Current Events in February 2011

An administrator working for the Federal Trade Commission is mailing 1,455 refund checks to consumers defrauded by a mortgage loan modification and foreclosure rescue scam.

The FTC alleged, and the court found, that operators of the scam falsely told consumers they would prevent their homes from being foreclosed and negotiate lower mortgage interest rates, monthly payments, and principal balances. The court also found that homeowners got few, if any, loan modifications, and many people lost their homes to foreclosure after paying up to $5,500.

At the request of the FTC, in April 2010, a federal court issued an $11.4 million contempt order against the defendants, Bryan D’Antonio, The Rodis Law Group, Inc., America’s Law Group, and The Financial Group, Inc., for operating the scam, which violated a 2001 order that banned D’Antonio from telemarketing and misleading consumers about goods or services.

The FTC obtained the 2001 order against D’Antonio and his former company, Data Medical Capital, Inc., for operating a work-at-home medical billing opportunity scheme.

Consumers who receive the checks should cash them, and they will have 60 days to do so before the checks become void. Those who submitted a valid claim form will receive about 24 percent of their total claim loss. The FTC never requires consumers to pay money or provide information before redress checks can be cashed. Consumers with questions should call the administrator at 1-888-398-8205 or visit www.ftc.gov/refunds.

Non-delivery of payment or merchandise. Scams impersonating the FBI. Identity theft. 

These were the top three most common complaints made to the joint FBI/National White Collar Crime Center’s Internet Crime Complaint Center (IC3) last year, according to its 2010 Internet Crime Report. The report also includes a state-by-state breakdown of complaints. 

In May 2010, the IC3 marked its 10th anniversary, and by November, it had received its two millionth complaint since opening for business. 

Complaints pour in

Last year, the IC3 received more than 300,000 complaints, averaging just over 25,000 a month. About 170,000 complaints that met specific investigative criteria -- such as certain financial thresholds -- were referred to the appropriate local, state, or federal law enforcement agencies. 

But even the complaints not referred to law enforcement, including those where no financial losses had occurred, were valuable pieces of information analyzed and used for intelligence reports and to help identify emerging fraud trends. 

So even if you think an Internet scammer was targeting you and you didn’t fall for it, you are urged to file a complaint with the IC3. Even if it’s not referred to law enforcement, IC3 considers your information vital in helping it paint a fuller picture of Internet crime. 

Report highlights

• Most victims filing complaints were from the U.S., male, between 40 and 59 years old, and residents of California, Florida, Texas, or New York. Most international complainants were from Canada, the United Kingdom, Australia or India.
• In cases where perpetrator information was available, nearly 75 percent were men and more than half resided in California, Florida, New York, Texas, the District of Columbia or Washington state. The highest numbers of perpetrators outside this country were from the United Kingdom, Nigeria and Canada.
• After non-delivery of payment/merchandise, scams impersonating the FBI, and identity theft, rounding out the top 10 crime types were: computer crimes, miscellaneous fraud, advance fee fraud, spam, auction fraud, credit card fraud, and overpayment fraud. 

2010 alerts

The report also contained information on some of the alerts sent out by the IC3 during 2010 in response to new scams or to an increase in established scams, including those involving: 

• Telephone calls claiming victims are delinquent on payday loans. 
• Online apartment and house rental and real estate scams used to swindle consumers out of thousands of dollars. More
• Denial-of-service attacks on cell phones and landlines used as a ruse to access victims’ bank accounts. More
• Fake e-mails seeking donations to disaster relief efforts after last year’s earthquake in Haiti. 

Because there are so many variations of Internet scams out there, the IC3 says it can’t possibly warn against every single one. But it does recommend that consumers practice good security: make sure computers are outfitted with the latest security software, protect personal identification information and be highly suspicious if someone offers an online deal that’s too good to be true.

The Earned Income Tax Credit (EITC) is one of the largest tax benefits available to moderate and low-income taxpayers, so it pays to investigate, to see if you qualify.

Last year more than 26 million eligible taxpayers received nearly $59 billion total in EITC. The economic stimulus law created a new category of families with three or more children and increased the maximum benefit of EITC for tax years 2009 and 2010. The Tax Relief and Job Creation Act of 2010 extended these changes through 2012.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. Even if you paid no tax, you could receive money from the Internal Revenue Service (IRS).

Do you qualify?

To qualify, you must meet certain requirements and file a U.S. Individual Income Tax Return. Individuals and families must meet certain general requirements:

• You must have earned income.
• You must have a valid Social Security number for yourself, your spouse (if married filing jointly) and your qualifying child.
• Investment income is limited to $3,100.
• Your filing status cannot be "married filing separately."
• Generally, you must be a U.S. citizen or resident alien all year.
• You cannot be a qualifying child of another person.
• You cannot file Form 2555 or Form 2555-EZ (related to foreign earned income).

Your income cannot exceed certain limitations. For Tax Year 2010, your earned income and adjusted grow income (AGI) must each be less than:

• $43,352 ($48,362 married filing jointly) with three or more qualifying children
• $40,363 ($45,373 married filing jointly) with two qualifying children
• $35,535 ($40,545 married filing jointly) with one qualifying child
• $13,460 ($18,470 married filing jointly) with no qualifying children

If you claim a child, he or she must have lived with you in the United States for more than half of 2010. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them. At the end of 2010, the child must have been under age 19, a full-time student under age 24, younger than the EITC-claiming taxpayer or any age if permanently and totally disabled at anytime during 2010.

Your qualifying child cannot be used by more than one person to claim EITC. If a child meets the rules to be a qualifying child of more than one person, only one person can treat that child as a qualifying child and claim EITC.

No kids

If you don't have a child, you must meet three additional tests:

• At the end of 2010, you must have been at least age 25, but under age 65.
• You cannot qualify as the dependent of another person.
• You must have lived in the United States for more than half of 2010.

