Current Events in August 2010

As states continue to crack down on payday loans, the payday lending industry is attempting to make a case for itself in the media, spewing out press releases when states take action to curb the usurious loans.

After the Colorado legislature passed a measure capping interest rates at a mere 45 percent, a Web site called aboutpaydayloan.com issued a press release taking issue with some of the measure's provisions. Specifically, the site took expection to the requirement that lenders give borrowers six months to repay the loan instead of the typical two weeks.

After all, it is hard to fathom why a six-month loan would be any more helpful when you only need a little cash for a car repair, or until payday, the press release observed.

The reason you need at least six months is, if you're living paycheck to paycheck, it's going to take a long time to repay the loan, said Uriah King, VP for State Policy at the Center for Responsible Lending. If you're borrowed $500 you don't have, how are you going to be able to pay it back out of your next paycheck? The answer is, you can't, so you have to take out another two-week loan. That's the debt trap.

Triangulation?

The press release claims that "reputable" payday lenders are pulling out of Colorado and other states that are cracking down on the industry, leaving consumers to the tender mercies of unscrupulous competitors, though it's far from clear what separates a reputable payday lender from an unscrupulous one.

It's not clear who or what operates aboutpaydayloan.com. It appears as some sort of blog, where anyone can post content. Most of the postings are anonymous, identified only as admin.

The ongoing scam in which a bogus debt collector harasses consumers over a phony payday loan debt also gives payday lenders the opportunity to associate themselves with law enforcement.

Pay1Day.com, an online lender, issued a press release associating itself with Illinois Attorney General Lisa Madigan's recent Scam Alert. There was no official connection between the two, but Pay1Day.com said it was passing along the attorney general's warning as a "community service."

Kinder, gentler

Despite attempts to show a softer side, Charlene Crowell, Communications Manger for State Policy at the Center for Responsible Lending, doesn't think it will work.

When voters have a say on payday lending, they usually reject it, Crowell told ConsumerAffairs.com. When the legislature gets involved, they usually have trouble getting pro-payday loan legislation out of committee.

Two organizations promoting payday lenders in the south BorrowSmart-Alabama and BorrowSmart-Mississippi, happen to be located in two of the most lucrative states for the payday lending industry, at least when it comes to number of borrowers. Both groups offer financial advice, but King says consumers shouldn't be fooled.

Unless they tell you 'don't ever take out a payday loan,' I don't think I would be taking financial literacy advice from payday lenders, King told ConsumerAffairs.com.

So far this year, two states have taken action against timeshare resellers. In Vermont, Attorney General William Sorrell reached a settlement with Timeshare Relief, Inc., in which the company agreed to pay $140,000 for violations of state consumer laws.

In March, Florida Attorney General Bill McCollum unveiled continuing investigations into at least 17 timeshare companies and their affiliates throughout the state for deceptive trade practices.

"Florida's consumers are trying to make prudent financial decisions," the attorney general said at the time, "but many timeshare resale companies are blatantly scamming people by promising sales or refunds and failing to provide services even after taking hefty up-front fees."

Complaints

ConsumerAffairs.com has received a sizable number of complaints about the practices of timeshare sellers from consumers across the nation.

"I called TimeShare Only in March of 2007 to sell my timeshare in Florida and they promised they would be able to sell it or rent it. They charge me 600 dollars for my two bedroom loft and I have never heard anything else from that company unless I call about it," Sheila, of Richmond, Va., told ConsumerAffars.com.

In warning timeshare owners to be careful when trying to sell their property, the FTC offered this advice:

• Even if the salesperson claims the local market is "hot," or his office is overwhelmed with buyer requests, don't agree to anything on the phone or online before checking out the reseller. Contact the Better Business Bureau, state Attorney General and local consumer protection agencies in the state where the reseller is located. Ask if any complaints are on file.

• Ask for all information in writing.

• Ask if the reseller's agents are licensed to sell real estate where the timeshare is located. If so, verify it with the state real estate commission. Deal only with licensed real estate brokers and agents, and ask for references from satisfied clients.

• Ask how the reseller will advertise and promote the timeshare unit. Will progress reports be issued? How often?

• Ask about fees and timing. It's better if the reseller takes its fee after the timeshare is sold. If a fee must be paid in advance, ask about refunds. Get refund policies and promises in writing.

• Don't count on recouping the purchase price of a timeshare, especially if you've owned it for less than five years and the location is not well known.

• To get an idea of the value of a timeshare, consider using a timeshare appraisal service. Check with the state where the service is located to make sure the appraiser's license is current.

• Before signing the contract, make sure it specifies the services the reseller will perform, the costs the seller is responsible for and when they must be paid, whether the seller can rent or sell the timeshare at the same time the reseller is trying to sell it, the length or term of the contract to sell the timeshare, and who is responsible for documenting and closing the sale.

• Don't sign the contract if the deal isn't what you expected or wanted. Negotiate changes or find another reseller.

• Check with the resort to determine restriction, limits, or fees that could affect resale or ownership transfer.

• Have available the name, address, and phone number of the resort, the deed and the contract or membership agreement, the financing agreement if money is still owed, information to identify your interest or membership, the exchange company affiliation, the amount and due date of the maintenance fee, and the amount of any real estate taxes that are billed separately.

In a conference call with reporters, the FDA reported finding piles of manure, rodents, flies and uncaged chickens roaming the grounds. The inspections took place at farms owned by Wright County Egg, Quality Egg and Hillandale Farms.

The inspections were conducted in the wake of a recall of over a half-billion eggs due to Salmonella contamination. The recall occurred within weeks of new federal rules designed to enhance egg production safety.

According to the Centers for Disease Control and Prevention (CDC), an estimated 1,400 consumers were sickened from eating the contaminated eggs, with the outbreak stretching back to at least mid-May.

