Current Events in March 2010

Consumers are accustomed to getting letters from credit card companies telling them they are "pre-approved" for a new account. Of course, in many cases it turns out they aren't.

Now, a company that markets car loans in the same manner has run afoul of the U.S. Federal Trade Commission (FTC). The agency accuses it of telling low-income and "credit-challenged" consumers that they were pre-approved for auto loans.

According to the FTC, Direct Marketing Associates Corp. and its president and owner, John M. Rainey, Jr. prepared sales solicitations for automobile dealers telling consumers that a specific finance company would lend them money to buy a car, but the finance companies featured in the ads lacked business licenses and didn't actually make any loans.

The marketing company obtained lists of consumers from a credit-reporting agency by falsely representing that the lists would be used to make prescreened firm offers of credit to consumers.

In a settlement with the government, the company and its principal are barred from telling consumers they are pre-approved for, or are likely to receive, an extension of credit or financing unless the defendants know that a lender can make good on the offer for all eligible customers.

The order also prohibits the defendants from obtaining credit reports from consumer reporting agencies without a purpose authorized by the Fair Credit Reporting Act.

The order imposes a $157,000 civil penalty that is suspended based on the defendants' inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition.

Ford Motor Company and software giant Microsoft are two companies that don't seem to have a lot in common, but the two firms announced plans today to collaborate to make a more efficient electric car.

Ford, of course, will actually build the cars but Microsoft says it will supply an "energy management" system that will debut in the Ford Focus electric model next year. The technology, called "Hohm," will help owners determine when and how to most efficiently and affordably recharge battery electric (BEV) and plug-in hybrid (PHEV) vehicles. It also should help utility companies manage the added demands of electric vehicles on the electric grid.

"For Ford, this is a needed step in the development of the infrastructure that will make electric vehicles viable," said Alan Mulally, Ford Motor Company president and CEO.

The partnership stems from a belief that, for electric vehicles to become viable consumer options, better energy management is required. Consumer interest is already there, the companies say. In a recent Accenture survey, 42 percent of consumers said they are likely to buy a hybrid or electric vehicle in the next two years. The next hurdle, however, is showing that investing in an electric car will actually pay off in the long run.

To pay off, electricity has to remain affordable. Increasing numbers of electric vehicles, however, will have a significant impact on energy demand. That is because the addition of an electric vehicle to a household could effectively double home energy consumption while the vehicle is charging.

"With Microsoft Hohm, Ford and Microsoft will deliver a solution that will make it easier for car owners to make smart decisions about the most affordable and efficient ways to recharge electric vehicles, while giving utilities better tools for managing the expected changes in energy demand," said Steve Ballmer, Microsoft CEO.

Ford plans to put five new electrified vehicles on the road in North America and Europe by 2013. In North America, they include the Transit Connect Electric later this year, Focus Electric in 2011, a plug-in hybrid electric vehicle and two next-generation hybrids in 2012.

While the Toyota Prius is perhaps the best-known hybrid, Ford currently has four hybrids on the road and another coming this year. They include the Ford Fusion Hybrid, Ford Escape Hybrid, Mercury Milan Hybrid and Mercury Mariner Hybrid. Also coming this fall is the Lincoln MKZ Hybrid, which Ford thinks will be the most fuel-efficient luxury sedan in America.

Lower electric bills

Hohm is an Internet-based service designed to help customers avoid unnecessary expense by providing insight into their energy usage patterns and suggesting recommendations to increase conservation. With Ford electric vehicles, Hohm also will advise drivers of the best time to charge their vehicle. Smart recharging habits will help utility companies understand and better manage the increased demands placed upon the electric grid because of electrified vehicles.

Ford and Microsoft have partnered before, though not on this scale. The Ford SYNC communications and infotainment system, built on the Windows Embedded Automotive platform, has been installed on more than 2 million Ford, Lincoln and Mercury vehicles since its launch in 2007. It allows drivers to connect and voice-control their mobile devices while driving.

Microsoft currently makes Hohm available for free to all U.S. residential energy consumers and has multiple partnerships with utilities and other stakeholders already in place, the company said. Ford is the first automaker to join in collaboration with Hohm.

"Rechargeable vehicles represent a new frontier. Their commercialization will take broad-based collaboration and systems solutions," said Mulally. "Working together, Ford and Microsoft will provide the systems solutions to help facilitate this exciting future."

More than a year after its outbreak, the infamous peanut butter-linked salmonella epidemic lives on, if only in the courtroom.

A class action filed on Monday accuses food giant Kellogg of failing to warn consumers that its snack foods were possibly contaminated with salmonella, thereby putting its customer base at risk of serious illness.

The suit alleges that, despite Kellogg's constant claims that its products were healthy, nutritious, made with only quality ingredients and safe, the snacks were manufactured using processes and quality-control measures that were grossly inadequate for purposes of ensuring that [they would] not be contaminated. The plaintiffs claim that Kellogg misrepresented its snacks as safe in order to reap significant financial rewards that it otherwise would not have obtained.

As is true for much of the January 2009 recall, the suit's allegations can be traced back to Peanut Corporation of America, the now-defunct company at the center of the outbreak. According to the suit, PCA provided Kellogg with peanut paste for a number of its products, including peanut butter-flavored cookies and cracker sandwiches. Kellogg recalled a handful of snacks in January, and twice expanded the recall to include a larger variety of products.

PCA was implicated in the outbreak after federal inspectors discovered that the corporation shipped peanut products that tested positive for salmonella. A subsequent inspection at PCA plants in Georgia and Texas uncovered a number of health code violations, including leaky roofs, mold, rodent droppings and live cockroaches.