Credit Limits for 2010 Tax Year

Income and family size determine the amount of the EITC. For tax year 2010, the maximum credit amounts are:

• $5,666 with three or more qualifying children
• $5,036 with two qualifying children
• $3,050 with one qualifying child
• $457 with no qualifying children

Any conscientious car owner would respond to a recall notice and have his vehicle fixed right away, right? Well, yes, unless that car owner was a rental fleet.

According to a survey commissioned by federal safety regulators, the big three in the rental car business -- Hertz, Enterprise which owns National and Alamo, and Avis/Budget – since 2006 have let tens of thousands of drivers go on the road without repairing defects.

Automakers told federal regulators that rental companies typically repair fewer than one-third of recalled cars in the first month after the recall is issued. Even after a full year, the figure is only 50 percent.

“The bottom line shows that none of the rental car companies are doing a good job," Clarence Ditlow, executive director of the Center for Auto Safety, said in an ABC News broadcast.

Perhaps even more surprising, there's nothing illegal about renting out recalled cars without bothering to fix them or tell customers about the risk they're taking. There's no law, after all, that says a car owner has to respond to recalls.

The alarming figures came from General Motors and Chrysler and were provided to the National Highway Traffic Safety Administration (NHTSA), which is looking into the issue. Ford, which has a long history of delaying recalls even in such life-threatening instances as unattended engine fires, refused to share its statistics with the feds.

No industry standard

If all this sounds pretty surprising to you, it sounds like business as usual to the American Car Rental Association (ACRA).

“Although ACRA does not maintain an industry standard for recalls, and each member company follows its own pre-established operating guidelines, in most cases, members place a 'hold' on recalled vehicles so they are not rented until the recall work is completed,” said ACRA president Bob Barton in a recent posting on the association's website.

Besides, said Barton, “Most recalls issued by manufacturers do not require the owner of the vehicle (whether it be a rental company, leasing company or a private individual) to ground a vehicle and cease operation.”

Barton, however, said that if given earlier notice of recalls, rental companies might be able to respond more quickly.

Ditlow has noted that there can be “months of delay between the time a manufacturer notifies NHTSA about a defect and when vehicle owners are informed of a recall” and has suggested that NHTSA could require car makers to notify rental companies sooner.”

That would be “a positive step towards helping our members in their commitment to  providing customers with vehicles that are safe to drive,” Barton said.

Enterprise has best record

The best overall performance in the NHTSA survey came from Enterprise. In a study of 10 General Motors and Chrysler recalls between 2006 and 2010, after 90 days, Enterprise had fixed an average of 65 percent of the cars subject to the recall.

For Avis/Budget, 53 percent of the cars were fixed . At Hertz, only 34 percent of the cars rented 90 days after a recall had been fixed.

The NHTSA study was launched after a widely-publicized accident in which two California sisters were killed when their Enterprise rental car caught fire and hit an oncoming semi-trailer truck on Highway 101 in Northern California. The car, a Chrysler PT Cruiser, had been recalled a month earlier because a possible power steering fluid leak could cause a fire.

The family sued Enterprise and won a $15 million award. The girls' mother is now lobbying the California legislature to require rental car companies to ground all recalled cars until they are fixed. The Center for Auto Safety has petitioned the Federal Trade Commission to require Enterprise to fix recalled vehicles before renting them out.

T-Mobile, firmly stuck in fourth place among U.S. wireless carriers, reported anemic financial results Friday, with analysts blaming the company's spotty network coverage and a growing scarcity of spectrum needed to handle streaming video and bandwidth-hungry smartphone apps.

The company said it lost 318,000 contract customers during the last quarter, replacing them with 295,000 less profitable prepaid customers.

The lack of an iPhone partnership has also stymied T-Mobile's efforts to regain momentum. It had a brief moment in the sun as the chosen carrier for Google's ill-fated Nexus One, a barely discernible blip on the cellosphere.

But the more pressing problem at the moment is what engineers sometimes call a lack of headroom: the carrier is bumping into the ceiling as it tries to provide enough bandwidth to satisfy the growing number of smartphone users.

It's not just a matter of adding more towers, not that there's anything very simple or inexpensive about that. T-Mobile, like other carriers, has only so many frequencies in its spectrum space. When all those frequencies are full, calls start being dropped, video snaps to a halt and web surfing stalls.

Like land, spectrum is a limited commodity. They're not making it anymore. So it T-Mobile is going to get more spectrum space, it's going to have to buy it from someone or team up with another carrier that has some excess capacity.

The most obvious answer would be a merger with Sprint, firmly stuck in third place. Put the two carriers together – along with the spectrum owned by wireless broadband provider Clearwire, which is 54% owned by Sprint – and you have overnight created a company that would be about the size of AT&T and Verizon Wireless.

There would be many technical, regulatory and business headaches associated with merging the two and neither company shows much desire to try it.

Ironically, T-Mobile's current 4G network, called HSPA+, runs at blazing speed when you can get a signal. But as it attracts more speed-hungry customers, HSPA+ contributes to the company's overall spectrum space problem by eating up precious bandwidth more quickly than ever.

It's sort of like opening up a two-lane country road to hordes of lead-footed supercar drivers. You quickly run out of asphalt.

What does all this mean to the consumer? It means it's more important than ever to remember that the gleaming smartphone you see at the cell phone store is only as good as the network it's on. Before signing a long-term contract, make sure there is a 30-day cancellation clause and be sure you understand its terms and conditions.   

Reverse mortgages have gained popularity since the economic downturn, with seniors 62 years old and older opting for this unique financial instrument.

Instead of making monthly mortgage payments, those with a reverse mortgage tap their equity, receiving monthly payments as long as they remain in the house. For many seniors in these uncertain times, it seems safe and secure.

