Current Events in July 2010

American Airlines has agreed to settle a class action alleging that a number of airlines arranged a price-fixing scheme, and has promised to provide information about the other implicated airlines.

The suit is one of several accusing a number of airlines -- including American Airlines, United Airlines, British Airways, Air France-KLM, and Lufthansa -- of conspiring to slap cargo shippers with fuel and security surcharges. The carriers are accused of using the September 11 attacks as an excuse to increase those surcharges, and one suit claims that Lufthansa took the reins in announcing new fees.

The settlement was filed in New York's Eastern District, but other suits are pending in a number of foreign jurisdictions, including Canada, Australia, and South Korea.

Denial of wrongdoing

American has agreed to pay $5 million to settle its part of the lawsuit, brought by freight shippers who say they were harmed by the alleged plot. The airline says it is not culpable, and that the settlement is purely in the interest of saving time and money.

"American Airlines has done nothing wrong," American spokesman Tim Wagner said in an email to Bloomberg. "Litigation is an expensive and uncertain proposition and avoiding the cost and inconvenience of trial made paying the settlement the best financial decision for American."

The airline has also agreed to cooperate in suits that are still ongoing, suggesting that it will turn over data inculpating the other accused carriers. Indeed, American has already promised to produce witnesses and documents to the plaintiffs.

Carriers settle up

According to the AP, American -- the first airline to offer its cooperation -- agreed to settle back in April 2009 and has been cooperating ever since. Air France-KLM, by contrast, paid $87 million to settle the case, but declined to cooperate. Lufthansa and Japan Airlines have also settled, paying out $85 million and $12 million, respectively.

The shippers are happy with the agreement, according to their lawyer, Michael Hausfeld.

"It is an important step forward for shippers in Europe and around the world and demonstrates that companies can act responsibly to resolve competition disputes without resorting to excessive or protracted litigation," Hausfeld said in a statement.

In court papers, Hausfeld suggested that his client would face a relatively steep hill at trial, writing that "while AA did face some risk of liability, it would be difficult for plaintiffs to obtain a judgment against it, given the evidence."

The alleged scheme also sparked an investigation by the Justice Department, which has so far led to a dozen guilty pleas and $1.6 billion in fines. British Airways and Korean Air were each fined $300 million; Air France coughed up $350 million. The European Union also probing the matter as well.

The new rules will help curb deceptive and abusive practices in debt relief services sold through telemarketing, according to Consumers Union, the nonprofit publisher of Consumer Reports.

"Most debt settlement companies charge big fees up front even though most consumers don't get the help they expect," said Lauren Bowne, staff attorney for Consumers Union's Defend Your Dollars campaign. "These new rules will help protect consumers who are already drowning in debt from being ripped off by debt settlement companies that fail to provide any relief. But more needs to be done to ensure that the amount of fees charged for debt settlement services are fair."

Most debt settlement companies market their services through Internet, television, or radio advertising. The advertisements typically promise to reduce debt substantially and urge consumers to call a toll-free number to find out more. Once the consumer signs up, the debt settlement company takes its fees over the first half of the contract period.

The FTC reports that nearly two-thirds of consumers who enroll in debt relief services, most of whom pay an advance fee, end up dropping out of the programs within the first three years without getting the help they paid to receive.

Bad advice

Debt settlement companies usually advise consumers to stop paying their creditors and to instead set up a special account to build savings that will be used in the future to negotiate a settlement. As the consumer deposits savings into the account, the debt settlement company withdraws money to cover its fees even though it hasn't reached a settlement with creditors. By stopping payments to creditors, the consumer ends up with a worse credit score, additional penalty fees and more interest charges.

While debt settlement companies claim they settle millions of dollars in debt for consumers, they have not revealed how much debt remains unsettled. The Better Business Bureau announced that it would stop calling debt settlement services "inherently problematic" if a company could show that it met several conditions, key among them that at least one half of its customers saved as much money as was paid in fees. The GAO reported in April 2010 that two debt settlement trade associations called that standard "unrealistic."

What they do

The FTC's new regulation banning advance fees will go into effect on October 27, 2010, and takes a key step forward by addressing the timing of the fees. Under the new rules, a debt settlement company will earn fees when it reaches a settlement on at least one of the consumer's debts that the consumer agrees to in writing. Fees cannot be collected until the consumer has made at least one payment to the creditor as a result of the negotiated agreement.

Fees can be held in a dedicated account before that time but all unearned fees must be returned to the consumer if he or she decides that the debt settlement program is not working out or cancels the program. Debt settlement firms can require a dedicated account only under certain conditions, including that the account must be set up and maintained by the consumer at an insured financial institution. The consumer will be entitled to earn interest on the account and can withdraw the funds at any time without penalty.

Beginning on September 27, 2010, the FTC rule requires that debt settlement companies make certain pre-contract disclosures, including how long it will take to get results and how much it will cost. The new rules cover calls consumers make to debt settlement firms in response to advertising as well as telemarketing calls made by firms. However, the FTC's new regulation does not apply to in-person sales or to Internet-only sales, so Congress or the states will have to act to apply the new rules to those debt settlement contracts.

Michael Calhoun, president of the Center for Responsible lending, praises the new regs, but believes more needs to be done. "While the FTC's new rule helps end one of the most egregious practices of the debt settlement industry, states can do more to curb others, such as charging unreasonably high fees that are not tied to performance and doing so without assessing if a potential client is likely to benefit from a debt relief program."

Two federal bills (S. 3264 and HR 5387) have been introduced in Congress to limit debt settlement fees to a one-time $50 fee and five percent of the savings from each final settlement.

