Current Events in May 2011

A class action claims CyberDefender Corp. sells bogus software that claims to clean viruses and speed up computers, but it "cleans" bogus errors and makes computers slow down and crash.

The suit charges that the company's RegistryCleaner ( "RC") and Early Detection Center ( "EDC") fail to live up the company's claims for them.

Far from speeding up computers, ridding them of viruses, pop-ups and spam, the suit claims the products do next to nothing and may even be harmful in some circumstances.

The plaintiffs say they hired an independent computer expert to analyze the CyberDefender products and found that, if anything, the products actually slowed computers down and made them more prone to crashes.

The suit also alleges that the company does not always honor its money-back guarantee and claims that many consumers have been unable to cancel the subscriptions after completing the initial test period.

The suit also charges that the one-year subscriptions are automatically renewed without notice and without the customer's consent.

CyberDefender's marketing practices are also challenged. The suit says the company cites favorable reviews which are in fact written by its marketing partners, inaccurately cites user ratings on consumer sites and categorically claims that its software improves computer speed when actual results depend on a number of factors.

The suit was filed in Cook County Court in Chicago.

Mothers Day is a busy time for florists, and not all of them, it seems, are able to deliver the goods. Carmen, of Cleveland, Ariz., said he ordered flowers through JustFlowers.com for his wife on May 3, asking that they be delivered last Thursday, May 5.

“I was contacted by customer service verifying my order was going to be delivered, and I did not understand why they called until I got a call from my wife saying she received four calls from the florist saying they could not deliver over county lines,” Carmen told ConsumerAffairs.com.

So Carmen called JustFlowers and was told there was a mix-up, the flowers would be delivered after all. Only now, the surprise was no longer a surprise. And Thursday and Friday came and went, with no flowers.

“Today is the Monday after Mothers Day and my order was never delivered, and every attempt to contact customer service goes unanswered,” Carmen said.

Carmen isn't the only consumer with a frustrating Mothers Day experience with an online florist. Holidays can be an overwhelming time for these businesses, that essentially act as “middle men.” At especially busy holidays, you may have much better luck dealing directly with a local florist.

Bag check

Travelers know all to well that airlines can lose your luggage. But what consumers might not expect is a cruise ship to misplace your bag.

“We took a cruise on the Disney Dream,” Cheryl told ConsumerAffairs.com. “We tagged our bags with the disney luggage tags they sent us, gave our bags to the their porter. Disney took my bag onboard and then never couldn't locate it.”

Cheryl thought surely the bag would turn up before long. And it finally did – once she got off the ship!

“The day we disembarked, my bag was unloaded with the rest of the luggage,” she said. “It had been on the ship the entire time and they never found it!”

Cheryl, meanwhile, had spent her entire cruise with no change of clothes or toiletries. Her only compensation was two $50 Disney gift cards.

Not cool

For some reason, today's modern, sophisticated refrigerators seem to cause more problems than the old fashioned models. Stacie, of Marathon, Fla., reports trouble with her GE Monogram side-by-side fridge.

“The freezer will not hold a temperature,” Stacie said. “Set on zero, actual temp 16. Won't make ice. Have spent $700 in service calls, replaced computers and it still won't work.”

Hmmm. Maybe the fact that today's modern refrigerators have onboard computers could be part of the problem. More things to break down.

Payday loans, no

We hate to say it, but George, of Buffalo, N.Y., is a good example of why you should steer clear of payday loans. George obviously didn't realize what he was getting into.

“On March 28 I applied online for a loan for $1,500 from Payday Loans, Yes,” George said. “After being asked what minimum amount I would accept I said $1,000.”

George then faxed his financial information, as instructed and heard nothing. He assumed the loan was denied. Big mistake.

“Today I was paying some bills online when I notice a extra $291.00 in my checking account,” he said. “I went to Payday Loan Yes website and put in my name and found that I owe $450.00. “I am on a fixed income and can't afford $150.00 interest payment on $300.00 for 7 days.”

With that last sentence, George has very succinctly stated the case against payday loans. Unfortunately for George, he figured it out too late.

A variety of bedside handles intended to help elderly or ill patients get into and out of bed, sit up or roll over in bed pose a huge danger: They can trap and strangle or suffocate people, Public Citizen said in a petition to the U.S. Food and Drug Administration (FDA).

The consumer organization is urging the FDA to order Blue Springs, Mo.-based Bed Handles, Inc. to recall all Bedside Assistant bed handles, ban the marketing of these devices.

Public Citizen always wants the FDA to investigate the link between similar bed handles (also known as bed rail devices) made by other companies and the risk of life-threatening injury or death due to entrapment and subsequent strangulation or suffocation.

The bed handles are used in patients’ homes and in nursing homes; they are rarely used in hospital settings.

“Contrary to the manufacturer’s claim that the Bedside Assistant bed handles make any bed a safer bed, data previously provided to the FDA demonstrate that these devices can turn a bed into a death trap for patients who are physically weak or have physical or mental impairments,” said Dr. Michael Carome, deputy director of Public Citizen’s Health Research Group.