The FDA last week revealed the initial inspection of the farms found Salmonella in chicken manure and in chicken feed. In Monday's session with reporters, FDA officials also reported they found Salmonella in water samples. The water, they said, was used to wash eggs.

Piles of manure

At some of the operations run by Wright County Egg, the inspectors said they discovered piles of manure reaching eight feet in height. There was so much manure on the ground, they said, that in some buildings the doors would not close, providing easier access for rodents and other animals.

"While it is really helpful that FDA is disclosing the results of their recent inspections of two facilities linked to a major illness outbreak from contaminated eggs, FDA's findings are truly stomach churning," said Caroline Smith DeWaal, Food Safety Director at Center for Science in the Public Interest (CSOI). "FDA found rodents and wild birds in the facilities, and five of the Wright County Egg facilities had giant manure piles inside their buildings. These violations are reminiscent of similar findings in another major outbreak linked to peanut butter."

DeWaal says it is equally troubling that the inspections occurred the month following the date that the new egg-safety regulation went into effect.

"Both companies involved had been on notice that they needed to meet requirements of the new egg-safety rule for over a year," she said. "Instead of finding companies that were ready to meet those requirements, FDA's inspections document companies with long-standing violations and apparently little intention to comply."

Unconcerned about inspections?

DeWaal says the state of conditions at the egg farms suggests the owners knew that FDA inspections are so rare, even following the adoption of a new safety regulation, that there was no urgency to fix their buildings and their operations to assure compliance with FDA statutes and regulations.

Hillandale Farms issued a statement Monday saying it is committed to addressing all issues raised by the FDA and plans to be "in full compliance as soon as possible." Wright County Egg said most of the issues tagged by FDA inspectors have been addressed or will be soon.

"We anticipate the expeditious completion of nearly all remaining items by mid-September," the company said in a statement.

It's a stark turnaround for the company that touts itself as the largest clothing manufacturer in the United States. For over a decade, AA was strictly a wholesaler, providing blank T-shirts to retailers across the country. The company went retail in 2003, and has since opened a jaw-dropping 260 locations worldwide -- an expansion that CEO Dov Charney says is the fastest in American history.

AA quickly gained a reputation as exacting and humane, producing simple, high-quality items while refusing to outsource their production. Employees at the company's Los Angeles factory are given full health care plans, paid more than twice the minimum wage, and are permitted to make international phone calls during work hours -- free of charge.

Those liberal policies, paired with tasteful design and eye-catching ads, made AA an attractive alternative to big-name retailers like the Gap and Banana Republic, especially for young shoppers. And the strategy paid off, with AA reporting $545 million in sales as recently as 2008.

But if the retailer's rise was precipitous, its fall is shaping up to be the same.

Last month, Deloitte & Touche, AA's auditor, resigned after reporting "material weaknesses" in the retailer's financial controls, a finding that has sparked a federal investigation.

Stock woes

AA's stock, which reached a high of $16.80 in December 2007, is also not what it used to be. Shares have plummeted 45 percent in the last two weeks alone, from $1.39 on August 16 to $0.76 on Monday. (For comparison's sake, as of Monday, competitors Urban Outfitters and the Gap were trading at $30 and $16 per share, respectively.)

And, as is often the case, that stock decline has sparked a series of shareholder class action lawsuits -- three in the past week alone. One of those suits claims the company "violated federal securities laws by issuing material misrepresentations to the market concerning American Apparel's operations and financial performance."

Worse, the American Stock Exchange has threatened to delist the company -- that is, remove its stock from the market altogether -- if it fails to file its quarterly statement soon. The company originally promised to file the statement by September 15, but now says it might need until November.

The company has even come under pressure over its once-renowned personnel practices: last year, a federal crackdown on illegal immigration forced AA to fire 1,500 workers -- a number that amounted to 15 percent of its workforce.

AA's melodrama is, at least, consistent with its founder's reputation. Charney, who started the company as a college student in 1989, has been a controversial figure for some time. He is known to walk around the company's factory in underpants, and has settled at least three sexual harassment lawsuits brought by female employees.

Future uncertain

While it's too soon to say whether American Apparel is destined to go the way of Circuit City and Tower Records, the company's recent actions aren't likely to soothe many stockholders' nerves. In its preliminary quarterly report, AA said it might not be able to continue as a "going concern," suggesting that it is at least considering the possibility of bankruptcy.

A more subtle -- but perhaps equally troubling -- development is the company's planned 180-degree change in style, as it moves away from its mainstay line and begins producing preppier clothes like pleated pants and blazers. Regardless of whether AA ultimately pulls itself out of the fire, it is certain to go down as one of the more unlikely stories in American clothing.

Well, keep in mind the advice that "if it sounds too good to be true, it probably is," because scammers are now using this pitch on Facebook in order to get their hands on your personal information.

Graham Cluley, a security expert for Sophos security software, is warning that in recent days he has begun seeing Facebook users who appear to be offering free iPads and iPhones for people who will try them out.

The come-on

Here's an example of a typical iPad tester scam that Cluley says has been seen many times on Facebook in the last few days:

Heyyyyy everyone )), 3 days ago I signed up at [website link] as a tester and today I got my iPad. All you need to do is to tell them your opinion about iPad and you can keep it forever. You should hurry since i highly doubt this is gonna last forever.

And Cluley offers this example of a similarly-worded iPhone 4 tester scam:

Hey, 3 days ago I signed up at [website link] as a tester and today I got my iPhone4g. All you need to do is to tell them your opinion about iPhone 4g and you can keep it forever. You should hurry since i highly doubt this is gonna last forever.

Many of these messages are appearing on users' photo walls. People who respond do not get a free iPad or iPhone.

Don't take the bait

"If you've found messages like these on your Facebook profile or in your photo galleries, remove them immediately and change your passwords," Cluley writes on his blog. "You would also be wise to have a thorough overhaul of your privacy and account settings -- to make sure that they-re secure enough. If you see applications or "likes" of pages that you are uncertain about, remove them from your account."