"The effective ban on up-front fees promotes fair, transparent markets," he concluded. "Consumers should pay for performance, not promises. The FTC has made clear it agrees."

Sherman Jones of Santa Paula, Calif., was excited. A longtime motorcycling enthusiast, Jones had just bought a used 2005 Honda CB250 motorbike. On Friday, as the weekend approached, Jones took a few minutes to give the bike a last once-over before hitting the road to Oxnard the next morning.

Not wanting to overlook any part of his new bike, Jones applied a coat of Turtle Wax F210 Tire Foam and Shine to the tires. The next morning, as he approached his first turn at about 20 miles per hour, the bike slid out from underneath him, breaking his shoulder on impact and sending him on an expensive trip to the Ventura County Medical Centers Emergency Room.

Jones attributes the accident to the tire shine, which he believes compromised the traction of his bikes tires.

"It was like hitting ice," Jones said. "I lost total control." The official cause of the accident as stated in the police report was "slippery spray on tires", terse testimony that calls into doubt the safety of using tire shine products on two-wheeled vehicles.

And no, it's not what you're thinking. He didn't put the foam on the tire's treads. He applied it only to the sidewalls, he said.

Looking back on it, Jones hypothesizes that as the tires spin, they "generate centrifugal force which causes a build-up of the shine material near edge of the tread," creating a potential hazard when the bike is leaning through a turn. This theory has been supported by a number of forum users on various motor vehicle enthusiast websites, including www.sportbikeworld.com.

The Turtle Wax F210 Tire Foam spray can that Jones used does feature a vaguely worded warning in the fine black print caution statement on its back, simply stating, "Do not use on cycle tires." Seemingly contradictory, however, Jones' edition of the product features a "Safe for all Tires" pitch in much larger font towards the cans top, a boast that has been removed in more recent editions.

Clearer warnings

Turtle Wax competitor Armor All, which has the "Extreme Tire Shine" line, warns against the use of its product on motorcycle and bicycle tires. The companys website explains how tire shine, while ideal for protecting car tires, should not be used on two wheeled vehicles "due to slipperiness."

Meguiars Hot Shine and Black Magics Tire Wet lines, each of which compete with Turtle Waxs F210 formula, feature distinct warnings in bold capital letters that caution against the use of tire shine on two-wheeled vehicles. These warnings, while the most clearly visible of the brands available at Jones local AutoZone store, were still limited to the backsides of each can and were set in the same color as the rest of the surrounding font. Jones insists that these labels "though better, should be on the front."

All of these manufacturers are evidently aware of the dangers that may result from using tire spray on two-wheeled vehicles, but Jones questions why they don't do a better job of warning consumers.

All the companies cans state in large bold letters spanning the bottom under the front logo "Danger: Contents under pressure," yet make no mention on the front side about the dangers of using the products on cycle tires. Most everyone who has not been in a time capsule knows that pressurized cans are dangerous, but it's not immediately evident that tire shine shouldn't be used on certain types of tires.

Jones says his painful injuries serve as a daily reminder of this hidden hazard and says he has a new attitude about shiny tires: "Tire shine has a place in car shows, but not on the road."

"The only thing I use to clean my tires now is water and a brush," Jones said.

A federal jury returned guilty verdicts against eight people on March 31, 2010,, following a month-long trial in Pensacola, Fla., involving the promotion of fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International.

Those sentenced were:

• Arnold Ray Manansala of Renton, Wash., to 12 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering;

• Dover Eugene Perry, also of Renton, to 10 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering;

• Michael Guy Leonard of Troy, N.Y., to nine years and one month in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering; and

• Mark Daniel Leitner of Fairport, N.Y., to five years in prison for conspiracy to defraud the United States and to commit wire fraud.

Tax evasion strategies

According to the evidence presented during trial, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams. Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion.

For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama. Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a "reliance defense" that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.

The government established that other PQI vendors sold fraudulent schemes for eliminating credit card debt, the most successful of which was called Financial Solutions. That enterprise charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt.

The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.

Warehouse bank

According to the evidence, another PQI vendor, MYICIS, operated as a sophisticated, computerized "warehouse bank." MYICIS was a single bank account in which customers pooled their money. It was promoted to PQI's clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three year period.

Evidence introduced at trial showed that PQI purported to sell only CDs and tickets to offshore conferences. However, PQI acted as a gateway to its fraudulent vendors. Clients seeking the tax evasion and debt elimination vendors could access the product only if they joined PQI first. The cost of membership ranged from $1,350 to $18,750, depending on the level of access. In May 2008, a federal district court issued a preliminary injunction against the promoters of Pinnacle Quest International.

"Today's sentences send a powerful and unequivocal message to those who seek to evade and help others evade their taxes," said Acting Assistant Attorney General John A. DiCicco of the Justice Department's Tax Division. "Those who promote tax fraud schemes will be investigated, prosecuted, and convicted, and they also face substantial prison sentences."

"Victor S. O. Song, Chief, IRS Criminal Investigation, noted, "There is no secret formula that can eliminate an individual's tax obligations, and those who create elaborate schemes that have no purpose other than to mislead others and defraud the Internal Revenue Service will be prosecuted."

The House on Wednesday unanimously approved The Truth in Fur Labeling Act (H.R. 2480) -- action that garnered support and praise from animal protection groups, consumer organizations, and designers and retailers.

Representatives Jim Moran (D-VA) and Mary Bono Mack (R-CA) introduced the bi-partisan bill in 2009 to close a federal loophole that does not require fur garments valued at $150 or less to have labels.