On its website, the company claims the Bedside Assistant is safer than regular deb rails because it does not to be raised and lowered. To get out of bed, users swivel sideways and put their legs through the space between the handles, using the handles for support.

Death trap

Because of the way the handles are designed and installed, they can slip out of place and create a gap between the edge of the patient’s mattress and the vertical bars of the device. The patient can slip into this gap, becoming entrapped.

Even a small gap, particularly when such devices are used with soft or worn mattresses, can trap people, who then can die when their tracheas or chest walls are compressed against the horizontal support bars.

Public Citizen’s review of FDA records found that since 1999, four patients have died after being trapped by Bedside Assistant bed handles. In three of these cases, it appears as though the patients were strangled or suffocated.

In a fifth life-threatening incident, the bed rails trapped a hospital patient. Public Citizen believes that the number of people killed or injured by bed handles is higher; these incidents generally aren’t reported because people don’t realize bed handles are medical devices overseen by the FDA.

Similar to cribs

The petition compared the need to recall the bed handles to the Consumer Product Safety Commission’s 11 recalls involving more than 7 million drop-side baby cribs that posed a similar risk of strangling or suffocating infants and toddlers to death. Hundreds of thousands of this variety of bed handles were sold between 1994 and 2009, the petition said.

“Although the patients jeopardized by the bed handles are primarily at the opposite end of the age spectrum than those exposed to dangerous drop-side cribs, it is important that federal agencies responsible for protecting the public health act consistently to protect the health and safety of both the young and old alike,” Carome said.

Francis, of Plainview, N.Y., recently discovered one of the downsides to using a gift card to buy gasoline. She just got an American Express $100 gift card for Mother's Day and immediately purchased $25 worth of gasoline at a Hess station. When she tried to use the card again the following day, she was in for a surprise.

“I was so embarrassed in the store as they told me the card was declined,” Francis told ConsumerAffairs.com. “I will not be able to use this card according to Am Ex for two or three days until they get the clear from the station.”

Even though there was $75 left on the gift card, the gas station placed a freeze on the entire amount. Some bars and restaurants – places where “pre-authorized” debit purchases are accepted – do it too.

The reason is simple. It can take two or three days for the transaction to clear. The gas station wants to make sure there is still money left on the card when the transaction goes through. It's something to keep in mind when you are shopping with a gift card.

Direct contradiction

When you subscribe to any service, the provider has to be able to deliver it to you, or you shouldn't be bound by the agreement, right? Eric of Mount Pleasant, S.C., cancelled his DIRECTV service when he moved to a new apartment and DIRECTV coiuldn't get a direct line of sight to establish service.

“They said they'd let us out of our fees because it was not our fault,” Eric said. “They then hit our checking account for a full months service and billed us for $300 more for early cancellation.”

Eric is trying to work things out with DIRECTV but still hasn't been reimbursed.

Mistaken identity

It's one thing when you know you are booking travel through a travel site like Hotels.com, but often, when you are searching for the name of a particular hotel or location, you can be on a travel site's web page while you think you are on the hotel's site.

“I called and spoke to a person who did not identify himself as a Hotels.com representative, so I proceeded with my reservation thinking I was speaking with someone at the Mariott,” V., of Philadelphia, told ConsumerAffairs.com. “ I booked a room for one night May 7th. After they got my credit card info he mumbled some disclosures and wished me a nice evening. To my understanding he said to call the day before if I wished to cancel my room, no specific time was mentioned. Our plans fell through and we decided to stay home that weekend so I call at 7:20PM on the 6th and was told that I will be charged the full fee!”

V. doesn't really have much of an argument, since she booked the site through Hotel.com and has to abide by their rules.

“I work very hard and long hours, don't have time to fool around online,” V. said. “I trusted people to take care of me on the phone with clarity.”

Sorry, V., but in the Internet age careful attention to detail is a requirement, and sometimes old fashioned trust is misplaced.

No shield against inconvenience

Many people purchase home warranties, or service contracts, thinking it protects them in the event of a major system failure. But getting satisfactory service when something goes wrong isn't always easy.

“We contacted American Home Shield regarding our residence hot water heater that was not working,” said Michael, of Phoenix, Ariz.

AHS sent its contract plumber out the next day and relit the burner on the water heater that Michael says had been working fine for six years. But the pilot would not stay lit, and Michael found the service company less and less responsive.

“I would think that with all the 24-hour plumbing service companies in Phoenix that AHS could have someone available for us,” Michael said.

True, but that's not how these service contracts work. The warranty company strikes the best deal possible with a local contractor, who may be paid less than the normal rate for the service call. At any rate, they are likely to be less enthusiastic about your emergency than a contractor that you hire directly. It's something to keep in mind when someone tries to sell you a service contract.

When you suffer a hit to your ego, it might be a good idea to postpone any shopping trips. A new psychology study suggests people are more likely to use their credit cards when their self-esteem is low.