But Lyn R. Link, who calls himself "the reverse mortgage critic," says people with reverse mortgages are in fact losing their homes to foreclosure. It's not that they're missing mortgage payments -- there are none.

But Link says the U.S. government has grown concerned recently that a large number of reverse mortgage holders have stopped paying property taxes, stopped their insurance payments, and have not maintained their properties. All are required under the terms of a reverse mortgage.

Unknown number of defaults

The U.S. Department of Housing and Urban Development (HUD) says it can't give an exact number of reverse mortgages currently in default.  However, a recent article in U.S. News and World Report quotes a source putting defaults at 20 percent. 

"With 525,000 active reverse mortgages, that would put those loans in noncompliance at 105,000," Link wrote on his blog. " I don't believe it's that high based on other sources, but until HUD can provide exact numbers we just won't know."

In any case, he says, that's too many senior homeowners with a reverse mortgage facing the prospect of losing their home. Even with plans to help borrowers catch up on their taxes and insurance, he says lenders may have no choice but to proceed with foreclosure to cure the loan default.

Link says he isn't a critic of all reverse mortgages, but says he's worried some lenders are steering seniors into reverse mortgages that aren't suitable for their needs. On the other hand, he says, the loans are very profitable for the lenders.

Déjà vu

If that has a familiar ring to it, it sound eerily similar to the way millions of borrowers were steered into subprime loans in the early part of the last decade, helping to bring on the housing collapse.

While a fixed rate is most desirable with a conventional mortgage, Link maintains the opposite is true in reverse mortgages. He says a senior is much better off with an adjustable rate, which he says is more flexible and help preserve equity.

"Despite the disadvantages with the fixed rate, in nine short months it went from 2.7 percent of the total reverse mortgages made monthly to 68.9 percent: a staggering 2,452 percent increase," Link said.

How it works

A reverse mortgage enables homeowners 62 and older to convert the equity in their home into cash for any purpose. The best part is that there is no repayment for as long as the homeowners live in their home.  Credit and income are not used to qualify, and Social Security and Medicare benefits are not affected.

When the homeowners no longer live in their home, the reverse mortgage is typically repaid from the sale of the home. There is no debt left to heirs since the lender can only look to the property for repayment. Reverse mortgages are growing in popularity as public awareness increases and associated costs continue to decrease.

The Department of HUD recently approved a single national loan limit of $625,500 from the previous limits ranging by county from $200,160 to $362,790. This new higher loan limit is expected to increase the number of retirees who qualify for a reverse mortgage, and to enable existing reverse mortgage borrowers to refinance their reverse mortgage to receive more money from their home.

Cash bonuses paid to New York City securities industry employees declined by nearly 8 percent to $20.8 billion in 2010, about one third less than paid out in 2007 before the financial crisis, according to an estimate released today by State Comptroller Thomas P. DiNapoli.

The decline in the cash bonus pool reflects changes adopted by the industry in response to regulatory reforms, such as a shift toward deferred compensation and higher base salaries. Wall Street profits totaled $27.6 billion in 2010, which would be second only to 2009 when the industry benefited from federal bailouts and low interest rates.

(Read consumer complaints about securities and investment companies).

"Cash bonuses are down, but that's not an indicator of a weakness on Wall Street," DiNapoli said. "Wall Street is changing its compensation practices in response to regulatory reforms adopted in the aftermath of the greatest financial meltdown since the Great Depression. Past practices rewarded short-term gains at the expense of long-term profitability."

"The industry's greater emphasis on deferred compensation will hold down tax collections this year, but the state and the city will benefit in future years when taxes are paid on this deferred compensation. A more stable and less volatile securities industry is in the best interests of Wall Street, the City and the State."

Others didn't see it quite that way.

“The Wall Street titans who crashed the economy are largely responsible for today’s state budget problems,” said Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch Division.

“Today, the New York Comptroller’s office released numbers showing that these same executives rewarded themselves with obscene compensation in 2010, even as corporate-backed governors demand a major sacrifice from already modestly compensated public employees.”

Naylor said that while Wall Street bonuses declined 8 percent, overall compensation increase 6 percent.

“Contrasting with this compensation, Republican governors are seeking pay cuts from school teachers, highway maintenance crews and other public servants vital to the real American economy. The disparity is painful.”

DiNapoli's office annually releases an estimate of bonuses paid to securities industry employees who work in New York City. Bonuses paid by New York City-based firms to their employees located outside of the City (whether in domestic or international locations) are not included. DiNapoli's estimate is based on personal income tax trends and reflects cash bonuses and deferred compensation for which taxes have been prepaid. The estimate does not include stock options that have not been realized or other forms of deferred compensation.

Last year, bonus payments extended into March and even April, well beyond the traditional bonus season. As a result, the Comptroller has revised his estimate of the growth in the 2009 bonus pool from 17 percent to 27 percent.

DiNapoli also reported that:

• The profits of the broker/dealer operations of New York Stock Exchange member firms, the traditional measure of Wall Street profitability, totaled $27.6 billion in 2010, making 2010 the second most profitable year on record after the $61.4 billion record set in 2009, which was fueled by federal bailouts, low interest rates, and proprietary trading.

• Strong Wall Street profits combined with a profitable banking sector helped drive New York City's tax collections higher in City fiscal year 2011.

• Before the start of the financial crisis, business and personal income tax collections from Wall Street related activities accounted for up to 20 percent of New York State tax revenues, but that contribution has declined to about 13 percent in the current year. Wall Street's contribution to the City's budget has declined from 13 percent of City tax revenues to 7 percent.

• The member firms of the New York Stock Exchange devoted nearly 47 percent of their net revenue to compensation (e.g., salary and bonuses) in 2010, which is in line with historical shares before the financial crisis but much higher than the 2009 share.

