Current Events in September 2011

At the request of the Federal Trade Commission, a U.S. district court has halted an operation that allegedly subjected consumers to abusive debt-collection practices and deceived the small-business clients for whom it collects. 

The order also freezes the operation's assets and appoints a permanent receiver to run it while the FTC moves forward with the case.

As part of its continuing crackdown on scams that target consumers in financial distress, the FTC filed a complaint against six individuals and three companies involved in a Van Nuys, California-based debt-collection operation doing business as Rumson, Bolling & Associates. 

The FTC complaint charges that the defendants, in collecting debts on behalf of their clients:

• harassed and abused consumers by threatening physical harm and death to them and their pets, threatened to desecrate the bodies of deceased relatives, and used obscene and profane language; 
• improperly revealed consumers' debts to third parties, such as the consumers' employers, co-workers, neighbors, and family members;
• falsely threatened consumers with lawsuits, arrest, seizure of their assets, or wage garnishment; and
• falsely claimed that consumers would be liable for legal fees incurred in the collection of the debt.

According to the FTC complaint, using the slogan “no recovery, no fee,” the defendants promised small businesses and other potential clients that they would collect debts on contingency, charging a fee only when they successfully collected a debt. 

But in many cases, the defendants allegedly collected money from consumers on a client’s behalf and then kept more than they were entitled to, sometimes keeping all the money for themselves, instead of forwarding what was owed to the client. 

In some cases, the defendants asked clients for additional fees, purportedly for legal expenses in filing a lawsuit that would “guarantee” the successful collection of a debt.  Many clients paid these fees, but the defendants failed to file the promised lawsuits and the clients never received any money in satisfaction of the debt in question.

The FTC charges that these practices violate the Federal Trade Commission Act and the Fair Debt Collection Practices Act.

Chrysler is recalling 2012 models equipped with a 3.6-liter engine. The connecting rod bearing can fail, which could cause the engine to seize and lead to a crash.

The Federal Reserve's new “swipe fee” rule, expected to significantly cut into bank profits, takes effect tomorrow, and at least one bank has already revealed plans to recoup some of its losses.

Bank of America says it will impose a $5 a month charge on customers who have a debit card and use it to make a purchase, as nearly all do. They aren't alone. Wells Fargo and Chase are testing similar fees while Region's Financial and SunTrust are also adopting debit card fees.

The banks hope the fees help offset expected losses from the new rule, known as the “Durbin Amendment,” which lowers debit card swipe fees charged merchants from 44 cents to 24 cents per transaction.

$6 billion loss in revenue

In June, the Fed adopted the rule which takes effect tomorrow. According to industry estimates, the change could cost banks more than $6 billion a year. Banks are still trying to make up for the more than $5 billion loss of overdraft fees.

Those fees have dropped after the Fed adopted a rule requiring bank customers to “opt-in” to the so-called overdraft protection, under which banks honored all purchases that overdrew customers' accounts, but charged a hefty fee for the service.

Banks and retailers waged a fierce lobbying war earlier this year as Congress debated what to do about the swipe fee. Retailers claimed it was excessive and resulted in higher prices for consumers. Banks scoffed at the notion that large retailers would pass the savings from a reduced swipe fee to consumers.

In the end, the retailers won, with Congress slashing the fee to 11 cents per transaction, but leaving it up to the Fed to adjust it. The Fed compromised, adjusting the new fee to 24 cents.

Criticism of Bank of America

Retailers were also quick to pounce on Bank of America's announcement of the debit card fee. The Retail Industry Leaders Association (RILA) charged Bank of America and other large banks had been imposing hidden fees on consumers for years. Now, the group said, the fees are in the open.

“Swipe fee reform will rein in these fees, increase transparency and allow consumers to see the costs associated with the various payment options and make decisions accordingly,” said Katherine Lugar, executive vice president for public affairs at RILA.

She cited Federal Reserve data that she said showed big banks collect a profit of 1100 percent every time a debit card is swiped.

'Explosion' of fees

“These fees have exploded over the past decade and last year cost merchants nationwide nearly $20 billion,” she said.

Sen. Richard Durbin (D-IL), who authored the swipe fee legislation, also weighed in on the new Bank of America debit card fee.

"After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers,” Durbin said. It’s overt, unfair and I hope their customers have the final say.”

With more consumers trying to avoid buying water in plastic bottles, water filers are gaining in popularity. But Kevin, of Athol, Mass., says he has had consistent bad luck with PUR water filers.