Why credit cards and not cash? Researchers Niro Sivanathan of the London Business School and Nathan Pettit of Cornell University say actually parting with cash can be psychologically painful

The researchers had people work on an ambiguous computer test, and then told half of them that their "spatial reasoning and logic ability was in the 12th percentile," which is a scientific-sounding way of telling them they're not very smart.

They told the other half that they were in the 88th percentile, a perfectly fine performance.

When asked how they might pay for "a consumer product that you have been considering purchasing," people who'd had their ego threatened were substantially more likely to say they were planning on paying on credit.

In a follow-up study, Sivanathan and Pettit asked 150 college students to think about buying a pair of jeans. Half were told to consider a pair of exclusive, high status designer jeans, while the rest were told to think about normal, everyday jeans. The students then went through the same computer test, and were told they had done poorly or well.

The self-esteem threat made people willing to pay almost 30 percent more for the luxury jeans, and were more than 60 percent more likely to intend to purchase the jeans with a credit card.

Does threat make any purchase look good, or are luxury items particularly good at repairing self-esteem? The students who thought about everyday jeans did not increase how much they would pay for regular jeans when threatened, and the threat did not change their willingness to use credit over cash.

Luxury items are especially effective at reassuring us of our value, the researchers say.

The lesson for consumers is, when you're feeling blue, stay away from the mall.

Dermatologists consider tanning salons a public health hazard, saying they pose a significant risk of skin cancer. Despite that, a survey suggests many of those most at risk are unaware of these concerns.

The survey by the American Academy of Dermatology (AADA) found that 43 percent of indoor tanners reported that they have never been warned about the dangers of tanning beds by tanning salon employees. When asked if they were aware of any warning labels on tanning beds, 30 percent of indoor tanners said no.

By age group, younger tanning bed users (age 14-17) were more likely to be unaware of any warning labels on tanning beds than older tanners (age 18-22) – 42 percent vs. 25 percent, respectively.

Significant health risk

“Indoor tanning poses a significant health risk, especially for Caucasians because of their fair skin. Studies have found that UV radiation from indoor tanning beds increases a person’s risk of developing melanoma by 75 percent,” said dermatologist Ronald L. Moy, MD, FAAD, president of the Academy. “Contributing to this problem is the fact that tanning bed facilities currently are not required to verbally warn patrons of the known health risks of ultraviolet (UV) radiation and, in some cases, they may be misleading the public by falsely promoting artificial UV light as safer than natural sunlight.”

AADA said it supports the Tanning Bed Cancer Control Act (TBCCA), which calls on the FDA to examine the classification of indoor tanning beds and implement enhanced labeling requirements. The measure was introduced in the last session of Congress but died in committee.

The Academy’s survey

Despite the fact that the U.S. Department of Health and Human Services (HHS) and the World Health Organization’s International Agency for Research on Cancer have classified UV radiation from tanning devices as cancerous and in the same category as cigarettes, a number of younger tanning bed users still think tanning beds are safer than the sun, according to the survey.

Specifically, younger tanning bed users age 14-17 are more than twice as likely to think tanning beds are safer than the sun than older tanners age 18-22 and more than three times as likely to think that tanning beds do not cause skin cancer.

“The FDA currently ranks tanning beds as a Class I medical device, which provides a minimal level of regulation and oversight similar to bandages, tongue depressors, gauze and crutches,” Moy said. “That is why it’s important that the FDA change the classification of indoor tanning devices to reflect the significant health risks that they pose, often unknowingly, to tanning salon patrons.”

The Tanning Bed Cancer Control Act (TBCCA) was re-introduced this week by Representatives Carolyn Maloney (D-N.Y.) and Charlie Dent (R-Pa.).  

Congress will be considering a bipartisan “Do Not Track” bill that would prohibit companies from tracking children on the Internet without parental permission. Itwould update landmark Children’s Online Privacy Protection Act, provide new protections for teens in mobile environment

The measure – sponsored by Reps. Joe Barton (R-Tex.) and Ed Markey (D-Mass.) -- would also restrict online marketing to minors and require an “Eraser Button” that would let parents eliminate children's personal information that is already online.

“The Internet presents a wide array of opportunities to communicate and access entertainment that were unimaginable only a few years ago,” Markey said. “But kids growing up in this online environment also need protection from the dangers that can lurk in cyberspace. Unfortunately, ‘Where the Wild Things Are’ can apply to the 21st century Internet and the beloved children's book.”

The bill, which is still in draft form, would require companies to clearly explain what kinds of information it was collecting on children, how that information is used and who else has access to it.

"We have reached a troubling point in the state of business when companies that conduct business online are so eager to make a buck, they resort to targeting our children," said Barton. "I strongly believe that information should not be collected on children and used for commercial purposes."

The “Do Not Track Kids Act of 2011” strengthens privacy protections for children and teens by:

• Requiring online companies to explain the types of personal information collected, how that information is used and disclosed, and the policies for collection of personal information;

• Requiring online companies to obtain parental consent for collection of children’s personal information;

• Prohibiting online companies from using personal information of children and teens for targeted marketing purposes;

• Establishing a “Digital Marketing Bill of Rights for Teens” that limits the collection of personal information of teens, including geolocation information of children and teens;

• Creating an “Eraser Button” for parents and children by requiring companies to permit users to eliminate publicly available personal information content when technologically feasible.

