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    Ticketmaster and TicketsNow Settle Springsteen Concert Charges

    FTC warns other ticket resellers to play it straight

    Some fans of The Boss are due to collect some loot.

    In a settlement of Federal Trade Commission (FTC) charges of deceptive bait-and-switch tactics, Ticketmaster has agreed to pay refunds to consumers who bought tickets for 14 Bruce Springsteen concerts in 2009 through its ticket resale Web site TicketsNow.

    The company also has agreed to be clear about the costs and risks of buying through its reseller sites.

    According to the FTC's complaint, when tickets went on sale February 2, 2009, for Bruce Springsteen & The E Street Band concerts in May and June, Ticketmaster displayed a "No Tickets Found" message on its Web page to consumers to indicate that no tickets were available at that moment to fulfill their request.

    The FTC charged that Ticketmaster used this Web page to steer unknowing consumers to TicketsNow, where tickets were offered at much higher prices -- in some cases double, triple, or quadruple the face value.

    Ticketmaster also displayed the same misleading Web page to consumers looking to buy tickets for many other events between October 2008 and February 2009, the agency charged.

    "Buying tickets should not be a game of chance," said FTC Chairman Jon Leibowitz. "Ticketmaster's refrain is that it sold through TicketsNow to give consumers more choices. But when you steer consumers to your resale Web sites without clear disclosures, and they unknowingly buy tickets at higher prices, they'll be left with a sour note."

    Compounding this deception, Ticketmaster failed to tell buyers that many of the resale tickets advertised on TicketsNow.com were not "in hand" -- in other words, they were not actual tickets secured for sale at the time they were listed and bought. In fact, some tickets were being sold speculatively -- that is, they were merely offers to try to find tickets.

    For example, many consumers hoping to go to a Springsteen concert at the Verizon Center in Washington, DC in May 2009 paid for tickets in February that never materialized. Ticketmaster kept the sales proceeds for more than three months without a reasonable basis for believing it could fulfill the orders, the FTC complaint alleged.

    "TicketsNow.com sold phantom tickets without letting consumers know that the tickets did not exist. Then, the company held onto consumers' money, sometimes for months, when it knew those fans weren't going to see Springsteen," Leibowitz said. "Clearly consumers deserve better. They deserve to know what they're buying, including the risk that their tickets won't materialize."

    Under the FTC settlement, eligible consumers who have not previously received a refund will get back the extra money they paid to buy the higher-priced tickets from TicketsNow. For example, if a consumer paid $400 for two tickets from TicketsNow, and those same two tickets would have cost $200 from Ticketmaster, the customer would get a $200 refund.

    It wasn't just Ticketmaster's handling of Springsteen tickets that raised the ire of consumers.

    Bruce of Coppell, TX, tells ConsumerAffairs.com that he bought tickets online for a Dwight Yoakam concert on Feb 5. "We took tickets to arena but could not find parking and were turned away by Mesquite police. We did not get to attend the concert although we paid good money for these tickets and felt that this was the most poorly planned concert. We are not happy Ticketmaster customers."

    "I am outraged at the fees being charged by Ticketmaster (25 percent of the cost of the ticket)," says Ray of Wilton, CA. "I was looking for tickets for Jeff Dunham. I was so outraged, I went down to the arena myself."

    The Commission staff is sending a warning letter to other ticket resale companies whose practices may violate the law. The letter discusses the Ticketmaster settlement and the FTC's concerns about the failure to disclose to consumers when tickets offered for sale are speculative or otherwise not in hand.

    According to the letter, the FTC strongly recommends, "that you review your own company's Web site to ensure that you are not making any misleading statements or failing to provide material information to prospective purchasers of tickets listed on your site."

    The state of New Jersey settled a complaint regarding Springsteen tickets about a year ago.

    Ticketmaster and TicketsNow Settle Springsteen Concert Charges...
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    Capital One Agrees to Refund $775,000 to Customers

    States had challenged annual membership fees on closed accounts

    With a little arm-twisting from the federal Office of the Comptroller of the Currency (OCC), Capital One has agreed to refund annual membership fees to customers who were assessed the fees after they had cancelled their credit card accounts and had no outstanding balance.

    The California and West Virginia attorneys general had challenged Capital One's practices. The OCC became involved when Capital One became a national bank, putting it under the OCC's jurisdiction. It announced the settlement today and said that Capital One would refund about $775,000 to customers affected by the actions, which occurred from 2004 to 2006.

    The bank said it would also reimburse all consumers who paid off their accounts within 90 days after requesting that the accounts be closed.

    "This problem was the result of a systems issue that we fixed in 2006," said bank spokesperson Tatiana Stead in a statement. At the time, we refunded membership fees for many customers who contacted us directly but, in retrospect, we should have done so for an additional 3,400 customers as well. We sincerely regret this error.

    Capital One was formerly a credit-card lender but expanded into banking as part of its strategy to weather the 2008-2009 financial meltdown. It acquired several banks over the last few years and is now the eighth-largest bank in the United States by deposits.

    It is also a frequent target of consumer wrath, as it has raised interest rates, cut credit limits and canceled credit-card accounts to reduce exposure to losses.

    "I received a notice from Capital One Bank stating the 4.9 percent APR on the Mastercard I have had for six years will be increasing to 13.9 percent," Helen, of Boca Raton, Florida, told ConsumerAffairs.com. "I have always paid my bill in total and on time if not early. I called the customer service line and they very politely read the 'cue cards' stating it was a "business decision due to the current economy."

    Capital One Agrees to Refund $775,000 to Customers...
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      FTC Cracks Down on Jobs Con Artists

      Scams prey on Americans left jobless by the recession

      The Federal Trade Commission (FTC) has launched a new crackdown on con artists who are preying on unemployed Americans.

      The fraudsters utilize job-placement and work-at-home scams, promoting empty promises that they can help people get jobs in the federal government, as movie extras, or as mystery shoppers; or make money working from their homes stuffing envelopes or assembling ornaments.

      As part of the law enforcement sweep, dubbed "Operation Bottom Dollar," the FTC has filed seven cases against the operators of deceptive and illegal job and moneymaking scams. In addition, the sweep includes 43 criminal actions by the Department of Justice, many involving the substantial assistance of the U.S. Postal Inspection Service.

      The agency also announced partnerships with the online job placement service Monster.com, the search engine Bing and the centralized network of online communities Craigslist to help job seekers recognize job scams so they can avoid being victimized. Monster, Careerbuilder, Bing and Craigslist will display FTC consumer education material to people who are using the companies' Web sites to look for jobs.

