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    Amazon.com Says E-Books Outselling Hardcovers

    Trend is reflected in industry data as well, online retailer says

    July 20, 2010
    People who purchase books from Amazon.com apparently prefer to receive their reading material electronically. The online retailer reports e-books outsold hardcovers by 43 percent over the last three months.

    The company also announced that sales of its Kindle device accelerated each month in the second quarter -- both on a sequential month-over-month basis and on a year-over-year basis.

    "We've reached a tipping point with the new price of Kindle -- the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189," said Jeff Bezos, Founder and CEO of Amazon.com. "In addition, even while our hardcover sales continue to grow, the Kindle format has now overtaken the hardcover format. Amazon.com customers now purchase more Kindle books than hardcover books -- astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months."

    Bezos said the U.S. Kindle Store now has more than 630,000 books, including new releases and 106 of 110 The New York Times Best Sellers. Over 510,000 of these books are $9.99 or less.

    E-book sales explosion

    Over the past three months, for every 100 hardcover books Amazon.com has sold, it has sold 143 Kindle books. Over the past month, for every 100 hardcover books Amazon.com has sold, it has sold 180 Kindle books, the company said.

    The e-book trend has been building over time. Amazon says it sold more than three times as many Kindle books in the first half of 2010 as in the first half of 2009. Industry data also reflect the e-book trend. The Association of American Publishers' latest data report that e-book sales grew 163 percent in the month of May and 207 percent year-to-date through May.

    Amazon.com Says E-Books Outselling Hardcovers...
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    Massachusetts Sues Credit Repair Companies

    Part of continued crackdown on operations exploiting economic distress

    By Mark Huffman

    July 20, 2010
    The State of Massachusetts has taken legal action against two individuals who charged illegal upfront fees and allegedly made false promises to fix Massachusetts consumers' credit reports through their credit repair businesses.

    The individuals operate under the business names of Credit Score Rebuilders and Integrity Credit Restoration.

    The lawsuit, filed against Reilly Silvia of West Barnstable and Bonnie Souza of Norton, alleges that since January 2008, the pair advertised services purporting to improve consumers' credit reports and credit scores by removing or correcting negative information on the consumers' credit report.

    Souza and Silvia conducted their operations under the business names of Credit Score Rebuilders and Integrity Credit Restoration. The pair also allegedly unlawfully charged fees prior to performing the credit repair services they promised, failed to include legally required information in the written materials and contracts provided to consumers in violation of state and federal law governing credit repair services, and made false statements to the credit bureaus in relation to consumers' credit histories.

    "It is becoming an all too common practice for individuals and businesses to try and profit off of consumers in economically vulnerable situations," said Massachusetts Attorney General Martha Coakley. "In many instances, consumers turn to these businesses to try to save their homes and their credit, and instead they end up in even worse financial straits by paying for services that are not delivered."

    Wild claims

    Credit repair scams have proliferated with a worsening economy. Some of these operations make promises and guarantees that simply aren't true. For example, a Florida credit repair operator recently ran afoul of the Federal Trade Commission for telling consumers that bankruptcies, judgments, slow pay history, repossessions, and collection accounts "can legally be erased!"

    These firms typically charge from $300 to $1,000, including an advance fee ranging from $75 to $150, and a monthly fee that they often debit from consumers' bank accounts.

    After paying the fees, consumers find that these credit repair services rarely, if ever, deliver the promised results. In many instances, they take consumers' money without providing any services. Consumers often find their cancellation requests ignored, and their refund requests are almost always denied.

    The Massachusetts Attorney General's Office is seeking a preliminary injunction prohibiting Silvia and Souza from continuing these practices and from destroying any records or transferring assets.

    The State of Massachusetts has taken legal action against two individuals who charged illegal upfront fees and allegedly made false promises to fix the con...
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      T-Mobile Settles Cramming Charges With Florida

      Will take additional steps to protect consumers

      When T-mobile customers in Florida started complaining about unauthorized charges showing up on their bills, the company said it wasn't to blame - it was simply passing on "sales" by third parties.

      But after the Florida Attorney General's office intervened, T-Mobile has agreed to do more. The company has agreed to a settlement in which it will protect consumers from third-party "cramming," including charges for "free" ringtones and other cell phone content customers either did not order or did not realize would result in a monthly charge.

      Florida Attorney General Bill McCollum said T-Mobile will continue its practice of issuing credits and refunds to consumers for unauthorized charges for third-party mobile content subscription purchases. As part of the agreement, the company will provide a clear and conspicuous notice to all consumers of their continuing ability to obtain refunds.

      Cell phone content includes ringtones, music, wallpaper, horoscopes and other material that is often promoted by online marketers as "free," but ultimately ends up costing up to $19.99 a month. The charges appear on a subscriber's monthly wireless bill and are usually recurring. The bill charges often appear under indiscernible names such as "OpenMarket," "M-Qube" or "M-Blox."


      McCollum said a large number of complaints about cramming led to an investigation which revealed that thousands of Florida consumers had received these charges on their cell phone bills for mobile content downloads that they neither knowingly authorized nor wanted.

      Prior to the investigation, T-Mobile offered its customers the ability to block third-party mobile content and to implement parental controls free of charge. The investigation and subsequent settlement have been negotiated by the Attorney General's CyberFraud Section of the Economic Crimes Division.

      T-Mobile has agreed to continue using the standards previously established by the Attorney General's Office for advertising on websites, prohibiting the use of the word "free" without clear disclosure of the actual price and requiring all content providers and advertisers to clearly and conspicuously disclose the true cost of cell phone content.

      These compliance standards, which include website design restrictions for online advertisers, will ensure consumers see and understand the terms and conditions of the purchase. T-Mobile will continue to enforce these standards through its contracts with all content providers and advertisers nationwide.

      As part of the settlement, the company will pay a total of $600,000 to reimburse the state for the costs of its investigation and to help the Attorney General's Office fund the efforts of the CyberFraud Section as it continues working toward similar reform across the industry. The agreement was negotiated with full cooperation from T-Mobile.