You don't normally think of Mother's Day as a precarious time, but Ohio Attorney General Mike DeWine says that's no reason to let your guard day.

"It's very important to take time to honor the mothers in our lives," Attorney General DeWine said. "Scam artists realize that this a busy time, and they may try to lure consumers with online scams related to Mother's Day. It's important for consumers not to let their guard down."

Consumers who shop online for Mother's Day gifts or flowers should beware of scams including: 

• Phishing scams – Cyber-crooks may send e-mails claiming to be from a flower company and saying the flowers you ordered will not be delivered unless you log in and re-enter your credit card information. If you receive an e-mail that makes these claims, contact your florist directly to see if there really is a problem.  

• Fake eCard scams – Scam artists could send fake eCards directing you to a website that looks similar to Hallmark or American Greetings. The fake site prompts users to download new software, which actually installs a virus on your computer.  To protect yourself, beware of spelling errors, or generic e-cards that do not include the sender's name in the subject line.

DeWine offered consumers the following tips to protect themselves:

• Stick to a reputable online retailer. Do your research and check the company with the Ohio Attorney General's Office and Better Business Bureau to see if other consumers have had problems with the business.  

• Verify delivery dates and make sure you get a detailed description of what you order. For flower orders, the description should include the type of flowers, arrangement size, total cost, and message on the card.

• Go to a company's website directly to order flowers or gifts; do not click on links in e-mails or social websites.  

• Make sure you have up-to-date security software installed on your computer.

• If a website asks for your Social Security number at check-out, beware: it is probably "phishing" for your private information.

• Ensure that the website is secure. When entering any type of credit card or payment information, you should see a "lock" icon on the bottom right of your screen (location varies among browsers). You also should look for the "s" in the web address (https).

An administrator working for the Federal Trade Commission is mailing 248,931 refund checks to consumers taken in by false claims for the Q-Ray bracelet.

More than $11.8 million is being returned to people who purchased the Q-Ray bracelet and filed a claim form. Purchasers will receive an average of about $47. Consumers who receive the checks should cash them by mid-June 2011.

The FTC never requires consumers to pay money or provide information before redress checks can be cashed, so consumers should disregard any calls, emails or letters asking them to submit any kind of payment prior to getting their refund.

The FTC filed its case in May 2003, alleging that QT Inc., Q-Ray Company, and Bio-Metal, Inc., located in Illinois, and their owner, Que Te Park, also known as Andrew Q. Park, made false and misleading advertising claims that the Q-Ray bracelet provided immediate and significant pain relief and deceptively advertised their refund policy, in violation of the FTC Act.

In September 2006, the federal district court in Chicago found in favor of the FTC.

In November 2006, the court required the defendants to turn over a minimum of $22.5 million in net profits and up to $87 million in refunds to consumers who bought the bracelets between January 1, 2000 and June 30, 2003, when the bracelet was advertised on infomercials and Internet Web sites, and at trade shows.

The district court later reduced the minimum disgorgement amount to $15.9 million, which an appellate court later upheld.

Q-Ray consumers with questions should call the redress administrator, Analytics Inc., at 800-269-0056 or visit the FTC’s Q-Ray bracelet webpage.

There are many reasons not to busy an extended car warranty. One of the reasons is, the company that sells you the warranty can go out of business.

“I purchased an extended warranty from Auto Warranty Service  in November 2010,” Michael of West Hills, Calif., told ConsumerAffairs.com. “In April I called the company to see if they had withdrawn the monthly fee of $49.92 All I got was a busy signal for two hours so I went to the website and there was a different telephone number.”

Michael says he eventually learned the company had gone out of business.

“Now I'm out $1400 and have no warranty on my car and have no more money to get one so if I have a breakdown I'm screwed,” Michael said.

Michael wants to know if any other consumers have had a similar experience, or knows the ultimate fate of Auto Warranty Service.

Pain in the neck

More and more aging Baby Boomers are turning to Botox to keep that youthful appearance. While it will help iron out those wrinkles, it can have some side effects. Sherri, of Harrisburg, Pa., says she knows that first hand.

“I received Botox Injections by a Neurologist and the side effects were severe.,” she told ConsumerAffairs.com. “I had experienced muscle spasms in my left shoulder, lazy eye, and severe neck pain.”

Botox side effects are usually noticeable one to two days after the procedure and can last up to six months. The common side effects include nausea, flu syndrome, respiratory infection, forehead and eyelid drooping, and headache.

Kitchen menace

The microwave oven should be a trouble-free kitchen appliance. L, of Richmond, Ind., says her GE Spacemaker gave her four years of great service. But then...

“The other day, I was home alone and heard a loud vibrating noise coming from the kitchen,” she said. “I went to the kitchen to find the microwave had turned on by itself and now had a small fire inside. I unplugged the microwave and threw it outside. If I would not have been home at the time, or this would have happened in the middle of the night- the outcome could have been devastating.”