      "Federal and state law enforcement officials will not tolerate those who take advantage of consumers in times of economic misfortune," said David C. Vladeck, Director of the FTC's Bureau of Consumer Protection. "If you falsely advertise that you will connect people with jobs or with opportunities for them to make money working from home, we will shut you down. We will give your assets to the people you scammed, and, when it's appropriate, we'll refer you to criminal authorities for prosecution."

      To help consumers avoid being conned by employment scams, the FTC has produced a new consumer education video in English and Spanish.

      FTC Law Enforcement Actions

      The FTC announced seven new cases against promoters of the job and moneymaking scams, including one that victimized more than 100,000 people. This brings to eleven the number of cases the agency has brought since last spring challenging these types of operations. In these latest actions, the FTC charged that:

      • Government Careers Inc. and three principals preyed on job seekers since at least March 2009 by running deceptive ads on job Web sites. Government Careers claimed it could help people get postal, border patrol, and wildlife jobs as well as administrative support and clerical positions with the federal government.

      • Real Wealth, Inc. and its principal allegedly conned more than 100,000 people by selling them booklets that supposedly explained how they could earn money by applying for government grants and working from home mailing postcards and envelopes.

      • Darling Angel Pin Creations and two principals allegedly claimed on the Internet and in newspaper advertisements that by purchasing a starter kit, consumers could earn up to $500 per week assembling angel pins, and that no experience, special tools, or sewing skills were required. Consumers paid between $22 and $45 to get started, and sometimes paid hundreds more for the supplies they would need to make the pins.

      • Abili-Staff, Ltd., two principals, and a related entity sold supposed work-at-home opportunities online. Billing itself as a "scam free" and "legitimate" job search service, Abili-Staff sold supposedly pre-screened lists of jobs, telling consumers they could access the lists after paying a fee ranging from $29.98 to $89.99, according to the FTC's complaint.

      • Entertainment Work, Inc. and two principals marketed memberships in a Web site that was supposed to list jobs as movie extras, jobs on television, or jobs in print media. By telemarketing and placing advertisements on Web sites and in newspapers across the country, the defendants sold trial memberships for $19.95 to $24.95, and automatically converted those into annual memberships for an additional fee of $80 after two weeks, according to the FTC complaint.

      • Independent Marketing Exchange, Inc. and its principal allegedly made false earnings claims, and additional misrepresentations in the course of selling a smorgasbord of work-at-home opportunities, including an envelope mailing opportunity, a postcard mailing opportunity, and a mystery shopper opportunity. Their deceptive practices have injured numerous consumers, including stay-at-home and single mothers.

      • Preferred Platinum Services Network and the husband-and-wife team who owned and operated it allegedly marketed a work-from-home scheme in which consumers were told they could earn significant sums by labeling postcards describing a non-existent product promoted by Preferred Platinum called "mortgage accelerator." Advertised in local pennysavers and newspaper classified sections, and at the defendants' Web site, the scheme touted earnings of up to $1 per postcard, as well as a 60-day money-back guarantee.

      Thousands of consumers get stung by schemes such as these.

      Sharon of New Bern, NC, tells ConsumerAffairs.com of an ad that she says was on AOL's home page about a company that was hiring workers to work at home. "It talked about the company and the start up rate ($1.95) I clicked the link to go to the website, and it said the cost and what you are expected to get for $1.95 It doesn't say anything about any other costs at all."

      Sharon says her account was debited the $1.95, but, "days later I was billed $129.00. I tried contacting the company by sending an email, and the email came back. It was undeliverable. There is no phone number on the website. I later found out through their Terms and Services (on the bottom of the website) that you have to cancel within 3 days. That's why I was billed."

      "Purchased a product for work at home opportunity," writes Sandra of Indiana. "Was promised that this purchase would include medical billing software and names of (2) doctors that I would do medical billing for from my home. Was promised that the purchase would be delivered in 48 hours. Product was not delivered until 8 days after purchase and did not include what was promised. I have made several attempts to contact the company leaving numerous messages and have never received a call back. I paid $399 for the product and did not get what was promised."

      The tough economy has helped the "work at home scams" proliferate. Your best protection against them is to know the warning signs so you can avoid being taken.

      FTC Cracks Down on Jobs Con Artists...
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      Illinois Sues Marketer For Alleged 'Cramming'

      Consumers request 'free sample' but end up paying for multiple orders

      The State of Illinois is suing an Evanston-based marketing firm for "cramming" consumers' credit cards with unauthorized charges for supposedly free trial offers of coffee products.

      "We've received an extraordinary number of complaints from consumers who believed they were signing up for free items but wound up with unauthorized charges from this company," said Illinois Attorney General Lisa Madigan. "Because of cases like this, it's important that consumers carefully review their monthly credit card statements to ensure they're not being unexpectedly billed."

      Madigan's complaint alleges that defendants Peel, Inc., and its President Brian Dale sell products online at dozens of Web sites, including hundreds of complaints, metroroasters.com, posterpass.com and shopdani.com. The company markets its products using "free trial" offers and requires consumers to provide their billing information purportedly to cover shipping and handling fees for the supposedly free merchandise.

      However, within days of signing up for a free trial, consumers begin receiving unauthorized charges ranging from $19.99 to $49.99 on their credit cards.

      Further, Madigan's complaint alleges that if consumers are able to reach Peel's customer service, the company allegedly promises to stop charging consumers but fails to do so. Consumers continue to receive unauthorized charges on their credit cards. Madigan's Consumer Fraud Bureau and the Better Business Bureau have received more than 2,300 complaints against Peel and its affiliated Web sites.


      ConsumerAffairs.com has also received hundreds of complaints about this company, most recently from Marvin, in Okemah, Okla.

      "In early August, 2009 I signed up for a free sample from Seattle Coffee Direct. All I had to pay was $2.99, which was charged to my eppicard.," he told ConsumerAffairs.com. "In late August I noticed a transaction on the eppicard account for approximately $38 from Seattle Coffee Direct, however they were using a different name to identify the payee. I immediately contacted eppicard and was told to call back to file a dispute when the charge cleared."

      Told that the disputed charge would be removed, Marvin was chagrined when another $38 charge appeared on his account four days later. When he called customer service he says he was told that he has signed up for two shipments a month, although he says he did nothing more than request a free sample.