      Bill McCollum said T-Mobile will continue its practice of issuing credits and refunds to consumers for unauthorized charges for third-party mobile content ...
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      Protecting Yourself From ID Theft

      You needn't buy expensive products to keep your identity safe

      July 19, 2010
      With identity theft on the rise, there is no shortage of outfits offering products or services claiming to help you keep your information safe. The editors of Consumer Reports Money Adviser (CRMA) say you don't need really need these things. In fact, CRMA's experts say most of these products are unnecessary or ineffective, or they duplicate things you can do yourself -- for free.

      The experts at CRMA offer the following steps on how to protect yourself from identity theft:

      Get serious, not scared. Don't let the horror stories freak you out. The worst-case scenario -- when someone opens new credit card accounts or commits other crimes using your name, Social Security number or other information -- is relatively uncommon. That nightmare happened to less than one percent of all U.S. households in 2005, the most recent year for which data are available.

      The most common form of ID theft is old-fashioned credit card fraud and check-kiting, with someone fraudulently accessing your credit-or-debit card account. It affects about four percent of households. In most cases, your liability is legally limited, and credit-card issuers or banks pay the direct losses, not you. Most victims suffered no out-of-pocket costs last year. But you can protect yourself by taking these low-tech, common sense precautions:

      • Never give your Social Security number or other information to strangers who call, text, or send e-mail messages to you even if they sound legitimate. And don't write your Social Security number on checks (except those that you send to the IRS), noncredit applications, or other forms.

      • Don't post your date of birth, mother's maiden name, first pet's name, or other personal information on websites like Facebook, Flickr, Friendster, LinkedIn, MySpace, or Twitter. They're often used to verify your identity and could allow an imposter electronic access to your accounts.

      Place security freezes and fraud alerts. You can shut out ID thieves before they cause damage by placing a security freeze on your credit reports at all three major credit bureaus: Equifax, Experian, and TransUnion. It will prevent anyone from looking at your credit report except for the companies that already have a financial relationship with you. To sign up for one, go to each bureau's home page and look for the security-freeze link.

      A security freeze is an excellent deterrent against fraud, but like all deterrents, it isn't fail-safe. Some creditors -- like payday lenders -- will give credit without getting a credit report. If you haven't placed a security freeze and you spot a sign of identity theft, put an initial fraud alert on your credit report immediately. That's fast, free and stays in place for 90 days. It also gives you additional legal protection. After that, request a security freeze.

      Secure your devices. If you access the Internet on your computer, you probably already know about the need for a firewall; regularly updated anti-virus, anti-spyware, and anti-phishing software; and strong passwords with upper-and lower-case letters, numerals, and symbols like #, &, and $. But you might not think about other wide-open doors to your identity. Make sure your smart phone, iPad, other mobile devices, and portable flash drives containing personal data have security applications and encryption in case they're lost or stolen.

      Stop unsolicited creditcard offers. One way crooks steal your name is by swiping pre-approved credit offers from your mailbox to open an account. They can then watch your mailbox to lift the new card you didn't know was coming. You can stop credit bureaus from selling your name to lenders by going to www.optoutprescreen.com or calling 888-567-8688.

      Monitor accounts often. You don't have to wait for your monthly credit-card or checking account statement to look for suspicious activity, if you're especially concerned. For added protection, sign up for online access to your accounts and check them regularly, even daily. And don't assume that the paper checks listed are legit. Crooks can tap into your funds using fabricated checks with a fictitious name, address, and bank -- as long as they use your real account number.

      Monitor your telephone bills (landline and cellular) to find any unauthorized "cramming" charges for phony services and purchases. As cell phones increasingly become mobile payment devices, fraudulent charges are showing up there, too.

      Protecting Yourself From ID Theft...
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      National Owner of Gas Stations Resolves ADA Claims

      Justice Department and QuikTrip reach comprehensive settlement

      The Justice Department (DOJ) has reached a comprehensive settlement under the Americans with Disabilities Act (ADA) with QuikTrip Corporation, a private company that owns and operates more than 550 gas stations, convenience stores, travel centers, and truck stops in the Midwest, South and Southwestern United States.

      Under the consent decree, which was filed along with a complaint in the U.S. District Court for the District of Nebraska, QuikTrip will create a $1.5 million compensatory damages fund for individuals who were victims of discrimination based on disability, as well as take various steps to make its stores accessible.

      The Justice Department opened the investigation in response to complaints about inaccessible parking by two individuals with disabilities in the Omaha, Neb., area. The DOJ lawsuit says the investigation revealed a nationwide pattern and practice of discrimination on the basis of disability. QuikTrip worked with the department to amicably resolve the matter without active litigation.

      "On July 26, 2010, we will celebrate the 20th anniversary of the ADA, a landmark civil rights law that ensures equal access and equal opportunity for individuals with disabilities," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "Ensuring full and equal access to all businesses open to the public is a top priority, and the Justice Department is committed to vigorous enforcement of the ADA to ensure equal opportunity for individuals with disabilities."

      Settlement terms

      Under the settlement, which remains subject to court approval, QuikTrip Corporation will:

      • Make necessary modifications at its current stores over a three year period to achieve compliance with ADA accessibility requirements. QuikTrip has retained an independent licensed architect approved by DOJ to certify compliance with the ADA architectural standards for each of its current stores;

      • Design and construct future stores so they comply with the ADA architectural standards and obtain a certification of ADA compliance for each future store from the independent licensed architect or a construction manager who has been trained by the architect on ADA compliance issues;

      • Ensure that at least two fueling positions at each of its current stores and all fueling positions at each store opened after the entry of the consent decree are accessible to individuals with disabilities -- including the fuel dispenser controls, self-service payment mechanism, call button and amenities. At QuikTrip stores opened after approval of the consent decree, two fuel dispensers will be on the shortest accessible route to the store entrance;

      • Adopt, implement and train store employees on policies to ensure fueling and other types of indoor and outdoor assistance for people with disabilities, equal access for individuals who use service animals, and maintain accessible features, such as accessible parking and routes;

      • Ensure and maintain operation of remote notification systems for outdoor assistance after an initial testing and upgrade of notification systems that may take up to six months;

      • Implement and maintain an ADA comment line and complaint resolution process and take appropriate corrective actions to resolve ADA-related complaints received from customers;

      • Ensure the accessibility of its website;

      • Pay a maximum civil penalty in the amount of $55,000;

      • Create a $1.5 million compensatory damages fund to compensate the complainants and other aggrieved individuals who make timely claims to the Justice Department. Claims must be received within 180 days of entry of the consent decree by the court.