• Although the size of the cash bonus pool has declined, overall compensation has grown. An examination of the financial statements for selected securities firms indicates that overall compensation was higher by 6 percent in 2010.

• Wages paid to workers in the securities industry in New York City during the first half of 2010 were 21.9 percent higher compared with the prior year, reflecting cash bonuses paid during the first quarter of 2010 for 2009 activities, higher base salaries, and deferred compensation that was realized during that period.

• The securities industry in New York City lost 30,700 jobs during the recession, a decline of 16 percent, or 3.5 times the rate of total job loss in New York City.

• The securities industry in New York City added 3,600 jobs between August 2010 and December 2010, and an examination of trends in employment covered by New York State unemployment insurance suggest job gains may have been even stronger during this period. The New York State Department of Labor is scheduled to release revised employment data in March 2011.

• The average cash bonus declined by 9 percent to $128,530 in 2010. The average bonus declined slightly faster than the total bonus pool because the pool was shared among slightly more workers than in 2009.

Now that big banks have become the symbols of corporate greed, credit unions are being lionized as the answer to consumers' dreams of an efficient, friendly and economical banking solution.

But while credit unions do indeed offer lots of services at little or no cost, they are not without their problems. Small is often regarded as beautiful and perhaps it is, but small institutions are not immune to greed, dishonesty and plain old incompetence, as a review of recent actions by the National Credit Union Administration shows.

Earlier this week, the NCUA – the FDIC of the credit union business – liquidated the New York City-based OTB Federal Credit Union. Perhaps not surprising for a credit union whose members are associated with Off-Track Betting parlors, the OTB FCU had a delinquent loan ratio of 7.02% and declining investment income.

Earlier this month, the Greensburg Community Federal Credit Union of Greensburg, Pa., was placed under conservatorship. It had assets of $2.2 million and 983 members.

Credit union members enjoy the same protections as bank customers. Credit union accounts are insured up to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund managed by NCUA and backed by the full faith and credit of the U.S. Government.

Hard times

Small and neighborly though they may be, many credit unions are having a difficult time making ends meet simply because their members are going through difficult times. And unfortunately, employees of credit unions can also fall prey to financial pressures and simple greed, often leading to embezzlement and other forms of fraud.

Bernie Metz, 57, former CEO of Center Valley Federal Credit Union, will have to repay NCUA over $4.65 million and pay $200,000 to a local organization in Ohio as part of her sentence for embezzlement.

U.S. Attorney William Ihlenfeld announced yesterday that Metz received 108 months imprisonment in addition to the financial parts of the sentence. She also had to surrender properties she purchased during her decade-long embezzlement, along with several vehicles and over $14,000.

As a result of the embezzlement, NCUA closed and liquidated the CU in 2009.

Ihnlenfeld said many former members of the CU are still suffering the effects of the embezzlement and closure, Credit Union Times reported..

“While a number of former credit union members chose to meet with me and my staff in person to discuss their issues, I know that there are many more similarly situated people who still are having problems with their credit union accounts, whether they are upside-down on their automobile loans or they feel they are being unfairly harassed by collection calls,” said Ihlenfeld. “My message to those people is to make sure that they fully explore all of their rights under state and federal law, and to make sure that their legal rights are not being violated in any way.”

14 years

Yesterday, the former CEO of CU National Mortgage, Michael McGrath, was sentenced to 14 years in prison for his part in a scheme which saw some credit union mortgages fraudulently sold on the secondary market, according to the office of the U.S. Attorney for New Jersey.

According to an FBI release, McGrath admitted in court he “conspired with several others” over a five-year period to fraudulently sell credit union loans, using the proceeds to address cash flow problems created by losses on investments in mortgage-backed securities.

At first, McGrath began pilfering funds from credit union mortgages authorized to be sold to Fannie Mae. However, as U.S. Mortgage’s financial condition continued to deteriorate, McGrath admitted to selling hundreds of mortgage loans to Fannie Mae without the knowledge and consent of owning credit unions.

American Suzuki Motor Corp. is recalling 73,426 motorcycles from the model years 2008-1010. 

     Vehicle Make / Model:                Model Year(s):

     SUZUKI / AN400                           2008-2009

     SUZUKI / DL1000                          2008-2009

     SUZUKI / GSF1250                        2008-2009

     SUZUKI / GSX-R600                      2008-2009

     SUZUKI / GSX-R750                      2008-2009

     SUZUKI / GSX1300B                      2008

     SUZUKI / GSX1300R                      2008-2010

     SUZUKI / GSX650F                        2008-2009

     SUZUKI / SFV650                          2009-2010

     SUZUKI / VL800                            2008-2010

     SUZUKI / VLR1800                        2008-2009

     SUZUKI / VZ1500                          2009-2010 

The vehicles are equipped with regulator/rectifier assemblies, Suzuki part numbers 32800-41f11, 32800-15h10, 32800-05h11, 32800-41g10, 32800-15h00, 32800-18h00, 32800-05g10, 32800-10g10, 32800-05h20, or 32800-06g01. 

Some regulator/rectifier assemblies were produced with insufficient adhesion between the power module (circuit board) and the rectifier case that contains a heat sink to dissipate heat. Due to insufficient adhesion, heat generated on the power module circuit board can cause the circuit board to deform, and lift of the case. 

This condition causes excessive heat on the circuit board and uncontrolled electric current output, which can result in insufficient charging current being provided to the motorcycle battery. This can cause discharge of the battery and can lead to engine stalling and/or a no-start condition. Engine stalling while riding can increase the risk of a crash. 

Suzuki will notify owners and Suzuki distributors will replace the regulator/rectifier with an improved part free of charge. The safety recall is expected to begin on or about March 2, 2011. Owners may contact Suzuki at 1-714-996-7040. 