It's a reminder to exercise caution and vigilance on the Internet, especially on social networking sites. Other good advice is to periodically run a virus-scan with an up-to-date anti-malware product -- just in case there's some spyware lurking on your computer which is trying to grab your account details.

Salmonella concerns have prompted Procter & Gamble to pull a limited number of bags of cat food off store shelves.

P&G Sunday recalled a small number of Iams Proactive Health Indoor Weight & Hairball Care dry cat food bags, which were recently sold in one or two Loveland, Colorado, stores.

The company said the cat food has the potential to be tainted with salmonella, a bacterium that can cause food poisoning. P&G, however, said it has not received any reports of illnesses linked to the pet food.

The recall is limited to Iams Proactive Health Indoor Weight & Hairball Care cat food sold in blue 6.8-pound bags, with a code date of 02304173 (B1-B6), and a UPC number of 1901403921.

P&G has worked with its retailers to remove the affected product from stores in the area, the company said. P&G believes that only three bags may have been purchased recently by consumers in the area. Yet, as a precautionary measure, the company is initiating this retrieval.

Pet owners who purchased the recalled cat food should discard it and contact P&G at 800-862-3332 for a replacement product.

Sundays action is the latest in a string of salmonella-related recalls the Cincinnati-based pet food maker has issued this summer.

In July, the company pulled two lots of its Iams Veterinary Formulas Feline Renal dry food off the market because of possible salmonella contamination. Less than two weeks later, the company expanded that recall to include some of its Iams and Eukanuba dry dog and cat food products.

P&G said it has not received any reports of illnesses linked to those recalled products, which were sold in veterinary clinics and specialty pet stores in the United States and Canada.

The Food and Drug Administration (FDA), however, warned pet owners they can become infected with salmonella if they handle any the recalled foods especially if they dont wash their hands after touching surfaces exposed to the products.

Symptoms of salmonella infections in healthy people include nausea, vomiting, diarrhea or bloody diarrhea, abdominal cramping and fever, the FDA said. In rare cases, salmonella can cause arterial infections, arthritis, muscle pain, and other serious health problems.

Pets with salmonella infections may have decreased appetite, fever and abdominal pain, the FDA said. If the infections are not treated, pets can become lethargic and have diarrhea or bloody diarrhea, fever and vomiting.

The FDA also warned that infected -- but otherwise healthy -- pets can spread salmonella to other animals or people.

Consumers with dogs or cats that ate the recalled food should contact their veterinarians if their pets experience any of these symptoms, the FDA said.

Despite a still-weak economy, the credit agency TransUnion reports the national 60-day delinquency rate for auto loans fell 19.7 percent between the first and second quarters of 2010.

The year-over-year delinquency rate at the national level fell by 27.4 percent in the second quarter.

Auto loan delinquency was highest in Mississippi and Louisiana at 1.05 percent and 0.97 percent, respectively. The lowest auto loan delinquency rates were found in North Dakota (0.28 percent), Michigan (0.29 percent) and Pennsylvania (0.32 percent).

The largest improvements in delinquency from the previous quarter were found in Vermont, which recorded a 41.4 percent decrease from 0.58 percent), and Connecticut, where the rate fell 36.4 percent from 0.55 percent.

Auto loan delinquency rates rose for only three states since the first quarter of 2010 -- Rhode Island, Utah and Montana.

Debt rises

Average auto debt nationally rose quarter over quarter from $12,501 to $12,643. Year-over-year, auto debt increased by 1.13 percent in the second quarter.

The District of Columbia held the largest average auto debt burden at $15,625, followed by Wyoming at $14,534. The lowest average auto debt was in Nebraska at $11,118.

On a year-over-year basis, national bank auto originations increased by the largest margin since the recession began in late 2007 (18.7 percent). District of Columbia led all other areas showing an increase in auto originations by 55.4 percent since the second quarter 2009. On a regional basis, only one state (Hawaii) showed a drop in year-over-year originations.

Improving trend

"The national trend we are seeing continues to point to a clear improvement in payment behavior," said Peter Turek, automotive vice president in TransUnion's financial services group. "Although part of the reason for the turnaround in delinquency rates is the influx of new, lower risk loans as we have noted before, consumers do not see a quick fix to the short term economic and employment situation and are focusing their attention instead on savings and lower consumption of discretionary goods."

Turek says the movement toward fiscal responsibility is reflected in year-over-year results as auto delinquency rates now have dropped 27.4 percent since second quarter 2009 -- the largest decline since the summer of 2001.

"Based on our current economic assumptions, TransUnion believes that the 60-day auto delinquency rate will continue to show seasonal patterns, but gradually drift upward, reaching a rate of around 0.6 percent by the fourth quarter of this year," Turek said.

Hardly a day goes by that we don't see or hear at least one story about the stock market plunging, soaring or faltering. As banks fail, real estate crumbles, bonds and CDs stagnate, those fortunate enough to have a few dollars invested in the stock market edge ever closer to the edge of their seats.

The world's nervous investors sit glassy-eyed, staring at the financial cable channels, poring through the nether pages of the Wall Street Journal and Investor's Business Daily, while fretting over apocalyptic warnings that they have missed forever the chance to invest affordably in gold.

Eventually, most lunge sweaty-palmed for the phone and call their stock broker or personal financial advisor. And guess what? Not only is their call not a surprise, the advisor has been expecting it and is ready with soothing words.

Of course, some financial advisors have always been more salesmen than objective advisors. (A few have been Ponzi artists, but that's a topic for another day). But in today's roller-coaster economy, nearly every financial advisor has been forced to learn the techniques practiced by psychologists, grief counselors, priests, ministers and rabbis.

When the news is bad about jobs, and a possible double-dip recession, the old fears rear their head, said Jane King, president of Fairfield Financial Advisors Ltd.," in a recent issue of Investment News, a trade publication for financial advisors.