“First unit lasted maybe two years, then started serious leaking around casing where it swivels,” Kevin told ConsumerAffairs.com. “Bought a second one thinking maybe I had done something to cause the leak, same exact leak started, sprays water everywhere. It will stop if I put upward pressure on the unit, but I shouldn't have to. These units aren't cheap. They will not be getting a third chance from me.”

Kevin's complaint does not seem to be an isolated. Several other consumers have recently reported the same problem to ConsumerAffairs.com.

Bad timing

Apple products are known to be a bit expensive. They can also be expensive to repair.

“My iPad was purchased on Sept. 8, 2010 and given to me as a gift at Christmas,” said Anne, of Croton on Hudson, N.Y. “The day after it left the one year warranty period, it developed a screen defect, an unmovable large black line the width of a pixel, permanently mars the screen. I have maintained it in pristine condition, the line appeared without cause. Apple wants $300 to fix the defect and insists that it can do nothing because the iPad is out of warranty -- by 22 days.”

Some companies actually offer a brief grace period for problems that occur just outside of warranty, and it's a policy that probably engenders a lot of consumer good will. Anne said she had been thinking of buying a $2000 MacBook, but is having second thoughts now.

Where there's smoke...

We received an interesting complaint from Philip, of Northport, Ala., about Holiday Inn Express, specifically about the hotel chain's no-smoking policy. Like many hotels, Holiday Inn Express attaches a $200 charge to your room bill if you smoke in a non-smoking room. But how do they know if you light up? That's the crux of Philip's complaint.

“I have stayed at this hotel since its opening with no problems,” Philip told ConsumerAffairs.com. “On checking in I know that one of the forms you have to sign is the no smoking policy and the requisite fine you will incur, so I use the designated smoking areas outside the hotel if I need to smoke. On receiving my credit card bill at the end of the month, attached to my hotel bill statement was a $200.00 smoking fee for this particular stay. There was no notice of this charge sent to me in e-mail. Upon calling the hotel to inquire why I was charged the extra fee I was told that I had smoked in my room when I know for a fact I did not.”

Philip said he repeatedly tried to speak with the hotel manager but could not. He said he was told that the house-keeping staff “smelled cigarette smoke in his room” and concluded that he had broken the rules. This does seem a bit arbitrary, since someone smoking outside would likely have the smell of smoke on their clothing, which could be transferred to an enclosed space, like a hotel room. Consumers who smoke should be aware of these policies when they check into hotels and stay in a no-smoking room.

Use it or lose it

Cheryl, of Spring Hill, Fla., says she is a senior living on a fixed income, so she doesn't want to spend a lot for a cell phone – just something for emergencies. She opted for a pre-paid phone from T-Mobile.

“Initially I bought $100 worth of minutes, feeling it would last,” Cheryl said. “After more than a year, the balance was $69. On September 26, I was forced to buy more time or lose the balance. I purchased $10 plus balance equaling 657 minutes. But that's good for only 90 days, at which time I will be forced to buy more time. This is a scam. How can T-Mobile force customers with prepaid phones to buy time plus lose the balance of money/minutes purchased?”

We checked T-Mobile's website and under the pay-as-you-go plan, it clearly states that the minutes purchased have a finite shelf life. It doesn't explain why, but our guess is that the company doesn't want you on their network if you aren't spending money. The minimum they'll accept appears to be $100 a year. All things considered, maybe not a bad deal for a cell phone.

Think straight hair is to die for?  You may be right.  And for the first time, the mainstream cosmetics industry agrees with yhou.

Citing the undisputed health risks of formaldehyde, frequent consumer complaints and a lack of evidence of safety, the Cosmetic Ingredient Review panel, a scientific advisory board established by the major American cosmetics manufacturers, has effectively disavowed expensive salon products sold by a handful of small companies such as the Los Angeles maker of Brazilian Blowout.

The federal Food and Drug Administration has yet to bar formaldehyde from hair straighteners, even though the U.S. Department of Health and Human Safety has labeled it a known human carcinogen.

However, last month the FDA issued a formal warning that publicly admonished Brazilian Blowout. The agency declared the company’s hair-smoother adulterated, because it contained dangerous levels of formaldehyde, and misbranded, because it claimed to be free of formaldehyde.

OSHA gets involved

Last week, the Occupational Safety and Health Administration, the federal agency charged with overseeing workplace safety, escalated its warning to hair salons and employees after investigators found that two popular brands of hair straighteners exposed salon workers to dangerous levels of formaldehyde.