The suit notes that, in issuing the recall, Kellogg urged consumers who bought the recalled products to destroy them and further stated that 'consumers with questions or concerns about their health should contact their doctor, and that the company maintains a page on its website entitled 'Peanut Butter Products Recall Information' on which it also urges consumers who bought the recalled products to destroy them and instructs consumers with questions or concerns about their health to contact their doctors.

But the plaintiffs contend that these measures don't go far enough, since they only offer relief to Class members who manage to learn of the recalls and meet the unreasonable conditions Kellogg has imposed.

Judging from the complaint, lead plaintiff Anthony Benavides doesn't appear to have actually gotten sick from the Austin brand peanut butter crackers at the center of the suit. According to the complaint, Benavides was misled into purchasing and spending money on the products, and received something other than what was represented, a product he did not seek. The suit says that Benavides was injured in fact since he lost money or property because of the company's alleged deception.

Whether that theory will pass legal muster is up for debate. In many situations, consumers can claim economic injury even when they haven't been visibly affected by a corporation's negligence -- owners of recalled Toyotas, for example, can point to the negative effect the flap has had on their cars' resale value. Whether that logic can be applied to crackers potentially subject to a recall -- but that didn't actually make anyone sick -- remains to be seen.

By James Limbach
ConsumerAffairs.com

March 31, 2010
The U.S. Department of Transportation (DOT) is proposing a federal rule that would specifically prohibit texting by interstate commercial truck and bus drivers.

And, in an effort to increase public involvement and collaboration in the rulemaking process, DOT has announced an e-Rulemaking Initiative (CeRI) partnership with Cornell University. The idea, according to the agency is to "make the federal regulatory process more accessible to the public through Regulation Room," an online public participation environment where people can learn about and discuss proposed federal regulations and provide effective feedback to the Department.

Citizens can find more information on the Cornell online effort and provide comments on the proposed rule online over the next 30 days.

Research by the Federal Motor Carrier Safety Administration (FMCSA) shows that drivers who send and receive text messages take their eyes off the road for an average of 4.6 seconds out of every 6 seconds while texting. At 55 miles per hour, this means that the driver is traveling the length of a football field, including the end zones, without looking at the road.

Drivers who text while driving are more than 20 times more likely to get in an accident than non-distracted drivers. Because of the safety risks associated with the use of electronic devices while driving, FMCSA is also working on additional regulatory measures that will be announced in the coming months.

"We are committed to using every resource available to eliminate the dangers of distracted driving," said FMCSA Administrator Anne S. Ferro. "This rulemaking to prohibit texting by interstate commercial truck and bus drivers, along with the Cornell E-Rulemaking Initiative, reinforces our unwavering commitment and provides the public with a unique opportunity to share their ideas and comments on how together we can make our roads safer."

During the September 2009 Distracted Driving Summit, the Secretary announced the Department's plan to pursue this regulatory action, as well as rulemakings to reduce the other risks posed by distracted driving.

President Obama also signed an Executive Order directing federal employees not to engage in text messaging while driving government-owned vehicles or with government-owned equipment. Federal employees were required to comply with the ban starting on December 30, 2009.

The proposed rule would make permanent an interim ban announced in January 2010 that applied existing safety rules to the specific issue of texting.

March 31, 2010
Are you one of those annoying people who can't get behind the wheel without carrying on a conversation on your cell phone?

You might be interested to know that a new study conducted by University of Utah psychologists found there is just a small group of people who have the extraordinary ability to multitask: Unlike 97.5 percent of those studied, they can drive safely while chatting on the phone.

These individuals -- described by the researchers as "supertaskers" - make up just 2.5 percent of the population. They are so-named for their ability to do two things at once successfully. In this case, they can talk on a cell phone while operating a driving simulator without noticeable impairment.

The study, conducted by psychologists Jason Watson and David Strayer, is to appear later this year in the journal Psychonomic Bulletin and Review .

The researchers believe their finding is important not because it shows people can drive well while on the phone -- the study confirms that the vast majority cannot -- but because it challenges current theories of multitasking. Further research may lead eventually to new understanding of regions of the brain that are responsible for supertaskers' extraordinary performance.

"According to cognitive theory, these individuals ought not to exist," says Watson. "Yet, clearly they do, so we use the supertasker term as a convenient way to describe their exceptional multitasking ability. Given the number of individuals who routinely talk on the phone while driving, one would have hoped that there would be a greater percentage of supertaskers. And while we'd probably all like to think we are the exception to the rule, the odds are overwhelmingly against it. In fact, the odds of being a supertasker are about as good as your chances of flipping a coin and getting five heads in a row."

The researchers assessed the performance of 200 participants over a single task (simulated freeway driving), and again with a second demanding activity added (a cell phone conversation that involved memorizing words and solving math problems). Performance was then measured in four areas -- braking reaction time, following distance, memory, and math execution.

As expected, results showed that for the group, performance suffered across the board while driving and talking on a hands-free cell phone.

For those who were not supertaskers and who talked on a cell phone while driving the simulators, it took 20 percent longer to hit the brakes when needed and following distances increased 30 percent as the drivers failed to keep pace with simulated traffic while driving. Memory performance declined 11 percent, and the ability to do math problems fell three percent.

However, when supertaskers talked while driving, they displayed no change in their normal braking times, following distances or math ability, and their memory abilities actually improved three percent.

The results are in line with Strayer's prior studies showing that driving performance routinely declines under "dual-task conditions" -- namely talking on a cell phone while driving -- and is comparable to the impairment seen in drunken drivers.

Yet contrary to current understanding in this area, the small number of supertaskers showed no impairment on the measurements of either driving or cell conversation when in combination. Further, researchers found that these individuals' performance even on the single tasks was markedly better than the control group.