Owners may also contact the National Highway Traffic Safety Administration's vehicle safety hotline at 1-888-327-4236 (TTY 1-800-424-9153), or go online.

U.S. Marshals have seized about $200,000 worth of food products from Bedford Cheese Store Inc. in Shelbyville, Tenn., after U.S. Food and Drug Administration (FDA) investigators found evidence of rodents throughout the company’s facility. 

The inspection found rodent feces, rodent hair, rodent nesting material and building defects that could allow rodents and other pests to enter food storage areas and other areas that apparently contributed to the infestation. 

Seizure of products 

Products seized at Bedford Cheese included cheese, frozen foods, pastas, salad dressings, prepared salads, soups, and various bulk ingredients. The products are adulterated under the Federal Food, Drug and Cosmetic Act because they have been held under unsanitary conditions and may have become contaminated with filth. 

“The violations at Bedford Cheese are widespread and significant,” said Dara A. Corrigan, the FDA’s associate commissioner for regulatory affairs. “This enforcement action was taken because the company failed to provide adequate safeguards to ensure that products they produce or hold for sale remain free of contamination.” 

In a written response to the FDA following the inspection, Bedford Cheese committed to cleaning up its facility. However, the company failed to complete all corrective actions, including the development and implementation of a pest control plan to rid the facility of the active rodent infestation.

Many common generic drugs beat brand names when it comes to safety, efficacy, and cost.  Yet a new report in the March issue of Consumer Reports (CR) finds many consumers aren’t taking advantage of the discount drug programs offering these drugs at prices as low as $4 a month. 

“Retailers like Kmart, Target, Walgreens and Walmart have been steadily expanding their discount programs, offering $4 a month prescriptions for drugs that our evidence based program deems ‘best buys,’ said Lisa Gill, editor, Consumer Reports Best Buy Drugs (BBD).  “We suspect that consumers aren’t taking full advantage of these programs because of the constant din of drug advertising which is steering consumers toward overpriced brand name drugs.” 

CR BBD identifies “best buys” based on a review of the medical evidence in partnership with the Drug Effectiveness Review Project (DERP), based at Oregon Health & Science University. For each class of drugs to treat a given condition, Consumer Reports BBD uses an analysis of hundreds of studies -- and sometimes thousands -- by DERP to derive its “best buy” designations.   

Hard sell

Drugmakers shell out billions of dollars each year to target consumers with their ads. In 2009, they spent $4.3 billion to reach consumers and $6.6 billion on promotions aimed at doctors, according to IMS Health, which tracks drug sales and marketing.  

Drug ads aimed at persuading consumers to ask for a drug by name are working: In a recent poll by Consumer Reports Health, one in five people said they’d asked for a drug they’d seen on TV and most (59 percent) of them said their doctor agreed to write the prescription. 

Best buys

The Best Buy Drugs report explains that generic drug makers must prove that their product contains the identical active ingredients as their brand name counterpart and that the drug is “bioequivalent,” meaning that as much active ingredient enters and leaves the bloodstream at the same speed.  

The U.S. Food and Drug Administration (FDA) regulates generics just as it does brand-name drugs and monitors them once they’re on the market.  To date, the FDA has found no difference in the rate of adverse reactions between generic and brand-name drugs. 

“Generics look different from brands because of trademark issues but they’re equivalent in efficacy and consumers can save up to 80 percent off the retail price,” said John Santa, M.D., M.P.H., director, Consumer Reports Health Ratings Center.

Brand names vs. generics: 

• High Cholesterol.  Not all cholesterol-lowering drugs are the same. Inexpensive generics are the best option unless an individual has had a heart attack or has another heart problem.   Consumer Reports BBD identifies lovastatin (generic) as a “best buy” at $4 a month versus Lipitor at $112 a month.
• Pain.  For treating moderate pain such as muscle aches or headaches, the best bet may already be in your medicine cabinet. BBD recommends ibuprofen (generic) for $4 a month versus riskier Celebrex at $139 a month.
• Depression.  For individuals who need an antidepressant, CR BBD recommends five inexpensive generics with which to start treatment.  Compare the recommended fluoxetine (generic) at $4 a month versus heavily advertised Cymbalta for an estimated $181 a month.  BBD notes that up to 40 percent of people will find no relief with the first antidepressant they try and may need to try a second, different medication or even a third before they find a drug that works for them.

Tips for purchasing $4 generics: 

• Consumers can purchase a 30-day supply for $4 at Target or Walmart without paying a fee.  It’s worth considering a 90-day supply for even greater savings per dose.
• The following programs require a fee: CVS ($15/year), Kmart ($10/year for one of their programs; another is free), and Walgreens ($20/year for individuals and $35 for the family).  The Costco program is free to Costco members and membership costs $50/year. 
• Ask about restrictions. Some programs are offered only to people without insurance or are not for medications that are covered by insurance.  And some are not available in certain states or their prices might be higher.
• Check with your independent pharmacy.  Some will match those deals when possible.
• Review the discount lists frequently for updates and new additions.  Lipitor and Plavix, two major heart drugs, are likely to become available as a generic over the next 36 months.

For some Americans, tax season is a season of dread. Instead of looking forward to receiving a refund from the Internal Revenue Service (IRS), these taxpayers owe the government money and are wondering how they're going to pay it.

The IRS says it wants to lend a hand to these people, and has outlined a series of new steps to help people get a fresh start with their tax liabilities. The goal is to help individuals and small businesses meet their tax obligations without adding unnecessary burden to taxpayers.

Specifically, the IRS is announcing new policies and programs to help taxpayers pay back taxes and avoid tax liens.

"We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start," IRS Commissioner Doug Shulman said. "These steps are good for people facing tough times, and they reflect a responsible approach for the tax system."

