Current Events in August 2011

A lot of organizations endorsed AT&T's proposal to acquire and merge with rival T-Mobile. Even a group of 10 state attorneys general backed the deal.

But consumers, the people who actually use cell phones and pay the bills, have never been all that enthusiastic. In fact, you might say some have been absolutely hostile to the deal.

When the U.S. Justice Department filed an anti-trust lawsuit to block the merger, you could almost hear some ConsumerAffairs.com readers cheering. Readers like Jack, who describes himself as a company president from Miami, Fla., who depends on his Blackberry on business trips, wrote to ConsumerAffairs.com in July, complaining about billing problems with T-Mobile.

Cartel

“To leave T-Mobile and go to another company, unfortunately there is no alternative with the Blackberry emails overseas - only AT&T,” Jack told ConsumerAffairs.com. “But T-Mobile is going to merge with AT&T soon, it will create a cartel on the Blackberry emails overseas. I hope very much as a citizen of the USA that FCC will not approve the merger between T-Mobile and AT&T.”

Dustin, of Iowa City, Iowa, wrote in March about his regret at leaving T-Mobile for AT&T, unaware that the two companies were about to announce a merger.

“I have to dial a number five or more times regularly to get the call to go through,” Dustin said. “This is ridiculous, with the price of AT&T being one of the highest in the market, I expected better! I should have just grabbed a tablet from T-Mobile so I could Facetime my family while I'm on the road. Overall I am very displeased it is almost like I don't have a phone at all the way it lacks reception.”

'Less competition not the American way'

Other consumers have posted comments on our stories about the proposed merger. Commenting on our story about growing criticism of the deal, one poster named Dave said “Ask the T-Mobile users. We all know what saved AT&T. Apple did! That's how come they can throw all that money around. Less competition is not the American way.”

“This could raise cell phone rates for everyone, not just T-Mobile users,” another poster, Daniel, said. “Less compition means higher prices, its basic economics. Let's band together and stop this, everyone speak out.”

Another poster, Craig, chimed in with “AT&T + T-Mobile = better reception? Oh, that's a good one.”

A ConsumerAffairs.com analysis of about 1.5 million consumer postings on social media sites found consumer sentiment about AT&T roughly evenly divided.  In March, when the proposed merger was announced, consumers made about 10,000 negative comments about AT&T and about 11,000 positive ones.

Perhaps more telling are the sentiments expressed by about 2.3 million consumers about T-Mobile during the same period of time.  During March, about 20,000 consumers expressed positive sentiments about T-Mobile, compared to 7,800 negatives, as shown in the chart below.

Real reason?

In our story quoting Free Press President Craig Aaron saying "We now know the truth: AT&T is willing to pay a $39 billion premium for one reason and one reason only — to kill off the competition," he got a big “amen” from Lisa, a reader in Utah.

“This bottom lines the real reason for the acquisition,” she said.

The Justice Department challenge was not unexpected, but it came a lot earlier in the process than many people expected. In the Wall Street Journal's "Heard On The Street," the business Bible noted that powerful political forces were lining up in favor of the deal. It called the government anti-trust suit a demonstration that “legal issues carried the day.”

Just because the government has challenged the merger in court, that doesn't mean it is dead. AT&T is expected to vigorously counter the suit.

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Sentiment analysis powered by NetBase

The U.S. Justice Department (DOJ) has filed a lawsuit in federal court to stop AT&T from taking over rival T-Mobile. The government said the proposed $39 billion transaction would substantially decrease competition in the U.S. mobile industry.

Should the merger be completed, AT&T would be, by far, the largest U.S. wireless company with Verizon Wireless second. Sprint/Nextel would be a distant third. The suit, filed in U.S. District Court for the District of Columbia, signaled the government's determination to prevent that large of a consolidation in the wireless industry.

“The combination of AT&T and T-Mobile would result in tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services,” said Deputy Attorney General James M. Cole. “Consumers across the country, including those in rural areas and those with lower incomes, benefit from competition among the nation’s wireless carriers, particularly the four remaining national carriers. This lawsuit seeks to ensure that everyone can continue to receive the benefits of that competition.”

Consumer activists had urged DOJ and the Federal Communications Commission (FCC) to intervene, to prevent the sale from taking place. In late July, Sen. Al Franken (D-MN) went on record against the deal, in a filing with regulatory agencies.

'Not in the public interest'

"This transaction is not in the public interest," Franken said in his filing. "If approved, it would result in greatly reduced competition, the potential loss of thousands of jobs, higher consumer prices, and less innovation in technology. I urge the FCC and the DOJ to deny AT&T's application for approval of its acquisition of T-Mobile."

Franken's opposition to the proposed deal was not exactly a secret. He initially raised concerns about this merger during a statement on the Senate floor on May 4. Franken also questioned the impact of the merger on consumers at a Judiciary Committee hearing in May.

If DOJ needed further prodding to take its position, it may have come in early August when AT&T released a number of documents in its filing with the FCC.

Communications Daily, which was first to publish the documents, reported that in the filing, AT&T admitted that expanding its most advanced network to 97 percent of the country would cost only an estimated $3.8 billion. But the filing shows AT&T rejected that option, claiming there wasn’t a “viable business case” to justify the expansion.

Wireless' critical role

In its suit, the government pointed out that mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today. Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections. The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing, DOJ said.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.“Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”  

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction but concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers. 

The U.S. Department of Transportation (DOT) today fined JetBlue Airways $50,000 for violating federal aviation laws  prohibiting deceptive price advertising in air travel.  Emirates was fined $100,000 for improperly limiting  reimbursements for delayed baggage.

“When passengers shop for an airline ticket, they have a right to know the full price they will have to pay,” said U.S. Transportation Secretary Ray LaHood. “We expect airlines to treat their passengers fairly and will take enforcement action when our rules are violated.”

The Department’s Aviation Enforcement Office found that for a period of time in early 2011, JetBlue displayed fare advertisements on several websites that did not provide any information on additional taxes and fees.