"There is clearly something special about the supertaskers," says Strayer. "Why can they do something that most of us cannot? Psychologists may need to rethink what they know about multitasking in light of this new evidence. We may learn from these very rare individuals that the multitasking regions of the brain are different and that there may be a genetic basis for this difference. That is very exciting. Stay tuned."

Watson and Strayer are now studying expert fighter pilots under the assumption that those who can pilot a jet aircraft are also likely to have extraordinary multitasking ability.

There's a growing sense of concern throughout the nation about "distracted driving" as it's become known. Numerous states have banned the use of cell phones while driving.

Transportation Secretary Ray LaHood calls talking on cell phone while driving "a recipe for disaster on our nation's highways." Last fall, he convened a two-day summit to deal with the problem.

The Environmental Protection Agency (EPA) said it may add BPA to the agencys list of chemicals of concerns and require testing of its impact on the environment.

Earlier this year, the Food and Drug Administration (FDA) said it had some concerns about the health impacts BPA had on the brain, behavior, and prostate gland in fetuses, infants, and young children.

BPA is used in many consumer products, including baby bottles, plastic water containers, metallic food and beverage cans, cash register receipts, medical equipment, and dental sealants.

Animal studies have shown the chemical can cause reproductive and developmental problems and may also affect the endocrine system, the EPA said. Other studies have linked BPA exposure in humans with cardiovascular disease, diabetes, heart disease, obesity, and reproductive issues.

Some scientists have also told ConsumerAffairs.com that children and developing fetuses are especially vulnerable to potential adverse health effects from BPA exposure.

In related news, more than 200 environmental and public health groups protested outside the GlobalChem Conference in Baltimore Tuesday and challenged chemical manufacturers to support federal changes that would protect the public from BPA and other potentially dangerous toxins.

The EPA said its decision to scrutinize BPA is a sign the agency is worried about the possible health and environmental risks posed by the chemical.

We share FDAs concern about the potential health impacts from BPA, said Steve Owens, assistant administrator of EPAs Office of Prevention, Pesticides and Toxic Substances. Both EPA and FDA, and many other agencies are moving forward to fully assess the environmental and health impacts to ensure that the full range of BPAs possible impacts are examined.

Action plan

The EPA, however, is not taking any regulatory action at this time to stop the use of BPA. Instead, the agency announced the following action plan regarding the chemical:

• Adding BPA to the chemical concern list because of its potential effects on the environment. This would identify BPA as a substance that may present an unreasonable risk of injury to the environment because of its potential for long-term adverse effects on growth, reproduction and development in aquatic species;

• Requiring information on concentrations of BPA in surface water, ground water, and drinking water to determine if the chemical may be present at levels of potential concern. The EPA said its especially concerned about levels that could harm environmental organisms, pregnant women, and children;

• Requiring manufacturers to provide test data to help the agency evaluate the chemicals possible long-term effects on growth, reproduction, and development in aquatic organisms and wildlife;

• Using EPAs Design for the Environment (DfE) program to encourage the reduction of BPA exposures. One of these activities, to be initiated in April 2010, will address thermal and carbonless paper coatings used in such applications as cash register receipts, a use where preferable alternatives to BPA may be readily available, the EPA said;

• Continuing to evaluate the potential disproportionate impact on children and other sub-populations through exposure to BPA from non-food packaging uses.

A trade group for chemical makers downplayed the EPAs action plan and its concerns about BPA.

It is important to recognize that EPA is not proposing any regulatory action regarding human health, said Cal Dooley, president and CEO of the American Chemistry Council (ACC). We look forward to a productive exchange with EPA on this action plan, and working to modernize the Toxic Substances Control Act (TSCA) in a way that allows EPA to better prioritize chemicals for review.

Cooley said many studies have shown that BPA does not pose any environmental risks at its current levels.

BPA is one of the most thoroughly studied chemicals in commerce and comprehensive scientific assessments recently conducted in Europe and Japan have affirmed that BPA is not a risk to the environment at current low levels, he said. Numerous studies have found that BPA rapidly biodegrades, does not bioaccumulate and, if detected at all, is present in the environment only at trace levels that do not cause harmful effects.

Dooley also pointed out that other U.S. regulators, including the Department of Health and Human Services (HHS), have determined that BPA is safe and have not banned the chemicals use.

HHS and FDA recently reaffirmed that BPA has not been proven to cause harm to infants or adults, and other regulatory bodies around the world have determined that the science supports the safety of BPA, he said.

But HHS officials in January said recent studies raised concerns and doubts about the safety of BPA.

In 2008, the Food and Drug Administration conducted a review of toxicology research and information on BPA, and, at that time, assessed that food-related materials made with BPA on the market were safe, HHS said. But recent studies have reported subtle effects of low doses of BPA in laboratory animals.

While BPA is not proven to harm children or adults, HHS added, these newer studies have led federal health officials to express some concern about the safety of BPA.

Canadian authorities have already announced plans to ban BPA in baby bottles as a precautionary measure, the EPA said. The country is taking these steps even though science indicates exposure levels are below potential health levels, the EPA said.

Outdated laws

Meanwhile, environmental and public health groups protesting in Baltimore today urged chemical makers to back legislative changes that would improve the countrys outdated Toxic Substances Control Act (TSCA).

The groups argue the chemical industry is more interested in improving its image than revamping the antiquated law that governs our countrys chemical policies.

The chemical industry knows it needs to respond to the increasing scientific evidence linking toxic chemicals to disease, and consumer demand for safer products, said Andy Igrejas, national campaign Director for the Safer Chemicals, Health Families (SCHF) coalition. The group represents more than 11 million health care professionals, environmental health advocates and concerned parents around the country. But reforming TSCA is not just about improving PR for the chemical industry its about genuinely protecting public health.