King recounted a calls he received from a nervous client in his 60s who had been fretting about the risks to his $2.7 million portfolio. She reminded him that his investment included such premier stocks as Anheuser-Busch, up 24% since last September.

He wouldn't have made a return even approaching that in bonds, King said.

The situation can be at its most perilous with older consumers who have worked hard, attained a high standard of living and accumulated a sizeable nest egg despite -- or perhaps because of -- growing up with memories of the Great Depression, when cash was king.

Fearful of outliving their assets, it can be difficult for these older investors to resist the temptation to pull their money out of stocks and stash it under their bed or in insured bank accounts, which amount to about the same thing.

Most armchair investors don't consider themselves experts but still have trouble putting their full faith in their financial advisors despite what may be years of stellar portfolio performance through good years and bad.

While it's true that the financial markets are confusing, it's still true that over the long-term, a balanced and diversified portfolio outperforms just about any other legal investment activity. Ideally, you want to be buying on the way up, selling on the way down. A good financial advisor can help you get it right, at least most of the time.

"Ultimately, it's all about education," said Anne Field, writing in Registered Rep, another trade newsletter. "Perhaps the most important thing you can teach them in your early discussions is how inflation will affect their portfolios if they don't take any risks."

Taking it seriously

Don't think financial advisors aren't taking the nervous investor phenomenon seriously. The Financial Planning Association recently sponsored a continuing education event for its members entitled "Retirementology: Rethinking the American Dream."

Topics included "relationship skills, communications skills, critical thinking" and promised to explain "how the role of the advisor is evolving to become more comprehensive."

All of this may sound familiar to doctors, lawyers and other professionals who in recent years have had to deal with the "consumerization" of their practices and to go beyond cultivating a good bedside manner. They've had to learn to probe patients' and clients' fears and biases and to more fully explain their methodology, qualifications and previous successes.

It took patients and legal clients a long time to become assertive, to ask questions and challenge authority. Now it's time for investors to do the same -- to politely but assertively question their advisors' advice, qualifications and methods.

Chances are, your advisor is doing a good job but the job description now includes keeping you well-informed and comfortable.

Whatever your financial advisor may achieve with your portfolio, he or she also owes you the time and respect to answer all of your questions, to hold your hand and explain clearly and unemotionally the likely consequences of the various investment options open to you.

If you're not satisfied with the results of your advisor's efforts, both fiscal and psychological, it may be time to look elsewhere. Fred Yager outlines what to look for in his article, "Is It Time to Fire Your Financial Advisor?"

If you don't have a financial advisor or are thinking of making a change, one good source of information is the National Association of Personal Financial Advisors, which has an online directory of fee-only financial advisors. (A fee-only advisors charges you for his service and takes no commission from products she represents).

Chances are, if you've accumulated a hefty nest egg, you've learned to find the best possible professional help and to delegate appropriately. This is no time to forget those lessons.

Wal-Mart has asked the U.S. Supreme Court to weigh in on a lawsuit contending that the retailer discriminates against female employees, The New York Times reported this week.

The suit, pending in federal court in San Francisco, alleges that female Wal-Mart employees are paid less, given smaller raises, and promoted less often than their male counterparts. If found liable, Wal-Mart could be on the hook for at least $1 billion.

The suit has been winding its way through the courts since it was first filed in 2001. In April, the Ninth Circuit Court of Appeals narrowly certified the case as a class action, ruling that just because over 1 million employees are potentially involved doesn't necessarily render [the] case unmanageable.

Wal-Mart sought to paint the court's decision as relying on technicalities.

"It is important to remember that the Ninth Circuits opinion dealt only with class certification, not with the merits of the lawsuit," the company said in a statement, contending that "the Ninth Circuits opinion contradicts numerous decisions of other appellate courts and even the Supreme Court itself."

Wal-Mart's appeal is based on the contention that the case is unsuitable for class treatment, since each employee's claim will necessarily involve individual factual issues that can't be applied to the case as a whole.

That argument echoes Judge Sandra Ikuta's dissent in the Ninth Circuit decision.

Never before has such a low bar been set for certifying such a gargantuan class, Judge Ikuta wrote, adding that the plaintiffs' allegations were based on general and conclusory allegations, a handful of anecdotes and statistical disparities that bear little relation to the alleged discriminatory decisions.

Attorneys for the plaintiffs cite as evidence data showing that women account for two-thirds of Wal-Mart employees, but only a third of its management.

Brad Seligman, an attorney for the plaintiffs, told the Times that class certification was entirely appropriate, even given the class's enormity.

The ruling upholding the class in this case is well within the mainstream that courts at all levels have recognized for decades, Seligman said. Only the size of the case is unusual, and that is a product of Wal-Marts size and the breadth of the discrimination we documented.

Company was warned

In a separate article, the Times reported that Wal-Mart was warned of potential liability a full six years before the lawsuit was filed. In 1995, lawyers for the firm Akin Gump reported that salaried male employees earned 19 percent more than females, and that men were five times more likely than women to be promoted into management jobs.

Paradoxically, Wal-Mart has been careful to avoid the appearance of discrimination in other areas. In 2003, the company announced that it was implementing policies designed to prohibit discrimination against gay and lesbian employees.

In any event, Wal-Mart is vigorously defending its workplace policies.

Wal-Mart is an excellent place for women to work and has been recognized as a leader in fostering the advancement and success of women in the workplace, the company said in a statement.

Assuming that the Supreme Court agrees to hear the case, its ruling is likely to either open the floodgates for future jumbo class actions, or effectively shut the door on them.

This is the big one that will set the standards for all other class actions, Robin S. Conrad, executive vice president of the National Chamber Litigation Center, told the Times. Conrad's organization is part of the U.S. Chamber of Commerce and has filed amicus briefs in support of Wal-Mart's position.

A lawsuit filed this week alleges that Biospot brand flea and tick spray is responsible for neurological problems in hundreds of animals, resulting in death in some cases.