      The consent decree was reached under Title III of the ADA, which prohibits discrimination against individuals with disabilities by businesses that are open to the public, including gas stations, convenience stores, and other retailers, both large and small.

      National Owner of Gas Stations Resolves ADA Claims...
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      KFC 'Free Lunch Coupon' Suit Moves Forward

      Suit charges KFC chickened out on offer aired on Oprah

      KFC is not entitled to dismissal of a lawsuit concerning a ham-handed coupon offer last year, a federal judge in Chicago has ruled.

      The suit, filed in February, stems from an incident on May 5, 2009, when talk show host Oprah announced that viewers had 24 hours to download a coupon good for a free grilled chicken meal, consisting of two pieces of grilled chicken, a biscuit, and two side dishes.

      Soon after the offer was announced, KFC became overwhelmed with customers trying to cash in the coupons and, in short order, stopped honoring them. According to the suit, consumers printed over 10 million coupons, but only 4.5 million were ever redeemed. The complaint alleges that many restaurants refused to honor more than 100 coupons per day, although they continued to sell the same meals after the limit had been reached.

      The suit notes that KFC stopped the promotion altogether on May 7, 2009 -- two days after it was announced, and told consumers that they could apply for a rain check online.

      U.S. District Judge James Holderman denied KFC's motion to dismiss, ruling that the plaintiffs state a plausible claim for common law fraud.

      KFC and Yum! Brands Inc., its parent company, insist that the rain check offer nullifies the plaintiffs' claim for breach of contract. Judge Holderman rejected that argument out of hand, saying it is plausible [that KFC] intended all along to offer a 'rain check' in place of the coupon, or otherwise limit redemption of the coupon beyond the terms stated on its face.

      Fast food might be cheap, but the plaintiffs' claims add up to a substantial amount. Given that the meals in question are worth around $4 each, and 5.7 million consumers were allegedly turned away, KFC is facing $23 million in potential liability.

      No free lunch

      The lesson for fast-food restaurants might be to never offer a free lunch during a recession.

      The incident set off a firestorm last September, when a group of unhappy diners arranged a protest at the annual African Festival of the Arts in Chicago.

      In addition to its coupon-related complaints, the group also took issue with KFC ads featuring African Americans dancing around and clucking like chickens for their 'finger-lickin' chicken,' and with the chain's use of the song 'Sweet Home Alabama' -- a song defending the Confederacy and Alabamas racist history -- to promote KFC.

      The protesters' website, BoycottTheColonel.com, is still up, although it hasn't been updated since before the planned The suit also alleges that the grilled chicken contains rendered beef fat and beef powder, which KFC apparently didn't include in ads for the product.

      Soon after the offer was announced, KFC became overwhelmed with customers trying to cash in the coupons and, in short order, stopped honoring them....
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      Senate Gives Final Approval to Financial Reform Bill

      What will the new law mean for consumers?

      By Mark Huffman

      July 16, 2010
      After months of debate and compromise, the U.S. Senate has passed the "Dodd-Frank Wall Street Reform and Consumer Protection Act" that supporters say will protect consumers from hidden fees and investment scams and require the financial industry to provide clear information so consumers can make the best financial decisions.

      The House has already passed the measure, which will now be signed into law by President Obama.

      How will the measure affect consumers? Almost as much as it affects businesses, supporters say.

      Consumer protection

      It establishes a first-of-its-kind regulator, whose sole job will be consumer financial protection -- cracking down on abusive lending and financial practices including mortgages, credit cards, payday loans and bank accounts. Mortgage reforms include requirements that borrowers provide evidence of their ability to repay mortgages, and prohibitions on compensating lenders for steering consumers into higher-cost loans.

      For consumers who are also investors, it seeks to ensure accountable, transparent derivatives trading: Nearly all derivatives will have to be exchange traded and cleared, so trades have enough money backing them and regulators can spot problems before they threaten the entire economy. Commercial banks will be prohibited from trading in some of the riskiest swaps. Supporters say it will strengthen reform by closing the loophole to ban all swaps trading by taxpayer-backed commercial banks.

      It adopts the so-called "Volcker Rule," named for the former Federal Reserve chairman who proposed it, It limits banks' ability to speculate with taxpayer-insured deposits, and prohibits financial companies from betting against their clients. Supporters say it closes the loophole to ban all speculation with taxpayer-backed funds.

      It begins to tackle "too-big-to-fail," creating a new system to break up, rather than bail out, failing financial firms and make banks pay the bill. It will set strict size and leverage limits, and rebuild the walls between investment and commercial banks.

      Wall Street oversight

      "This bill sets the wheels in motion to replace the failed deregulatory policies of the 1990s with real oversight of Wall Street," said Carmen Balber, Washington Director for Consumer Watchdog.

      AARP said it supports the legislation because it will establish a watchdog that will protect consumers from getting a mortgage or credit card that has hidden fees that cause their bills to skyrocket; ensure Americans get the clear, accurate information they need to shop for mortgages, credit cards and other financial products; and crack down on investment scams targeted at older Americans.

      "Over the last three years, older Americans have lost billions of hard earned dollars due to the failure of an outdated and compromised financial regulatory system," said AARP Maryland senior state director Rawle Andrews. "The failures that led to this crisis require bold action to restore responsibility, accountability and consumer confidence in our financial system, and this bill will protect Americans' money and help stabilize our entire economy."