Consumers clicking on the advertisements were taken to a page where a list of routes and prices were displayed, along with a statement that taxes and fees would be added to the fare. However, the statement was not a link, and consumers had to scroll to the bottom of the page or click a link next to each of the listed fares to see, listed in fine print, the amount of the additional taxes and fees they would have to pay. 

JetBlue’s website violated DOT rules requiring any advertising that includes a price for air transportation to state the full price to be paid by the consumer, including all carrier-imposed surcharges.

The only exception currently allowed is government-imposed taxes and fees that are assessed on a per-passenger basis, such as passenger facility charges, which may be stated separately from the advertised fare but must be clearly disclosed in the advertisement so that passengers can easily determine the full price they must pay.

Internet fare listings may disclose these separate taxes and fees through a prominent link next to the fare stating that government taxes and fees are extra, and the link must take the viewer directly to information where the type and amount of taxes and fees are displayed.

Under DOT’s recently adopted consumer rule that enhances protections for air travelers, carriers will be required, among other things, to include all government taxes and fees in every advertised fare beginning Jan. 24, 2012.

Emirates

In the Emirates case, the DOT said the Dubai-based airline limited compensation for lost, damaged, and delayed baggage to less than consumers were entitled under an international treaty.

“All air passengers, regardless of whether they are taking domestic or international flights, deserve to be compensated fairly for lost, damaged or delayed baggage,” LaHood said. “We will continue to take enforcement action when necessary to protect airline consumers.”

Under the Montreal Convention, an international agreement that sets liability limits for international air transportation, airlines are liable for damages caused by lost, delayed or damaged baggage up to a limit that is the equivalent of approximately $1,820 in U.S. currency unless the carrier has taken all reasonable measures to prevent the damage or it was impossible to take these measures.

The Convention forbids carriers from setting a lower baggage compensation limit for international flights, and does not allow carriers to refuse to provide compensation for jewelry, electronics or other specific types of items. U.S. aviation statutes require airlines to comply with the Convention.

Based on a consumer complaint received by DOT, the Department’s Office of Aviation Enforcement and Proceedings investigated Emirates’ handling of baggage claims for flights to or from the United States and found numerous violations of the Montreal Convention.

In many cases, Emirates denied reimbursement for expensive items such as lost electronics, jewelry, and cameras. In its written responses to passengers, Emirates stated that its contract of carriage limited its liability for such items and incorrectly claimed that its practice complied with the Convention.

Emirates’ website also stated that the carrier was not liable for valuables damaged while in the carrier’s custody. In addition, the carrier often provided limited or no compensation for costs related to delayed baggage while claiming in responses to passengers that limiting compensation was allowed by the Convention.

Things are looking a little better for the economy than they were a couple of weeks ago, right? True, unless you happen to buy a lot of gasoline.

With sentiment on Wall Street beginning to turn bullish again, energy prices are going up. The national average price of self-serve regular today is $3.617 a gallon, up nearly four cents in the last week, according to AAA's daily Fuel Gauge Survey.

The price of gasoline is down 9.2 percent from its May 5 high of $3.985 a gallon while the price of West Text Crude is down 12 percent from recent highs. Oil prices began dropping a few weeks ago when economic data suggested the U.S. economy was slowing down again. Now that the outlook has improved, somewhat, oil prices are climbing again.

More stimulus?

One reason the outlook has improved is the growing belief that the Federal Reserve will step in with a third round of stimulus. It may be no accident that the acceleration in oil prices began in the fall of 2010, just as the Fed launched its plan to pour liquidity into the economy. Some economists said that drove down the value of the dollar, thus making oil, which is purchased with dollars, more expensive.

From a supply standpoint, there seems to be plenty of oil. But there has emerged two different prices for it. Brent crude – much of which comes from the Middle East – costs about $26 a barrel more than oil from Texas. Unfortunately, the U.S. imports a lot of Brent, making gasoline from the refineries using it cost more.

Powerful rumor

Now, all oil seems to be headed higher again. A rumor sweeping Wall Street this week says Goldman Sachs purchased three million barrels of West Texas crude for February delivery, a very bullish move if true. Though unconfirmed, the rumor has been enough to spark buying in the oil market, pushing prices sharply higher Tuesday.

What all this may mean for the average motorist is an end to falling gasoline prices. We may have already seen the low, at least in this cycle. Even without hard data showing the economy is actually getting stronger, oil prices might continue to rise on traders' expectation of a cheaper dollar.

When HP announced it was getting out of the tablet business earlier this month and slashed the price of its TouchPad, it set off a stampede of consumer demand. For a weekend, the company and it's product enjoyed an Apple-like buzz.

The company and its retailers, however, quickly sold out of the devices, since the 16GB tablet, which normally retailed for $399, went for the fire sale price of $99. In fact, many consumers were upset that they didn't get one after submitting their orders online.

“I could have bought one at $99 from other stores, but I didn't because they sent me a confirm email, making me think I successfully bought one,” Lei, of Terre Haute, Ind., told ConsumerAffairs.com. “I missed this great opportunity because of their mistake.”

Well, maybe she didn't miss it after all. After selling out its entire inventory of TouchPads, HP apparently is ordering more. Mark Budgell, a blogger in HP's public relations department, says the absence of TouchPads is only temporary.

“We will have more available shortly,” Budgell wrote. “Please keep an eye on www.hp.com/go/touchpad-availability. We will have a link up soon where you can subscribe to be notified when these products are back in inventory.”

Will it still be bargain priced?

The TouchPad didn't sell particularly well until HP slashed the price by 75 percent. That raises the question, will HP sell the next batch of TouchPads at the old price or will it continue the fire sale price?

Budgell did not directly address that question, leaving the impression that bargain-hungry consumers will be able to snap up 16GB tablets for $99 and 32GB machines for $149. At those prices, PC Magazine called the TouchPad “possibly one of the best tech deals ever.”

Budgell did say that consumers who purchase TouchPads will continue to receive service and support from HP.