The Humane Society of the United States (HSUS) said that gap in the law prevents consumers from knowing if they're buying genuine or faux animal fur.

"Many consumers prefer to avoid buying and wearing animal fur, and they deserve to have the information to make informed purchasing choices," said Michael Markarian, chief operating officer for the HSUS. "The Truth in Fur Labeling Act would protect consumers by requiring all garments containing animal fur to be accurately labeled."

Shocking discovery

HSUS investigations have revealed that retailers and designers across the country sold jackets trimmed with animal fur that did not have any labels and were falsely advertised as "faux fur."

A recent HSUS probe made the chilling discovery that domestic dog fur had slipped into the country on unlabeled jackets.

Another HSUS investigation discovered raccoon dog fur on more than two-thirds of a nationwide sample of fur-trimmed jackets purchased from "well-known" retailers and designers.

Raccoon dogs are part of the canine family and look like raccoons. They are nocturnal animals that live in Asian and northern European forests. "Of the raccoon dog fur jackets tested, not a single one properly identified the animal in advertising or labeling, instead calling it such things as faux fur, raccoon or simply not labeling it at all," the HSUS said.

Closing the loophole

The bill now pending on Capitol Hill would require all fur garments sold in the United States -- regardless of their value -- to meet the standards set under the 1951 Fur Products Labeling Act. That law requires seven out of every eight fur garments sold in the country to have labels that disclose the species of animal and the country of origin, the HSUS said.

The proposed legislation would extend those labeling requirements to the approximately 13 percent of fur garments sold in the country that are exempt from the law because they have a value of $150 or less.

Consumers' rights

The bill's sponsors said consumers have a right to know if the garments they're buying are made with faux fur - or real fur that might have come from a dog or cat.

"Consumers expect to have access to all necessary information in order to make informed purchases," said Moran. "Unfortunately, a current loophole in federal regulations exempts a sizable portion of U.S. garments containing fur from labeling requirements. This means consumers could be purchasing products with the expectation that they bought 'faux' fur, but which actually contain real fur, perhaps from a dog or cat."

Bono Mack applauded her fellow lawmakers for supporting the measure. "I am pleased that the passage of this legislation will close the loophole that has for too long allowed companies to sell fur products made from cats and dogs as 'faux fur,'" she said. "It is important that consumers are provided with product labels that allow them to make informed decisions on their purchases, and this bill will help provide clarity for customers."

Consumer groups, designers, and upscale national retailers -- including the Gucci Group, Burberry, Macy's, Bloomingdale's, Saks Fifth Avenue, and Andrew Marc -- support the legislation.

The Senate will now debate the companion bi-partisan bill -- Truth in Fur Labeling Act of 2009 (S 1076) -- introduced by Senators Robert Menendez (D-NJ) and Susan Collins (R-ME).

Toyota says it is recalling approximately 373,000 2000-2004 Model Year Toyota Avalons sold in the United States because the vehicle's steering lock bar could break under certain conditions.

No other Toyota or Lexus vehicles are involved in this recall, the carmaker said.

Toyota says there was improper casting of the steering lock bar, which is a component of the steering interlock system. That defect, it says, creates the possibility that a minute crack may develop on the surface.

Such a crack may expand over a long period of repeated lock and unlock operations, and eventually the lock bar could break. If this occurs, the interlock system may become difficult to unlock when stationary.

Possible lock-up

If the vehicle -- while being driven -- is steered to the right with sufficient lateral acceleration, a broken and loose lock bar may move toward the steering shaft. If the engagement hole in the shaft happens to line up at the specific time the broken lock bar has moved, this could cause the steering wheel lock bar to engage, locking the steering wheel, and increasing the risk of a crash.

The carmaker said it is aware of three accidents because of the steering problem. None of the accidents, it said, caused any injuries.

"Toyota is continuing to work diligently to address safety issues wherever they arise and to strengthen our global quality assurance operations so that Toyota owners can be confident in the safety of their vehicles," said Steve St. Angelo, Toyota chief quality officer for North America.

As part of the recall, Toyota will replace the steering column bracket on involved vehicles, a procedure that takes about two hours to complete depending on the dealer's schedule. Toyota will notify owners by first class mail beginning in late August 2010 to bring their vehicles to their local Toyota dealer for replacement of the steering column bracket at no charge to the customer.

It's the latest in what has been a year of recalls for Toyota. Most recently the carmaker recalled nearly 40,000 Lexus LX 470s for an unrelated steering problem. Since October, Toyota has recalled more than 8 million cars worldwide to address a variety of issues, most notably sudden acceleration.

When buying new tires for your vehicle, it's important to check the side of the tire for its manufacture date, said Connecticut Consumer Protection Commissioner Jerry Farrell.

"My tires had 50,000 miles on them so I knew it was time for a change, but I asked the technician to take a look at them anyway," Farrell said, while shopping for tires at a Wallingford dealer. "During his inspection, he explained how the materials used in tires naturally age and are affected by temperature, storage conditions, maintenance, and weather, and how tires can gradually harden and lose elasticity, leading to tread separation, cracking, and tire failure." Many times these changes are not noticeable from the outside of the tire.

Sean Kane, founder and president of Safety Research & Strategies, Inc., a Massachusetts-based national research organization specializing in safety matters, notes the majority of vehicle manufacturer owners' manuals now recommend tire replacement at or around six years -- regardless of tread wear.

Deciphering the code

To help consumers identify the age of their tires, the U.S. Department of Transportation's National Highway Traffic Safety Administration (NHTSA) requires that Tire Identification Numbers be printed on the sidewall of each tire. These numbers must identify the manufacturing location, tire size and manufacturer's code, along with the week and year the tire was manufactured.