The suit, filed in federal court in San Francisco, blames the problem on pyrethrins, organic compounds that kill fleas and ticks but that also have a long history of poisoning cats.

Pyrethrins kill fleas and ticks by interfering with their nervous systems, thus paralyzing and killing the parasites, the suit says. However, [pyrethrins] have the same effect on very significant numbers of pets, causing neurological problems which have and often will result in injury and/or death to the animal.

While the Environmental Protection Agency (EPA) is charged with oversight of products like Biospot, the suit says that the agency rarely conducts independent tests and instead depends largely on information provided by manufacturers when determining whether such products are safe.

Biospot, which can be purchased over-the-counter, is significantly cheaper than its prescription counterparts, such as Frontline.

Pet owners represent proposed class

Five named plaintiffs represent a putative class composed of anyone who bought flea products containing pyrethrins, manufactured by the defendants, provided that their claims fall within the applicable statute of limitations.

Sunny Johannson, a plaintiff from California, usually treated her cat Jack O'Punkin with Frontline and Revolution, neither of which ever caused any adverse effects. Earlier this month, Johannson used Biospot for the first and only time. The following morning, Jack bit [Johannson's] hand and collapsed into a seizure that lasted approximately a minute and a half.

Johannson immediately shampooed Jack in an attempt to remove as much Biospot as she could. Her vet's assistant confirmed the likely cause [of the seizure] to be Biospot, having seen similar reactions in other animals. While Jack survived the incident, he continues to be lethargic and uninterested in food, according to the suit.

Plaintiff William Shelby, a Texas resident, wasn't so lucky. On July 1, 2010, he applied Biospot to Waggles, his seven-year-old pit bull. Within days, Waggles's hair began to fall out and she developed bumps on her back and sides. Shortly thereafter, her immune system shut down; her eyesight deteriorated; and she began suffering seizures.

By late July, Waggles had become totally blind, and was not eating because she could not swallow. [She] was running into walls, was disoriented and in great pain. Shelby had Waggles euthanized on July 29, less than a month after he had used Biospot.

The suit alleges that Biospot manufacturers Central Garden & Pet and Farnam Companies know, and have known for many years, that these chemicals will substantially injure and/or kill very significant numbers of dogs and cats.

As evidence, the suit notes that the manufacturers have reported to the EPA a sharp increase in adverse consequences from application of these products to companion animals. According to the suit, [i]n 2008 alone, there were approximately 44,000 reports of adverse events resulting from squeeze-on products containing pyrethrins, a group that includes Biospot.

Problems not limited to Biospot

Consumers should always be careful when using spot-on treatments, a point hammered home by an EPA advisory issued in May 2009. According to the advisory, the majority of consumer allegations detailing adverse reactions from flea and tick treatments dealt with spot-on products.

Last August, ConsumerAffairs.com's Lisa Wade McCormick detailed the nightmare that befell Diane S., a pet owner from North Carolina, when she used Seargeant's, another spot-on treatment. Her dogs immediately began to whine and jerk, and soon developed burns on their skin.

Diane's vet, who examined the dogs the next day, said [the treatment] was pure poison and it's a wonder it didn't kill them.

The EPA advisory warns pet owners to carefully follow instructions when using flea and tick products, and advises them to consult a veterinarian before using the products on weak, aged, medicated, sick, pregnant or nursing pets, or on pets that have previously shown signs of sensitivity to pesticide products.

The price motorists pay at the gas pump continues to fall as the summer driving season draws to a close.

The average price of self-serve regular today is $2.682 a gallon, down just over four cents from last Friday, according to AAA. Prices fell five cents a gallon the week before that, after edging higher in mid-summer.

The price of diesel fuel is $2.959 a gallon, down two cents from last Friday.

Prices have fallen in the weeks leading up to the Labor Day weekend because of growing concerns about the prospects for economic growth. Because of those concerns, crude oil prices have lost ground, trading this week around $73 a barrel.

"The good news for consumers is an extremely stable and relatively modest price at the pump," said Andrew Delmege, AAA's manager of regulatory affairs. "The bad news seems to be that few are actually taking advantage."

Those who are taking advantage of low prices are finding supplies plentiful. The Energy Information Administration reported this week stockpiles of crude oil rose by more than four million barrels in the week ending August. 20. With supplies plentiful, prices should remain stable well into the fall months.

The states with the most expensive gasoline today are:

Alaska ($3.521)
Hawaii ($3.487)
California ($3.115)
Washington ($3.085)
Oregon ($3.001)
Idaho ($2.991)
Nevada ($2.923)
Utah ($2.923)
Montana ($2.898)
New York ($2.850)

The states with the least expensive gasoline today are:

Missouri ($2.446)
South Carolina ($2.452)
Mississippi ($2.508)
Tennessee ($2.513)
Alabama ($2.520)
Virginia ($2.525)
New Jersey ($2.528)
Texas ($2.537)
Georgia ($2.534)
Louisiana ($2.554)

The recall involves older models 1998 to 2003 and the carmaker says vehicles with high mileage may be especially vulnerable.

In a very small number of cases, Ford said, the axles have fractured in certain locations on the right and/or left side, and affected vehicle handling.

We will notify affected owners in the very near future and ask them to bring their vehicles to their local dealers for inspection and any necessary repairs, the company said in a statement.

Preceded by lawsuit

In May, a group of Ford Windstar owners filed a class action lawsuit in federal court in Pennsylvania, alleging that their vans' rear axles are rusting out, rendering the cars unfit, unsafe, and unmerchantable.

The plaintiffs say that a design defect collects and traps water [in the axle], causing it to rust from the inside out. Specifically, the suit alleges that the cylinder is hollow and unsealed, making it easy for liquid to enter, and lacks drainage ports, meaning that the water then gets stuck inside the cylinders and has no way of getting out.