“We are fully committed to providing support and service of customers who purchased webOS devices,” Budgell wrote. “We will honor our product warranties and will continue to provide support via services like the webOS Butler, our free setup support service available to all purchasers of HP webOS products for the first 90 days after purchase.”

He also said that HP TouchPad owners can expect an over-the-air update that will enhance the platform and add functionality and a growing applications catalog.

Senior citizens, unfortunately, are common scam victims and a recent senior scam that has popped up in Arkansas involves Medicare.

Telephone solicitors have been calling Medicare beneficiaries asking for personal information, including bank account information and Social Security numbers. Other callers offer updated or replacement Medicare cards for a fee.

"It's never a good idea to give out personal financial information over the phone to a stranger, no matter how legitimate the reason seems to be," said Arkansas Attorney General Dustin McDaniel. He issued a consumer alert to warn Medicare beneficiaries specifically about the possibility of fraud or potential scams concerning their Social Security Number and bank accounts.

Not associated with Medicare

The scam being reported in Arkansas is likely being repeated in other states.

The card offered in the new Medicare card pitch is, of course, not legitimate. Callers may use the names of fictitious companies such as National Medical Office, Medicare National Office and National Medicare or even state they are with the government. Beware if you hear any of these or similar names.

Also, the scam artists may ask senior citizens for bank information, including bank account numbers, which they then use to electronically withdraw money from a beneficiary's account.

It is against Medicare's rules to call a Medicare beneficiary and request bank account or other personal information, or cash payments. No beneficiary should ever provide that kind of information to someone who calls them, no matter how official the caller sounds.

To prevent this scam, seniors should follow these rules:

• Never give out any personal information in person, over the phone, or on the Internet to people or companies with which you are unfamiliar. 
• If personal information is requested, verify the request for information directly with the company or organization involved by contacting the entity using a telephone number from an independent source. 
• Remember that legitimate federal Medicare organizations never attempt to collect sensitive information via telephone, email or unsolicited mail. This includes bank account information, Social Security numbers, addresses and Medicare numbers. 
• Seniors or family members should call 1-800-MEDICARE to report any of these types of calls or go to www.stopmedicarefraud.gov to learn more about efforts to fight these types of scams. 

We all love to feel we got a great deal. Mike, of Clearwater, Fla., said he found an Adidas tennis racquet at Sports Authority, marked down from $100 to $67. Thinking it was a great deal, he bought it.

“Later I saw that the average price for this racquet is about $65-$68,” Mike said. “I felt I was cheated. I complained on the website and got no response. I wrote to the company president and also got no response. I can only conclude from this lack of response that such misrepresentations are not uncommon. If I ever go back, I will check third parties before making a purchase.”

Sports Authority may have tried to sell the racquet at a premium price and found that it couldn't, so it may have indeed been “on sale.” Mike ended up paying the average price, so he shouldn't feel too bad. However, he is absolutely correct in his observation that he should do research on a product before buying it.

Hard to quit

Consumers often get angry when they find that a service they have subscribed to – perhaps only to receive a gift or discount – has auto-renewed their membership and charged their credit card again.

“Classmates.com posted a charge to my Visa,” Maureen, of Chesterton, Ind., told ConsumerAffairs.com. “The bank set up a conference call between the bank, them and myself. Scott said it was an automatic renewal. I had emailed them months ago to cancel. Scott said he saw the email but not the follow-up. Said they respond to emails with a 'how to cancel.' I never got this email. Of course, I can't prove it. They won't refund my $39.00. Nice to do to a almost 79 year old.”

Consumers need to understand that simply sending an email almost never cancels a subscription. Usually, one must wade through the website to find instructions. Apparently, in the case of Classmates, you must request the instructions to be emailed to you.

No guarantees

Just because you can't get a cell signal at your house doesn't mean T-Mobile, or any other mobile provider, is going to let you out of your contract.

"I had cell service with T-Mobile for about a year and then I could no longer get a signal,” Annissa, of Point Arena, Calif., told ConsumerAffairs.com. “I spent a week with them trying to get them to figure out why and they could not. So finally one of the representatives told me either I keep my account and have no signal for four to six months until they merge with AT&T or turn it off. Well I told him I didn't want to pay for phone service I could not use. The representative told me that all I would have to do is mail in proof of residence and they would wave the fee. I did that and now they are saying that customer relations department denied me and that I would have to pay it because once I signed up with them they don't have to guarantee service.”

It's also another reminder not to take the word of a customer service representative. You have to read the service agreement.

Another scam victim

Bob, of Menomonee Falls, Wisc., was targeted by the fake payday loan scam, and unfortunately, bit on it.

“Someone called me saying I owed a $517 and if I didn't pay I was going to be charged with bouncing checks,” Bob said. “I paid $388.13. I was suppose to pay the rest today or I was going to be 'charged.' I tried to call the number and pay the rest and the number was disconnected. I feel really stupid and $388, is a lot of money for me.”

This scam shows no sign of going away, having spawned a number of copycats. Keep in mind if a “debt collector” starts threatening you with jail, or threatening your job, it's one of these scams.

One of the frequent questions readers pose to ConsumerAffairs.com, usually at the end of a detailed complaint, is “Why hasn't this product been recalled?”

The answer, of course, is that it is up to the U.S. Consumer Product Safety Commission (CPSC) to issue a recall, and the agency must first hear from consumers about the issue, then conduct an investigation.

In cases where the manufacturer discovers the problem, there is a fast-track process for initiating a recall. In fact, manufacturers and importers bear a lot of responsibility in initiating most recalls.

Under the law, companies are required to report product hazards to CPSC. If companies are aware of product hazards but fail to report them, the companies risk serious civil and/or criminal penalties.

Filing a complaint

Consumers can, and should, report their experiences with an unsafe product at the CPSC website. On the main page there is a link for consumers to report an unsafe product. Clicking it will take you to a complaint form where you will be asked to describe the product and your experience with it. You will also be given the option of filing your report online, by mail, or by telephone.

