U.S. residents was conducted in January, shortly after the 2008 holiday season, when people could best remember what they gave. A separate survey CR conducted in October 2009 shows that the downward trend might continue: 26 percent of Americans who usually tip or give a gift to a service provider said they would spend less this holiday season than last. Just six percent said they planned to spend more.

The big recipients were house cleaners, with 58 percent of people who employ them tipping them with cash, check or a gift card and 17 percent tipping them with a gift last year. House cleaners also received a larger gratuity than other service providers, averaging about $50 or an equivalent gift per tip.

Consumer Reports found other service providers included in the survey received, on average, tips valued between $10 and $40 per gift. Average cash or noncash tips were also smaller for some occupations. The median tip value for manicurists was $10, half the amount given during the prior holiday season; the median tip for pet-care providers dropped from $30 to $25.

Samantha von Sperling, owner and director of the New York-based image consulting firm Polished Social Image Consultants, says she's not surprised that people are cutting back on their holiday tipping. She tells ConsumerAffairs.com that the economy, for many people has reached a "critical point where the trickle-down effect has people who managed to survive the first year of the recession are now finding themselves struggling to get through the second year."

von Sperling suggests that those who are unable to provide cash gratuities to service people for the holiday put things on a more personal level. In lieu of cash, she suggests "spending a weekend baking cookies, wrap them up nicely and give them to everybody" who would normally receive a cash gratuity. These, she says, "are things we could do in order to still be gracious and polite so that at least people know that we care about them and hopefully understand that we just can't afford tipping this year.

"Families are looking for ways to balance their financial concerns with the need to thank people who have helped them during the year," said Tobie Stanger, the magazine's senior editor. "This year, tipping is more of a challenge than ever, but CR's survey shows that people are still trying to do it, for the most part."

Dr. Michael Lynn, a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration, says much of the information on tipping is anecdotal. But he tells ConsumerAffairs.com that we do know that "people who are more price sensitive tend to tip less than those who are not price sensitive."

Rounding out the list of other service providers who received cash, a check or a gift card and who typically receive holiday tips in the survey: hairdresser (36 percent), manicurist (33 percent), newspaper carrier (30 percent), barber (26 percent), pet-care provider (26 percent), child's teacher (20 percent), mail carrier (13 percent), lawn-care crew (18 percent), and garbage collector (6 percent).

The State of Florida has gone to court to block two related South Florida timeshare resale marketing companies from operating in the state. The suit claims the defendants preyeed on desperate timeshare owners trying to unload their properties.

Attorney General Bill McCollum filed a lawsuit and has requested an emergency injunction against Universal Marketing Solutions, Creative Vacation Solutions, and owner/manager Jennifer Kirk.

The suit claims the companies allegedly collected over $4 million in marketing fees on a monthly basis, but rarely if ever marketed, advertised, or facilitated sales for the timeshare owners who had contracts with the companies. The injunction requests the companies' cease doing any timeshare business while the lawsuit is pending.

An investigation conducted by the Attorney General's Economic Crimes Division indicated that Kirk and her companies were charging marketing fees as high as $2,500 for timeshare resale advertising services. The companies were soliciting hundreds of consumers nationwide via the Internet and though aggressive telemarketing calls, allegedly making empty promises and false misrepresentations that they would actively match timeshare sellers with prospective buyers.

According to the lawsuit, when prospective buyers contact the companies to purchase a timeshare, no attempt would be made by the companies to match those prospective buyers with sellers who had contracted with the companies, thus making the advertising and marketing claims a complete sham.

Advance fees

To solicit more customers, the companies allegedly boasted of their "superior marketing tools," including marketing events, presentations and seminars. Kirk and her companies allegedly claimed they could "definitely" sell timeshares within a certain period of time and that they had buyers waiting with approved financing to buy the consumers' timeshare. Consumers were also verbally assured contract terms during telemarketing calls, but were furnished contracts with entirely different terms regarding the resale services.