Inevitably, the suit said, this combination leads to rust which weakens these axles, which bear significant loads while the vehicle is being operated, and renders the vehicle's axle susceptible to failing while the vehicle is being operated. The suit says that the defect is present in all Windstars for model years 1999 through 2003.

The recall for the Windstar which is no longer in production applies to vehicles in 21 states, the District of Columbia and Canada where road salt corrosion is more common.

At no charge to customers, Ford dealers will reinforce the axles of the affected vehicles as parts are available. If its determined the axle cant be reinforced, it will be replaced as soon as parts are available, the company said.

Ford also said it will provide for rental vehicles for customers until the rear axle of their vehicle has been replaced.

By Mark Huffman
ConsumerAffairs.Com

August 27, 2010
Food and Drug Administration (FDA) inspectors trying to trace the source of Salmonella contamination at two giant egg producers say they have found at least four samples so far.

The contamination has led to the recall of more than a half-billion eggs in the last week.

FDA Inspectors were dispatched to Iowa farms operated by Wright County Egg and Hillandale Farms and, within days, found evidence of Salmonella. In a news teleconference, FDA Associate Commissioner Jeff Farrar said inspectors found traces of Salmonella enteritidis in samples of chicken manure and in chicken feed.

Hens eating contaminated feed can become sick, laying eggs that contain the bacteria. The FDA's Sherri McGarry says the evidence gathered so far suggests that Wright County Egg and Hillandale Farms are the probable sources of the salmonella outbreak.

Toll rises

The Centers for Disease Control and Prevention (CDC) this week raised its total of people who have gotten sick from eating contaminated eggs. The CDC says it has estimates more than 1,400 cases of Salmonella traceable to eggs occurred from May 1 though August 25.

However, the actual toll could be much higher. The CDC estimates as many as 38 unreported case of Salmonella for every reported case, meaning the actual toll could be 55,000 or more. No deaths from the illness have been confirmed.

So far, 39 brand names of eggs have been recalled and the FDA has published an updated list online.

Since May, CDC has identified a nationwide, four-fold increase in the number of Salmonella enteritidis (SE) cases through PulseNet, the national subtyping network made up of state and local public health laboratories and federal food regulatory laboratories. CDC received reports of approximately 200 SE cases every week during late June and early July.

Higher than normal

Normally, CDC has received an average of some 50 reports of SE illness each week for the past five years. Many states have also reported increases of this pattern since May 2010, CDC said.

Epidemiologic investigations conducted by public health officials in California, Colorado, and Minnesota have revealed several restaurants or events where more than one person ill with this type of SE has eaten. Preliminary information from these investigations suggests that shell eggs are the likely source of infections in many of these restaurants or events.

FDA, CDC, and state partners conducted a traceback investigation and found many of these restaurants or events received shell eggs from a single firm: Wright County Egg, in Galt, Iowa. FDA said it is currently conducting an extensive investigation at the firm in Iowa, as well as Hillandale Farms.

Illinois Attorney General Lisa Madigan says her office has seen a rise in complaints about these fraudulent collection calls.

Many consumers targeted in the scheme complain they've taken out payday loans before -- usually from online lenders -- but have paid off the debt. They say the con artists often know their names, social security numbers, place of employment, and bank account numbers -- information that leads them to believe they're dealing with legitimate debt collectors.

The con artists also claim to be affiliated with official-sounding companies or law enforcement agencies, including: the Federal Bureau of Investigators, Department of Law and Enforcement, Morgan & Associates, DNR Recovery, DNI Recovery, Legal Accounts Association, CashNet USA, America Legal Services, Quick Cash, and ACS.

"Although many of these names are fake, some are names of legitimate businesses that the purported debt collectors may be using without permission," Madigan said in a press release.

Threats and intimidation

Victims of the scheme say the scam artists use threats and intimidation to force them into sending hundreds of dollars.

"In almost every case, the bogus collector threatens the victim with legal action, including a lawsuit or arrest, if they don't make a payment right away," Madigan said. "The scammers attempt to force victims into an immediate payment and ask them to authorize a direct withdrawal from their checking account."

In some cases, consumers are asked to sign promissory notes and fax them to the phony collectors.

Protective action

Madigan, however, said consumers can protect themselves from getting taken in this fake debt collection scheme by remembering:

• They can't go to jail for failing to pay a debt;

• Debt collectors cannot threaten them. If they do, hang up and file a complaint with the Attorney General's office;

• To never give out personal information over the telephone, including bank account numbers or credit card numbers;

• To ask debt collectors for written documentation that verifies the debt they're trying to collect;

• To contact the creditor and verify the debt has been paid. If it's not, ask the company if it's sold the debt to a third party collector.

Illinois consumers who've received calls from fraudulent debt collectors can file complaints online with Madigan's office. Consumers can also contact Madigan's Consumer Fraud Hotline at one of the following numbers: Chicago 1-800-386-5438, Springfield 1-800-243-0618, Carbondale 1-800-243-0607.

By Mark Huffman
ConsumerAffairs.Com

August 26, 2010

Homeowners are still having trouble paying their mortgage, but not quite as much trouble as earlier this year, according to a report from the Mortgage Bankers Association.

In its report on the second quarter of 2010, the MBA found that 9.85 of all loans outstanding were delinquent, meaning nearly one in ten mortgage holders had missed at least one payment. While troubling, its a decrease of 21 basis points from the first quarter of 2010, but an increase of 61 basis points from one year ago.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 4.57 percent, a decrease of six basis points from the first quarter of 2010, but an increase of 27 basis points from one year ago.

The combined percentage of loans in foreclosure or at least one payment past due was 13.97 percent on a non-seasonally adjusted basis, a four basis point decline from 14.01 percent last quarter.

The seriously delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.11 percent, a decrease of 43 basis points from last quarter, but an increase of 114 basis points from the second quarter of last year.

The numbers suggest that 2010 is a worse year for foreclosures than 2009, but that the trend has improved slightly in recent months. The question is whether that trend will continue or worsen if the economy slips into a double-dip recession.