The announcement  centers on the IRS making significant changes to its lien filing practices that will lessen the negative impact on taxpayers. The changes include:

• Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
• Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
• Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
• Creating easier access to Installment Agreements for more struggling small businesses.
• Expanding a streamlined Offer in Compromise program to cover more taxpayers.

Win-win

"These steps are in the best interest of both taxpayers and the tax system," Shulman said. "People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens."

In 2008, the IRS announced lien relief for people trying to refinance or sell a home. In 2009, the agency added new flexibility for taxpayers facing payment or collection problems. And last year, it held about 1,000 special open houses to help small businesses and individuals resolve tax issues with the Agency.

This latest announcement comes after a review of collection operations which Shulman launched last year, as well as input from the Internal Revenue Service Advisory Council and the National Taxpayer Advocate.

Tax lien thresholds

The IRS will significantly increase the dollar thresholds when liens are generally filed. The new dollar amount is in keeping with inflationary changes since the number was last revised. Currently, liens are automatically filed at certain dollar levels for people with past-due balances.

The IRS plans to review the results and impact of the lien threshold change in about a year.

A federal tax lien gives the IRS a legal claim to a taxpayer's property for the amount of an unpaid tax debt. Filing a Notice of Federal Tax Lien is necessary to establish priority rights against certain other creditors. Usually the government is not the only creditor to whom the taxpayer owes money.

A lien informs the public that the U.S. government has a claim against all property, and any rights to property, of the taxpayer. This includes property owned at the time the notice of lien is filed and any acquired thereafter. A lien can affect a taxpayer's credit rating, so it is critical to arrange the payment of taxes as quickly as possible.

"Raising the lien threshold keeps pace with inflation and makes sense for the tax system," Shulman said. "These changes mean tens of thousands of people won't be burdened by liens, and this step will take place without significantly increasing the financial risk to the government."

Tax lien withdrawals

The IRS will also modify procedures that will make it easier for taxpayers to obtain lien withdrawals.

Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it. The IRS has determined that this approach is in the best interest of the government.

In order to speed the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the liens.

Direct debit installment agreements and liens

The IRS is making other fundamental changes to liens in cases where taxpayers enter into a Direct Debit Installment Agreement (DDIA). For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals under several scenarios:

• Lien withdrawals for taxpayers entering into a Direct Debit Installment Agreement.
• The IRS will withdraw a lien if a taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement.
• The IRS will also withdraw liens on existing Direct Debit Installment greements upon taxpayer request.
• Liens will be withdrawn after a probationary period demonstrating that direct debit payments will be honored.

In addition, this lowers user fees and saves the government money from mailing monthly payment notices. Taxpayers can use the Online Payment Agreement application on IRS.gov to set-up with Direct Debit Installment Agreements.

"We are trying to minimize burden on taxpayers while collecting the proper amount of tax," Shulman said. "We believe taking away taxpayer burden makes sense when a taxpayer has taken the proactive step of entering a direct debit agreement."

Installment agreements and small businesses

The IRS will also make streamlined Installment Agreements available to more small businesses. The payment program will raise the dollar limit to allow additional small businesses to participate.

Small businesses with $25,000 or less in unpaid tax can participate. Currently, only small businesses with under $10,000 in liabilities can participate. Small businesses will have 24 months to pay.

The streamlined Installment Agreements will be available for small businesses that file either as an individual or as a business. Small businesses with an unpaid assessment balance greater than $25,000 would qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less.

Small businesses will need to enroll in a Direct Debit Installment Agreement to participate.

"Small businesses are an important part of the nation's economy, and the IRS should help them when we can," Shulman said. "By expanding payment options, we can help small businesses pay their tax bill while freeing up cash flow to keep funding their operations."

Offers in compromise

The IRS said it is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers.

This streamlined OIC is being expanded to allow taxpayers with annual incomes up to $100,000 to participate. In addition, participants must have tax liability of less than $50,000, doubling the current limit of $25,000 or less.

OICs are subject to acceptance based on legal requirements. An offer-in-compromise is an agreement between a taxpayer and the IRS that settles the taxpayer's tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer's income and assets to make a determination regarding the taxpayer's ability to pay.

New York State Acting Agriculture Commissioner Darrel J. Aubertine is alerting consumers to undeclared peanuts in Dry Fruit “Kachori”, packaged and distributed by Maya Overseas Food Inc., located in Maspeth, New York.  

People who have severe sensitivity to peanuts may run the risk of serious or life-threatening reactions if they consume this product. 

The recalled Dry Fruit “Kachori” are packaged in an 8.75-ounce, cardboard box.  There is no apparent production code on the package. 

Product distribution includes 13 states (NY, FL, NJ, CT, MA, VA, NH, NC, VT, DE, MD, GA, PA) and Puerto Rico. 

Routine sampling by New York State Department of Agriculture and Markets’ food inspectors and subsequent analysis of the product by the New York State Food Laboratory revealed the product contained peanut allergens, which were not declared on the label. 

No illnesses have been reported to date to the department in connection with this product.  

Consumers who have purchased Dry Fruit “Kachori” may return to place of purchase or discard the product.   Questions about the recalled product should be directed to the distributor at (718) 894-5145.

Women who take commonly prescribed drugs for osteoporosis such as Fosamax, Actonel or Didrocal (known as bisphosphonates) for five years or more lower their risk for hip fracture, but they may be at higher risk of certain kinds of fractures of their thigh bone.

A new study by researchers at St. Michael's Hospital and the Institute for Clinical Evaluative Sciences, published today in the Journal of the American Medical Association (JAMA) found, however, women at high risk for hip and other osteoporosis-related fractures should not stop taking bisphosphonates since the risk for thigh bone fracture caused by drugs is low.

Typical hip fractures caused by osteoporosis occur in the upper part of the femur close to the hip joint and are an important cause of disability, need for long-term care and even death in the elderly.

The risk of these kinds of fractures is reduced by bisphosphonate treatment, which was confirmed by this study.