      Madigan's suit alleges the defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act by placing unauthorized charges on consumers' credit card bills. The suit seeks a permanent injunction barring the defendants from doing business in Illinois, restitution for consumers, civil penalties of $50,000 for violating the Consumer Fraud Act, and an additional $50,000 for each violation committed with the intent to defraud.

      Want to know how cramming works? Click here.

      The State of Illinois is suing an Evanston-based marketing firm for "cramming" consumers' credit cards with unauthorized charges for supposedly free trial ...
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      Bank of America Steps Up Loan Modifications

      Reports improvement in modification rate after slow start

      Under pressure from the Obama Administration, Bank of America says it has stepped up its efforts to modify mortgages through the White House's Home Affordable Modification Program.

      Bank of America now says more than 12,700 of its mortgage holders have a permanent Home Affordable modification, up from nearly 3,200 a month earlier. Another 13,700 permanent modifications are pending, meaning final modified loan terms have been approved and documents have been sent for the customers' signatures, which will be their final step to a completed modification.

      The program began almost a year ago, with a strong government incentive for mortgage servicers to modify mortgages for struggling homeowners to help avoid rising foreclosures. But until now, very few loans were modified under the program.

      In fact, many homeowners reported to ConsumerAffairs.com that nearly all servicers were difficult to deal with, asking that documents be faxed multiple times, stringing out the process, and in the end denying the modification or waiting until the property went to foreclosure.

      And despite Bank of America's reported improvement, it apparently can't help everyone.

      "We have submitted an application for the home affordable housing program ,the President Obama, program, to help us and Bank of America has denied us twice," Bea, of Temecula, Calif., said in a complaint to ConsumerAffairs.com this week. "First because we don't have enough income and second, that we received $353.00 a month more income and extra $50.00 for food, we don't qualify."

      'Extraordinary measures'

      But the bank said it is continuing to take "extraordinary measures" to reach customers who face deadlines for providing necessary documentation for consideration of a permanent modification.

      "This initiative entails mail, telephone and door-to-door outreach -- averaging more than a dozen contacts per customer -- aimed at encouraging and helping eligible homeowners meet their documentation requirements and avoid falling out of the program," Bank of America said in a press release.

      But April, of Albuquerque, N.M., reports a somewhat different experience with Bank of America. It began, she says, when she called the mortgage servicer to say she was having trouble paying her mortgage and to request a modification.

      "I spoke with Louie who took all my financial information and told me he had an offer for a new mortgage trial payment of 967.20 for three months and if we could make that payment for three months our loan would be modified to a new affordable payment," April told ConsumerAffairs.com. "After making the three payments I called to find out what the status of the modification was and the rep told me there was no record of an offer or loan modification and there was nothing they could do."

      HAMP resulted in only 66,465 permanent modifications by the end of December, according to the Treasury Department. That compares with its goal of up to 4 million by 2012.

      Bank of America Steps Up Loan Modifications...
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      Packaged Salad Can Contain High Levels Of Bacteria

      Consumers Union calls for standards for greens

      The latest tests of packaged leafy greens by Consumer Reports found bacteria that are common indicators of poor sanitation and fecal contamination -- in some cases -- at rather high levels.

      Consumers Union, publisher of the magazine, is urging the Food and Drug Administration (FDA) to set safety standards for greens. FDA food safety legislation pending in the Senate, and passed last summer by the House of Representatives, would require the FDA to create just such safety standards.

      The tests, which were conducted with financial support from the Pew Health Group, assessed for several types of bacteria, including total coliforms and Enterococcus -- "indicator organisms" found in the human digestive tract and in the ambient environment that can signal inadequate sanitation and the potential for the presence of disease-causing organisms.

      While there are no existing federal standards for indicator bacteria in salad greens, there are standards for these bacteria in milk, beef, and drinking water. Several industry consultants suggest that an unacceptable level in leafy greens would be 10,000 or more colony forming units per gram (CFU/g) or comparable measure.

      Consumer Reports found that 39 percent of samples exceeded this level for total coliform, and 23 percent for Enterococcus. The tests did not find E. coli O157:H7, Listeria monocytogenes or Salmonella -- sometimes-deadly pathogens that can be found in greens, although it was not expected given the small sample size. The goal was to investigate other markers of poor sanitation that should be used in the food safety management of produce.

      "Although these 'indicator' bacteria generally do not make healthy people sick, the tests show not enough is being done to assure the safety or cleanliness of leafy greens," said Dr. Michael Hansen, senior scientist at Consumers Union. "Levels of bacteria varied widely, even among different samples of the same brand. More research and effort is needed within the industry to better protect the public. In the meantime, consumers should buy packages of greens that are as far from the use-by date as possible."

      For its latest analysis, CR had an outside lab test 208 containers of 16 brands of salad greens, sold in plastic clamshells or bags, bought last summer from stores in Connecticut, New Jersey, and New York. Among the findings:

      • 39 percent of samples exceeded 10,000 CFUs (or another similar measure) per gram for total coliforms and 23 percent for Enterococcus, the levels industry consultants deemed unacceptable.

      • 2 percent of samples exceeded French and 5 percent Brazilian standards for fecal coliform bacteria.

      • Many packages containing spinach, and packages which were one to five days from their use-by date, had higher bacterial levels. Packages six to eight days from their use-by date generally fared better.

      • Whether the greens came in a clamshell or bag, included "baby" greens, or were organic made no difference in bacteria levels.

      • Brands for which there were more than four samples, including national brands Dole, Earthbound Farm Organic, and Fresh Express, plus regional and store brands, had at least one package with relatively high levels of total coliforms or Enterococcus.

      "The Senate should act immediately to pass pending FDA food safety reform legislation that requires the agency to set performance standards as well as develop safety standards for the growing or processing of fresh produce," said Hansen. "FDA should also formally declare that certain pathogenic bacteria -- such as E. coli O157:H7, Salmonella, and Listeria -- be considered adulterants when found in salad greens." The Senate bill, S. 510, the FDA Food Safety Modernization Act, was voted unanimously out of committee in November. The House passed similar legislation last July.

      Until packaged salad becomes cleaner, consumers' best line of defense involves following these procedures in stores and kitchens:

      • Buy packages far from their use-by date.

      • Wash the greens even if the packages say "prewashed" or "triplewashed." Rinsing won't remove all bacteria but may remove residual soil.

      • Prevent cross contamination of greens by keeping them away from raw meat and poultry.