Reversal of recent trends

These latest delinquency numbers contain a mixture of somewhat good news and somewhat bad news, said Jay Brinkmann, MBAs chief economist. The good news is that foreclosure starts are down and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005. Loans 90 days or more past due, the largest share of delinquent loans, also fell. The fact that both the 90 plus delinquency rate fell and the foreclosure start rate fell means that a significant number of these seriously delinquent loans have been successfully modified and reclassified as performing, current loans.

Offsetting that good news is the fact that, after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up.

The percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009, Brinkmann said. Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak.

The United Egg Producers, a trade association for companies in the egg business, said the loss of more than a half-billion eggs from the food supply, due to the recall, was bound to place pressure on prices. Producers not affected by the Salmonella scare are facing significantly higher demand.

Among producers facing higher demand are those in West Virginia, who are not connected to the recall. A West Virginia Agriculture Department spokesman says the state currently has 200 licensed egg producers. Since the recall, he says many farms have been selling out their supplies at a faster than normal rate.

Vaccinating hens

While U.S. consumers have become all too aware of potential Salmonella contamination in eggs, it's not a problem for consumers in the UK. More than 10 years ago, British producers began vaccinating their hens. Since then there has been no egg contamination problem.

The U.S. Food and Drug Administration (FDA) drafted new egg safety rules that went into effect last month, The New York Times reports the agency considered -- but decided against -- requiring similar vaccinations for U.S. hens. The FDA said its new rules would have prevented the outbreak if they had been in force earlier in the year, when the problem occurred.

The Centers for Disease Control and Prevention (CD) noted a spike in Salmonella illnesses in mid May. The illnesses were eventually traced to two egg producers in Iowa. The Times report quotes industry experts who say they were disappointed the mandatory hen vaccination element was left out of the new egg rules. Salmonella can infect hens, who pass the bacteria onto the eggs as they are being formed.

Staying vigilant

The CDC reports that, by its count, more than 1,300 consumers have been sickened with Salmonella due to contaminated eggs. But keep in mind that symptoms don't appear immediately.

In fact, the CDC says illnesses that occurred after July 17, 2010, might not yet be reported due to the time it takes between when a person becomes ill and when the illness is reported. This takes an average of two to three weeks for Salmonella, according to the CDC.

"Epidemiologic investigations conducted by public health officials in 10 states since April have identified 26 restaurants or event clusters where more than one ill person with the outbreak strain has eaten," the CDC said on its website. "Data from these investigations suggest that shell eggs are a likely source of infections in many of these restaurants or event clusters."

The agency says preliminary information indicates that Wright County Egg, in Galt, Iowa, was an egg supplier in 15 of these 26 restaurants or event clusters. A formal traceback was conducted by state agencies in California, Colorado, and Minnesota, in collaboration with FDA and CDC, to find a common source of shell eggs.

Wright County Egg in Iowa was found as the common source of the shell eggs associated with three of the clusters. Through traceback and FDA investigational findings, Hillandale Farms of Iowa, Inc. was identified as another potential source of contaminated shell eggs contributing to this outbreak. FDA is currently conducting extensive investigations at both of these firms in Iowa. The investigations involve sampling, records review and looking for potential sources of contamination, such as feed.

On August 13, 2010, Wright County Egg conducted a nationwide voluntary recall of shell eggs. On August 18, 2010, the company expanded its recall. On August 20, 2010, Hillandale Farms of Iowa conducted a nationwide voluntary recall of shell eggs.

Longtime Los Angeles attorney Mitchell Roth promised foreclosure relief through aggressive litigation, "but the frivolous and phony lawsuits he filed instead left 2,000 desperate homeowners in even greater debt," said California Attorney General Edmund G. Brown Jr. A $1.1 million judgment against Roth "prohibits him from ever again preying on new victims," Brown added.

In 2008, Roth joined with Nevada-based United First, Inc. and the company's owner, Paul Noe, to provide foreclosure relief services to homeowners struggling to pay their mortgages. Noe, who was previously convicted of wire fraud and the subject of a 2004 Department of Insurance Cease and Desist Order, operated the company and handled client solicitations, while Roth provided legal services.

Homeowners were told that if they worked with United First and hired Roth to pursue their cases in court, they could lower or eliminate their mortgage debt and save their homes.

Big fees, little action

United First charged homeowners some $1,800 in up-front fees, plus at least $1,250 each month, and 50 percent of the cash value of any settlement. If a homeowner's debt was eliminated altogether, the homeowner was required to pay United First 80 percent of the value of the home.

After collecting up-front fees, Roth filed lawsuits on behalf of homeowners, pushing a novel legal argument that a borrower's loan could be deemed invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it.

Once the lawsuit was filed, Roth did next to nothing to advance the case and often failed to make required court filings, respond to legal motions, comply with court deadlines or appear at court hearings. Instead, he tried to extend the lawsuits as long as possible to collect additional monthly fees from clients.

This approach did not generate a single victory in court and did not lower or eliminate the mortgage debt for a single one of the 2,000 homeowners who hired Roth and United First.

Restitution

Brown filed suit last July, alleging that Roth, Noe and United First engaged in unfair competition, made untrue and misleading statements and violated California's credit counseling and foreclosure consultant laws.

The settlement requires Roth to pay $1 million in restitution to defrauded homeowners plus $125,000 in penalties, and prohibits him from ever engaging in similar conduct in the future.

Homeowners who were defrauded by Roth and United First, or victimized by any other foreclosure rescue scam, should contact Brown's office at 1-800-952-5225 or file a complaint online.

Homeowners can also file a complaint against a lawyer, a legal specialist or a company purporting to operate as a law firm with the State Bar by calling 1-800-843-9053.

United First customers who are eligible for a refund will be contacted by mail.