      Heather McGhee, Director of Demos' Washington DC office who supported efforts to pass the bill, said the reform will help middle class consumers.

      Greater security

      "After the new consumer regulator opens its doors, Americans will open a checking account or apply for a loan with greater security because their lender will be accountable to basic standards of fairness and transparency," McGhee said. "Investors will know that their broker-dealers are acting in their interest. Businesses hedging risk will know the real price of the derivatives contracts they buy. And if we have truly independent regulators with the will to stop reckless speculation, those regulators will have the power and tools to do so."

      Michael D. Calhoun, president of the Center for Responsible Lending, also hailed Senate passage of the law, saying will help end a nightmare for many American families.

      "People will get loans they can afford to repay, and principles of fairness and value in financial products will trump easy money and self-enrichment," Calhoun said. "The new regulatory framework will go far to reduce risky practices and restore common-sense in financial services."

      Senate Gives Final Approval to Financial Reform Bill...
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      Pace Of Foreclosures Slows in First Half of 2010

      'Massive' number of distressed properties sit below the surface

      July 15, 2010
      For those judging the health of the housing market by the number of foreclosures, there may be a bit of good news, tempered with a nagging concern.

      In a report covering the first half of 2010, the foreclosure listing firm RealtyTrac says the number of foreclosure filings was up eight percent over the first half of 2009, but were down five percent from the previous six months.

      The company's Midyear 2010 U.S. Foreclosure Market Report shows a total of 1,961,894 foreclosure filings -- default notices, auction sale notices and bank repossessions -- were reported on 1,654,634 U.S. properties in the first six months of 2010.

      The report also shows that 1.28 percent of all U.S. housing units (one in 78) received at least one foreclosure filing in the first half of the year. It signals a definite slowdown in foreclosures.

      Foreclosure filings were reported on 313,841 U.S. properties in June, a decrease of nearly three percent from the previous month and a drop of nearly seven percent from June 2009. June was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.

      Foreclosure filings were reported on 895,521 U.S. properties during the second quarter, a decrease of nearly four percent from the previous quarter and an increase of less than one percent from the second quarter of 2009. Default and auction notices were down on a quarter-over-quarter and year-over-year basis in the second quarter, but bank repossessions (REOs) increased five percent from the previous quarter and 38 percent from Q2 2009 to 269,962 -- a new quarterly high for the report.

      Two trends

      "The second quarter was a tale of two trends," said James J. Saccacio, chief executive officer of RealtyTrac. "The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009."

      According to Saccacio, the midyear numbers put the U.S. housing market on pace to exceed three million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions. But for the housing market to improve, there needs to down a downward trend in foreclosures, indicating a return of stability. To date, that hasn't happened.

      "The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market," Saccacio said.

      Nevada, Arizona, Florida post top state foreclosure rates

      Nearly six percent of all Nevada housing units (one in 17) received at least one foreclosure filing in the first half of 2010, giving Nevada the nation's highest foreclosure rate during the six-month period despite decreasing foreclosure activity. A total of 64,429 Nevada properties received a foreclosure filing from January to June, a decrease of 13 percent from the previous six months and a decrease of 6 percent from the first six months of 2009.

      Arizona registered the nation's second highest state foreclosure rate in the first half of 2010, with 3.36 percent of its housing units (one in 30) receiving a foreclosure filing, and Florida registered the nation's third highest state foreclosure rate, with 3.15 percent of its housing units (one in 32) receiving a foreclosure filing during the six months.

      Other states with foreclosure rates ranking among the nation's 10 highest were California (2.54 percent), Utah (1.91 percent), Georgia (1.79 percent), Michigan (1.73 percent), Idaho (1.68 percent), Illinois (1.61 percent), and Colorado (1.40 percent).

      California, Florida, Arizona post highest foreclosure totals

      A total of 340,740 California properties received a foreclosure filing in the first half of 2010, the nation's highest total but down 15 percent from the previous six months and down nearly 13 percent from the first six months of 2009.

      With 277,073 properties receiving a foreclosure filing in the first six months of 2010, Florida documented the second highest state total. First-half foreclosure activity in Florida decreased nearly 9 percent from the previous six months but increased three percent from the first half of 2009.

      Arizona's 91,484 properties receiving a foreclosure filing in the first six months of 2010 was the third highest state total even though the state's foreclosure activity decreased nearly two percent from the previous six months. Arizona foreclosure activity in the first half of 2010 was still up nearly two percent from the first half of 2009.

      Other states with first-half totals among the 10 highest in the country were Illinois (85,223), Michigan (78,509), Georgia (71,949), Texas (64,883), Nevada (64,429), Ohio (59,927), and New Jersey (36,542).

      Pace Of Foreclosures Slows in First Half of 2010...
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      Pottery Barn Kids Recalls Drop-Side Cribs

      Pottery Barn Kids is recalling about 82,000 drop-side cribs. The cribs drop-sides can detach when hardware breaks, creating a space into which a young child can become entrapped, which can lead to suffocation. A child can also fall out of the crib. Drop side incidents also occur due to incorrect assembly and with age-related wear and tear.

      CPSC and Pottery Barn Kids have received 36 reports of drop sides that have malfunctioned or detached, resulting in seven minor injuries when children fell out of the cribs or got their legs caught between the mattress and the drop side. One child became entrapped at the head between the drop side and crib mattress but was freed without injury.

      This recall involves all Pottery Barn Kids drop-side cribs regardless of the model number. Pottery Barn Kids is printed on a label attached to the crib headboard or footboard.

      The cribs were sold through the Pottery Barn Kids catalog, www.potterybarnkids.com, and at Pottery Barn Kids retail stores nationwide from January 1999 through March 2010 for between $300 and $600. They were made in Canada, Malaysia, China, Taiwan, Vietnam, Indonesia and Italy.

      Consumers should immediately stop using the recalled cribs, inspect the hardware to make sure it is not broken, and contact Pottery Barn Kids to receive a free fixed-gate conversion kit that will immobilize the drop side.