      Packaged Salad Can Contain High Levels Of Bacteria...
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      Florida Probes Eight Firms For Alleged Employment Scams

      Suspected of exploiting desperate job-seekers

      The ads make it sound easy; let the advertised firm train and place you in a new job, or set you up in a work-at-home business that will triple your income. It hardly ever works out that way, however.

      Now, the State of Florida has issued subpoenas to eight firms suspected of running employment or work-at-home scams.

      "Unemployed Floridians are particularly vulnerable to scams that falsely promise quick fixes for people who are jobless," said Florida Attorney General Bill McCollum. "With the unemployment rate in Florida at record highs, we need to be vigilant in our efforts against people looking to capitalize on someone else's difficulties."

      One of the firms receiving a subpoena is Career Services International, based in Orlando. McCollum's office is investigating allegations that the company misrepresents available services and collects fees for those services, but fails to provide them. Consumers have complained that the quality of service was not what the company had promised and indicated problems with missed deadlines, untrained employees, and lack of advertised expertise.

      Federal-State Crackdown

      The subpoena is one of a series issued over the past several months targeting employment scams and was announced today to highlight the office's joint enforcement effort with the Federal Trade Commission (FTC)and several other states. Seven other Florida companies have also received subpoenas investigating potential violations of Florida's Deceptive and Unfair Trade Practices Act. Allegations include misleading or deceptive marketing of work-from-home opportunities as well as job placement services and other Internet business ventures.

      The other firms under investigation include:

      Coretech Media LLC, doing business as Netcadetpro.com and Net Money Training, located in St. Petersburg; Investigation of unfair and deceptive trade practices related to home business opportunity kits advertised over the internet

      Darling Angel Pin Creations, Inc., located in Brandon; Investigation of unfair and deceptive trade practices involving work at home job opportunity

      GC Displays, Inc., doing business as Atlanticpacificonline.com, located in Clearwater; Investigation of unfair and deceptive trade practices involving job placement services

      Home Biz Ventures, LLC, doing business as Bidfuel.com and Blogtoolkit.com, located in Clearwater; Investigation of unfair and deceptive trade practices involving internet business opportunity which offers on-line membership access to training and products to sell on auction sites

      My Career Corp., Inc., located in Tampa; Investigation of unfair and deceptive trade practices involving job placement services

      Pacific Webworks, Inc., located in Salt Lake City, Utah; Investigation of unfair and deceptive trade practices involving work from home opportunities

      Viable Marketing Corp., located in Seminole; Unauthorized recurring charges associated with negative option "work at home" internet business opportunity

      McCollum says consumers should be wary of any company offering employment positions that require little or no education but claim to pay high wages, companies that charge an up-front fee for their services or products, companies that offer "memberships" to internet-based employment opportunities, and any other opportunity that sounds too good to be true.

      Florida Probes Eight Firms For Alleged Employment Scams...
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      Survey: Customers Staying Satisfied Through 2009

      Retailers, financial services and e-commerce show improvement

      Customer satisfaction with the goods and services that Americans buy remained strong in the fourth quarter of 2009, according to the American Customer Satisfaction Index (ACSI).

      The index was virtually unchanged, dipping a mere 0.1 percent from the previous quarter -- to 75.9 on the ACSI's 100-point scale. It remained much higher than it was prior to the recession and also slightly higher than this time a year ago.

      Because economic recovery is highly dependent on consumer spending and high levels of customer satisfaction tend to strengthen consumer demand, the latest ACSI reading does not add to more economic woes. Despite anecdotal evidence to the contrary, most companies are providing good customer service and many have very satisfied customers.

      "As long as unemployment remains high and credit tight, it is difficult to see how we can get to a sustainable pace of consumer spending growth," said Professor Claes Fornell, head of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference.

      "But it is not all bad: the 'will to spend' is evidenced by high customer satisfaction. The issue is whether or not consumers have the 'means to spend,'" He added. "The recent news about the decline in unemployment and the rise in manufacturing hiring may not only lead to more people working, but may also dampen the fear of job loss. If so, the means to spend will face less of a hurdle."

      As the stock market rebounded in 2009, the rewards have been greater for those companies with improving ACSI scores. On average, companies that did well in ACSI saw their stocks increase by 75 percent, while stock prices for those with declining ACSI scores rose just 22 percent over the same period.


      Customer satisfaction with the retail sector, which includes department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal care stores, gained 1.3 percent to an ACSI score of 76.2.

      Nordstrom maintained its lead among department and discount stores, rising four percent to an all-time high of 83. Several other retailers posted large gains, including Target (+4 percent to 80), Dollar General (+5 percent to 79) and Dillard's (+4 percent to 78).

      Macy's, notable for bucking the positive trend, saw its score fall four percent to an industry low of 71.

      "I have never had a friendly experience at the Macy's in Reno," Victoria of Reno, NV, told ConsumerAffairs.com. "I would boycott the store altogether but sadly in Reno it is our only 'nice' store. I was looking at jewelry with a friend of mine, and by jewelry I mean the real stuff, diamonds, sapphires, etc. Anyway as we were looking at the cases the sales girl starts taking everything out and closing up for the night. The store didn't close for another 45 minutes!"

      Among specialty retailers, Barnes & Noble stood out, leading for a third straight year with a score of 84. Office supply retailers rebounded from a year ago, with OfficeMax making the biggest move, up four percent to 77 to tie Staples (+1 percent). Office Depot followed behind (+1 percent to 76).

      Home Depot improved for a second straight year, gaining three percent to 72. However, the improvement was not enough to move Home Depot up from the bottom of the specialty retail category or to close the gap with rival Lowe's, which gained four percent to an all-time high ACSI score of 79.

      Supermarkets were unchanged for a third straight year with an ACSI score of 76, even though food prices dropped after two years of large increases. Publix has been in the lead since 1994 and this year was no exception: the supermarket chain improved five percent to 86 -- its highest score ever.

      Safeway moved in the opposite direction one year after undertaking a large-scale store makeover. Its customer satisfaction retreated four percent to 72.

      Maureen of Novato, CA, tells ConsumerAffairs.com that her local Safeway is always out of stuff. "Nine times out of ten, I have to go to another store to get items this store stocks, but the shelves are empty each time I shop there. The manager doesn't seem to care when you bring things to his attention."


      The finance and insurance sector improved slightly, rising 1.4 percent to 77.1. Health insurers made the largest gain, up 2.7 percent to an ACSI score of 75, led by improvements for UnitedHealth Group (+14 percent to 72) and Aetna (+8 percent to 70). Even though healthcare costs continue to rise, the pace of price increases has slowed.