Filing the report will take between five and ten minutes, the agency says. Once filed, your report will be part of any investigation the agency undertakes into the product. Consumers should also report the problem to the manufacturer or importer, to make sure they are aware. If they are informed of a problem and fail to act, they can be held accountable.

Consumer product recalls fall in second quarter

While food recalls increased during the second quarter of the year, consumer product recalls were down, according to a report earlier this month by ExpertRECALL. Laceration risks were the leading cause of product recalls by the CPSC. Recalls of sports and recreational equipment increased for the third straight quarter, accounting for more than 20 percent of all CPSC recalls.

Food recalls are monitored by the Food and Drug Administration (FDA). The leading cause of food recalls in the second quarter was undeclared allergens, accounting for 45 percent of all recalls.

“While we don’t see increased recall activity in every category, we can expect regulatory agencies to continue to beef up their oversight of both manufacturers and retailers, resulting in more recalls for the remainder of the year,” said Mike Rozembajgier, Vice President of Recalls for Stericycle ExpertRECALL. “Manufacturers and distributors need to keep a close eye on their regulatory agencies, as well as industry critics and consumer safety advocates because their persistence has often influenced government oversight, leading to more recalls.”

Stericycle ExpertRECALL is a company that manages consumer product, pharmaceutical, medical device, juvenile product, and food and beverage recalls.

The ExpertRECALL Index shows that children’s and infant products recalled during the second quarter caused 65 reported injuries. FDA enforcement reports documented 97 pharmaceutical recalls during the second quarter of 2011, a five-quarter high for the category.

Northern California is home not only to Google, Apple and other big players in the cell phone business but also to lots of consumer activists who fret about the possible health effects of radio-frequency emissions.

Lobbying by the citizen groups is starting to get results.  

In Burlingame, just across the bridge from San Francisco, the city council has passed a motion to post guidelines on the city’s website to advise consumers how they can minimize their exposure to cell phone radiation. (Not talk so much, maybe?)

Admittedly, posting information on a website is not exactly taking it to the streets but in today's increasingly odd world, it's a victory of sorts.

Burlingame is not only a leader in the fight against inadequate safety warnings on websites.  It has also been blazing new trails in the struggle against noisy lawn implements.  The council has been considering banning or limiting the use of leaf blowers.  A public hearing on that proposal is set for Sept. 6.  

California already leads the world in warning consumers about dangerous chemicals.  Nearly every public place imaginable displays one of the "Proposition 65" warnings, made mandatory by the initiative of the same name.  If nothing else, it has been beneficial for the sign business. 

SF wants posters 

The Consumer Federation of America (CFA) is warning homeowners they may not find it easy to get their insurance companies to pay up for damage caused by Hurricane Irene.

Hurricane Irene could result in up to several hundred thousand claims for wind damage by homeowners but fewer than 100,000 federal flood insurance claims, CFA estimates.

Hurricane Katrina resulted in 1,200,000 wind claims and over 500,000 flood insurance claims. Payments for wind damage from Hurricane Irene will likely exceed $5 billion, while flood claims will not exceed $2 billion, in part because so few people purchase flood insurance in the area hit by Irene, compared to the region struck by Katrina.

In other words, Hurricane Irene is likely to result in wind insurance
losses of about one-sixth of those caused by Hurricane Katrina in 2005, but under 10 percent of the flood claims of Katrina.

"Families will have to dig deeper into their pockets because insurers have been steadily increasing hurricane wind coverage deductibles and imposing other policy limitations," said J. Robert Hunter, Director of Insurance for CFA and former Federal Insurance Administrator and Texas Insurance Commissioner. “This liability shift to consumers may take some by surprise, since disclosures are often buried in renewal paperwork that consumers may not understand or even read,” he said.

“Because so many consumers experienced claims problems in the wake of Hurricane Katrina, we urge homeowners dealing with losses caused by Hurricane Irene to be vigilant with their insurance companies to ensure that that they receive a full and fair settlement,” Hunter said. 

As consumers prepare to contact their insurance companies in the wake of the storm, the Consumer Federation of America offered the following tips.

1.) Report your claim as promptly as possible as insurance companies generally handle them first come, first served.

2.) Once your claim is reported, be sure to get your claim number and write it down. Insurance company claims departments can locate your file easiest by your claim number. 

3.) When the insurance company sends out an adjuster to survey your damage, ask if he/she is an employee of the insurance company or an independent adjuster (I.A.) hired by them. If an independent adjuster, try to secure the name of the actual company adjuster that the I.A. is sending your information to or are they authorized to make claim decisions and payments on behalf of your insurance company.

Keep good records

When you file a claim, you should immediately start a notebook documenting contacts with your insurance company. List the date, time and a brief description of the exchange. If you need to
complain later, this information will be vital.

If an adjuster says he or she will come and does not, write it down. If an adjuster is rude, write it down.

Get out your inventory of possessions or try, at once, to list your possessions. Take pictures of your possessions before the storm and keep them in a safe place. If you later realize you have no pictures when you file a claim, don't forget that your family likely has pictures of rooms in your house (for example, from Christmas or other celebrations) that can be helpful in recreating a list of your belongings.

Obtain a repair estimate from a trusted local contractor to use as a guide in talking with the adjuster. Keep receipts from emergency repairs and any costs you incur in temporary housing. This
may be reimbursable under the "Additional Living Expense" portion of your homeowners' policy.

You may be entitled to money up-front for living expenses, such as hotel costs, if your home becomes uninhabitable. Insurers are usually very good about these initial payments, while the media is focused on the hurricane aftermath. Most claims problems, if they arise, come later, when bigger payments are sought.

Deciding whether to file a claim

You have paid your premium and are entitled to coverage. If you have a legitimate claim, do not hesitate to file it. Insurers treated many people poorly who filed claims for damages caused by Hurricane Katrina.

For example, after Hurricane Katrina, insurers pulled back from offering coverage along the coasts, dumping people into higher-priced, state-run insurance pools. They also cut coverage and raised rates substantially. However, this should not deter you from seeking fair compensation for losses caused by Hurricane Irene.