Additionally, the companies would allegedly charge consumers' credit cards or cash consumers' checks without and/or before obtaining a signed written contract from the consumer delineating all the terms and conditions of the services to be provided.

Consumers who complained to the Attorney General's Office 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 believes that there could a total of more than 400 victims affected by the two companies' deceptive practices, and has been receiving approximately 10 complaints per day against these companies.

The lawsuit seeks an injunction prohibiting the defendants from engaging in any timeshare resale business while the litigation is pending. The lawsuit also requests full restitution on behalf of all victimized consumers, civil penalties, and reimbursement for fees and costs related to the investigation.

By Mc Nelly Torres
ConsumerAffairs.com
Copyright © 2009 All Rights Reserved

November 2, 2009
An attractive brochure express-mailed by the International Banking Group to seniors living in affluent areas claims the company's certificates of deposit (CDs) earn above average interest rates.

IBG lists 12 U.S. banks and several international institutions as the banks that supposedly issue the high-interest CDs, and claims that since its retail division was founded in 2008, the company has serviced over 35,000 new accounts worldwide.

But five of the seven banks contacted by ConsumerAffairs.com said they have never heard of IBG and at least one of them is in the process of seeking legal action because they claim that IBG uses their logo without permission. And state officials in California, where the company claims to have a Beverly Hills office, opened an inquiry after ConsumerAffairs.com asked questions about the registration requirements for corporations operating in the state.

It looks like they [IBG] should be registered and that would make them in violation of the law, said Mark Leyes, a spokesman for the California Department of Corporations. Because we are aware of it, we are looking into the matter.

Consumers in California and Florida have complained that IBG staff is making cold calls to seniors living in exclusive retirement communities, making sales pitches on the phone before mailing its brochure overnight. Database searches of incorporation records in California and Florida did not produce any registration records for IBG or its Web site, www.ibgmutual.com, ConsumerAffairs.com has found.

Disappearing act

IBG denies any wrongdoing but recently took down its Web site.

Robert, who asked not to have his full name used, said a long-time friend asked him to look into IBGs background after receiving an unsolicited call. The 85-year-old widow who lives in Timber Pines, an exclusive retirement community near the Tampa, Fla., area, got a package from IBG days after receiving the call.

I told her dont send them any money, said Robert, who contacted Florida Attorney Generals office and other state officials in Florida and California. She was a little nervous about it.

Harry T., of Camarillo, Calif., also received a brochure after getting a cold call from a salesman. The 92-year-old man, who lives in a retirement community, turned the brochure over to his son, an attorney, and said that other Leisure Village residents had also been contacted. Both asked that their names not be published. The son checked out the Beverly Hills office and found that it was a short-term "executive suites" operation that offers mail-forwarding for clients wanting to appear to have an established operation.

Until recently, IBGs Web site, www.ibgmutual.com, listed an array of awards, including Best Worldwide Private Bank in Western Europe and Best Private Bank in the United Kingdom, both supposedly awarded by The Economist in 2008 and 2007, respectively.

But Sal Genna, an executive with the London-based magazine, said: The awards that IBG claims on its Web site to have received from The Economist were not awarded to IBG by The Economist.

The site, which was created on June 18, 2009, according to registration data listed at HostMonster.com, is now "under construction" and not accessible for view. HostMonster.com said the site administrator is Jason Santos, who listed an address in Singapore.

ConsumerAffairs.com contacted seven financial institutions in the U.S., Canada and Great Britain. JP Morgan Chase, Citibank, Royal Bank of Canada and Wells Fargo said that they have no relationship with IBG.

Neil Brazil, a spokesperson for HSBC North America, said: Following a thorough investigation I can confirm that HSBC Bank USA, N.A. has no relationship with a company named IBG Group. The issue of inappropriate use of the HSBC logo is currently being addressed.

Bank of America and Lloyds TBS did not respond to several requests for comment.

Wrongdoing denied

Roger Vanzant, a deposit broker with IBG in California, contended that IBG is a legitimate business. Vanzant denied any wrongdoing.