Femur at risk

But the study also found that less common fractures lower down from the hip and closer to the middle of the femur -- sometimes called "atypical" or "unusual" fractures -- occurred more than 2.5 times as often in women who had taken bisphosphonates for more than five years than short-term users of the drug.

Study lead author, Laura Park-Wyllie, a pharmaceutical safety and outcomes researcher at St. Michael's, said prolonged use of bisphosphonates is associated with rare and unusual fractures of the femur but the proven benefits of the drugs for the much more common fractures due to osteoporosis usually outweigh the harm, especially in the initial years of treatment for osteoporosis.

“Women with osteoporosis, at high risk for osteoporotic fractures, should not stop taking bisphosphonate therapy because of the small risk of these thigh fractures," said Park-Wyllie.

She said the study was prompted by an increasing number of reports of thigh bone fractures among older women who have taken bisphosphonates for five years or more and by conflicting findings from small, observational studies.

Risk not significant

The St. Michael's-ICES study is the largest assessment of the issue to date. The researchers identified 205,466 women over age 68 who had been prescribed bisphosphonates between 2002 and 2008.

Of those, 716 women (0.35 per cent) had a fracture of the femur. These women were compared to other women of similar ages who had also been prescribed the drugs but who did not have femur fractures.

"Our study estimated that the risk of fractures to the femur was 0.13 per cent for women entering their sixth year on the drug -- or just over one in 1,000," Park-Wyllie said. "Use of bisphosphonates for less than five years was not associated with a significant risk of thigh fractures."

About 50 percent of women over 50 will suffer an osteoporosis-related fracture. The most common involve the wrist and the spine, but hip fractures can have some of the most severe consequences, with one in five of those women expected to die within 12 months of injury.

Svelte 30 Nutritional Consultants has been informed by the Food and Drug Administration (FDA) that a sample of Svelte 30 orange & gray capsule was collected and tested by FDA in January 2011. The capsules tested positive for Sibutramine, an FDA-approved drug used as an appetite suppressant for weight loss. The FDA has not approved Svelte 30 orange & gray capsules as drugs; therefore the safety and effectiveness of this product is unknown.

FDA advises that these products may pose a threat to consumers because sibutramine is known to substantially increase blood pressure and/or pulse rate in some patients and may present a significant risk for patients with a history of coronary artery disease, congestive heart failure, arrhythmias or stroke.

Svelte 30 orange & gray capsules are marketed as a Natural Herb for Weight Loss. Svelte 30 Herb Supplement is packaged in plastic bottles containing 30 capsules per bottle and bears UPC #’s from 04-3000 to 04-5999. Were MFD: 10/22/2010 with EXP: 10/21/2012. This lot would have been available for sale on January 03, 2011.

The lots from 04-3000 to 04-5999 is the only one subject to recall and it was not distributed through www.svelte.com.

The company discontinued total distribution. It sincerely regrets any inconvenience to our customers.

The product was sold directly to individual customers in our Kissimmee, Florida sales office.

No illnesses or injuries have been reported to the company to date in connection with this product. This recall is being conducted with the knowledge of the FDA.

Svelte 30 Nutritional Consultants is taking this voluntary action because we are committed to the health and safety of our customers and to the quality of our select brand. We are working diligently to make available an appropriate Natural Herbal replacement product manufactured in the USA for all of our affected customers. We are moving forward with new suppliers for our NEW custom formula.

Consumers should not consume Svelte 30 orange & gray capsules Herb Supplement and should return it immediately to the place of purchase for a refund. Consumers with questions should contact Pedro A Lopez at 407-350-5940, Monday - Friday, 10:00 am - 5:00 pm, EDT.

We value our relationship with you and will continue to provide you with the best possible service. Thank you for your continued business and allowing us to be a trusted partner.

Any adverse reactions experienced with the use of this product should be reported to the FDA’s MedWatch Program by phone at 1-800-FDA-1088, by fax at 1-800-FDA-0178, by mail at MedWatch, FDA, 5600 Fishers Lane, Rockville, MD 20852-9787, or on the MedWatch website atwww.fda.gov/Safety/MedWatch/default.htm.

Haddon House of Medford, New Jersey is recalling Asian Gourmet Cheese Rice Crackers (UPC 076606-710889), because it may contain undeclared milk and food coloring additives used to create the cheese powder listed on the label. People who have an allergy or severe sensitivity to milk run the risk of serious or life-threatening allergic reaction if they consume these products.

The Asian Gourmet Cheese Rice Crackers was distributed in the following states and was distributed by Haddon House Food Products to numerous retailers: AL, CT, DE, FL, GA, IL, IN, KY, ME, MD, MA, MI, MS, NH, NJ, NY, NC, OH, PA, RI, SC, TN, VT, VA, Washington, DC, WV, WI.

Specific information on how the product can be identified is as follows. This recall includes all lot numbers. Product is packed in a semi transparent cellophane package red in color with a black and white logo ASIAN Gourmet – Rice Crackers – Cheese. The UPC number of 076606-710889 can be found on the back of the package next to the Nutritional Panel.

As of this date, no illnesses have been reported due to this recall. This recall was initiated when it was discovered the following ingredients had not been included on the products’ ingredient statement: the ingredients of the cheese powder (Cheese Solids, Milk Solids, Salt, Disodium Phosphate, Calcium Chloride, FD & C Yellow 5, FD & C Yellow 6, Silicon Dioxide). The packaging does not declare the milk allergen.

This is a voluntary recall. Anyone possessing this product may return it to their place of purchase for a full refund. Please address any questions or concerns you have pertaining to the recall of Asian Gourmet Cheese Rice Crackers to Steve Spatzier, Haddon House Food Products, Inc., telephone 1-800-257-6174 between the hours of 8 a.m. and 5 p.m. Monday through Friday eastern standard time.