Indeed, insurers should face greater scrutiny by regulators because of the serious claims problems that occurred after Hurricane Katrina. CFA is calling on state regulators not only to closely monitor insurers to prevent claims abuses but to stop insurers from moving unjustifiably after claims are paid to increase rates and cut back on the coverage they offer.

There is no reason, actuarially, for insurers to raise rates or cut back coverage due to Hurricane Irene, which is a storm well within the projections of insurers’ current rate schedules. Insurers have already raised prices and cut back coverage along the East Coast of
America and no further price or coverage action is called for.

Consumers must also act to protect themselves. To do this, consumers must stand together and agree not to buy auto insurance and other coverage from any insurance company that refuses to
renew policies with consumers who make claims related to Hurricane Irene.

Consumers stood together after Hurricane Andrew, persuading Florida to pass a moratorium on the non-renewal of policies and to look carefully at rate increase applications. Consumers should fight any attempt to use hurricane claims as an excuse not to renew homeowners' policies and should complain to state regulators to assure that insurers do not take such actions.

Claim disputes

If the claim is denied or you feel the offer is too low, demand that the company identify the language in your homeowners' policy that served as the basis for denying your claim or offering so 
little. This approach has a number of benefits:

• The company may be right and you may not know it. Once they pinpoint the appropriate language in the policy, you should be able to make this determination. For example, you may have $400 in damage, but the company could well point out that you have agreed to a
$500 deductible.

• The company may have slipped new limitations into the policy and not adequately informed you. If you feel that you have been misled in this regard, it might be a good idea to consult an attorney. The introduction of percentage deductibles (up to 10 percent of the value of a home) will greatly shift the cost of Hurricane Irene from insurance companies to insurance consumers, as compared to earlier storms. The practice of shifting the cost of previously insured events back to consumers is acceptable, as long as consumers are clearly given the option to select the level of coverage they want with fully informed consent. 

• Another restriction new to many policies is a limit on replacement cost payments, which might come into play in the event that a home is totally destroyed. A typical cap is 20 percent above the face value of the policy. If costs surge because of the spike in demand in
materials or labor from a major storm like Hurricane Irene (or if the state does not monitor price gouging sufficiently) this limit might apply. For example, if a home would cost $200,000 to replace and that amount was the limit on the policy, the insurance company
would pay no more than 20 percent more, or $240,000. If the surge in construction costs due to extreme demand caused the price of replacing the home to jump to $300,000, the homeowner would be short $60,000.

• Once the insurance company tells you the reasons for its action, it cannot produce new reasons for denying payment or making a low offer at a later time. You have locked them in—a major advantage for the consumer.

• If you review the policy and find that, under a reasonable reading, you think you are entitled to the full amount of your claim as you read the language they relied upon, you will likely win if you go to court. Courts consistently rule that if an insurance policy is ambiguous, the
reasonable expectation of the insured party will prevail since the consumer played no part in writing the language of the insurance policy,

How to complain

If you feel that the offer is too low or the claim denial is wrong, the best process for getting your complaint resolved is as follows:

• Complain to more senior staff in the insurance company. Use the records you have kept since the claim process began. The more serious the insurance company sees that you are in documenting how you were treated, the more likely they will make a more reasonable offer.

• Complain to your state insurance department. All states will at least seek a response to your complaint from your company. A few states may actually intervene on your behalf with the insurance company in clear cases of bad claims handling. It is important to dispassionately
present your side of the story, using the notes you have been taking.

• See a lawyer. Now the notes you took are vital. In addition to an award covering your claim, if your treatment was particularly bad, the courts in many states will allow additional compensation when the insurance company acted in “bad faith.” Since insurance companies
take your money in exchange for their promise to make you whole when disaster strikes, they must act in utmost good faith in performing that obligation.

What isn't covered

Homeowners' policies do not cover flood, earthquake, tree removal (except when the tree damages the house) or food spoilage from power failures. Some insurers use an “anti-concurrent causation” clause in their policies that, insurers allege, removes coverage for wind damage if a flood happens at about the same time. CFA believes that these clauses are ambiguous, so if an insurer uses such a clause to deny your claim, read the provision carefully to see if you think it is
ambiguous and, if so, see an attorney right away.

What about flood claims?

The federal government underwrites flood insurance coverage, although insurance companies often service claims. Follow the same procedures as above, except direct complaints to the Federal Emergency Management Agency (FEMA), the government agency responsible for running the federal flood insurance program (1-800-427-4219, TDD# 1-800-427-5593).

The FEMA flood insurance program tips on handling claims are available online.  

Since the National Flood Insurance Program (NFIP) is paid for by taxpayers, and often the same insurance company will handle the claim for both the wind and the flood damage, it is very
important that consumers verify that insurers do not attribute an unjustifiably large portion of the losses they experience to flood damage.

Consumers must be the first line of defense against
insurers shifting costs for wind losses to the NFIP. If you see such potential abuse by insurers, contact your U.S. Representative and Senators so that they can make sure that taxpayers are
protected.

"Not all insurance companies handle claims badly, so go into the claims process with an open mind," said Hunter. "Be vigilant though, or you run the real risk of being shortchanged," he concluded.

Missouri recently enacted a tough, new animal-cruelty law and officials have been busy enforcing it. The state this week brought action against a Richmond, Mo., dog breeder under the terms of the new law.

Missouri Attorney General Chris Koster, in cooperation with the Missouri Department of Agriculture, filed a lawsuit against Jeannine Julian for violations of the Animal Care Facilities Act and the Canine Cruelty Prevention Act.