In the next few weeks, Senator Frank Lautenberg (D-NJ) and Representative Bobby Rush (D-IL) are expected to introduce reforms to the TSCA.

Environmental and public health advocates have urged Congress to overhaul the law, saying it fails to protect consumers from potentially dangerous chemicals.

When Congress adopted the TSCA in 1976, for example, it "grandfathered" in the 62,000 chemicals on the market at the time. Since then, the EPA has regulated only five of those chemicals and required testing of slightly more than 200.

But three fundamental differences between how the chemical industry and public health groups want to revamp the TSCA have recently surfaced, according to the Safer Chemicals, Health Families coalition.

The coalition said public health advocates want the following reforms made to the TSCA:

• Public disclosure of safety information for all chemicals in use. This requirement will both identify and keep harmful chemicals out of commerce and identify safer chemicals that can replace the dangerous ones, the SCHF said;

• Prompt action to phase out or reduce the most dangerous chemicals;

• Deciding safety based on real world exposure to all sources of toxic chemicals. Currently chemicals are too often assessed without taking into account that, in the real world, people are exposed to multiple chemicals from multiple sources, including air, water, food, and consumer products, the SCHF said. Public health advocates believe that, when assessing safety, EPA must take into account the sum of all exposures to a chemical and to other chemicals that cause the same or similar health impacts.

The coalition said the chemical industry only wants these changes made to the TSCA:

• Limited testing of a handful of chemicals, which public health advocates say would leave consumers in the dark about safety hazards. Only these priority chemicals would be subjected to further information requirementsand then only on a case-by-case basis, the SCHF said. By not requiring at least basic information up front for all chemicals, the industry's proposal would fail to identify all problem chemicals on the market;

• More lengthy and costly studies of chemicals already proven to be dangerous;

• An assumption that the public is only exposed to one chemical at a time, and from one source at a time. This approach not only fails to consider the full extent of chemical exposures; it wont tell us how most chemicals are used or how we are exposed to them, the SFHC said.

Highest priority

The president and CEO of the American Chemistry Council said today that he welcomes talks with environmental and public health groups about improving the TSCA.

Our highest priority is public health and safety, said the organizations Cal Dooley. Americans deserve to have confidence that the products they buy are safe for the uses for which they were designed.

Paramount to the success of a comprehensive legislative proposal is the ability to discuss ideas and concepts in a transparent fashion and allow for meaningful discussion by all key stakeholder groups, he added. Todays conference is another step in the right direction.

Dooley also said his organization is not unilaterally opposed to legislative action to improve the TSCA and protect the publics safety.

While TSCA has been protective of public health and the environment, we recognize that more can be done to harness the advances made in science and technology over the past three decades, he said. We are committed to developing a new comprehensive chemical management law that puts the safety of the American consumer first, while ensuring the innovation that will lead to the development of essential new consumer products and high-paying American jobs.

A copy of the Safer Chemicals, Health Families coalitions statement on this issue is now posted on the groups Web site.

March 30, 2010
Trader Joe's, the trendy low-cost grocery chain that nurtures a green image, has bowed to pressure from environmental groups and says it will stock only sustainably-harvested seafood by 2012.

Greenpeace and other environmental groups, has kept the heat on Trader Joe's lately, noting that its seafood policies don't match its eco-friendly image. It was recently ranked 17 out of 20 in a Greenpeace review, the lowest of any national grocery chain.

"Greenpeace applauds the supermarket chain for finally seeing the light and working towards sustainable seafood policies that will help save the oceans and put an end to destructive fishing practices," a Greenpeace spokesman said.

"Trader Joe's felt the heat from Greenpeaces mock website (www.traitorjoe.com), relentless phone calls from supporters, thoughtful karaoke songs from shoppers and in-store demonstrations and questions to store managers from activists across the country," he added.

In a statement, Trader Joe's said it intends for its new policy to "address customer concerns including the issues of over fishing, destructive catch or production methods, and the importance of marine reserves" and said it will "use our purchasing power to leverage change within the seafood supply community."

"Based on customer feedback and in support of our work to source sustainable seafoodwe stopped selling Chilean Sea Bass in 2005, Orange Roughy in July of 2009, and Red Snapper in March of 2010," the statement said.

Other chains have also gotten the message. Target recently announced that it will replace farmed salmon with more sustainable Alaskan wild salmon.

However, eight major chains have made no visible effort to increase the sustainability of their seafood operations, according to the latest report from Greenpeace. These include: Aldi, Costco, Giant Eagle, H.E.B., Meijer, Price Chopper, Publix and Winn Dixie.

The office of Missouri Attorney General Chris Koster has won judgments against two foreclosure rescue companies that allegedly took money from distraught homeowners and failed to provide promised services.

"This Attorney General's office has instituted a zero tolerance policy for any mortgage modification firm that preys on and cheats desperate homeowners," Koster said. "Our office will use all its powers to investigate and prosecute businesses involved in these schemes to defraud Missouri consumers."

Gateway Mortgage Modification, owned by Richard R. Reichert, Jr, was accused of having unlawfully charged up-front fees for foreclosure and mortgage modification services and of falsely promising consumers that attorneys would negotiate loan modifications on their homes.

The court ordered Gateway and Reichert to pay $65,000 restitution and permanently prohibited the company from charging up-front fees for services and from falsely representing to consumers that attorneys would negotiate modifications.

The court also permanently barred Gateway and Reichert from violating the state's merchandising practices and foreclosure consultant laws and ordered them to pay attorney fees and costs. If the company fails to pay restitution as ordered, an additional $10,000 penalty will be imposed.