      For additional information, contact Pottery Barn Kids at (877) 804-3847 between 7 a.m. and midnight 7 days a week or visit the firms website at www.potterybarnkids.com.

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

      Pottery Barn Kids Recalls Drop-Side Cribs...
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      Lottery Scammer Draws Prison Time

      Canadian man's racket targeted elderly Americans

      A Vancouver, British Columbia, man has been sentenced to nine years in federal prison for running a fraudulent lottery scheme that targeted dozens of elderly Americans who lost at least $600,000.

      Henry Anekwu, 43, received the sentence from United States District Judge John F. Walter, who also ordered him to pay $510,840 in restitution to his victims.

      During the sentencing hearing, Judge Walter noted that Anekwu showed no remorse for his victims, who suffered "devastating consequences" as a result of his fraudulent conduct.

      Anekwu was convicted in April of 10 counts of mail fraud committed through telemarketing and six counts of wire fraud committed through telemarketing. He ran the lottery scheme out of two Canadian companies he owned -- Platinum Award, Inc. and Capital Award, Inc.

      Victim shakedown

      The evidence presented at his trial showed that Anekwu -- from 1998 through 2003 -- employed telemarketers who contacted potential victims in the United States to falsely inform them they had won a lottery. Victims were advised that they were required to pay taxes or fees prior to collecting the lottery winnings. Victims wrote checks to the fraudulent lottery companies in amounts ranging from $475 to $60,000.

      "If a victim sent money, [Anekwu] or the telemarketers he employed would call the victim back over and over again, demanding more and more money, even encouraging the victims to borrow money and/or mortgage their homes," prosecutors wrote in their sentencing brief filed with the court. None of the 79 identified victims ever received any lottery winnings, and several victims lost their homes as a result of this scheme.

      At the sentencing hearing, Judge Walter said it was "painful" to listen to the trial testimony of victims, who were both financially and emotionally devastated by Anekwu's crimes.

      Two years after Anekwu was indicted by a federal grand jury, he was arrested in Canada in 2005 by the Royal Canadian Mounted Police. Anekwu was extradited to the United States in December 2009 after the Supreme Court of Canada rejected his appeal of his extradition.

      Lottery Scammer Draws Prison Time...
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      Palm Treo Phones Defective, Suit Says

      Suit contains similar allegations to 2005 complaint

      By Jon Hood

      July 14, 2010
      A class action suit filed last week says that two Palm Treo smartphone models are junk, and that the manufacturer isn't doing enough to address consumers' complaints.

      The suit, filed in the circuit court of Cook County, Illinois, says that the premium-priced Palm Treo 700 series and ... 755p hand-held devices are saddled with malfunctions and problems. Specifically, the suit alleges that the phones freeze or lock up, requiring the owner to turn the phone off, remove and reinstall the battery, and turn the phone back on again, an annoying routine to perform on a regular basis. Worse, the defect can wipe out user data like phone numbers and photos.

      The complaint also says that the phones have poor sound quality, rendering them difficult or impossible to use, and that it can be difficult to view or download documents or attachments from email or the internet.

      According to the suit, Palm markets the Treos as speedy, state-of-the art smartphones, and boasts on its website that, [w]ith this easy-to-use productivity device in hand, you can stay connected on your terms.

      When Palm started hearing about the problem from customers, according to the suit, it simply replaced the broken phones with more of the same model. As a result, the plaintiffs cycled through numerous Treo Phones, none of which provided the functionality and quality that such phones are supposed to provide.

      Instead of fixing the problem, Palm chose to continue peddling its inventories and intentionally replace[] defective Treo Phones with equally defective Treo Phones, according to the complaint. This creates a system in which consumers continue to receive defective products until they either tire of the process or their warranties run out.

      Suit resembles previous action

      The suit also says that Palm has taken no action to effect a lasting fix of the defects, despite having received scores of complaints from consumers. The complaint also points out that Palm has provided class-wide compensation to owners of older Treo models, a claim that appears to reference a 2008 settlement involving the Treo 600 and 650 models. That settlement provided a cash rebate to Treo users who had to replace or repair their phones at least twice.

      That suit, filed in 2005, contained allegations strikingly similar to those in the Illinois complaint, including frequent restarts, the loss of stored information, and poor sound quality. That suit also said that Palm replaced defective phones with equally defective refurbished phones of the same model.

      ConsumerAffairs.com has received several complaints that seem to echo the claims in the suit. As Nicole of Marina Del Ray, CA, wrote in 2008:

      "I have had problem after problem with the palm treo. I have been given one defective replacement after another. I have lost work and clients due to these problems."

      Elaine of Warsaw, IN, had a similar experience:

      "I purchased a new palm centro online through the palm store. This phone was unlocked and the cost was 299.99. After I recieved this phone it froze within the first 3 days. The phone was sent back and a new one was sent to us. I have had this phone for 4 months and am now having problems with it again. The palm store requires the phone to be sent in (at my expense) to be analyzed and repaired. This will take approx. 7 days. (7 days without my only form of commucation). This is unacceptable.

      The suit covers anyone who bought or received, under warranty, a Treo 700 series or 755p phone. Consumers in California are excluded from the class. The complaint charges Palm with breach of express and implied warranty, violations of the Magnuson Moss Warranty Act, unjust enrichment, and violations of several California state statutes.

      Palm Treo Phones Defective, Suit Says...
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      Oregon Sues Countrywide Over Pension Fund Losses

      Lawsuit alleges misleading tactics led to $29 million in investment losses

      The state of Oregon is suing Countrywide Financial Corp. of Delaware and its underwriters on charges of misleading investors into buying risky mortgage-backed securities.

      "Oregon is taking a stand against predatory lenders and the financial wreckage they caused for families and for investors including Oregonians," said state Treasurer Ted Wheeler. "With this lawsuit, we are attempting to recover losses from lenders that took advantage of innocent families, whose only fault was wanting to participate in the American dream and own a home."