Koster said Julian owns JJ Kennel, a commercial breeder. Missouri Department of Agriculture inspections allegedly uncovered numerous violations of the law, including that Julian: 

• repeatedly refused to allow Department of Agriculture inspections of her breeding facility;
• failed to provide adequate veterinary care to animals who were in obvious medical distress;
• failed to provide housing that protected the animals from injury;
• failed to ensure that interior surfaces were free of excessive rust and that kennel doors were properly maintained;
• failed to maintain adequate lighting, leaving some dogs in complete darkness;
• failed to prevent excessive accumulation of feces and food waste in the primary housing enclosures and to provide uncontaminated, wholesome food to the dogs;
• failed to have adequate employees to carry out the required level of husbandry practices, resulting in excessive feces throughout the outdoor runs; and
• failed to pay a $100 reinspection fee required in the case of repeat violations of the ACFA.

Seeks injunction

Koster is asking the court to issue injunctions and a temporary restraining order prohibiting Julian from any further violations of the Animal Care Facilities Act or the Canine Cruelty Prevention Act and from conducting any commercial breeding activity until further order of the court; assess a $100 ACFA license reinspection fee; assess a civil penalty of up to $1,000 per violation of the Animal Care Facilities Act; and pay court costs.

The lawsuit marks the third case in which the state has enforced the Canine Cruelty Prevention Act, sometimes called the Missouri Solution, which was approved by the Missouri legislature and signed into law by Governor Jay Nixon on April 27, 2011.

The Act, the result of an agreement between the Missouri Department of Agriculture, commercial dog breeding and farming interests, and Missouri-based animal welfare organizations, strengthens standards for veterinary care and living conditions for dogs in commercial breeding facilities.

The Act also gives the Attorney General’s Office the authority to file criminal charges for “canine cruelty,” the authority to seek civil penalties for offenders, and to seek enhanced penalties for repeat offenders.

When electronic devices constantly fail, it can be maddening. Especially if they are now, and expensive.

“I bought a Kodak 6150 all in one printer in Feb. 2011,” said Jackie, of Adelanto, Calif. “From day one the thing shuts off randomly, then turns back on randomly. Kodak just tells me to upgrade the driver, which doesn't work, or reset it. I found out early on they will not take it back and neither will the store where I bought it, Office Max.”

It does, indeed, sound like a driver issue, but if Jackie has tried that, maybe it's something else. We have found that taking equipment to a small, independently owned computer repair shop in your community – not one operated by a big chain store – often yields good results. The equipment is likely to be worked on by the owner, who might have more skill and experience than at other places.

No easy solution

Richard, of San Antonio, Tex., writes to say that he just discovered Experian has been billing his credit card each month this year.

“This company has been billing me for credit reports,” Richard told ConsumerAffairs.com. “I must have been tricked in to asking for a free credit report but did not read the fine print. I know they have been billing me since January of 2011 at the rate of $15.88 per month. No apparent way to contact this company to cancel or question the billing. I have had American Expresss block this company from any further billings.”

It goes without saying that Richard should have been more careful when asking for anything for free. There's usually a monthly charge involved. Beyond that, his resolution of this problem, unfortunately, isn't going to work.

If he blocks Experian's access to his credit card, they may turn the account over to collections, which will have a negative impact on his credit report. As far as they are concerned, it is a legitimate charge. Richard is going to have to show that it isn't. That's going to take some time and effort on his part.

Costly change in plans

Shelia, of Seeleys Bay, Ontario, wanted to book a five-night stay at a Courtyard by Marriott in Woodbridge, Virginia. She booked it through TravelNow.com, even though she said she wanted to make sure she could cancel the reservation if she needed to. She said she thought calling the site's 800 number would allow her to do that.

“We were offered a rate and we provided our credit card and were told we could cancel up to 24 hours prior to the check in time,” Shelia said. “We received a confirmation e-mail that indicated we couldn't cancel and that our credit card had already been charged. We tried vehemently to have the reservation cancelled and reissued with a cancellation provision. We were quite prepared to pay a higher rate for this option but were informed we would still be charged the $844.00 already charged to our credit card.”

Travelers need to understand that it may not be advisable to book hotel rooms using an online travel service, if you need flexibility in your travel plans. These sites almost never allow for changes because they get rooms at a steep discount and most of the time aren't allowed to make changes. If you need flexibility, always deal directly with the hotel yourself. You might pay a little more, but in some cases, you might not.

Business 101

With unemployment at stubbornly high levels, a lot of people are looking for ways to go into business for themselves. Often it's made to sound easy and inexpensive. Michael, of Collinsville, Ill., paid $200 to set up a website through MyGen Online.

“It is a networking marketing company that sets up a web site for its customers,” Michael told ConsumerAffairs.com. “This web site has four distinct areas; shopping, dating services, medical insurance and finally, travel. I supposedly have over 20,000 total views to my site without one sale. I asked for information about this. I wanted to know exactly how I can view and see what potential buyers did once entering my site. I also asked for steps in getting a refund very early on obviously without any progress.”

Michael says he is having a hard time reaching anyone in customer service and wants to cancel his arrangement. It's not clear that the terms and conditions allow him that option. As with any “business opportunity” or “work at home” enterprise, diligent research should come first, before any money changes hands.

Even before Google bought Motorola Mobility, there was a lot of excitement and buzz around the Droid Bionic, Motorola's latest attempt to get back into the smartphone race.

The release date of the much-anticipated phone has been a question mark, so interest peaked today with a Tweet from "@DroidBionic," saying the device would be released Sept. 8.

But hold on a second.  Although the Tweet claims to be the "official Motorola Droid Bionic Twitter page," it's no such thing, both Motorola and Verizon Wireless hastened to assure a Droid-starved public today.

So who is  "@DroidBionic"?  Things being what they are, it could be just about anybody.  Whoever it is can't spell or talk English good, which is what initially tipped off PCMag.com's Sascha Segan, who was -- as far as we can tell anyway -- the first byte-stained wretch to note the discrepancies.

Numerous other publications, including the usually reliable Dealerscope, fell for the phony Tweet. 

As for Verizon Wireless, its Web site is still saying the Bionic will be available in September but it's not being any more specific.  

Why the buzz?

Why is everyone getting so worked up over yet another smartphone?  Well, the Droid, we'll have you know, is the first dual-core 4G LTE smartphone, which should mean it will be the fastest and the most capable of doing somewhat amazing things.