First Universal Lending, LLC, based in Palm Beach Gardens, Florida, marketed its services to homeowners who were having difficulty paying their mortgages or facing foreclosure, promising them lower house payments or lower interest rates. Company representatives told some clients to stop making mortgage payments while the modification process was proceeding, which harms consumers by injuring their credit rating and increasing likelihood of foreclosure. The business also illegally required homeowners to pay up-front fees before they would provide any services.

Gregg of Bradenton, FL, tells ConsumerAffairs.com that he got hassled by First Universal while applying for a refinance of his mortgage. "During the process, the loan officer kept requesting info, saying 'we are closing any day now.' Upon getting the info, he would request more info from me. This went on many times. During this, I was asked to pre-pay an appraisal on the property for $325. Tired of what appeared to be incompetence and no knowledge with the loan process, I demanded a copy of the appraisal for which I paid before I sent more documents. I finally grew tired of this and informed the loan officer that I was concluding our business relationship."

Gregg says efforts to get his money refunded have been fruitless.

The court ordered First Universal to pay more than $51,000 restitution and $23,000 civil penalties in the foreclosure rescue case. It also prohibited the company from charging up-front fees; advising homeowners to stop making mortgage payments; and promising loan modifications on which they fail to follow through.

With many states already putting laws on their books to ban advance-fee foreclosure rescue operations, there's a move in the Federal Trade Commission to outlaw the practice through rulemaking rather than legislation.

If you've watched much television lately, you've likely seen back-to-back car commercials touting zero percent financing. As carmakers compete to sell vehicles, nearly all are resorting to "no cost" financing.

Zero percent financing offers often draw consumers to new car showrooms, but the results aren't always advantageous for buyers.

"On the surface, zero percent financing can sound like a no-brainer," said Ethan Ewing, president of Bills.com, a financial advice Web site. "However, consumers must understand that zero percent financing is intended to generate foot traffic for dealers as a bait and switch tactic, and that it is sometimes not as rewarding as alternative incentive offers."

In many cases, zero percent financing can present tremendous opportunities to potential car buyers. However, consumers should first do their homework to ensure that it is actually the bargain it is marketed as by dealers and car companies.

Some things to consider:

&#149 Remember that all dealer incentives are designed to generate car sales. The ultimate goal is to bring consumers into the showroom.

&#149 Zero percent financing is predicated on good credit. Normally, only the best credit customers will qualify for this promotion. If you are purchasing because of the promotion, check your credit score ahead of time so you can know whether to even step foot into the showroom.

&#149 Most zero percent financing offers come with a relatively short payback term, which can make for higher overall payments. For families on a monthly budget, it might make more sense to avoid the promotion and opt for a longer-term payback so monthly payments are lower.

&#149 Most zero percent financing offers are only available on a limited number and type of models. Car buyers should research which automobiles are being offered as part of the promotion before visiting the showroom.

&#149 Be wary of automobile prices that are elevated to compensate for low interest rate offers. Negotiate the price of the car independently from the loan terms. By packaging your new car price, any trade-in and your loan terms as one deal, you stand to lose money.

&#149 Finally, explore competing promotions such as cash back offers. Sometimes, the case for a cash back award might be more compelling in the long run.

For example, the monthly payment on a $28,000 vehicle at zero percent interest over 48 months is $583.33. This compares to a $572.52 monthly payment for the same vehicle with a $3,500 cash back offer and a six percent interest rate over 48 months (not including tax and title fees). Do your research carefully and compare all offers.

"Car buyers should arrive at the dealership as well-armed as possible, with an auto in mind, a set price range, and some idea of your creditworthiness," continued Ewing. "Without this information you are at a great disadvantage."

"Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS," Brown said. "Taxpayers should be on high alert, avoid paying upfront fees to these companies and never ignore notices from the IRS."

Throughout the tax season, tax-relief companies advertise on the radio, television and internet promising help for taxpayers in distress. For an upfront fee ranging from $2,000 to $3,000, these companies claim to reduce or even eliminate tax debts to the IRS and stop back-tax collection.

However, soon after collecting upfront fees, these companies typically inform taxpayers that they do not qualify for a relief program or that the IRS has rejected their attempt to reduce or eliminate the back-tax debt. Often these companies never even contact the IRS directly. Rather than reduce or eliminate the amount owed in back taxes to the IRS, these companies increase taxpayers' debt burden.

Brown offered the following tips to taxpayers who owe back taxes and are having trouble paying:

• Don't ignore notices from the IRS. Call and ask about collection alternatives, as you may be eligible for a monthly payment plan. In some cases, it is possible to pay less than the total amount you owe.

• Don't trust promises from companies that imply that you are "qualified" or "eligible" for an IRS program to resolve your back-tax debt. Only the IRS can make that determination.

• Don't pay upfront or advance fees for tax-debt relief services.

Taxpayers with problems paying back taxes can also contact the Taxpayer Advocate Service, an independent organization within the IRS dedicated to providing free assistance to individuals who are experiencing financial difficulties, need help resolving IRS problems, or believe the IRS is not working as it should.

Taxpayers can call the Taxpayer Advocate Service at 1-877-777-4778.

Taxpayers can also seek help from local Low Income Taxpayer Clinics, which represent low income taxpayers before the IRS; assist taxpayers in audits, appeals and collection disputes; and can help taxpayers respond to IRS notices and correct account problems. To learn more about these local services and the Taxpayer Advocate Service, visit: www.irs.gov/advocate.

Early refunds

There are new rules in place for credit card companies and, in the long run, consumers stand to benefit. But it just makes sense that credit card customers need to understand the most important rule changes contained in the CARD Act and what their impact will be. Here then, are the "5 Things You Need to Know About Credit Cards."