      The Oregon Public Employee Retirement Fund was induced to invest $200 million into home loans originated by Countywide, and lost $29 million as a result of misrepresentations by Countrywide and its financial underwriters, the lawsuit says.

      "Oregon is currently No. 3 nationwide in foreclosures," said Attorney General John Kroger. "This lawsuit will hold the responsible companies accountable."

      Oregon not alone

      With this action, Oregon is partnering with the Iowa Public Employees' Retirement System, which is the lead plaintiff in the case. Along with the Oregon Public Employee Retirement System, other plaintiffs include the General Board of Pension and Health Benefits of the United Methodist Church and the Orange County Employees' Retirement System.

      The lawsuit, filed in federal court in California, accuses Countrywide of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors' ability to accurately assess the risks of their investments.

      According to the lawsuit, from 2005 through 2007, Countrywide was the nation's largest residential mortgage lender originating in excess of $850 billion in home loans throughout the United States in 2005 and 2006 alone.

      False claims

      The lawsuit alleges that Countrywide's ability to originate residential mortgages on such a massive scale was facilitated, in large part, by its ability to rapidly package -- or "securitize" -- those loans and then, through the activities of the underwriter defendants, sell them to investors as purportedly investment grade mortgage-backed securities.

      The suit says that Countrywide provided documents that falsely claimed that all the mortgage loans held in the investment fund met accepted underwriting standards for evaluating prospective buyers' credit history and ability to repay the loan when in fact they did not.

      Countrywide also falsely claimed that its appraisals met acceptable standards designed to insure that the value of the property was adequate collateral for the mortgage, the lawsuit says.

      Countrywide Financial Corp. is incorporated in Delaware but is based in California. The lawsuit also names underwriters Banc of American Securities LLC, Bear & Stearns Co., Inc., BNP Paribas Securities Corp., Citigroup Global Markets, Inc., Deutsche Bank Securities, Inc., Goldman Sachs & Co., Greenwich Capital Markets, Inc., J.P. Morgan Securities, Inc., Merrill Lunch Pierce Fenner & Smith, Inc., Morgan Stanley & Co., Inc. Barclays Capital, Inc., Credit Suisse Securities (USA) LLC, UBS Securities LLC, Countrywide Securities Corp., HSBC Securities (USA), Inc., Edward D. Jones & Co., L.P., and Countrywide Capital Markets.

      Oregon Sues Countrywide Over Pension Fund Losses ...
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      Toyota Blames Drivers In Some Acceleration Cases

      Safety investigators still continue their probe, however

      By Mark Huffman

      July 14, 2010
      After reviewing nearly 2,000 cases of sudden, uncontrolled acceleration events reported by drivers of its cars, Toyota says it has found no problem in the vehicle electronics that control the throttle.

      In some of the cases, the carmaker said, it has evidence that the driver mistook the accelerator for the brake.

      Toyota elaborated on a subject raised Wednesday when The Wall Street Journal reported U.S. safety investigators had reached a similar conclusion.

      The newspaper quoted sources within the National Highway Traffic Safety Administration (NHTSA) as saying that, in a few of the reported cases of sudden acceleration, a review of the electronic event recorder showed the car's throttle was wide open while there was no pressure applied to the brakes.

      Since the incidents of uncontrolled acceleration began to occur, Toyota attributed many to driver error. When Audi vehicles were investigated two decades ago for similar reasons, safety investigators concluded that drivers, in most case, slammed on the accelerator when they believed they were applying the brakes.


      After launching an investigation of reports of sudden acceleration in Toyotas during the early 2000s, NHTSA reported in 2004 that it was unable to find a cause for the problem. The agency said it analyzed many of the cars involved in the mishaps and found nothing abnormal with the throttle controls.

      Once again NHTSA pointed to the driver. The agency said sudden surges are sometimes caused by drivers who are unfamiliar with their new vehicles.

      The Transportation Department declined to comment on the subject, noting that a NHTSA probe of Toyota's electronics system is still underway and will not be completed for several months. The agency is conducting an investigation to determine if electronics played any role in hundreds of reported incidents.

      The reports of uncontrolled acceleration resulted in a massive recall of Toyota and Lexus vehicles in late 2009 and early 2010. Toyota has steadfastly maintained the problem does not lie in the electronics, but rather in the design of the accelerator pedal. The recall removed floor mats and modified the pedals in affected cars and trucks.

      Toyota Blames Drivers In Some Acceleration Cases...
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      Don't Be Scared By 'Scareware'

      Fear should not be a motivating factor in protecting your computer

      We've all seen them -- pop-up messages telling you your computer is infected with a virus. To get rid of it, all you have to do is order the antivirus software being advertised.

      Before you click, though, know this: few Internet security companies use ads to tell you about a virus on your computer. Most of these pop-ups are scams, and it's one of the fastest-growing types of Internet fraud today.

      These scams have a name. They're called "scareware" because they try to frighten you into purchasing fake antivirus software with a seemingly genuine security warning. But if you do try to buy this program, it will either do nothing -- or it could compromise your computer by installing malicious software onto your system. And in some instances, you don't even have to click on the pop-up box; the software downloads automatically.

      Dirty tricks

      Cyber criminals often use notorious botnets -- networks of compromised computers under their control -- to push out their software. They'll also masquerade as legitimate Internet security companies and buy ads on other websites -- called "malvertising" -- but when consumers click on the ads to purchase the products, they are redirected to websites controlled by the bad guys.

      Indications of a potential scareware infection include:

      • Windows Update fails to run.

      • Other legitimate security applications won't update.

      • Certain website, especially Internet security sites, won't load.

      Tracking them down

      Many of these criminals operate outside the U.S., making investigations difficult and complex for the FBI and its partners. But there have been successes. Just this past May, for example, three people were charged in Illinois in connection with a scheme that caused Internet users in more than 60 countries -- including the U.S. -- to buy more than $100 million worth of bogus scareware software.