We dont make cold calls, Vanzant said when contacted by phone Oct. 1. We call existing customers or customers who have been referred by existing clients.

Vanzant stated that IBG is registered with California Department of Corporations, but he hasnt provided ConsumerAffairs.com any evidence to support that claim despite several requests. The company, Vanzant said, is headquartered in Hong Kong and has offices in Beverly Hills, New York and Canada.

When asked about the banks that denied doing business with IBG, Vanzant dismissed the banks claims as a "small oversight" by bank officials. Because IBG's retail division opened in 2008, Vanzant said, the public relations divisions might not be fully aware of it.

Seniors at risk

In a volatile economy, small investors, including seniors, are more likely to fall victims to risky investments, financial scams and unscrupulous financial brokers, experts say. Elder financial abuse cost older Americans more than $2.6 billion annually, according to a 2009 report by Metlife Mature Market Institute.

The true cost may be even higher. Financial crimes against older Americans tend to be under-reported because seniors are less likely to report fraud for an array of reasons. In many cases, seniors dont know where to report these types of crimes, they are ashamed of falling victims to a scam or do not know they have been scammed.

Even so millions of senior Americans have fallen victims to financial exploitation, including mail, telemarketing and Internet fraud, the report shows.

Mark A. Tepper, securities fraud attorney based in Fort Lauderdale, Fla., said an investment product that is difficult to verify as legitimate is not worth the risk.

A good question to ask is, if this is a good investment why is he/she calling folks to tell them about the investment? Tepper asked.

U.S. Representatives Tammy Baldwin, (D-Wis.) and Howard Coble, (R-N.C.), introduced legislation (H.R. 3040) in June that would prohibit abusive mail, telemarketing and Internet fraud targeting seniors.

The Senior Financial Empowerment Act of 2009, which was referred to the subcommittee on Crime, Terrorism and Homeland Security in July, would also promote efforts to increase public awareness of the enormous impact that mail, telemarketing and Internet fraud have on seniors.

Investors' complaints filed with the Financial Industry Regulatory Authority (FINRA), an independent regulator for all securities firms doing business in the U.S., have jumped 15 percent to 5,405 complaints in 2008 from 4,687 in 2004. FINRA keeps a public registry of its broker-dealer members and their sales personnel.

Due diligence

It's essential for all investors -- not just seniors -- to check out all investments, especially those that claim to pay much higher rates of return than would normally be expected.

• To check brokers or firms call 800-289-9999 or log onto www.finra.org/brokercheck.

• To check a sellers background visit www.SaveandInvest.org or call 888-295-7422.

• To file a complaint against a broker or firm go to www.finra.org/complaint.

• The U.S. Securities and Exchange Commission provides a list of unregistered entities or entities, which have been the subject of consumer complaints. To find the list go to www.sec.gov/investor/oiepauselist.htm.

Not all alike

According to FINRA, brokered CDs are mostly offered by a stockbroker or investment professional, who serves as a deposit broker for the issuing bank. These CDs are complex and carry more risk.

Though most brokered CDs are bank products, some may be securities and wont be FDIC insured, FINRA warns. Also, you may have to pay a fee to buy a brokered CD, as a fixed amount or as a percentage of the amount you are investing.

Remember, FDIC insurance generally covers only $250,000 per depositor per bank. So if you are investing more than that amount, it's important to spread the money around among different institutions. There are exceptions. See the FDIC site for details.

Financial advisers said consumers should ask questions about the investment, and whether the broker or the product are registered with state or national regulatory authorities such as FINRA, to distinguish good investment offers from bad ones.

Be skpetical of salespeople

Steve Pomeranz of Pomeranz Financial Management in Boca Raton, Fla., said investors should be suspicious from salesmen who are soliciting door-to-door or making phone calls.

CDs are a bank product, but if the gain is significantly higher than a bank thats a huge red flag, Pomeranz said. Also look twice when it says that it is backed up by the U.S. government, because sometimes thats not the case.