      Banks held steady with a score of 75, although two of the largest banks -- Bank of America and JPMorgan Chase -- face a challenging customer environment with significant dropped in satisfaction. Smaller banks did better, as their aggregate score was unchanged for a third year at 80.

      One year after acquiring Wachovia, Wells Fargo improved one percent to 73, best among the large banks. JPMorgan Chase and Bank of America also made large acquisitions, but in the aftermath of the Chase purchase of Washington Mutual, customer satisfaction fell seven percent to 68.

      Likewise, Bank of America dropped eight percent to an industry low of 67 following its acquisition of Merrill Lynch and the subsequent cost-cutting undertaken to offset higher-than-expected debt.

      The property and casualty insurance industry declined 1.2 percent to an ACSI score of 80, while life insurance improves 1.3 percent to 79. Among life insurers, Northwestern Mutual and New York Life led the category, rising four percent each to 81 and 80, respectively.

      In the property and casualty industry, State Farm was on top at 82, a three percent improvement, followed closely by GEICO (+1 percent to 81) and Progressive (+1 percent to 80). The drop in ACSI for property and casualty insurance as a whole was driven by a three percent decline for smaller insurers, which have faced a more negative reaction to premium increases.


      The ACSI score for e-commerce was up 1.8 percent to 81.4, nearly matching its all-time high. Internet retail improved 1.2 percent to 83. Netflix led, rising two percent to 87. The online video rental company has seen sizable increases in its subscriber base, revenues and stock price over the past year.

      Amazon (unchanged) and Newegg (down two percent) were also strong performers with very high scores of 86. Customer satisfaction with eBay was up one percent to 79, but the auction site hasn't improved much over the years and eBay remained at the bottom of the list.

      "Overall, online shopping continues to grow and provide higher levels of customer satisfaction," said Fornell. "Free shipping promotions, competitive pricing, and the ability to browse and research an ever wider selection of merchandise from the comfort of one's home have made online retailing a very attractive and powerful alternative to traditional stores."

      As the stock market slump contributed to lower customer satisfaction with Internet brokerage services, the rebound in stock prices has had the opposite effect. Investor satisfaction with online brokerage was up 5.4 percent to an ACSI score of 78, the largest improvement for any category this quarter.

      Customer satisfaction with the larger full-service brokerages Fidelity and Charles Schwab has been less affected by the ups and downs of the market. They didn't fall as far last year and show less of a rebound this year, with Schwab up one percent and Fidelity down one percent to share the lead at 79.

      Even though their ACSI scores were lower, TD Ameritrade and E*Trade made big gains a year after customer satisfaction with their services plummeted, improving seven percent to ACSI scores of 76 and 74, respectively.

      Customer satisfaction with online travel websites jumped 2.7 percent to a score of 77. Priceline showed the greatest improvement, up six percent to an all-time high of 76, while Expedia led among major travel websites for a fourth straight year, up three percent to 79.

      Survey: Customers Staying Satisfied Through 2009...
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      Toyota Recalls Impact Online Car Shopping

      Toyota's loss is Ford &, Chevrolet's gain

      From the start, auto industry experts predicted Toyota's high-profile problems would benefit the carmaker's competitors. Early evidence tends to confirm that.

      CarGurus.com is among the first to issue a study of Toyota's recalls on car shopping. It concludes there has been a noticeable shift away from Toyota and toward Ford and Chevrolet models.

      That confirms findings by Kelley Blue Book, which said that purchase consideration of Toyota fell 20 percent after the recent recalls, droping it from first place to third behind Chevrolet and Ford.

      For its study, CarGurus measured the change in online search volume within its car shopping product for specific recalled Toyota models. Search volumes were measured 10 days prior to and 10 days after Toyota's January 26th product recall announcement.

      After the recall announcement, Toyota's share of shopping search volume at CarGurus dropped between six and 16 percent depending on the car model. For the top four best-selling Toyota models recalled, comparable models from Ford and Chevrolet garnered the greatest increase in search volume share.

      Corolla's loss, Cobalt's gain

      During the ten days after the recall, search market share for the Toyota Corolla, the fifth best-selling car in the United States, dropped 13 percent compared to the ten days prior to the recall announcement. During this same period, the leading search share gainers for competitive products to the Corolla were the Chevrolet Cobalt, up 11 percent, and the Ford Focus, with a nine percent gain.

      Toyota's other top seller, the Camry, the third best-selling car in the United States, saw a similar shift in consumer consideration during this period. During the 10 days after the recall announcement, the Camry's share of search volume dropped 8 percent.

      During this same period, however, search market share increased 15 percent for the Ford Fusion and eight percent for the Chevrolet Impala.

      "Industry experts have already noted that Toyota's problems could impact other carmakers," said Langley Steinert, Founder/CEO of CarGurus. "What is surprising, however, is how much Ford and Chevrolet in particular appear to have benefited from Toyota's troubles. These two domestic manufacturers could leverage this opportunity to take significant market share from Toyota."

      But Toyota is mounting a counterattack but how effective it will be remains to be seen.

      Toyota Recalls Impact Online Car Shopping...
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      Dietary Supplement Scammer Pleads Guilty

      False claims generated nearly $12 million

      A Springfield, Mo., business owner has pleaded guilty in federal court to her role in a conspiracy to fraudulently market dietary supplements over the Internet with illegal claims that these supplements could prevent, treat or cure a number of diseases.

      Mai Lor, 25, used several Web sites were used to sell nearly $12 million worth of the products in 2005 and 2006, according to Beth Phillips, United States Attorney for the Western District of Missouri.

      Lor was co-owner, along with her husband, of Medycinex, which purchased dietary supplements and sold them over the Internet. At her husband's direction, Lor also formed Bio Nutrasource, LLC to carry on the business previously conducted by Medycinex.

      Lor contracted with co-defendant Tony T. Pham, 41, of Grand Rapids, Mich., to market and distribute the dietary supplements. Co-conspirators claimed that six products sold over the Internet had been proven reliable through clinical testing for the treatment and prevention of diabetes, irritable bowel syndrome, gout, high cholesterol, high blood pressure, heartburn and diarrhea. In reality, no clinical testing had been performed.

      Under federal law, a dietary supplement may not claim to treat, cure or prevent a specific disease or class of diseases. None of the dietary supplements sold by Lor and her co-conspirators are generally recognized, among experts as safe and effective for use under any of the conditions recommended in their labeling. Therefore, each of these dietary supplements is a new drug.