This is something that GE should probably hear about. Also, the Consumer Product Safety Commission.

Playing hardball

Trilegiant is well known to consumers as the company that, in the past, slipped those unauthorized charges on your credit card. These days, they seem to be more upfront and direct. Karen, of Billings, Mont., says Trilegiant called her on the phone and offered her a $100 gas card if she signed up for a 30-day “trial membership” in their Great Fun promotion.

 "If I cancelled within 30 days, I would not be charged, otherwise it was $29.95 per month,” Karen said. “The gas card never arrived. I called them today and insisted that both their Great Fun and Shopper's Advantage memberships be closed. They agreed without argument.”

That certainly doesn't sound like the Trilegiant we know, but maybe they've changed. But in case they haven't, Karen is prepared.

“If more charges are posted to my card, they'll get a surprise,” she said. “I tape recorded the conversations including today's date and confirmation number. Guess time will tell.”  

There was no Hollywood ending for Hollywood Video and Movie Gallery stores. No sooner had the credits rolled than former customers of the defunct movie-rental chains started getting collection notices for supposed overdue-film fees.

Many consumers claimed they didn't owe the fees at all and others said they weren't given a chance to return their movies because the chains collapsed suddenly, as we reported back in 2010.

Attorneys general from around the country heard the complaints and have reached a settlement with the liquidating trustee for the stores. Among the agreement’s terms is a requirement that negative information be removed from consumers’ credit reports.

“Collection laws require that consumers have a chance to pay or dispute their debts,” said Washington Assistant Attorney General Mary Lobdell, who helped lead the multistate investigation and settlement negotiations. “But starting in October, we received a flurry of complaints from Washington residents who told us they didn’t owe the fees or were never informed of these debts before they were reported to the credit bureaus.”

Complaints to the Washington Attorney General’s Office show that a young woman was turned down for her first credit card because of the negative mark. A man said his credit card limit was slashed from $8,700 to just $600. And yet another consumer blamed the late charge for preventing him from obtaining a mortgage.

The problems started after Hollywood Video and Movie Gallery filed for Chapter 11 bankruptcy in 2010. Hollywood’s approved plan created a liquidating trust to collect an estimated $244 million in outstanding debts reportedly owed by 3.3 million customers. The trust contacted with Credit Control Services, Inc. in Massachusetts, which subcontracted to National Credit Solutions of Oklahoma.

The agreement was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. Under the settlement, the trustee agreed to:

·      Rescind all negative information submitted to any credit agency or bureau related to the accounts of customers in participating states. Additionally, no further credit reports will be submitted.

·      Not collect any fees or interest charges that were added to the principal debt amount.

·      Not bill customers for both a late fee and the full price of items that were supposedly not returned. For accounts that include both a late fee and a charge for a damaged, late, or never-returned product, the collection agency will only pursue the lesser charge.

·      Comply with the Fair Debt Collection Practices Act.

·      Assist the attorneys general in any effort to recover collection fees that were improperly paid by customers.

Attorneys general for the following states and the District of Columbia participated in the settlement: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

It's a bad time to be a sacred cow. With Congress and the White House looking for ways to at least appear to be addressing the nation's deficit, favorable tax treatment of retirement savings and investment income is likely to be at risk.

Last year's deal between President Obama and Congress extended favorable treatment of capital gains and dividends, but only through the end of 2012 – after the fall election that will decide the make-up of the White House and Congress, it just so happens.

What that means is that the real battle won't be fought until 2013, when Democrats are expected to continue their tax-the-rich campaign while Republicans argue that higher-income Americans carry a disproportionate share of the tax burden.

“[T]he real action is likely to come in 2013, and you'll see a macro effort to deal with the reform of the tax code,” said James Delaplane, a partner at Davis and Harman LLP, speaking at the Investment News Retirement Income Summit. “At some point, action is going to be forced onto the policy makers. I think it's just a matter of time before the grand deficit reduction legislation happens.”

“Presuming the economy is more solid and the deficit pressures are starker, then that's a recipe for tax cuts not being extended,” he added.

Retirement savings

And what about retirement savings? With all the talk of Social Security and Medicare being on the ropes, you'd think the tax code would be modified to encourage Americans to save more for retirement.

Don't bet on it.

Delaplane noted that the Bowles-Simpson deficit reduction commission proposed capping tax-deferred savings in defined-contribution plans to the lesser of $20,000 or 20% of income in an attempt to shore up the nation's budget. The commission didn't specifically comment on the treatment of tax-free inside build-up for life insurance and annuities, but it may be limited in some way, he warned.

Delaplane advised his audience of personal financial advisors to put clients on notice that tough times may lie ahead, especially as the nation keeps bumping up against the federal debt ceiling. Each time Congress is called on to raise the ceiling, it increases pressure to cut spending on raise taxes.

“It's going to get down to the last minute, and it won't be what the Treasury will prefer or what the markets want,” he said. “Put on your seatbelts.”

One of the nation's largest rental chains spies on customers by equipping rent-to-own computers with secret software that remotely snaps their photos, takes screen shots, tracks keystrokes, and snoops on private communications, a class action claims in Federal Court.