The ads for credit card debt settlement companies make it sound pretty easy. If you have $10,000 or more of credit card debt, these firms say they can negotiate with your lender so that you can walk away from all but a small percentage of the money you owe.

Are these promises on the level? The Better Business Bureau calls the debt settlement industry one fraught with "inherent problems." That's a diplomatic way of saying some of these companies are outright scams. In recent months several have been targets of legal action by state attorneys general.

The typical debt settlement business model requires an upfront payment from a distressed consumer. For that payment, the company agrees to negotiate on the consumer's behalf with the credit card company. Sometimes the company makes an effort to negotiate a reduction in debt, sometimes it simply disappears with the money. The consumer is left with less money and more debt, along with a severely damaged credit rating.

But a debt settlement firm that says credit card companies will negotiate a lower balance isn't necessarily lying. Lenders will, in some cases, do just that. However, the consequences for the consumer aren't particularly pleasant and need to be weighed against paying off the legal debt.

Expect more collection calls

To begin the process, the consumer stops paying his credit card bill for at least six months. Almost immediately the collection calls begin and the consumer's credit rating takes a hit.

At the end of six months the credit card company will likely write off the debt as a loss. However, you will still legally owe the debt and your credit score falls even further. It is at this point that credit card debt settlement companies say they go to work, negotiating with your credit card company to agree to lower the amount owed, in exchange for the agreed-upon amount to be paid.

However, the Federal Trade Commission (FTC) notes that it can take years for these debt settlement firms to get around to negotiating with your lender. In the meantime, late fees and interest are accumulating. Oh yes, those calls from collectors will continue. In fact, the credit card company might sell your "uncollectible" debt to a more aggressive debt collector.

Should you decide to go the debt-settlement route, the FTC says you would be much better off negotiating with the credit card company directly. You would save the large up-front fee and the percentage of the reduced debt the company usually demands as a final payment.

Seek good advice

Before taking that step, however, the FTC suggests you consider the move carefully and get expert advice. Reputable credit counseling organizations advise people on managing money, bills and debts, help them develop a budget, and usually offer free information and workshops.

They should discuss your entire financial situation with you, and help you develop a personalized plan to get you out of the hole. Finding reputable credit counselors has recently become more convenient because the new credit card law requires credit card issuers to include a toll-free number on their statements that directs cardholders to information about finding nonprofit counseling agencies. The federal government maintains a list of government-approved organizations , by state, at the website of the U.S. Trustee Program.

Debt settlement companies that make the process sound simple and relatively painless should be avoided. According to the FTC, some "red flags" include ads that tout some alleged government program or "guarantees" it can reduce your debt or makes other promises. However, the biggest tip-off of all is the requirement that you write a large check to them before they start work.

An Iowa court has ruled that Vertrue, a company with a long history of marketing so-called 'buying club memberships,' deceived Iowa residents to the tune of $36 million over the last 20 years.

"Our jaws dropped, too, when we discovered the numbers," said Iowa Attorney General Tom Miller, who filed the consumer fraud lawsuit that led to the court's decision. "We learned during the litigation that, as of mid-2009, 497,683 Iowans had been enrolled in 863,970 buying club memberships offered by Vertrue over two decades."

Typical Vertrue buying club "memberships" cost $9.95 to $19.95 per month, with charges usually made to consumers' credit card or bank accounts. The memberships purport to provide discounts or savings on books, music, clothing, home improvement items, entertainment activities, dining out, and fashion and fitness products.

"We filed the lawsuit because consumers consistently told us they didn't even know they were members," Miller said. "We alleged Vertrue's illegal sales practices resulted in a vast number of Iowans' credit cards being charged, sometimes repeatedly, for memberships most of the Iowans didn't even know they had and never used."

The state lawsuit, which alleged violations of the Iowa Consumer Fraud Act and Iowa's Buying Club Law, was tried Oct. 26-Nov. 5, 2009, in a bench trial before Judge Robert Hutchison, who issued a 62-page ruling late last week finding that Vertrue and its subsidiary companies, Adaptive Marketing LLC and Idaptive Marketing LLC, were liable for consumer fraud.

At it a long time

Hutchison ruled that over two decades Vertrue had used deceptive and unfair techniques to enroll consumers in memberships and charge their credit cards, often without the consumers' knowledge. Consumers often made monthly or annual payments for memberships they were not aware of -- and sometimes kept paying for years.

"Judge Hutchison's well-reasoned decision is a great benefit to Iowa consumers," Miller said. "We have been litigating this case for four years, and it is gratifying that the judge established such an important precedent," he said.

In this decision, Hutchison determined "liability" -- that the Vertrue companies violated Iowa consumer protection laws. Next he will determine the "remedy," such as restitution or penalties, in a separate proceeding to be scheduled soon.

At one point, one of Vertrue's "membership" programs, Simple Escapes, was among the biggest generator of complaints to ConsumerAffairs.com. Consumers were particularly infuriated because they could not find a way to cancel the membership. Many were enrolled by third party companies that shared billing information with Vertrue.

Hutchison noted that Vertrue's total Iowa membership revenues over a 20-year period exceeded $36 million, even after previous refunds to consumers were subtracted.

"We will be seeking restitution for consumers and penalties for Vertrue in the next phase of this case," Miller said.

New York Attorney General Andrew M. Cuomo is suing a pair of loan modification companies that he says ran nationwide foreclosure rescue scams.

The lawsuits were filed against National Modification Service ("National Modification") and its founder Joseph Romano, and Infinity Mitigation Corporation, Infinity Funding Group ("Infinity"), and their owner and principal Neil Singer.

According to Cuomo, the companies and their owners prey on homeowners facing foreclosure by claiming that they can save their homes, but often fail to provide the services promised.