The sidewall also includes the maximum pressure for your tires. But that's not necessarily the best tire pressure for your car, and you shouldn't inflate your tires to the maximum level.

Instead, look for a sticker inside the driver's-side doorjamb or glove box, or check your owner's manual for the correct air pressure for the tires on your vehicle. You will improve gas mileage by keeping your tires inflated to the proper pressure. Under-inflated tires can reduce mileage at a rate of up to eight cents-per-gallon of gas.

"When looking for the manufacture date on the sidewall, look for the long series of letters and numbers starting with the letters DOT," Farrell said. The week and year the tire was produced is printed as the last four digits of this Tire Identification Number; the last two digits identify the year, and the two immediately before them identify the week of the year. For example, if the last four digits read 2209, the tire was made in the twenty-second week of 2009.

Tire tips

"When you shop, consider choosing the tire that offers the longest possible life," Farrell said. "And remember, the unused tires sitting in your garage or in your spare tire compartment need to be checked for age also."

He also recommends having your tires inspected by your mechanic during regular automobile maintenance and keeping them inflated according to the manufacturer's recommendations for longest life and safest use. Regular tire rotation and checking for uneven wear will save on tires and gas costs.

"Buy a tire gauge and check your car's tire pressure every month," Farrell concludes. "If your tires are low on air, you're wasting gas and money. The best time to check your tire pressure is when the tires are cool -- not right after a long drive. In hot weather, check the pressure during the coolest part of the day."

The subject line of the email states: "Unauthorized ACH Transaction."

The email includes a link that redirects the individual to a fake Web page and contains a link that is almost certainly an executable virus with malware.

"Do not click on the link. The text, email, and the related website are fraudulent," NACHA warned in a statement.

NACHA said the fake emails look like this:

Damaging emails

Security experts say consumers should be aware that phishing emails frequently have links to Web pages that host malicious code and software. Do not follow Web links in unsolicited emails from unknown parties or from parties with whom you do not normally communicate, or that appear to be known but are suspicious or otherwise unusual.

NACHA said it does not process nor touch the ACH transactions that flow to and from organizations and financial institutions. It also does not send communications to individuals or organizations about individual ACH transactions that they originate or receive.

If malicious code is detected or suspected on a computer, consult with a computer security or anti-virus specialist to remove malicious code or re-install a clean image of the computer system.

It's a good idea to always use anti-virus software and ensure that the virus signatures are automatically updated. Ensure that the computer operating systems and common software applications security patches are installed and current. Be alert for different variations of fraudulent emails.

The Mariposa Botnet -- a network of remote-controlled compromised computers -- was built with a computer virus known as "Butterfly Bot" and was used to steal passwords for websites and financial institutions. It stole computer users' credit card and bank account information, launched denial of service attacks, and spread viruses. Industry experts estimated the Mariposa Botnet may have infected as many as 8 million to 12 million computers.

"In the last two years, the software used to create the Mariposa Botnet was sold to hundreds of other criminals, making it one of the most notorious in the world," said FBI Director Robert S. Mueller, III. "These cyber intrusions, thefts, and frauds undermine the integrity of the Internet and the businesses that rely on it; they also threaten the privacy and pocketbooks of all who use the Internet."

International effort

In February, the Spanish Guardia Civil arrested three suspected Mariposa Botnet operators: "Netkairo," "Jonyloleante," and "Ostiator," aka Florencio Carro Ruiz, Jonathan Pazos Rivera, and Juan Jose Bellido Rios. They are being prosecuted in Spain for computer crimes.

"The Mariposa case showed how the coordinated and joint actions of different international police forces, along with the efforts of the Internet security industry, have been able to face the global threat of cyber crime," said Maj. Juan Salom, commander of the Guardia Civil's Cyber Crime Division. "The cyber kingpins know that they are not invincible anymore because the global efforts of the FBI, Slovenian Criminal Police, and Spanish Guardia Civil have shown that it doesn't matter where or how they try to hide, they will be located and prosecuted."

Last week, the Slovenian Criminal Police identified and arrested the Mariposa Botnet's suspected creator, a 23-year-old Slovenian citizen known as "Iserdo." The work of the Slovenian and Spanish authorities was integral to this investigation, officials said.

"We are glad to cooperate with the United States; the FBI's assistance is invaluable and represents professional affirmation of our force," Slovenian Minister of the Interior Katarina Kresal and Director General Janko Gorsek, Slovenian Criminal Police, said in a statement. "This case shows that cyber crime issues call for international police cooperation that shouldn't be hindered by geographical borders. This partnership serves as a solid basis for future cooperation."

From 2008 to 2010, the Slovenian citizen created "Butterfly Bot" and sold it to other criminals worldwide. In turn, these criminals developed networks of infected computers -- botnets -- and the Mariposa variety from Spain was the most notorious and largest. In addition to selling the Butterfly Bot program, the Slovenian citizen developed customized versions for certain customers and created and sold plug-ins (add-ons) to augment the botnet's features and functionality.

"This case shows the value of strong partnerships among law enforcement agencies worldwide in the fight against cyber criminals", said FBI Cyber Division Assistant Director Gordon M. Snow. "Cyber crime knows no boundaries, and without international collaboration, our efforts to dismantle these operations would be impossible."

July 29, 2010
For those who don't have cell phones, or those who need a cheap way to make international calls, pre-paid calling cards can be a convenient way to stay in touch. But these cards are not always a good deal.

The Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) warn that hidden costs and other problems can leave consumers with less call time than they were promised.

When you're selecting a calling card, the FTC says you should always look first at the fees. Add them up and see what kind of dent they put in the card's value.

For other ways to avoid calling card pitfalls:

• Check whether the advertised minutes only apply if you make one call and not more.

• Find out whether the advertised minutes still apply if you use the "toll-free access" number rather than the "local access" number, and whether the advertised minutes can be used to call cell phones.

• Ask whether there is an expiration date for minutes.

• Make sure that the explanation of fees makes sense to you.

• If possible, select a card that comes with a toll-free customer service number.

• Consider buying a card of a small denomination first, because if something goes wrong, your loss is limited.

According to Cuomo's investigation, LHGR violated state and federal debt collection laws and, under the agreement, must immediately reform its business practices and pay $125,000 in penalties and costs. The action is the latest in the state's continuing probe of illegal practices in the debt collection industry.

"This company's business model was to harass consumers by calling them multiple times a day, continuously calling them at work after being told not to, and repeatedly calling even after the alleged debt was disputed," Cuomo said. "It is unacceptable for debt collection companies to use illegal tactics for their own profit and we will continue to put a stop to the practice."

Massive violations

Here are some of the actions that Cuomo says violated the law:

• An LHR collector called an Oswego resident up to 16 times in one day in an attempt to collect a 10-year old debt that belonged to her husband. When she questioned the debt to LHR, the collector said, "You must not know your husband that well then." The collector illegally told her she would be arrested, have a lien put on her house, her vehicle confiscated and wages garnished.

• LHR wrongly targeted a Lackawanna man for a debt he did not owe.

• LHR collectors called a Georgia resident 10 times per day in an attempt to collect a debt that was allegedly inflated to more than triple the original amount owed.

• LHR tried to recover a debt from a Mississippi man that was actually owed by his ex-wife. After explaining this and telling LHR to stop calling him, the collector told the man he would call every day at 8 a.m. until the bill was paid.

• LHR repeatedly called a California-based Iraq war veteran over a $2,500 cell phone contract from a company he never signed up with. Despite being provided proof that the debt was not his and that he was serving overseas at the time the company claimed he signed the contract, LHR collectors continued to call him.

According to the federal Fair Debt Collection Practices Act and the New York State debt collection and consumer protection laws, a debt collector cannot pose as an attorney, threaten lawsuits or other legal action which cannot be taken, tell a consumer they have committed a crime or will be arrested, or talk with third parties except to get location information.

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

By Jon Hood
ConsumerAffairs.com

July 28, 2010
Don't take that iPad outside. A class action lawsuit filed last Friday claims that Apple's latest supposed wonder quickly overheats in normal environmental conditions.

The suit, filed in federal court in Oakland, California, says that the iPad turns off, sometimes after just a few minutes of use, when exposed to direct sunlight.

The iPad does not live up to the reasonable consumer's expectations created by Apple insofar as the iPad overheats so quickly under common weather conditions that it does not function for prolonged use outdoors, or in many other warm conditions, according to the complaint.

Consumers who sunbathe with their iPads are quickly greeted by a yellow warning sign and the caption iPad needs to cool down before you can use it.

The news probably didn't surprise tech junkies, who reported on the iPad's apparent fragility soon after it was released. Zach Honig, an editor for PC Magazine, was outside in New York for only ten minutes when his iPad shut down. Honig tweeted that a minute in the fridge was all it took to revive the tablet. (Whether putting your iPad in the refrigerator is a good idea is a topic open to debate, to say the least).

The suit is a potential ding in the armor of Apple's newest gadget, which sold 3.27 million units and generated $2.17 billion in the quarter ending June 10. The iPad was introduced to great fanfare in late January, with Apple CEO Steve Jobs touting it as creating a third category of device -- fitting between traditional notebook computers and smartphones like the iPhone and Blackberry.

And while it perhaps seems intuitive that an electronic device works less well in high temperatures, the suit potentially weakens the iPad's standing as a bona fide e-reader. Indeed, the complaint takes issue with Apple's contention that [r]eading on iPad is just like reading a book, pointing out that using an iPad is not 'just like reading a book' at all since books do not close when the reader is enjoying them in the sunlight or in other normal environmental conditions.

The lawsuit also threatens to extend a weeks-long rough patch for Apple. The tech king is still trying to recover from an embarrassing rollout of the long-awaited iPhone 4, which has been so plagued with reception problems that consumers have been forced to cover the exposed antenna with duct tape.

Apple is offering a bumper to iPhone owners free of charge, which it says will fix the problem. The saga prompted Motorola to poke fun in an ad for its new Droid X phone -- a photo of that device sits below the heading, No Jacket Required.

The complaint accuses Apple of throwing consumers to the wind in the name of corporate profits, contending that the company has clearly established a policy of accepting a certain amount of collateral damage as incidental to its business operations, rather than accept the alternative costs of full compliance with fair, lawful and honest business practices.

The suit, brought on behalf of everyone in the United States who bought an iPad, charges Apple with fraud, negligent and intentional misrepresentation, unjust enrichment, and breach of express and implied warranties.

The scam is an evolution of an older email scam. In the past, a scammer would compromise an individual's email account and send messages to everyone in the address book. The message, which looked like it was from the victim, said the individual is traveling in a foreign country and lost all their money. It asked that the recipient wire some cash.

By hacking into a Facebook account, the scammer's job is actually easier. Instead of reaching out to everyone in an address book, the hacker appeals to the victim's Facebook "friends."