      Two of the defendants, including an American, are accused of running an overseas company that claimed to sell antivirus and computer performance/repair software over the Internet. A third man operated the company's Cincinnati call center, which was responsible for technical and billing support to its customers (but in reality deflected complaints from consumers who realized the software didn't work).

      Don't Be Scared By 'Scareware'...
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      FTC Issues Report On Reforming Debt Collection Litigation And Arbitration

      Agency says system is 'broken' -- recommends steps to repair it and protect consumers

      By James Limbach

      July 13, 2010

      A new Federal Trade Commission (FTC) report concludes that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to give consumers a fair shake.

      The report, "Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration," is drawn from information gathered at roundtable discussions the FTC held throughout the country in 2009, as well as public comments and the FTC's experience in debt collection matters.

      The roundtables followed a February 2009 report that identified some concerns with debt collection litigation and arbitration, but concluded that more information was needed about certain debt collection litigation and arbitration practices before further recommendations could be made.

      Lack of info

      The report found that debt collection litigation raised concerns about collectors failing to give consumers proper notification of suits that have been filed, collectors filing suits based on insufficient evidence of indebtedness, courts frequently granting default judgments against consumers who do not appear or defend themselves, collectors seeking to recover on debts beyond the statute of limitations, and banks freezing funds in bank accounts that are exempt from garnishment by law.

      Horacio of Santa Cruz, CA, has had experience with agents trying to collect on non-existent debts. He tells ConsumerAffairs.com that he got a letter from the Academy Collection Service, "saying I owe $321.71 to First USA but I don't have an account with them so what's the deal?"

      Shortly after having open-heart surgery, Joseph from Asbury Park, NJ, got a call from Cynthia from ACS regarding credit card debt. "I told her that I was under a doctor's care and could not discuss this, due to the added stress, until I was released by my doctor," he says. "She proceeded to press the matter and I hung up. She called again the following day and again ignored my request to be left alone."

      Joseph told ConsumerAffairs.com that when he asked Cynthia for the name of the company she worked for, its address and telephone number, "she gave me her name, the company's name, an 800 number which was not the number she was calling from. She flatly refused to give me the address or location of the company she worked for."

      Fixing the problems

      The Commission makes the following recommendations to address these concerns:

      • States should consider adopting measures to make it more likely that consumers will defend themselves in litigation, decreasing the prevalence of default judgments.

      • States should require collectors to include more information about the alleged debt in their complaints.

      • States should take steps to make it less likely that collectors will sue on debt on which the statute of limitations has run.

      • Federal and state laws should be changed to prevent the freezing of a specified amount in a bank account including funds exempt from garnishment.

      The FTC's new report also addresses concerns about requiring consumers to resolve debt collection disputes through binding arbitration without meaningful choice, bias or the appearance of bias in arbitration proceedings, and procedural unfairness in arbitration proceedings. In its new report, the commission's principal recommendations regarding debt collection arbitration are:

      • Consumers should have a meaningful choice about arbitrating debt collection disputes.

      • Arbitration forums and arbitrators should eliminate bias and the appearance of bias.

      • Arbitration forums should conduct proceedings in a manner that makes it more likely that consumers will participate.

      • Arbitration forums should require that awards contain more information about how the case was decided and how the award amount was calculated.

      • Arbitration forums should make their process and results more transparent.

      The FTC said it would closely monitor debt collection arbitration and evaluate whether creditors and arbitration forums provide consumers with meaningful choice and a fair process. It also said that -- as appropriate -- it will report its views on new debt collection arbitration models to policymakers, industry, consumer groups, and the general public.

      FTC Issues Report On Reforming Debt Collection Litigation And Arbitration...
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      Salsa And Guacamole Common Source of Contamination

      Trend has developed in last 20 years

      Researchers at the U.S. Centers for Disease Control and Prevention (CDC) have concluded that salsa and guacamole are responsible for a disproportionate amount of foodborne illnesses associated with restaurant food.

      The health agency says nearly one of every 25 restaurant-associated foodborne outbreaks with identified food sources between 1998 and 2008 can be traced back to contaminated salsa or guacamole, more than double the rate during the previous decade.

      "Fresh salsa and guacamole, especially those served in retail food establishments, may be important vehicles of foodborne infection," said Magdalena Kendall, an Oak Ridge Institute for Science and Education (ORISE) researcher who collaborated on the CDC study. "Salsa and guacamole often contain diced raw produce including hot peppers, tomatoes and cilantro, each of which has been implicated in past outbreaks."

      To better assess the role of these popular foods in outbreaks, Kendall and her colleagues searched all foodborne outbreaks reported to the CDC for those with salsa, guacamole or pico de gallo as a confirmed or suspected food vehicle and analyzed trends in the proportion of all outbreaks with identified food sources.

      No outbreaks before 1984

      CDC began conducting surveillance for foodborne disease outbreaks in 1973, yet no salsa- or guacamole-associated (SGA) outbreaks were reported before 1984. Restaurants and delis were the settings for 84 percent of the 136 SGA outbreaks. SGA outbreaks accounted for 1.5 percent of all food establishment outbreaks from 1984 to 1997. This figure more than doubled to 3.9 percent during the ten-year period from 1998 to 2008.

      Inappropriate storage times or temperatures were reported in 30 percent of the SGA outbreaks in restaurants or delis and may have contributed to the outbreaks. Food workers were reported as the source of contamination in 20 percent of the restaurant outbreaks.

      Causes and prevention

      "Possible reasons salsa and guacamole can pose a risk for foodborne illness is that they may not be refrigerated appropriately and are often made in large batches so even a small amount of contamination can affect many customers," Kendall said. "Awareness that salsa and guacamole can transmit foodborne illness, particularly in restaurants, is key to preventing future outbreaks."

      The agency says risk can be lowered by following guidelines for safe preparation and storage of fresh salsa and guacamole to reduce contamination or pathogen growth.

      "We want restaurants and anyone preparing fresh salsa and guacamole at home to be aware that these foods containing raw ingredients should be carefully prepared and refrigerated to help prevent illness," Kendall said.