      None of them were approved by the FDA, and their labels do not bear adequate directions for use. Therefore, they are also categorized as unapproved drugs and misbranded drugs.

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

      Pham, who pleaded guilty on July 2, 2009, to charges contained in the April 2, 2009, superseding indictment, owned and operated Techmedica Health, Inc., located in Grand Rapids. He admitted that he used Techmedica to repackage, sell, market, and distribute unapproved new drugs and misbranded drugs over the Internet.

      Pham acknowledged that since April 6, 2004, he participated in a conspiracy to buy and sell unapproved new drugs and misbranded drugs and to defraud the United States by impeding the lawful functions of the Food and Drug Administration to prevent the introduction of unapproved new drugs and misbranded drugs in interstate commerce, to regulate the interstate sale and distribution of drugs in the United States, and to safeguard the health and safety of consumers who purchase drugs.

      In addition to the conspiracy, Pham pleaded guilty to one count of wire fraud related to payments in the form of a wire transfers to a bank account.

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

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

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

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

      Techmedica, through Pham, operated several Web sites using mirror image technology. When each of these Web sites was accessed from an FDA network computer, they displayed a "sanitized" version of the Web site containing medical claims that attempted to comply with the federal Food, Drug, and Cosmetic Act (FDCA).

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

      By pleading guilty, Lor also agreed to forfeit to the government any property derived from the proceeds of the offenses, including $11,954,648 (for which she and her co-defendants are jointly and severally liable), three real estate properties in Springfield, properties in Rogersville, Mo., and Pleasant Hope, Mo., three vehicles and various bank accounts.

      Under federal statutes, Lor is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 or twice the gross gain.

      Diet supplement scams area huge business. The FTC routinely brings charges against these phony operations.

      A Springfield, Mo., business owner has pleaded guilty in federal court to her role in a conspiracy to fraudulently market dietary supplements over the Inte...
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      Energy Drinks, Alcohol a Bad Mix, Researchers Say

      Growing concern over trendy young adult cocktail

      Energy drinks are emerging as a beverage of choice for young people, who often mix them with alcohol. But combining alcohol and energy drinks may create a dangerous mix, according to research conducted at the University of Florida.

      In a study of college-aged adults exiting bars, patrons who consumed energy drinks mixed with alcohol had three time the risk of leaving a bar highly intoxicated and were four times more likely to intend to drive after drinking than bar patrons who drank alcohol only.

      The study appears in the April issue of the journal Addictive Behaviors.

      "Previous laboratory research suggests that when caffeine is mixed with alcohol it overcomes the sedating effects of alcohol and people may perceive that they are less intoxicated than they really are," said the study's lead researcher Dennis Thombs, an associate professor in the UF College of Public Health and Health Professions' department of behavioral science and community health. "This may lead people to drink more or make uninformed judgments about whether they are safe to drive."

      The UF study is the first of its kind to evaluate the effects of alcohol mixed with energy drinks in an actual drinking environment, that is, at night outside bars. Research on college student alcohol use in campus communities has traditionally relied on self-report questionnaires administered to sober students in daytime settings, Thombs said.

      Data for the UF study were collected in 2008 from more than 800 randomly selected patrons exiting establishments in a college bar district between the hours of 10 p.m. and 3 a.m. Researchers conducted face-to-face interviews with participants to gather demographic information and details on participants' energy drink consumption and drinking behavior.

      Participants also completed self-administered questionnaires that asked about their drinking history and intention to drive that night. Next, researchers tested participants' breath alcohol concentration levels. Participants received feedback on their intoxication levels and advice about driving risk.

      3 times more likely to be drunk

      Bar patrons who reported drinking alcohol mixed with energy drinks -- 6.5 percent of study participants -- were three times more likely to be intoxicated than drinkers who consumed alcohol only. The average breath-alcohol concentration reading for those who mixed alcohol and energy drinks was 0.109, well above the legal driving limit of 0.08.

      Consumers of energy drink cocktails also left bars later at night, drank for longer periods of time, ingested more grams of ethanol and were four times more likely to express an intention to drive within the hour than patrons who drank alcohol only.

      Consumers of alcohol mixed with energy drinks may drink more and misjudge their capabilities because caffeine diminishes the sleepy feeling most people experience as they become intoxicated. It's a condition commonly described as "wide awake and drunk," said study co-author Bruce Goldberger, a professor and director of toxicology in the UF College of Medicine.

      "There's a very common misconception that if you drink caffeine with an alcoholic beverage the stimulant effect of the caffeine counteracts the depressant effect of the alcohol and that is not true," Goldberger said. "We know that caffeine aggravates the degree of intoxication, which can lead to risky behaviors."

      The study, funded by the University of Florida Office of the President, raises a lot of questions and suggests topics for future research, Thombs said.

      "This study demonstrates that there definitely is reason for concern and more research is needed," he said. "We don't know what self-administered caffeine levels bar patrons are reaching, what are safe and unsafe levels of caffeine and what regulations or policies should be implemented to better protect bar patrons or consumers in general."

      Energy Drinks, Alcohol a Bad Mix, Researchers Say...
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      Big Banks Fare Worst In Consumer Survey

      HSBC achieves record low rating; Citibank, Fifth Third close behind

      One year after the financial meltdown and resulting bank bailouts, consumers have regained some trust in some financial institutions, according to a report by Forrester Research.

      "But the positive sentiment is not evenly distributed," the research group said in a statement accompanying the report.

      Some insurance companies, like USAA and Geico, regained some ground in the latest report, as did super-regional banks like PNC Bank, U.S. Bank, and Branch Banking and Trust (BB&T).

      "But some of the largest banks in the US, such as Chase and Citibank, still crowd the very bottom of the rankings," the report said. "And almost all investment firms are in the bottom half of our rankings. For the second year in a row, these wealth management firms as a group get the worst customer advocacy ratings overall."

      Forrester's annual Customer Advocacy rankings ranks nearly 50 US financial services firms in the by the percentage of customers who agree "my financial provider does what's best for me, not just its own bottom line."

      The financial services firms that rated lowest on the answer to that question are, in order:

      No more than 33 percent of customers of these companies agreed with the statement when it came to their bank or financial services firm.

      HSBC fared the worst of all, with only 16 percent of its customers agreeing with the statement. Forrester said it was the lowest customer advocacy score ever recorded.