"People lower their guard when someone they know from a social networking site needs their help," said New Jersey Attorney General Paula Dow. "Rather than sending an email to random people, these thieves have learned they can improve their chances by hacking into social networking accounts and then directing pleas for money to the account holder's list of friends."

First, the scammer has to hack into the Facebook account. Some common warning signs that a criminal is trying to hijack a user's account while on the social networking site include:

• Anything that asks you to paste a code or URL into your browser;

• Quizzes, polls or contests that require you to provide personal information such as your social security number, credit card number or bank account information;

• Requests that you update Flash Player or other programs, or that you download a new program; and

• Anything that requires you to link to another page and invites your friends to that page.

In order to protect yourself, you should be wary of these warning signs and guard against any actions that would provide criminals with the tools necessary to break into your account.

If you can't log into your account, this is a warning sign that it's been hacked, Dow said. Contact the social website to report this and to have your account disabled.

July 28, 2010
The office of Washington State Attorney General Rob McKenna reached a settlement with an Arizona company accused of violating a three-year-old state law intended to crack down on 'trust mill' schemes.

Under the agreement, The Preservation Group and its founders will offer refunds to more than 60 Washington seniors who purchased living trusts.

"We believe the defendants pushed expensive living trusts on Washington seniors while misrepresenting probate as a time-consuming process that can eat up a nest egg," McKenna said. "This case enforces the law our office requested to ensure that only legal professionals can prepare estate documents."

The AG's Consumer Protection Division accused The Preservation Group, LLC, of Chandler, Ariz., and its owners Kevin D. Boterman and Robert J. Feinholz of violating the state's Estate Distribution Documents Act. The law, requested by the attorney general, prohibits anyone who is not a licensed attorney from marketing living trusts or wills.

Exaggerated benefits

The Preservation Group conducted estate planning seminars throughout Washington from approximately August 2007 to at least September 2008. According to the state's complaint, salespeople promoted the advantages of a living trust while exaggerating the complexity of probate, the court-supervised process by which property is transferred to heirs. They then set up appointments to meet with seniors in their homes.

Seniors who paid $2,195 to $2,995 for living trusts were encouraged to provide details about their finances that the salespeople used to pitch additional insurance and investment products, the state alleged.

At the time of the sales, Boterman and Feinholz were registered to sell insurance in Washington but were not licensed to practice law.

Sales ban

The settlement filed in King County Superior Court doesn't require the defendants to admit any wrongdoing but prohibits them selling estate planning products here in the future. They agree to pay up to $40,000 in restitution to eligible consumers who request refunds, as well as $10,200 to reimburse the state for attorneys' fees and legal costs. A $25,000 civil penalty is suspended provided the defendants comply with the settlement terms.

Properly drafted and executed, a living trust can help someone avoid probate and offer other advantages, but isn't a one-size-fits-all solution. For example, individuals with small estates may avoid probate without a living trust. Joint ownership of assets is another way to avoid probate.

Laboratory tests commissioned by the Environmental Working Group (EWG), a consumer group, have reportedly found high levels of BPA on 40 percent of receipts sampled from major U.S. businesses and services, including outlets of McDonald's, CVS, KFC, Whole Foods, WalMart, Safeway and the U.S. Postal Service.

Receipts from Target, Starbucks, Bank of America ATMs and other important enterprises were BPA-free or contained only trace amounts.

The total amounts of BPA on receipts tested were 250 to 1,000 times greater than other, more widely discussed sources of BPA exposure, including canned foods, baby bottles and infant formula, the group said.

"These data should not be interpreted to suggest that policymakers shift their focus from BPA contamination of food, which is widespread, to receipts," EWG said in a statement. "BPA exposure from food sources is ubiquitous and should remain the first priority of U.S. policymakers. However, a significant portion of the public may also be exposed to BPA by handling receipts. Since many retailers do not use BPA-laden thermal paper, this particular route of exposure is easy to correct."

BPA is a plastic hardener and synthetic estrogen that has been linked by some researchers to a long list of serious health problems. It's used to coat thermal paper used by major retailers, grocery stores, convenience stores, gas stations, fast-food restaurants, post offices and automatic teller machines (ATMs). The chemical reacts with dye to form black print on receipts handled by millions of Americans every day.

Environmental Working Group (EWG) collected receipts from various locations in seven states and the District of Columbia and had them tested by the University of Missouri Division of Biological Sciences laboratory, which has the capability to detect environmentally relevant amounts of BPA.

Rubs off

Wipe tests conducted by the lab easily removed BPA, indicating that the chemical could rub off on the hands of a person handling the receipt, the group says.

Scientists have not determined how much of a receipt's BPA coating can transfer to the skin and from there into the body.

A study published July 11 by scientists with the Official Food Control Authority of the Canton of Zrich in Switzerland found that BPA transfers readily from receipts to skin and can penetrate the skin to such a depth that it cannot be washed off. This raises the possibility that the chemical infiltrates the skin's lower layers to enter the bloodstream directly, EWG said.

Last fall the National Institutes of Health said it would launch a new study to examine the safety of BPA , and the findings could result in recommendations for further curbs on its use.

In March, the Environmental Protection Agency (EPA) said it may add BPA to the agency's list of chemicals of concerns and require testing of its impact on the environment.

Concerns

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.

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.

The disease-specific scheme first showed up in Mississippi, where diabetics have reported telephone calls from people claiming to be from the Diabetes Foundation of Mississippi and the American Diabetes Association. The callers request personal information such as social security numbers, dates of birth and credit card information.

The scam is all the more effective because the caller knows the intended victim has diabetes.