      Salsa And Guacamole Common Source of Contamination...
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      Home Buyers Continue To Turn To Foreclosures

      Discounted prices draw buyers into the home sales market

      July 13, 2010
      Nearly one-third of all residential properties sold in the first quarter of 2010 were foreclosure properties, according to Foreclosure Deals, an online lister of foreclosed homes for sale. Experts at the company believe that shows that people are continuing to turn to the foreclosure market as a plentiful source of low cost homes.

      With 232,950 foreclosure homes sold during the first quarter, the total is down slightly from the final quarter of 2009, and down 33 percent from the total foreclosure homes sold in the first quarter of 2009.

      The drop in total sales could be an indication of a shrinking market, but falling prices over the same period show that foreclosure homes can still be purchased at prices far below the national average. The price of a foreclosure during the first quarter was 27 percent below the average sale price of a traditional home sale.

      "Buyers are attracted to foreclosures because they offer tremendous discounts," said James Foxx, a business analyst with Foreclosure Deals. "The numbers show that each year, the total number of foreclosures sold has increased, and that's not just a reflection of supply. They're very popular, and for good reason, there's no better investment value in real estate currently out there."

      Rising foreclosure sales

      According to statistics, foreclosure home sales did increase by 25 percent from 2008 to 2009, and over 320 percent since 2007. During the first quarter, foreclosures accounted for more than 50 percent of home sales in California, Nevada and Arizona. Foreclosure homes accounted for at least 33 percent of home sales in Michigan, Massachusetts, Florida, Georgia, and Illinois.

      Bank-owned and real estate owned (REO) properties accounted for 19 percent of all residential sales during the first quarter, with an average market value discount of 34 percent. Pre-foreclosure homes -- homes in default -- accounted for 12 percent.

      Ohio had the highest average discount on a foreclosed home in the first quarter, at 39.5 percent below market value. Close behind were Kentucky and Illinois at 39 percent, and California and Tennessee at 37 percent.

      "The statistics show that buyers and investors are getting some great deals," said Foxx. "And you don't have to buy in the really tough markets, like Las Vegas, NV or Phoenix, AZ to find them."

      The average discount on a foreclosure home nationwide has risen from 21 percent to 27 percent since 2006.

      Home Buyers Continue To Turn To Foreclosures...
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      Southern California Home Sales Rise In June

      Market shows small signs of recovery

      July 13, 2010

      Despite the expiration of a federal tax credit for buyers, sales of Southern California homes increased in June, according to MDA Dataquick, a San Diego-based real estate analyst.

      Home prices were slightly lower than they were in May, but were up 13 percent over June 2009.

      A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for June 2009.

      The sales count was the highest since July last year when 24,104 homes were sold. It was the strongest month of June since 2006 when 31,602 homes sold. The average June since 1988 has had 28,086 sales.

      "The market was wildly out of kilter a year ago, now it's just somewhat out of kilter," said John Walsh, MDA DataQuick's president. "We're still seeing lots of bargain hunting, and we're not seeing much discretionary buying. The single-biggest issue is still mortgage financing. Rates may be at record lows, but that doesn't mean much if the lender won't qualify you."

      Still, the report shows more money was spent last month buying homes in Southern California than in the past two years, and more money was loaned.

      "The tax credits had something to do with that, though it's not clear exactly how much," Walsh said. "With the impact of the credits fading fast, the next few months will tell us a lot."

      Prices dip

      The median price paid for a Southland home was $300,000 last month. That was down 1.6 percent from $305,000 in May, and up 13.2 percent from $265,000 for June 2009.

      The low point of the current cycle was $247,000 in April 2009, the high point was $505,000 in mid 2007. The median's peak-to-trough drop was due to a decline in home values as well as a shift in sales toward low-cost homes, especially foreclosures.

      Foreclosure resales accounted for 33.0 percent of the resale market last month, down from 33.9 percent in May, and down from 45.3 percent a year ago. The all-time high was February 2009 at 56.7 percent, DataQuick reported.

      Government-insured FHA loans, a popular choice among first-time buyers, accounted for 39.0 percent of all mortgages used to purchase homes in June.

      Last month 20.8 percent of all sales were for $500,000 or more, compared with 22.2 percent in May and 19.3 percent a year ago. Zip codes in the top one-third of the Southland housing market, based on historical prices, accounted for 29.6 percent of existing single-family house sales last month, down from 31.0 percent in May but up from 27.8 percent a year ago. Over the last decade those high-end areas have contributed a monthly average of 33.3 percent of regional sales.

      Their contribution to overall sales hit a low of 21.0 percent in January 2009.

      Fewer jumbos

      High-end sales would be stronger, and the overall market recovery more robust, if adjustable-rate mortgages (ARMs) and "jumbo" loans were more available, the company noted. Both have become much more difficult to obtain since the August 2007 credit crisis.

      While 43.9 percent of all Southland purchase mortgages since 2000 have been ARMs, it was 6.6 percent last month, up from 6.5 percent in May and up from 2.7 percent in June last year.

      Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 17.3 percent of last month's purchase lending, up from 17.2 percent in May and from 14.9 percent in June 2009. Before the credit crisis, jumbos accounted for 40 percent of the market.

      Absentee buyers - mostly investors and some second-home purchasers - bought 19.7 percent of the homes sold in June, paying a median of $220,000. Buyers who appeared to have paid all cash - meaning there was no indication that a corresponding purchase loan was recorded - accounted for 23.5 percent of June sales, paying a median $213,000. In February this year cash sales peaked at 30.1 percent. The 22-year monthly average for Southland homes purchased with cash is 14.1 percent.

      The "flipping" of homes has also trended higher over the past year. Last month the percentage of Southland homes flipped - bought and re-sold - within a six-month period was 3.4 percent, while a year ago it was 1.9 percent. Last month it varied from as little as 3.0 percent in Orange and San Diego counties to as much as 3.8 percent in Los Angeles County.

      Southern California Home Sales Rise In June...
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