Aaron's Rent To Own, the lead defendant, has more than 1,500 outlets in the United States and Canada.

In the suit, filed in Pittsburgh Federal Court, Crystal and Brian Byrd of Casper, Wyoming, charge that computers rented by Aaron's are loaded with software called “PC Rental Agent,” manufactured by DesignerWare, LLC.

The software enables Aaron's to spy on its customers, the complaint alleges, in violation of the Electronic Communications Privacy Act and the Computer Fraud Abuse Act.

The suit says that DesignerWare designed and assembled the computers containing the spy software and sold them to Aaron's.

The alleged spying began as early as 2007 and enables Aaron's and its agents to capture screen images, keystrokes and images from computers rented and sold to the firm's customers.

The PC Rental Agent device is soldered onto the computer's motherboard and cannot be detected, accessed or controlled by the computer user, the suit charges, saying it can only be deactivated by a special wand which is not provided to consumers.

In the suit, Crystal Byrd says she rented a Dell Inspiron laptop computer on a rent-to-own agreement from Aaron's in July 2010. She paid off the lease in October 2010.

But, according to the suit, the manager of the Aaron's store in Casper, Christopher Mendoza, mistakenly claimed the Byrds were in default on their lease and demanded the compujter be returned.

Mendoza showed Brian Byrd a photo of Byrd using the computer, the suit says. When Byrd demanded to know how Mendoza had obtained the photo, Mendoza allegedly said he was not supposed to disclose that information.

Byrd contacted local law enforcement agencies and investigators allegedly identified the spyware and learned that it was routinely installed on computers rented by Aaron's.

While investigators were at the Casper Aaron's store, the suit charges, they observed at least one other unauthorized photo of a consumer using an Aaron's machine.

The suit seeks class action status.

Swiss-owned bank UBS has reached a settlement with federal regulators and several states, resolving charges that UBS employees tried to rig the bidding process in the municipal bond derivatives market.

The U.S. Justice Department, Securities and Exchange Commission, the Internal Revenue Service and 25 states brought the action, claiming UBS' actions from 2001 to 2006 corrupted the competitive process and hurt municipalities, as well as taxpayers.

The complaint says several former UBS employees constantly manipulated the bidding process in which local governments invested the revenue raised from the sale of municipal bond offerings.

The bank has agreed to pay $160 million in fines and restitution.

On-going investigation

“This settlement is part of our ongoing effort to return taxpayer money to those whom it was intended to benefit – the state agencies, municipalities, school districts, and not-for-profit entities that purchased the derivatives rather than the providers and brokers who engaged in this illegal scheme,” said Missouri Attorney General Chris Koster. “I also want to thank UBS for doing the right thing by cooperating with our investigation and providing meaningful restitution to those harmed.”

Municipal bond derivatives are contracts that tax-exempt issuers use to reinvest the proceeds of bond offerings until the funds are needed, or to hedge interest rate risk. In 2008, a group of states began an investigation of allegations that certain large financial institutions, including national banks and insurance companies, and certain brokers and swap advisors, engaged in various schemes to rig bids and commit other deceptive, unfair, and fraudulent conduct in the municipal bond derivatives market. That investigation is ongoing.

Holding banks responsbile

“Bid rigging and other fraudulent conduct is illegal, and we will hold banks and brokers responsible for their actions,” said Florida Attorney General Pam Bondi. “I am pleased that we were able to reach a resolution that will repay those entities harmed by the fraudulent activity.”

UBS is the second large financial institution to settle bid-rigging charges in the municipal bond derivatives market. Late last year, Bank of America agreed to a $137 million settlement.

UBS issued a statement saying it was glad to have the matter resolved, noting that the underlying transactions were entered into a business that no longer exists within the company.

In addition to Florida and Missouri, Alabama, California, Colorado, Connecticut, District of Columbia, Idaho, Illinois, Kansas, Maryland, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, Tennessee and Wisconsin also took part in the settlement.

Sony executives were absent today as members of a House committee took turns lambasting the company for the way it handled breaches of its Sony PlayStation Network and Sony Online Entertainment, breaches that exposed personal data of more than 100 million consumers.

In a letter submitted to to the House Subcommittee on Commerce, Manufacturing, and Trade, the company said it is a victim in the scheme, not the perpetaror.

Sony "has been the victim of a very carefully planned, very professional, highly sophisticated criminal cyberattack designed to steal personal and credit card information for illegal purposes," said Sony Computer Entertainment chief Kaz Hirai.

But lawmakers blasted Sony for its slow response to the beaches, which committee chair Mary Bono Mack (R.-Calif.) called “half-hearted, half-baked” and also blasted Epsilon, the email marketing firm that lost control of millions of consumers' names and email addresses last month. Epsilon had also been invited to testify at today's hearing but did not bother to show up.

“I am deeply troubled by these latest data breaches, and the decision by both Epsilon and Sony not to testify today. This is unacceptable,” Bono Mack said. She said Epsilon claims it “did not have time to prepare for our hearing — even though its data breach occurred more than a month ago. Sony, meanwhile, says it’s too busy with its ongoing investigation to appear. Well, what about the millions of American consumers who are still twisting in the wind because of these breaches? They deserve some straight answers, and I am determined to get them.”