Pre-Bionic, there hasn't been a smartphone that's both dual-processor and capable of running on Verizon's lightning-fast 4G network.  Put those two together and the result should be pretty awesome in terms of speed and page-loading (which are sort of the same thing but also sort of not).

Besides that, the Droid Bionic's 960-by-540 screen delivers higher resolution than the other LTE phones available from Verizon.  It may also deliver better battery life.

Of course, Samsung and HTC already make some pretty amazing 4G phones and both are no doubt working on dual-processor models.  But Motorola, a storied name in radio communications, has been on the sidelines the last year or so and everyone is pretty keyed up to see what wondrous things it may finally have wrought.  

Maybe that will happen soon.  Or not.

Virginia Attorney General Ken Cuccinelli has filed a lawsuit against R.L. Brad Street, LLC, a mortgage loan modification company based in Chesapeake, for allegedly charging illegal advance fees of up to $3,000 before performing "foreclosure rescue" services for its customers.   

The attorney general alleges that R.L. Brad Street violated the Virginia Foreclosure Rescue Law by charging advance fees in connection with services to avoid or prevent foreclosure.

State law prohibits a supplier of foreclosure avoidance or prevention services from "charging or receiving a fee prior to the full and complete performance of the services it has agreed to perform, if the transaction does not involve the sale or transfer of residential real property." 

R.L. Brad Street allegedly collected fees of up to $3,000 in the form of checks made payable to Rhonda Wyland, the company's manager, from consumers before performing any services for them.  

Cuccinelli also alleges that R.L. Brad Street violated the Virginia Consumer Protection Act (VCPA) by failing to deliver on promises to assist consumers in obtaining mortgage loan modifications.

The Virginia Consumer Protection Act generally prohibits suppliers from using any deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction. 

"In these difficult economic times, the last thing distressed homeowners need is to be cheated out of large sums of money that could otherwise be spent meeting pressing financial obligations. The advance fees collected should be refunded where services have not been completely performed," Cuccinelli said.

This is the fourth lawsuit filed by the Cuccinelli's office against Tidewater-based loan modification companies. The office continues to work with the Virginia Office of Consumer Affairs and the Virginia Bureau of Financial Institutions to identify and investigate companies thought to be violating the advance fee prohibition on foreclosure rescue companies.

Consumers who contracted with R.L. Brad Street for foreclosure prevention loan modification services on or after July 1, 2009, and who paid advance fees to the company before services were performed are encouraged to file written complaints with the Virginia Office of Consumer Affairs.  

The lawsuit was filed in the Chesapeake Circuit Court.  The lawsuit requests that the court enjoin R.L. Brad Street from violating the Virginia Consumer Protection Act and that fees paid be returned to consumers where services were not performed completely. The suit also seeks civil penalties of up to $2,500 for each violation.

Do you care that the purse you bought with the Coach label was not produced by the upscale manufacturer, but rather a counterfeiter who sold it for $35?

Rather than being a good deal for consumers, Mississippi Attorney General Jim Hood says counterfeit goods harm businesses and consumers and in some cases, might even prove to be hazardous. Hood's state has just launched the Mississippi Intellectual Property Crimes Center (MIPCC), a new website to help consumers recognize and report “knock-off” items.

“Our new website, provides tips on how to spot counterfeit merchandise and what to do if you suspect merchandise is of questionable origin,” said Hood.  “The website also has a password protected zone specially designed for our law enforcement agencies.”

Mississippi's site was developed with assistance from the National White Collar Crime Center (NW3C), the premier DOJ-funded training project for high tech law enforcement methods. Hood says Mississippi's site is the first of its kind for a state attorney general’s office.

“The NW3C has been a valuable training partner for our state’s task force,” Hood said. “In fact, the NW3C provided counterfeit prevention training at the Attorney General’s recent law enforcement conference in Jackson.

Not a victimless crime

Hood said Intellectual property crime hurts the economy by cheating legitimate retailers out of business and depriving local government of valuable sales taxes. It also poses health hazards in the case of “knock-off” medication and food items, which do not meet federal health standards and may contain dangerous ingredients or be produced under unsanitary conditions. Furthermore, revenue generated by counterfeit products often divert money to organized crime, terrorist activity and drug traffickers.

According to estimates by the Counterfeiting Intelligence Bureau (CIB) of the International Chamber of Commerce (ICC), counterfeit goods make up five to seven percent of world trade. That total has grown as a result of the recession, making consumers more likely to be tempted by seeming bargains.

The range of consumer goods that are counterfeited and sold as genuine is wide and includes watches, purses, movies and software, and even high-end sports cars like Porsches and Ferraris.  

Telemarketers allegedly running a nationwide “government grant scam” have been ordered to stop making their phony pitches.

Attorneys general from North Carolina, the Federal Trade Commission, and the states of Illinois, Kansas and Minnesota have pursued the complex scheme in federal court in Kansas since 2009. Cooper and the other plaintiffs have now won court orders or settlements that resolve the case against fifteen defendants implicated in the scheme.

“Grant scams prey on people’s hopes and waste their money,” North Carolina Attorney General Roy Cooper said. “We’re working to shut down these scams in North Carolina and across the country.”

The companies and individuals behind the scam used telemarketing and misleading tactics to convince consumers to pay for services that were supposed to help them win grant money from the government. Consumers who paid for the help never won any grants or received any money.

The Government Grant Scam is a play on the old Sweepstakes Scam. Potential victim is told they are being awarded a federal grant of $6,000 or $7,000, just because they are “a good citizen,” or because they pay their taxes on time.

A common ploy

ConsumerAffairs.com constantly hears from people contacted by these scammers, including Janet, of Rogers, Ark.

“All I needed to do was go to the nearest Western Union office, take a valid state ID and $199.00 as a security deposit,” Janet told ConsumerAffairs.com. “Then he proceeded to say that I was not to discuss the transaction with anyone at Western Union office or Western Union would charge me $1500.00 for the transaction.”