The Diabetes Foundation of Mississippi and the American Diabetes Foundation reported these complaints to the Consumer Protection Division of the Mississippi Attorney Generals Office. While Mississippi is the only state to report the scam, it's very possible that it will spread to other states.

Stay alert

Legitimate organizations like the Diabetes Foundation of Mississippi and the American Diabetes Foundation will not initiate a phone call or send an email asking you to provide, update or confirm sensitive information. Before responding to any request for personal information, consumers should contact the institutions directly to ensure the request is valid.

"Unfortunately, scam artists will often use the name of reputable organization to lure consumers into thinking they are dealing with a familiar organization," said Mississippi Attorney General Jim Hood. "Because of this, we continue to urge consumers to use caution before acting on unsolicited emails, voice mails, text messages or phone calls requesting personal information. Educating our consumers is one of the most important actions we can take to combat scams like this one."

If you're a Verizon wireless customer and want an iPhone, can figure out how to "unlock" its network safeguards, and are willing to void your warranty, the government says it's you legal right to do so.

In an official ruling, the Copyright Office of the Library of Congress ruled there's nothing in the law to prevent any mobile phone from being altered to work on a different network than it was intended.

Apple has an exclusive contract with AT&T; for the popular iPhone and has strongly discouraged consumers from "jailbreaking," the term applied to unlocking the phone's network feature. It has threatened legal action against those who do, though it has never followed through on the threat.

The Electronic Frontier Foundation (EFF) requested the ruling, as well as legal protections for artists who remix videos -- people who, until now, could have been sued for their non-infringing or fair use activities.

"By granting all of EFF's applications, the Copyright Office and Librarian of Congress have taken three important steps today to mitigate some of the harms caused by the Digital Millennium Copyright Act (DMCA)," said Jennifer Granick, EFF's Civil Liberties Director. "We are thrilled to have helped free jailbreakers, unlockers and vidders from this law's overbroad reach."

In its reasoning in favor of the jailbreaking exemption, the Copyright Office rejected Apple's claim that copyright law prevents people from installing unapproved programs on iPhones.

Jailbreak

"When one jailbreaks a smartphone in order to make the operating system on that phone interoperable with an independently created application that has not been approved by the maker of the smartphone or the maker of its operating system, the modifications that are made purely for the purpose of such interoperability are fair uses," the ruling stated.

"While some consumers may welcome the elimination of these copyright protections when considering new applications and features for their wireless devices, they still need to review the terms of service from their carrier and device manufacturer since altering the underlying source code may void the manufacturer's warranties and adversely affect how the device operates on a wireless network," said Michael Altschul, Senior Vice President and General Counsel of CTIA-The Wireless Association.

The new rules, of course, don't apply just to the iPhone. They also clear the way for jailbreaking of Motorola, Samsung or other manufacturers' phones, which may have exclusive apps. The operating system on Motorola's Droid X cannot be changed and Samsung's Captivate can install apps only from the Google and AT&T; Marketplace.

The bottom line of the government ruling, says EFF, is that the previous rules were not designed to protect consumers.

"The Copyright Office recognizes that the primary purpose of the locks on cell phones is to bind customers to their existing networks, rather than to protect copyrights," said Granick. "The Copyright Office agrees with EFF that the DMCA shouldn't be used as a barrier to prevent people who purchase phones from keeping those phones when they change carriers. The DMCA also shouldn't be used to interfere with recyclers who want to extend the useful life of a handset."

Tip #1: Where In the Life Cycle Are You or Your Friends?

Are you an empty nester 60-year-old Boomer or a 59-year-old with a 12-year-old who needs to be chauffeured to soccer practice every day after school? Some Boomers are married and raising their grandchildren and some are divorced and working two jobs. Be careful about making any assumptions about your friends based solely on their chronological age. Find out whats going on in their lives so you will know how much time, energy, or even resources they have to give to your friendship, whether you are new friends who just met in the neighborhood or friends from high school who recently reconnected on Facebook.

Tip #2: Nostalgia friendships are important to cherish but make sure there is more than just your history to sustain your relationship.

Yes, it is wonderful to have friends who go all the way back to your years in college, high school, and even elementary school. David Couper, a 50-year-old career coach who has lived in California for 16 years but is originally from England, still has strong friendships with two women he first met when he worked in Japan thirty years ago. Its great were still friends, says Couper because we shared a lot of good and bad times such as relationship breakups. We had a joke that our exes would be in the pub to talk about how terrible we were and wed be in another wine bar doing the same thing about them.

Mary A. Redmond, 58, a speaker, entrepreneur, and author, also embraces her nostalgic friendships, a group of eight girlfriends, all Boomers, ranging in age from 53 to 63 with whom she worked from 1976 to 1982. They used to have breakfast together every Saturday morning and even though they dont meet as regularly, they still get together for what Redmond calls a special girlfriend trip, a birthday with a zero in it, or a condo deal too good to pass up usually near the ocean.

We know each others stories, says Redmond. We have shared so much history that we can pick up at any moment with a crisis or a celebration.

But, for some, nostalgia may not be enough. As Couper says, Some people I have history with, I realize Ive moved on, and theyve moved on, and we have nothing in common now.

If you find you have drifted apart from your nostalgia friends, you do not have to dramatically end the relationship. Just put more time and energy into other friendships that are more satisfying, or find new friends.

Tip #3: Boomers Have to Be Prepared That Life Experiences May Test Them as a Friend

I recently received an e-mail from an extended family member whose 90-year-old father is in the hospital because of a life-threatening infection. Her e-mail thanked all her friends who had been there for her over the last week of her fathers latest illness, reinforcing that they came through for her as her true friends.