In the letter, Hirai concedes that, although Sony first learned of the PlayStation Network breach on April 19, it did not shut down the network until the next day and did not inform users until six days later that their personal information and possibly credit card account numbers had been compromised.

Bono Mack noted that the company first disclosed the data breach on a company blog, “putting the burden on consumers to search for information instead of accepting the burden of notifying them.”

Unpatched

Sony and Epsilon also took heat from academicians and computer scientists who pointed to weak spots in the companies' security.

Dr. Gene Spafford of Purdue said key parts of Sony's PlayStation Network ran on Apache servers that "were unpatched and had no firewall installed." This was reported in a forum known to be frequented by Sony employees, he said, though no changes were made in the months leading up to the attack.

The Federal Trade Commission noted that it has been asking Congress to give it civil penalty authority to go after companies that lose data through carelessness; in the last 10 years, the FTC has brought cases against 34 such companies, though it is currently limited in the penalties it can seek.

“Data security is of critical importance,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “If companies do not protect the personal information they collect and store, that information could fall into the wrong hands, resulting in fraud and other harm, and consumers could lose confidence in the marketplace.”

The FTC is committed to a comprehensive, three-pronged effort to promote data security that includes law enforcement, consumer education, and data collection and analysis, Vladeck said. Since 2001, the agency has brought 34 cases against businesses that allegedly failed to protect consumers’ personal information, including two cases earlier this week involving Ceridian and Lookout Services, Inc.

Bono Mack was not the only lawmaker sharpening her pencil.

Rep. G.K. Butterfield (D.-N.C.), the commerce panel's ranking member, called it "alarming" that more than 100 million customers' personal details were compromised in the hack. Rep. Henry Waxman (D.-Calif.) said "companies have an obligation to inform those individuals whose information was lost or stolen."

A New York City postal worker has been found guilty of participating in a massive tax and mail-theft scheme involving Postal Service letter carriers and co-conspirators in the Dominican Republic. A U.S. District Court jury found Robert A. Warren guilty following a one-week trial.

Prosecutors said Warren and his accomplices fraudulently generated millions of dollars in federal tax refund checks, then stole the checks from the U.S. mail.

According to evidence presented at the trial, co-conspirators operating out of the Dominican Republic electronically filed thousands of fraudulent federal tax returns, seeking tens of millions of dollars in tax refund checks.

The fraudulent returns were filed using Social Security numbers and other identifying information stolen from residents of the Commonwealth of Puerto Rico. Participants in the scheme targeted Social Security numbers assigned to residents of Puerto Rico because they are generally not required to file federal tax returns with the Internal Revenue Service (IRS), so long as their income derives solely from Puerto Rican sources.

Each of the tax returns at issue falsely represented that the taxpayer on the return resided at an address in the Bronx, where the refund check requested in the return would be sent. The checks were then collected by mail carriers assigned to the mail routes where the checks were sent. The mail carriers participating in the scheme were paid a kickback for each check they collected.

The carriers passed the checks on to other co-conspirators, who cashed them at various banks and check-cashing businesses located in the United States and the Dominican Republic.

Warren has been a mail carrier employed by the U.S. Postal Service at Tremont Post Office in the Bronx. He was recruited into the tax scheme in 2007, prosecutors said. From July 2007 until May 2008, Warren collected at least 256 fraudulent refund checks that were sent to his mail route as part of the scheme. He was paid a $100 kickback for each check that he stole. Each check was worth, on average, close to $10,000.

In all, Warren helped steal over $2.5 million worth of fraudulent tax refund checks, according to evidence presented at the trial. He made at least $25,000 in kickbacks from the scheme.

Warren, 46, of the Bronx, New York, is scheduled to be sentenced by Judge Denny Chin on September 13, 2011, at 10 a.m. He faces a maximum term of 20 years in prison.

In this way, the fraudsters minimized the risk that legitimate federal tax returns were already filed by the owners of the Social Security numbers they were using in the scheme.

One of your Facebook friends breathlessly posts on your wall, “Osama Dead – Censored Video Leaked.” You are then invited to click a link to see video footage of the terrorist mastermind being killed.

But hold on. It's just the latest in a series of scam exploiting the news story that has riveted the world since Sunday evening, according to security experts at Sophos Security.

The message reads as follows:

Watch the Osama Shoot down video

Osama Dead - Censored Video Leaked on.fb.me
Osama is dead, watch this exclusive CNN video which was censored by Obama Administration due to level of violence, a must watch. Leaked by Wikileaks.

If you click the link, you won't see the video because, there isn't a video. However, you will be asked to take an online survey. That, of course, is the whole point of the scheme.

The scammer makes money for every survey that's filled out. Promising sensational footage of Osama Bin Laden getting whacked by Navy Seals is just the latest way to get people to click on a link.