Fortunately, Janet didn't call for the scam, but thousands of people do.

The defendants

In this mutli-state action, the defendants include Real Estate Buyers Financial Network and Martin Nossov of Raleigh, N.C., are prohibited from illegal telemarketing and from making misrepresentations or misleading consumers under a permanent injunction issued by U.S. District Court Judge Julie A. Robinson.

Martin Nossov and his company have also been ordered to pay $5,373,106. Under a settlement agreement, Alicia Nossov ofRaleigh agreed to follow laws that govern telemarketing and fair business practices and will pay $126,894, the amount she allegedly made from the scam.

Defendants Affiliate Strategies, Landmark Publishing Group, Grant Writer’s Institute, Answer Customers, and Apex Holdings International, all of Overland Park, Kansas are permanently banned from telemarketing, misrepresenting products and their costs, misleading consumers, and pitching money-making opportunities under a default judgment issued by Judge Robinson. Defendants Brett Blackman, James Rulison and Jordan Sevy of Overland Park, Kansas worked with the companies and agreed to similar bans.

The companies’ assets are being liquidated and any proceeds will go to pay consumer refunds and cover the costs of bringing the case.

Judge Robinson also issued a default judgment against defendant Direct Marketing Services of Utah, banning the company from telemarketing, misrepresentation, misleading consumers, and pitching money-making opportunities. The company was ordered to pay $3.4 million.

Defendants Wealth Power Systems and Aria Financial Services of Utah are banned from marketing grant-related products and services, illegal telemarketing, making misrepresentations, and misleading consumers under a settlement agreement.  Justin Ely of Utah, who worked with the companies,agreed to a similar ban. The companies will pay $265,000, the total amount of their assets, toward consumer refunds and the costs of the case. If they’re found to misrepresent their assets, they will have to pay $3.4 million.

The states and the FTC are trying their case against remaining defendant Meggie Chapman in U.S. District Court in Kansas.

We've endlessly reported the problems homeowners are having getting mortgage modifications. The stories are all very similar. They keep sending the requested paperwork only to be told it never arrived and they have it send it again. Lender personnel never have the same story, a fact that was reported to us in this horrifying post from Rick, of Nixa, Mo.

“Same complaint as every one else. I sent paper work to Bank of America three times, each time they said we dont have it all.,” Rick told ConsumerAffairs.com.

Then finally, he said, he found a customer service rep who seemed to be sympathetic and willing to help.

“She said 'email the paperwork to me and I'll take care of it,'” Rick said. “I've been talking with her for four months or so, with everything looking great. She says the paperwork is with the underwriter and and we should be approved any day now.

Then Rick called back and the customer service rep with whom he had been working was no longer there. He spoke to someone else who had some bad news.

“This person she says our house is set to be sold September15, which is two weeks from now,” Rick said. “I have had three heart attacks and will probably have one more before this is over.”

We're not sure what happened here, but the way it was handled seems especially cruel.

Ka-pow!

It appears that Pyrex dishes don't have to be in an oven to explode.

“I took my lunch in a glass pyrex container to work,” said Donna, of Mount Pleasant, S.C. “It exploded in a million pieces, it was just sitting on the counter. I'm just thankful I wasn't eating out of it at the time! Scary!! Why is this product still being sold?”

Donna might direct that question to the U.S. Consumer Product Safety Commission.

Free Gift

Companies often used free online offers as a way to enroll you into a membership program with a recurring charge. Sometimes they even send things through the mail.

“Without ordering anything, I received a box with the words written on it: CONTENTS: FREE,” Lori of Oregon City, Ore., told ConsumerAffairs.com. “So, i opened it and found a Reader's Digest book, a Sweepstakes Card, and a Portfolio Pamphlet of eight pages explaining their sweepstakes. But then I found out I had been added to their book club. This information was BURIED within the pamphlet! I never signed up for a book club. The paragraph said...you'll receive new volumes of great reading every two to three months for just $22.98 plus delivery and any sales tax. As promised, if you ever decide you don't want more books, just send us a note." They did not supply an address within the portfolio or a phone number for me to use to cancel...something which i didn't even order!”

If Lori didn't order anything from Readers Digest, she is under no obligation to send them any money, nor is she required to send back the book. It's hers to keep. Here's what the U.S. Postal Service has to say about these situations:

You, the consumer, may only legally be sent two types of merchandise through the mail without your consent or agreement:

Free samples which are clearly and conspicuously marked as such.

Merchandise mailed by a charitable organization that is soliciting contributions.

And in these two cases, you can consider the merchandise a gift if you wish. In all other situations, it is illegal to send merchandise to someone, unless that person has previously ordered or requested it.

 Unfortunately, the company is likely to turn the “unpaid bill” over to collections, requiring Lori and others to take the time to dispute it. But they will win.

LivingSocial, always No. 2 to Groupon's No. 1, is keeping up with its big competitor in ways it might not want, falling prey to no fewer than five consumer class action suits.

The suits, which were consolidated last week in federal district court in Washington, D.C., where LivingSocial is based, accuse the daily deals site of including illegal expiration dates on its gift certificates -- or coupons, as the daily deals sites prefer to call them.

The lawsuits were filed earlier this year in California, Washington state, Florida and the District of Columbia.  They will now move forward as a single action in D.C. federal court before Judge Ellen Segal Huvelle.

Plaintiffs say LivingSocial violated consumer protection laws that ban expiration dates of less than five years on gift certificates. The suit charges that LivingSocial knew that many of consumers would not use the certificates before the expiration date and would therefore lose their money.

"LivingSocial just doesn't do enough to make sure that consumers are aware of what their rights are, and they're not doing enough to communicate with their merchants," said attorney Christopher Carney, who filed the Washington state suit in February. 

LivingSocial, like Groupon, is expected to argue that its gift certificates are more like coupons.  Coupons can expire too but since they are free, there's no loss to the consumer.

LivingSocial also claims its promotional deals clearly indicate that they must be used within a limited time and are not deceptive.