      What could HSBC be doing to alienate so many customers? Camie, of Dayton, Ohio, is an HSBC customer by virtue of her Best Buy credit card.

      "They have the worst customer service I have ever dealt with," she told ConsumerAffairs.com. "One day when I got online to check my statement, I had a late fee of $39 dollars, but I have never received my statement in the mail. I called them and they claimed that I had signed up for paperless statements when I know that I would never do that because it would make me forget."

      Michelle, of Modesto, Calif., also has a Best Buy card through HSBC.

      "After the second statement arrived I noticed a small miscellaneous charge," she told ConsumerAffairs.com. "I looked back at the statement from the month before and there was one there too."

      Michelle called HSBC and said she was told it was an "insurance charge" in case she had a hardship and couldn't pay her bill.

      "I never signed up for this or was made aware of it at the time of purchase," she said.

      Bob, of Vancouver, British Columbia, is completely unimpressed with HSBC's financial services.

      "Their fees are astronomically high and their advisors are less knowledgeable than your local mom and pop financial planner," Bob told ConsumerAffairs.com. "They under performed the market every single year I was with them and tried to lie about the performance to trick me. They pretend to have a global advantage but really they have absolutely nothing."

      Forrester says large banks and financial institutions routinely place in the bottom of the rankings while smaller institutions rank near the top.

      "Part of it is that the banks are preoccupied with their bottom line," Forrester vice-president Bill Doyle told the New York Times. "They are public institutions who are in business to make money for their shareholder and inevitably, that shows to customers."

      Among the best-performing institutions in the Forrester survey are credit unions. This year's survey shows 70 percent of credit union customers say their financial institution puts their interests first.

      One year after the financial meltdown and resulting bank bailouts, consumers have regained some trust in some financial institutions, according to a report...
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      Consumers Scammed by Bogus Debt Collector to Get $1.6 Million

      Refund checks will arrive this month

      Thousands of consumers who were scammed into paying money they did not owe by con artists who threatened, harassed and lied to them will soon be receiving a total of $1.6 million.

      In 2003, the FTC sued three companies, operating under the name National Check Control, charging them with harassing and abusing consumers, falsely threatening criminal prosecution, illegally communicating with third parties, collecting amounts that were not due, and other violations of federal laws.

      In 2005, the court ordered a permanent halt to their operations and ordered them to pay redress to the consumers they had bilked. The defendants, including Check Investors, Inc., Check Enforcement, Inc., Jaredco, Inc., the companies' owner, Barry Sussman, and their corporate counsel, Charles Hutchins, unsuccessfully appealed the case to the Third Circuit Court of Appeals and the Supreme Court.

      Several readers wrote ConsumerAffairs.com describing their run-ins with National Check Control.

      Kellie of Arlington, TX, says she received a letter stating that she had an unpaid check in the amount of $146.15, from "Sears." The claim, she says, came from National Check Control, which is "implying criminal prosecution. I have only shopped at Sears once in my life, and that was to purchase a major appliance for several, several, hundreds of dollars, in which I paid cash."

      Melissa from Newport News, VA, says she was threatened with jail over returned checks. "I asked for a copy of these checks because I dispute that I wrote them. He didn't let me finish before asking me did I want to go to jail today. He asked if I had children I said 'yes,' he told me to make arrangements because I was going to jail." She said she was in fear of being arrested.

      On February 7, 2008, one day after the appeals court refused to reconsider Sussman's appeal, he removed from a bank safe deposit box coins valued at $335,000 that the federal court had ordered him to turn over to the FTC for consumer redress.

      A federal jury convicted him of two felony counts -- theft of government property and obstruction of justice. In October 2009, he was sentenced to 41 months in federal prison and is currently serving his sentence.

      The FTC recovered a total of $1.6 million for consumer redress. The funds will be distributed to 24,916 consumers who each lost $100 or more as the result of the defendants' illegal actions. Consumers will begin to receive checks this month.

      Consumers Scammed by Bogus Debt Collector to Get $1.6 Million...
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      State Attorneys General Settle with Western Union Over Money Laundering

      Millions to be used to fight 'profit smuggling' by Mexican cartels

      Attorneys general from the southwestern U.S have reached a $94 million settlement with Western Union Financial Services, Inc., that resolves a decade-long investigation into illicit money transfers that "have flowed freely" in the border region.

      The settlement includes $50 million in funding for the "Southwest Border Anti-Money Laundering Alliance," a four-state coalition against money laundering that includes the attorneys general of Arizona, California, New Mexico and Texas.

      "For years, billions of dollars in smuggling profits have flowed freely between the United States and Mexico," said California AG Edmund G. Brown Jr. "Today's agreement with Western Union gives our region the resources and cooperation we need to stem the flow of illicit cash across our borders."

      The settlement follows a decade-long investigation by the Office of the Arizona Attorney General into illegal money-laundering activity in the Southwest border region. The investigation found that hundreds of millions of dollars are being channeled to drug, weapon and human traffickers through Western Union money transfers.

      To resolve Arizona's investigation and more effectively address illegal money laundering, Western Union has agreed to:

      • Provide $50 million to establish and fund the Southwest Border Anti-Money Laundering Alliance;

      • Invest $19 million over the next several years into upgrades to its anti-money-laundering program;

      • Provide $4 million to support an independent monitoring program established to ensure anti-money-laundering measures are implemented; and

      • Pay $21 million to the State of Arizona to cover investigation and litigation expenses.

      "Bringing the four Southwest border states together and providing the money and information available in this agreement is a major step in our ability to crack down on drug cartels and organized border crime." said Arizona Attorney General Terry Goddard.

      The Southwest Border Anti-Money Laundering Alliance will support and fund training, information sharing and other initiatives in member states and Mexico and will work to enhance and better coordinate money-laundering investigations and prosecutions.

      Under the agreement, law enforcement organizations in Arizona, California, New Mexico and Texas will each be guaranteed grants totaling a minimum of $7 million to bolster efforts to combat money laundering.

      The U.S. Drug Enforcement Agency estimates that $18 billion to $39 billion is being smuggled from the United States to Mexico every year.

      State Attorneys General Settle with Western Union Over Money Laundering...
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      Seniors Looking for Love Online

      Lifestyles of older people encourage Internet dating

      Who really uses the Internet to make those "emotional connections" -- the young stud looking for a hit-and-run hookup?