By law, all individuals and businesses offering mortgage-foreclosure consulting, loan modification and foreclosure-assistance services must register with Brown's office and post a $100,000 bond. It is also illegal for loan modification consultants and businesses to charge up-front fees for their services.

United States District Court Judge James M. Rosenbaum sentenced Cook to 25 years in prison on one count of mail fraud and one count of tax evasion in connection to the crime. In imposing the sentence, Judge Rosenbaum described Cook's offense as "wretched, tawdry, and cheap." Cook was charged on March 30, 2010, and pleaded guilty on April 13, 2010.

"Affinity fraud is a horrible crime. Victims are swindled not only of their money, but of their trust," said United States Attorney for the District of Minnesota, B. Todd Jones following sentencing. "Cook preyed upon those with whom he made connections through church or in the community. Today he atoned for his crimes."

In his plea agreement, Cook admitted that from January 2007 through July 2009, he schemed to defraud people by purportedly selling investments in a foreign currency trading program.

In reality, however, he diverted a substantial portion of the money provided him for other purposes, including making payments to previous investors; providing funds to Crown Forex, SA, in an effort to deceive Swiss banking regulators; purchasing ownership interest in two trading firms; buying a real estate development in Panama; paying personal expenses, including substantial gambling debts; and acquiring the Van Dusen Mansion in Minneapolis.

Investor advice

IRS Criminal Investigation Special Agent in Charge Julio La Rosa warned the public against falling victim to schemes that involve taking money from later investors and using it to pay earlier ones.

"Although the economics of Ponzi schemes are simple, contemporary swindlers conceal this fact with sophisticated marketing," he said. "Go beyond the sales pitch and personality to find the truth behind the numbers.

Cook has been in jail since January because he refused to hand over more than $35 million in frozen assets, including $27 million in offshore accounts, a BMW and two Lexus automobiles, a collection of expensive watches as well as a collection of Faberge eggs, and $670,000 in cash. He has now agreed to assist the government in recovering assets to repay victims for their losses. Failure to follow through would subject him to additional court action.

How it worked

To carry out his massive Ponzi scheme, Cook made false statements to potential investors, including promises that the investment program would generate annual returns of 10 to 12 percent, and that trading would present little or no risk to the investors' principal. He also withheld material information from investors, such as the precarious financial position of Crown Forex, SA, in Switzerland -- an entity through which he traded. In addition, he withheld the fact that trading at PFG in Chicago generated losses in excess of $35 million between July 1, 2006, and August 31, 2009.

To further his scheme, Cook opened an account in the name of Crown Forex, LLC, at Associated Bank, which he used to deposit investor funds subsequently diverted for his own use as well as the use of others. He also sent statements to investors that misrepresented the status of their investments. Moreover, due-diligence letters were prepared that falsely indicated that Oxford Global Advisors had more than $4 billion in assets under management, and that all accounts were liquid.

Cook now admits that on January 29, 2009, he sent a $50,000 check through the U.S. mail from Arizona to Minnesota for investment in his foreign currency trading program.

He also admitted that on April 15, 2009, he filed a false and fraudulent U.S. Individual Income Tax Return, Form 1040, for calendar year 2008. That return failed to report taxable income of at least $5,285,719, upon which tax was due in the amount of at least $1,844,571.

The U.S. Food and Drug Administration (FDA) is warning consumers about the dangers posed by sexual enhancement and "natural" erectile dysfunction drugs.

MasXtreme, a dietary supplement, is sold without a doctor's prescription, but the FDA says it shouldn't be.

Natural Wellness, maker of the tablets, is conducting a nationwide voluntary recall of MasXtreme, Lot # 907043, UPC 094922300805. Laboratory analysis conducted by FDA has determined the product contains undeclared amounts of Aminotadalafil, an analog of tadalafil.

Tadalafil is an FDA-approved drug used to treat erectile dysfunction (ED), making the MasXtreme, in the eyes of the FDA, an unapproved new drug.

If this all sounds familiar, it should. The FDA pressed Natural Well to conduct a similar recall of the product earlier this year.

Meanwhile, the FDA is warning consumers not to take TimeOut Capsules because they contains an active drug ingredient that can dangerously lower blood pressure. The product is marketed as a dietary supplement for sexual enhancement.

TimeOut is labeled as 100% natural and consumers may mistakenly assume the product is harmless and poses no health risk. TimeOut is distributed on Internet sites and online marketplaces as 2,500 mg capsules.

Consumers who have TimeOut Capsules should stop using them immediately. Sexual enhancement products that claim to work as well as prescription products are likely to expose consumers to unpredictable risks and the potential for injury or death.

The FDA analyzed TimeOut and determined that it contains hydroxythiohomosildenafil, a chemical similar to sildenafil, the active ingredient in Viagra. Like sildenafil, this chemical may interact with prescription drugs such as nitrates, including nitroglycerin, and cause dangerously low blood pressure. When blood pressure drops suddenly, the brain is deprived of an adequate blood supply which can lead to dizziness or lightheadedness.

Risk statement

The FDA advises that MasXtreme poses a similar threat to consumers because aminotadalafil may interact with nitrates found in some prescription drugs such as nitroglycerin and may lower blood pressure to dangerous levels. Consumers with diabetes, high blood pressure, high cholesterol, or heart disease often take nitrates, the FDA said.

MasXtreme is sold in blister packs containing one capsule. The product is distributed nationwide by Natural Wellness Inc. This product is being promoted for increasing desire and sexual performance. The product is sold without medical prescription. The company says it is not aware of any adverse events associated with the product.

Consumers who have purchased MasXtreme tablets are urged to immediately discontinue their use and return the product to their place of purchase or directly to Natural Wellness Inc. at 440 S Federal Hwy, Suite 107, Deerfield Beach, FL 33441.

Consumers with questions regarding this recall may contact the company at 954-570-6662 Monday through Friday 8 am to 4 pm. Consumers who have purchased this product and have medical concerns should consult with their health care providers.