"As New Yorkers and others across the country fight to stay afloat in these tough times, we continue to see dishonest companies preying on vulnerable homeowners," said Attorney General Cuomo. "These companies pretend to be reaching out a helping hand, but instead they push consumers further down into debt and, in some cases, into foreclosure."

Foreclosures have claimed the homes of thousands of New Yorkers. In January 2010 alone, there were 4,569 foreclosed properties in the state, and one in every 1,737 housing units had received notice of foreclosure. The AG's investigations have shown that thousands of New Yorkers and homeowners throughout the country have been affected by foreclosure rescue scams.

The lawsuits against National Modification and Infinity claim the companies charged homeowners up-front fees of several thousand dollars, a violation of New York law. In addition, the companies are accused of using misleading advertising and made false representations to customers, including unsubstantiated claims of over a 90 percent success rate and guarantees that they would be able to convert an adjustable-rate mortgage to a lower, fixed-rate mortgage.

The lawsuits also contend that the companies promised a 100% money-back guarantee but then failed to provide refunds to customers that they scammed, often even refusing to answer the customers' calls.

The lawsuits seek to shut down the companies and provide restitution and damages to customers and aim to prevent them from ever providing foreclosure rescue services. In addition, the lawsuit seeks penalties and costs from the companies and their principals. Collectively, they may be subject to penalties of $1 million and potentially much more.

Cuomo also announced settlement agreements with two companies, ABM Mitigation Corporation ("ABM"), a Ronkonkoma-based loan modification business, and Raymond, Louis & Fitch ("RLF"), a Florida-based loan modification company doing business in New York.

As part of the settlements, both companies will refund fees to all customers who have not obtained a loan modification. ABM will shut down their practices nationwide and RLF will stop doing business in New York State.

Both companies illegally charged customers thousands of dollars in up-front fees and failed to provide their customers with contracts as required by law. ABM, which is now prevented from obtaining any new clients, lured customers by misrepresenting their qualifications, falsely claiming that they were accredited, and falsely advertising a 100 percent success rate. RLF used fabricated testimonials, falsely represented that consumers had been selected for special government programs, and falsely claimed consumers' homes qualified for fabricated loan modification programs.

Under the law in New York, foreclosure rescue companies are required to provide clients with contracts, let financially vulnerable homeowners know that there are non-profit counselors that can help them for free, and refrain from charging up-front fees.

Consumers who are unable to make their mortgage payments should call their lender immediately to discuss the available alternatives to foreclosure. Many lenders offer foreclosure avoidance programs and have pledged publicly to assist distressed borrowers.

While mortgage loan modifications have helped some homeowners, there are many for whom the whole process has been a nightmare.

The crib's tubular metal mattress-support frame can bend or detach and cause part of the mattress to collapse, creating a space into which an infant or toddler can roll and become wedged, entrapped or fall out of the crib.

CPSC has received a report of a one-year-old child from North Attleboro, Mass. who suffocated when he became entrapped between the crib mattress and the crib frame in April 2008. CPSC is aware of 13 additional incidents involving the recalled cribs collapsing due to the metal mattress-support frame bending or detaching, including one child entrapment that did not result in injury, and one child who suffered minor cuts to his head when his mattress collapsed and he fell out of the crib.

CPSC staff urges parents and caregivers to stop using these cribs immediately and find an alternative, safe sleeping environment for their baby. Do not attempt to fix these cribs.

Due to the fact that Simplicity and its successor, SFCA Inc., are no longer in business, CPSC has limited information about the number of cribs sold.

All Simplicity drop-side cribs have previously been recalled for a hazard involving the drop side. Simplicity drop-side cribs could still be in use by parents or caregivers who are unaware of the recalls or by those who received a repair kit to immobilize the drop side from Simplicity when the firm was still in business. This recall involves all Simplicity cribs with tubular metal mattress-support frames, which include but are not limited to the following models:

Some model numbers are followed by letters, indicating the color or finish of the crib. The name "Simplicity Inc." or "Simplicity for Children" appears on a label on the crib's mattress-support frame and/or the crib's end panels. The cribs were manufactured in China.

The recalled cribs were sold at Walmart, Target, Babies R Us and other stores nationwide for between $150 and $300. Consumers should contact the store where the crib was purchased to receive a refund, replacement crib or store credit.

Warning

CPSC would like to remind parents not to use any crib with missing, broken or loose parts. Make sure to tighten hardware from time to time to keep the crib sturdy. When using a drop-side crib, parents should check to make sure the drop side or any other moving part operates smoothly. Always check all sides and corners of the crib for disengagement. Any disengagement can create a gap, which could fatally entrap a child. In addition, do not try to repair any side of the crib with tape, wire, rope or by other means. Infants and toddlers have died in cribs with makeshift repairs.

For more information on Crib Safety, visit CPSC's Crib Information Center.

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

March 29, 2010
After a number of recalls and infant deaths associated with drop-side cribs, the State of Illinois is pushing crib manufacturers to make the beds safer.

Illinois Attorney General Lisa Madigan says she has sent a letter to the Juvenile Products Manufacturers Association (JPMA) requesting that they "...take immediate action to address the hazards associated with drop-side cribs." She has specifically asked JPMA Executive Director Michael Dwyer to take three immediate actions:

• Remove the JPMA seal from all drop-side cribs that remain on the market.

• Initiate an education and outreach campaign to inform consumers of the risks associated with drop-side cribs; and

• Provide consumers who have drop-side cribs with a purchase incentive in exchange for their unsafe crib.

"The JPMA Certification Seal is meant to guarantee consumers that the product was designed, built and tested to the very highest safety standards. Allowing the JPMA Certification Seal on drop-side cribs falsely assures consumers that these dangerous products are safe." Madigan said in her letter.