      Maybe. But Alicia Cast, associate professor of sociology at Iowa State University, says older adults who are too busy to find a relationship in the conventional way are turning to the Web -- and are largely successful in making desired connections.

      "In many cases, there are some real structural forces that encourage the support and use of these technologies," says Alicia Cast. "And one of them is just structural constraints on people's time -- such as people who have kids, or have full-time jobs, or work long or extensive hours. They might also be older and the majority of people who are in their pool of eligibles are already in relationships."

      Cast and her graduate research assistant, Jamie McCartney, collected data from approximately 175 central Iowa newlywed couples over a three-year period. Among the sample, 25 couples first met online-either through online dating, social networking sites, or some other online means.

      Online daters didn't differ significantly from offline couples in terms of self-esteem levels, attractiveness, intelligence, and other personal characteristics, Cast says.

      The research found that spouses who meet online are older, less likely to be marrying for the first time, and have much shorter courtships -- averaging 18.5 months of dating before getting married compared with 42 months for those who met in more traditional ways offline.

      "There's an interesting contradiction there because the people who look online may not be perceived as being serious [by friends and family]," Cast says. "But the people who are doing the actual searching may look at it as a way to be incredibly serious about the process. And one of the things we found was that, indeed, their courtship periods are shorter."

      McCartney first identified the online trend among the study's sample, which Cast says has afforded them a rare research opportunity.

      "My understanding is that there are very few studies that have been able to simultaneously get access to a source of couples who meet through more conventional means, along with those who choose to meet people online," she says.

      Cast and McCartney continue to analyze data from their newlywed sample and are planning to publish that study in a professional journal.

      While her new research has found that people are using online means to find love, a previous study Cast conducted with David Schweingruber, ISU associate professor of sociology, suggests that a traditional proposal may have the most powerful impact when a couple decides to get married.

      Their study of 2,174 Midwestern university students on audience judgments about engagement proposals -- published in the journal Sex Roles -- found that using traditional proposal elements -- making the proposal on bended knee with an engagement ring -- still sends the most positive messages about the strength of the couple's relationship to their family and friends.

      "Taking to one's knee is still the gold standard, and so is a diamond [among the perceptions of friends and family]," Cast says.

      "Most couples know what's going to happen and so issues of sizing rings and those kinds of things are largely done behind the scenes," she adds. "But if you have a partner who doesn't do that and surprises you, then there is this kind of public evaluation where it's not considered serious until you show them the ring."

      The study also found that both men and women and older and younger individuals were likely to evaluate relationships based on their conformity to traditional proposal scripts.

      Would-be daters writing to ConsumerAffairs.com drive home the point that one needs to be careful when looking for love online.

      Laurie of Westwood, MI, calls eHarmony "a complete fraud." She contends "they have the most unethical sick practices I have ever seen. You will be scammed in every way. I found email addresses most bogus but I kept writing. I finally got a refund or at least they said they would give me one. I now have it in writing to provide to my credit card company."

      "My profile (with Match.com) was never honored as promised," writes Steve of Breckenridge, CO. "Sent random photos of people not even close to my desired profile. When I complained, they said it would change, it never did. A big scam. On top of that they promised 6 months free after charging my credit card without authorization. I am out almost $100. The site creates a lot of frustration!"

      Problems with online dating are nothing new. As long as four years ago, the state of Illinois was considering legislation to protect consumers using such services.

      Alicia Cast, associate professor of sociology at Iowa State University, says older adults who are too busy to find a relationship in the conventional way a...
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      Minnesota Sues Two Health Discount Companies

      Consumers led to believe they were buying insurance

      Another state is taking a hard look at companies that sell medical discount cards, which many consumers easily mistake for cheap health insurance.

      Last week California regulators said they would seek new regulations for these health discount plans. This week Minnesota filed suit against two companies it says are exploiting the difficulty many Minnesotans have finding affordable health coverage by deceptively marketing and selling limited health discount plans to Minnesota consumers.

      The plans -- which Minnesota Attorney General Lori Swanson says were often represented to consumers as traditional or comprehensive health insurance or the equivalent -- at best offer limited discounts at select health care providers.

      "With insurance premiums rising and health care reform stalled, health discount plans are filling the void. The problem is they don't provide the financial protection people need if they get sick," Swanson said.

      A study released on February 5 by the Minnesota Department of Health found that the percentage of Minnesotans without health insurance rose from 7.2 percent to 9.1 percent between 2007 and 2009.

      Delaware and Texas firms sued

      Swanson sued Direct Medical Network Solutions, Inc., a for-profit Delaware corporation with its primary place of business in Southlake, Texas, and Association Healthcare Management, Inc., d/b/a Family Care, a for-profit Texas corporation with its principal place of business in Houston, Texas. Both companies have been given "F" ratings by the Better Business Bureau.

      The lawsuits allege that both companies deceptively marketed and sold their limited discount plans to Minnesota consumers, in part by misleading them into believing that the plans are health insurance or insurance-like products. Both companies used insurance terms like "coverage," "deductable," "co-pay" and "premium" to confuse consumers, the complaint says.

      The lawsuits allege that both companies represented to consumers that they cover 80 percent of medical expenses and have a vast network of doctors and hospitals. In fact, Swanson says the companies do not provide health insurance but only offer limited discounts off the prices charged by a narrow number of providers.

      The companies often pushed for quick sales by claiming that the current price was only available for a limited period of time or that the company could only sell a limited number of policies. They also used a misleading verification process to further the deceit on consumers, the suits say.

      Swanson says Direct Medical charged consumers an enrollment fee of around $135 and a monthly "premium" of up to $459.50. Family Care charged consumers an enrollment fee of around $100 and a monthly "premium" of up to $109.95 or more.


      Both companies, according to Swanson, generally refused to send written materials for the consumer to review prior to a purchase. When consumers received the written materials following their purchase, they often quickly cancelled the plans.

      Over one-half of Direct Medical's Minnesota customers cancelled within the first month, and more than 95 percent of the 1,216 Minnesota consumers who signed up with Direct Medical since 2007 have since cancelled. Similarly, more than 90 percent of the 3,411 Minnesota consumers who signed up with Family Care since 2004 have since cancelled, with 38 percent of Family Care's enrollees cancelling in the first month and 71 percent cancelling in the first six months.

      Both lawsuits were filed in Hennepin County District Court and seek injunctive relief, restitution for consumers, and civil penalties.

      Another state is taking a hard look at companies that sell medical discount cards, which many consumers easily mistake for cheap health insurance....
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