OSHA officials also instructed the manufacturer of Brazilian Blowout Acai Professional Smoothing Solution, one of the products that failed OSHA’s tests, to stop suggesting that OSHA tests had found its product safe. Brazilian Blowout’s hair-straightener, though labeled “formaldehyde free,” was found by OSHA to contain significant amounts of the chemical.

"Misleading or inadequate information on hazardous product labels is unacceptable," said OSHA Assistant Secretary Dr. David Michaels. "Salon owners and workers have the right to know the risks associated with the chemicals with which they work and how to protect themselves."

Though OSHA singled out Brazilian Blowout and Brasil Cacau Cadiveu, an investigation earlier this year by the Environmental Working Group uncovered 15 companies that claimed to use little to no formaldehyde, yet whose products contained substantial amounts of the chemical. As a result of its investigation, EWG urged the federal Food and Drug Administration to ban formaldehyde as an ingredient in hair straighteners.

FDA declines to act

The agency declined to do so, responding that it was “looking to [the Cosmetic Ingredient Review panel] to get additional information … that we need to be able to take an action. Right now we are not there.”

It is unclear how the industry panel’s assertion that no level of formaldehyde can be considered safe will affect FDA’s decision-making on a possible ban, EWG said.

An April 2011 survey by EWG found dozens of top salons still promoting formaldehyde-laced hair straighteners despite the mounting evidence of the risks to stylists and clients.

"The incentive to downplay mounting health concerns is substantial when you can charge several hundred dollars for a single treatment," said Thomas Cluderay of the Environmental Working Group. "Until regulators pull the plug on Brazilian Blowout, I think it's clear the company is prepared to do just about anything to peddle these products."

Researchers at UCLA have leveled a serious charge at U.S. tobacco companies. For more than 40 years, they say, tobacco companies knew that cigarette smoke contained radioactive alpha particles that can cause cancer, but kept their findings from the public.

The analysis of dozens of previously unexamined internal tobacco industry documents, made available in 1998 as the result of a legal settlement, allegedly reveals that the industry was aware of cigarette radioactivity some five years earlier than previously thought and that tobacco companies, concerned about the potential lung cancer risk, began in-depth investigations into the possible effects of radioactivity on smokers as early as the 1960s.

Aware in 1959

"The documents show that the industry was well aware of the presence of a radioactive substance in tobacco as early as 1959," the authors write. "Furthermore, the industry was not only cognizant of the potential 'cancerous growth' in the lungs of regular smokers, but also did quantitative radiobiological calculations to estimate the long-term lung radiation absorption dose of ionizing alpha particles emitted from cigarette smoke."

The researchers say the study, published online Sept. 27 in Nicotine & Tobacco Research, adds to a growing body of research detailing the industry's knowledge of cigarette smoke radioactivity and its efforts to suppress that information.

"They knew that the cigarette smoke was radioactive way back then and that it could potentially result in cancer, and they deliberately kept that information under wraps," said the study's first author, Hrayr S. Karagueuzian, a professor of cardiology who conducts research at UCLA's Cardiovascular Research Laboratory, part of the David Geffen School of Medicine at UCLA. "Specifically, we show here that the industry used misleading statements to obfuscate the hazard of ionizing alpha particles to the lungs of smokers and, more importantly, banned any and all publication on tobacco smoke radioactivity."

Carcinogenic alpha radiation

The radioactive substance — which the UCLA study shows was first brought to the attention of the tobacco industry in 1959 — was identified in 1964 as the isotope polonium-210, which emits carcinogenic alpha radiation. Polonium-210 can be found in all commercially available domestic and foreign cigarette brands, Karagueuzian said, and is absorbed by tobacco leaves through naturally occurring radon gas in the atmosphere and through high-phosphate chemical fertilizers used by tobacco growers. The substance is eventually inhaled by smokers into the lungs.

The study outlines the industry's growing concerns about the cancer risk posed by polonium-210 inhalation and the research that industry scientists conducted over the decades to assess the radioactive isotope's potential effect on smokers — including one study that quantitatively measured the potential lung burden from radiation exposure in a two-pack-a-day smoker over a two-decade period.

Despite the potential risk of lung cancer, the study maintains that tobacco companies declined to adopt a technique discovered in 1959 and then another developed in 1980 that could have helped eliminate polonium-210 from tobacco. The 1980 technique, known as an acid-wash, was found to be highly effective in removing the radioisotope from tobacco plants, where it forms a water-insoluble complex with the sticky, hair-like structures called trichomes that cover the leaves.