Especially when you are in the 50s and 60s, helping your friends deal with aging and sick parents as well as the death of one or both of their parents, is for many Boomers a rite of passage that can really show who is there for you. These traumatic but inevitable life experiences may also be somewhat easier to go through because of a little help from your friends. Be prepared to be there for your friends when the e-mails or the phone calls arrive telling you about these crises situations. If possible reach out without having to be asked directly for your help. Try not to stand on ceremony; just do what you would like someone to do for you if the situations were reversed.

Friends will also start to get ill and die as the years go by. Creating rituals and support systems for helping each other through these inevitable life passages is as important as the fun times that friendships can bring.

Beverly D. Flaxington is a corporate consultant and author of Understanding Other People: The Five Secrets of Human Behavior (Motivational Press, 2009). She turns 50 this year and has 12 friends going back to grammar school with whom she is still connected. Flaxington shared how her group was a support system when they lost one of the group, Carlos, to a sudden heart attack about two years ago. She said We were all in a pretty deep state of shock. Of all the times our group would get together, Carlos was always there. Afterwards, it was a surreal, hard to believe. It was being able to be together, getting the news and being at the funeral and all that. We know his Mom, we know his three sisters. We were little kids together. We still feel the pain of the loss. It has made us more focused on keeping together!

As 55-year-old Canadian entrepreneur Pat Mussieux notes, We have all experienced tragedy of some kind, whether it be dealing with aging parents, the loss of family or friends, divorced, etcetera. Ive been through it all and I absolutely would not have survived and come to thrive in my new life without the four solid friendships in my life.

Tip #4: Make sure you are putting the fun factor into your friendships

Having fun is as crucial to Boomers as it was during our formative years perhaps even more so since for those of us who are older, so much of everyday concerns can be devoted to earning a living and taking care of others who are dependent. Friendship offers a chance to just have a good time, to have a reprieve from the day-to-day career, financial, or every day cares. So try new activities with your friends including travel, even if its a day trip, or start a poetry writing club or a book club, explore a new sport or make a point of finding new experiences to share that youve have always wanted to embark on.

Tip #5: You are not Too Old to Make New Friends

When I do friendship coaching, often one of the questions I am asked is how to make friends especially if you are older. Age has little to do with making new friends. It is more a question of being open to the possibility of exploring someone new which means you are opening yourself up to acceptance but also to the flip side of that coin, rejection.

The process is the same, whether youre 15 or 50. You might, of course, find that you feel like you have become a fast friend with someone new but my research has found that it takes, on average, three years from when you meet till you become tried-and-true friends. During those three years, you will be testing each other out.

The fastest way to push away a potential friend is to be too needy. So be careful about coming on to strong to a potential friend or making too many demands on your new connection especially since everyone has other concerns including their family, work, or other friends.

You can make friends in the old-fashioned ways that have worked all your life such as just being friendly to the new neighbor who just might become a friend or taking a class and going out for a cup of coffee afterwards with someone who accepts your invitation.

But today you also have the benefit of using the Internet to initiate a connection that might become a friendship. Eons.com is a website aimed at Boomers that was started by Monster.com founder Jeff Taylor. It is a free signup online community for Boomers that offers the opportunity to start or join the scores of groups that center around shared interests such as the mobile home community, healthy recipes, and athletes.

There are sites on the Internet that offer the opportunity for potential friends a chance to connect such as Girlfriend Circles, founded by Shasta Nelson and Girlfriend Social (GFS), based in Ottawa, Ontario, Canada, which was started in January 2009.

If you have a particular interest, or even a health concern, you might find online options especially appealing. Says Andrea Bonior, Ph.D., psychologist and author of the forthcoming The Friendship Fix (Thomas Dunne/St. Martins, Winter 2011), Boomers who are facing health problems can find particular emotional intimacy with online support groups, and form very special bonds and intense friendships with people who might live thousands of miles away. Often, things that might be too shameful or scary to talk about in person can be more easily discussed online, where support can be found. Also, for people suffering from rare conditions, this can be particularly beneficial.

If you are finding it hard to make friends as a Boomer, is this a new situation for you, or a lifetime challenge? I heard from a Boomer who shared that she has always had issues with friends. She said that when she was eleven, one girl told her, The only reason I invited you was because your mother called my mother and she made me invite you.

Seek out professional help if you find yourself in that Ive always had problems making and keeping friends category since there is still time to change your behavior and find the devoted and positive friends who could make the rest of your life so much rewarding.

Tip #6: Avoid Letting the Differences in Your Work Situations Hurt Your Friendships

Just as each Boomer may be at a very different place romantically or in terms of your family situation, in terms of work, whether you are working fulltime, part-time, or retired can vary greatly as well. Some may already be thinking about retirement, some are back in school in order to start a new career, and some may be at the height of their careers. Find those you are comfortable being around who are in a similar situation to you, based on shared values and situations rather than just chronological age, but also, if you do value a nostalgic friendship, or even a new friend, emphasize what is similar about you rather than dwelling on the differences in your work situations.

Tip #7: Make Friendship a Priority

It may sound obvious, but so many think that friendship is a relationship you get to when you have the time for it. If that is how you think, you may spend a lot of time alone. Friendship takes time and commitment. You need to e-mail and call, set up get togethers, and even if you are on Facebook together, you have to read their posts, make responses, and post now and then yourself, if you are comfortable doing that, or find another way to communicate regularly if you prefer private e-mails. Make friendship a priority. Friendship is not just an extra relationship; it is a key ingredient to a healthier, happier and more satisfying life.