“What's most interesting about this scam is that they trick you into cutting-and-pasting a line of JavaScript into your web browser's address bar,” writes Graham Cluley, Sophos' Senior Technology Consultant, in his blog. “Not that you'll realize that you're doing that, of course. As far as you know all you're doing is following a sequence of instructions and keyboard presses before you watch the video.”

Whenever you paste a script into your browser's address bar, you're actually running code written by the scammers without the safety net of protection. Why is that a problem?

Because before long, your computer will be sending out news of the exciting Osama shoot-down video to all your Facebook friends. That's how the thing spreads.

In the days ahead there are likely to be many more scams built about the news of Osama bin Laden's death. Make sure you don't fall for them.

The Internet Crime Complaint Center (IC3) urges computer users to not open unsolicited (spam) e-mails, including clicking links contained within those messages. Even if the sender is familiar, the public should exercise due diligence. Computer owners must ensure they have up-to-date firewall and anti-virus software running on their machines to detect and deflect malicious software.

The Internet Crime Complaint Center (IC3) recommends the public do the following:

• Adjust the privacy settings on social networking sites you frequent to make it more difficult for people you know and do not know to post content to your page. Even a “friend” can unknowingly pass on multimedia that’s actually malicious software.
• Do not agree to download software to view videos. These applications can infect your computer.
• Read e-mails you receive carefully. Fraudulent messages often feature misspellings, poor grammar, and nonstandard English.
• Report e-mails you receive that purport to be from the FBI. Criminals often use the FBI’s name and seal to add legitimacy to their fraudulent schemes. In fact, the FBI does not send unsolicited e-mails to the public. Should you receive unsolicited messages that feature the FBI’s name, seal, or that reference a division or unit within the FBI or an individual employee, report it to the Internet Crime Complaint Center atwww.ic3.gov.

The U.S. Food and Drug Administration (FDA) and the Federal Trade Commission (FTC) are warning companies to stop making unproven claims that their products can treat, cure, and prevent sexually transmitted diseases (STDs), saying the products violate federal law.

Among the products targeted are Medavir, Herpaflor, Viruxo, C-Cure, and Never An Outbreak.

The products, sold online and in retail outlets, have not been evaluated by the FDA for safety and effectiveness. The joint action is the first step in keeping these unproven items from being sold to the public and preventing consumers from being misled. 

The companies that received the warning letters claim that their products treat a range of STDs, including herpes, chlamydia, genital warts, HIV, and AIDS. While some of the companies market these products as dietary supplements, they are all drug products under the Federal Food, Drug, and Cosmetic Act, as they are offered for the treatment of disease and may not be introduced into interstate commerce without an FDA-approved new drug application.

“These products are dangerous because they are targeted to patients with serious conditions, where treatment options proven to be safe and effective are available,” said Deborah M. Autor, director of the Office of Compliance in FDA’s Center for Drug Evaluation and Research. “Consumers who buy these products may not seek the medical attention they need and could spread infections to sexual partners.”

Further, under the Federal Trade Commission Act it is illegal to make such unsubstantiated treatment claims.

“These companies are on notice that advertising health benefits that are not supported by rigorous scientific evidence violates the FTC Act,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “They also should know that health scams that endanger public health will not be tolerated.” 

Consumers should be aware that there are no over-the-counter or online drugs or dietary supplements available to treat or prevent STDs. Appropriate treatment of STDs can only occur under the supervision of a health care professional. There are many FDA-approved medications available for treating these conditions, but they do require a prescription.

“Our Warning Letters give these firms time to voluntarily comply with the law,” said Dara Corrigan, the FDA’s associate commissioner for regulatory affairs. “The FDA will continue to take aggressive enforcement action against firms that market false treatments or cures that may lead to significant public health consequences.”

The Warning Letters inform the companies that they have 15 days to notify the FDA of the steps they have taken to correct the violations cited. Failure to do so may result in legal action, including seizure and injunction, or criminal prosecution.  

A Massachusetts man claims he got hepatitis, jaundice and liver damage from Magna Drol, a "dietary supplement/muscle enhancer" made, sold and distributed by Flex Appeal LP, Bodybuilding.com, and BOSC Enterprises. 

Matthew Jordan, of Wilmington, Mass., says in the suit that he suffered hepatitis, jaundice and liver damage after he purchased Magna Drol from Bodybuilding.com in January 2010.

Bodybuilding.com, which calls itself the “World's #1 Supplement Store,” no longer offers Magna Drol for sale, listing it as “discontinued.”

On the site, which features profiles of its customers, one user – known as “Ditrone” – rates Magna Drol a “10/10” product and says it produced “Great gains in strength and in really lean mass.”

What the site doesn't say is that on November 3, 2009 Bodybuilding.com and the U.S. Food & Drug Administration (FDA) issued an urgent, nationwide recall of BOSC Enterprises Magna Drol because it contains ingredients that the FDA consider to be steroids.

Acute, permanent liver damage is one of the most common effects related to using steroids. According to the Injury Help Network, other potential consequences include male infertility and breast enlargement, elevated cholesterol, mood swings, and an increased risk for a heart attack or stroke.