A study of more than 3,000 kids reveals the culprit behind many childhood allergies could be low vitamin D levels.

Researchers from Albert Einstein College of Medicine of Yeshiva University headed the study which looked at blood vitamin D levels collected in 2005-2006 from a nationally representative sample of more than 3,100 children and adolescents and 3,400 adults.

The samples are derived from the National Health and Nutrition Examination Survey (NHANES), a unique program of studies designed to assess the health and nutritional status of adults and children in the United States via interviews, physical examinations and laboratory studies.

One of the blood tests assessed was sensitivity to 17 different allergens by measuring levels of Immunoglobulin E (IgE), a protein made when the immune system responds to allergens.

When the resulting data was analyzed by Einstein researchers, low vitamin D levels were linked to sensitivity to 11 of the 17 allergens tested, including both environmental allergens (e.g., ragweed, oak, dog, cockroach) and food allergens (e.g., peanuts) in children and adolescents.

For example, children who had vitamin D deficiency (defined as less than 15 nanograms of vitamin D per milliliter of blood) were 2.4 times as likely to have a peanut allergy than were children with sufficient levels of vitamin D (more than 30 nanograms of vitamin D per milliliter of blood).

No association between vitamin D levels and allergies was observed in adults.

Michal Melamed, M.D., M.H.S., assistant professor of Medicine and of Epidemiology & Population Health at Einstein and senior author of the study said the research only shows an association between low vitamin D levels and the risk of allergies, it doesn’t prove it.

Nevertheless, she said, children should certainly consume adequate amounts of the vitamin.

"The latest dietary recommendations calling for children to take in 600 IU of vitamin D daily should keep them from becoming vitamin-D deficient," said Melamed.

The study was published in the February 17 online edition of the Journal of Allergy and Clinical Immunology.

Banks have been complaining loudly about new federal caps on debit card processing fees, and now they've picked up an unlikely ally: the Consumer Federation of America (CFA).

After years of complaints by merchants and consumer advocates, the Federal Reserve is proposed to cap so-called “interchange” fees at roughly 12 cents per transaction, a 75 percent drop from its current level.

Merchants have long argued that the fees force them to raise the prices consumers pay for goods and services. The common wisdom has long been that the fees hit poorer consumers hardest and that capping them would help those struggling to make ends meet.

But in a filing with the Federal Reserve the CFA, while saying it “strongly endorses the intent of the statute,” echoes some of the objections being raised by banks.

”[The rule's] implementation could have a very significant impact on consumers who use debit cards or participate in the banking system, as well as the many who do not,” said Travis Plunkett, the CFA's legislative director.

Many banks have said they will offset the loss of debit card fees by adding new fees to checking accounts and other services, meaning that the poorest consumers may no longer be able to afford traditional bank accounts.

Plunkett also expressed concern about the health of smaller banks: “We also urge the Federal Reserve to pay close attention to how this rule would affect the financial viability of small depository institutions, especially credit unions, which often provide safe, lower-cost financial products to millions of Americans.”

Fed Chairman Ben Barnanke and Federal Deposit Insurance Corporation Chairman Sheila Bair have also cautioned that the Fed's proposal could hurt smaller banks and poorer consumers.

Plunkett quoted a CFA member, the Navy Federal Credit Union, as warning that the 7-to-12-cent fee proposed by the Fed would not cover the credit union's actual cost of providing debit cards.

“We recommend that the Federal Reserve consider broadening its pricing standard to include compensation for additional, legitimate incremental expenses. Such expenses could include, for example, network processing fees for each transaction processed, charge-backs involving billing errors, and fraud losses over which the Federal Reserve determines issuers have no ability to prevent,” Plunkett said. “These types of costs are associated with the authorization, clearance and settlement of particular transactions, as required by the statute. A separate adjustment for effective fraud prevention measures, as allowed in the law, is also justifiable. ”

The Fed's final proposals will be unveiled in April and implemented in July. 

A new federal rule that strengthens protections for bank accounts used to collect federal benefits is welcome news for retirees, veterans and disabled persons, according to a lawyer for the National Consumer Law Center.

The “interim final” rule was issued yesterday and will take effect on May 1. It will limit creditors’ ability to freeze and take funds from accounts that contain Social Security, Supplemental Security Income (SSI), VA and other federal benefits. These benefits, which are legally protected from court-issued garnishment orders, are critical to the survival of many ecipients.

“We applaud the work of the Treasury Department and the other agencies to safeguard these essential benefits, and the leadership of Sen. Max Baucus on this issue,” said Margot Saunders, an attorney with the Center. “All too often, elders, veterans, and disability benefit recipients who rely on these benefits for their basic needs have been unable to access them for extended periods because of creditor-imposed garnishment freezes.”

Social Security, Supplemental Security Income (SSI), VA, and similar federal benefits are intended to meet beneficiaries’ daily needs. Federal law makes these funds immune from seizure by creditors.

But in practice, creditors frequently obtain court garnishment orders so that banks then freeze bank accounts containing protected funds. A beneficiary may be unable to access urgently needed funds for weeks or months.

Often, the paperwork and procedures needed to end an illegal freeze prove too daunting for a recipient, so that a bank turns over supposedly “untouchable” funds to a creditor.

The new rule prohibits the practice of denying beneficiaries access to these essential funds in bank accounts. It requires all banks to determine whether an account contains protected funds. If an account contains protected funds, the bank is required to protect two months of benefit payments from garnishment. Protection of more than two months of benefit payments requires additional court filings by the beneficiary.

In announcing the rule, the agencies stated that its framework could be expanded in future years to protect other federal payments such as military retirement.

“There are still many other steps that need to be taken to make bank accounts safe,” Saunders said. “But this new rule will give peace of mind to many elders, veterans, and disability benefit recipients.”