Almost seven million cribs have been recalled since 2007 because of drop-side detachments. Twenty-one children have died when the drop-side of their crib detached, creating a gap that they slid into, and then suffocated.

The Attorney General made the announcement today at a press conference hosted by Kids in Danger (KIDS) in Chicago where it released its annual study of recalled children's products.

One call consumers won't be getting in the future is one pitching all manner of credit products from marketer James Nicholson. The telemarketing ban is part of a settlement with the Federal Trade Commission (FTC), which has labeled Nicholson's operation a scam.

The FTC sued Nicholson and his companies last year, alleging he tricked consumers into paying hundreds of dollars for a credit card that could be used only to buy merchandise from his companies' Web sites. The charges also include those related to an advance-fee credit card scam and a bogus advance-fee interest-rate reduction/debt negotiation program, as well as allegations that they debited consumer bank accounts without permission, failed to tell consumers they would not be able to get a refund, and illegally called consumers whose names were on the National Do Not Call Registry.

Under the settlement order, Nicholson and his companies will pay more than $200,000.

The FTC filed a complaint in 2009 charging Nicholson and several of his businesses with using deceptive telemarketing pitches since 2006 to offer consumers with poor or no credit a general-use credit card in exchange for an up-front fee of as much as $250. Telemarketers working for Nicholson's chief company, Group One Network, also claimed that consumers would get access to a significant line of credit that could be used for cash advances, and that their payment histories would be reported to the three major credit bureaus.

Not what it appeared

In reality, consumers who paid the fee received an online shopping card they could use only to buy products from Group One's Web sites, they could not get cash advances, and their credit histories were never reported to the credit bureaus.

In April 2009, the FTC filed an amended complaint naming four more companies and adding new allegations relating to the deceptive telemarketing of a bogus advance-fee interest-rate reduction/debt negotiation program by a business operating as Credit First Financial Solutions. The FTC's amended complaint alleged that Nicholson's telemarketers, among other things, falsely represented that in exchange for an up-front fee, they could lower consumers' interest rates by negotiating with consumers' creditors; would provide consumers a minimum savings of $1,500 to $20,000 within the first 30 days of their enrollment; and would provide a full refund if they failed to achieve the promised savings.

The settlement bans Nicholson, a repeat offender who pleaded guilty to wire fraud in connection with fraudulent telemarketing in 1995, from telemarketing and from selling advance-fee loans or credit cards. It also bans him from assisting anyone in telemarketing or marketing such loans. Furthermore, the settlement prohibits Nicholson and his companies from misleading consumers about credit-related goods or services, or any other goods or services they market.

$17.2 million judgment

Finally, the order imposes a $17.2 million judgment against all the defendants, which has been suspended based on their inability to pay the full amount. However, Nicholson will turn over a 31-foot power boat, his Nissan Pathfinder, and jewelry and art valued at more than $10,000. The other defendants will turn over more than $200,000 in cash and other assets.

The settlement resolves the FTC's charges against: Group One Networks, Inc., doing business as (d/b/a) Credit Line Gold Card, The USA Workers, TheUSAWork.com, and TheUSAWorkers.com; US Gold Line, LLC, d/b/a USGoldLine.com, Gainsway Credit, and GainswayCredit.com; My Online Credit Store, LLC d/b/a MyOnlineCreditStore.com, MYOnlinecr.com, Diamond Executive, NewECredit, and NewECredit.com; James Nicholson, individually and as president of Group One Networks, Inc., and manager of US Gold Line, LLC and My Online Credit Store, LLC; Credit First Financial Solution, LLC; Group One Administrative, Inc.; Tall Pines Administrative Services, LLC; and Sun Coast Data Services, LLC.

Brett Fisher, the chief executive officer of Group One Networks, Inc., and manager of US Gold Line, LLC and My Online Credit Store, LLC, settled similar FTC charges in December 2009. He agreed to a court order banning him from selling advance-fee credit cards and from violating the Telemarketing Sales Rule. The order against Fisher also imposed a $17.2 million judgment, which was suspended based on his inability to pay. He has turned over $21,000 in cash to the FTC.

Attorney General Richard Blumenthal said the R. J. Reynolds Tobacco Company (RJR) will pay the state $150,000 to settle his lawsuit alleging a 2007 Camel advertising spread in Rolling Stone magazine used cartoons in violation of the master tobacco settlement.

The company also agreed to end its The Farm: Free Range Music campaign, which Blumenthal alleged in his December 2007 lawsuit violated the tobacco agreements ban on cartoons in cigarette advertising. The agreement prohibits cartoons and because they entice children and teenagers to smoke.

This settlement plows under R. J. Reynolds The Farm campaign, which we charged flagrantly violated the ban on marketing cigarettes with cartoons, Blumenthal said. This campaign improperly employed cartoons to sell cigarettes, enticing kids into addiction, illness and early death. These ads hark back to the insidious and disingenuous Joe Camel, the cute and cool cartoon character designed to appeal to kids. Like Joe Camel, this campaign used cartoons to make smoking appear cool and desirable. The truth: cigarettes are uncool and deadly.

Big Tobacco must absolutely adhere to the settlement, especially the vital ban on marketing to children. I will continue to vigorously and vigilantly enforce the tobacco settlement to safeguard the public -- especially children -- from the deadly ravages of smoking.

The ad spread, which included a four-page fold out poster, appeared in the 40th anniversary edition of Rolling Stone dated November 15, 2007.

RJR denied that the ad campaign violated the agreement and made the payment to cover the states legal costs.

A study released earlier this month found that Camel's 2007 ad campaign has led to an uptick in smoking among young women and girls.