The real reason?

And while the industry frequently cited concerns over the cost and the possible environmental impact as rationales for not using the acid wash, UCLA researchers uncovered documents that they say indicate the real reason may have been far different.

"The industry was concerned that the acid media would ionize the nicotine, making it more difficult to be absorbed into the brains of smokers and depriving them of that instant nicotine rush that fuels their addiction," Karagueuzian said. "The industry also were well aware that the curing of the tobacco leaves for more than a one-year period also would not eliminate the polonium-210, which has a half-life of 135 days, from the tobacco leaves because it was derived from its parent, lead-210, which has a half-life of 22 years."

"We used to think that only the chemicals in the cigarettes were causing lung cancer," Karagueuzian said. "But the case of the these hot spots, acknowledged by the industry and academia alike, makes a strong case for an increased probability of long-term development of malignancies caused by the alpha particles. If we're lucky, the alpha particle–irradiated cell dies. If it doesn't, it could mutate and become cancerous."

Karagueuzian said the findings are very timely in light of the June 2009 passage of the Family Smoking Prevention and Tobacco Control Act, which grants the U.S. Food and Drug Administration broad authority to regulate and remove harmful substances — with the exception of nicotine — from tobacco products. The UCLA research, he said, makes a strong case that the FDA ought to consider making the removal of alpha particles from tobacco products a top priority.

An enterprising individual who allegedly sent millions of illegal spam text messages to consumers is banned from sending any unsolicited text messages, under a settlement agreement with the Federal Trade Commission entered by a federal court.

According to the FTC complaint filed in February 2011, the marketer sent a “mind-boggling” number of unsolicited commercial text messages pitching mortgage modification services to consumers, and misrepresented that he was affiliated with a government agency.

The FTC alleged that many consumers had to pay fees to their mobile carriers to receive the unsolicited text messages. The FTC also alleged that the marketer advertised his text message blasting services by sending consumers illegal spam. The agency charged him with violating the FTC Act and the CAN-SPAM Act. 

The complaint states that the text messages instructed consumers to respond to the messages or visit various websites advertised in the messages.

One of the websites, loanmod-gov.net, claimed to provide “Official Home Loan Modification and Audit Assistance Information,” and displayed a photo of an American flag.

The agency alleged that the defendant collected information from consumers who responded to the text messages – even those who responded by asking to be removed from his list – and sold it to third parties, claiming the consumers were “debt settlement leads.”

The settlement bans the defendant, Phil Flora, from sending or helping others send unsolicited commercial text messages, and bars him from making false or misleading claims about any good or service, including misrepresentations that he, his representatives, or any other person is affiliated or associated with a government agency. The order also bars him from violating the CAN-SPAM Act.

The settlement order imposes a judgment of $58,946.90. 

Until now, Amazon's Kindle has been basically an ereader -- something you could use to view the virtual versions of those odd boxlike things they used to call books, leaving the hipster crowd to jam, groove, chat and game play (as playing games now seems to be called) on the iPad.

The Kindle Fire aims to change all that, providing nearly as much spark for a lot less scratch.  The Fire is to the old Kindle what Lady GaGa is to Doris Day, filled with sound and fury and signifying, well, that's another question.

It's a little smaller than the iPad, which isn't necessarily a bad thing.  And it costs a lot less, $199 compared to the iPad's starting price of $499.

Or as Amazon founder and CEO Jeff Bezos put it on Amazon's home page today: "There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp."

Verbose

But don't call the Fire cheap, Bezos cautions.

"Kindle Fire brings everything we’ve been working on at Amazon for 15 years together into a single, fully-integrated experience for customers – instant access to Amazon’s massive selection of digital content, a vibrant color IPS touchscreen with extra-wide viewing angle, a 14.6 ounce design that’s easy to hold with one hand, a state-of-the-art dual core processor, free storage in the Amazon Cloud, and an ultra-fast mobile browser – Amazon Silk – available exclusively on Kindle Fire," he continued, on an apparent quest to construct the longest sentence in a non-scholarly journal.

Bezos is betting he can succeed where such giants as H-P and Samsung have failed.  He's betting he can unseat Apple as King of Tablet Valley.

But, you say, Apple has all those wondrously sleek stores.  Yes, but Amazon has its wonderfully ubiquitous Web site, which exists in a few billion more places than Apple's stores.  

Both companies, of course, have lots of product, although you can't buy a lawn mower at Apple last time we checked.  Apple may have more music in its iTunes section but with Spotify and the like becoming more common, does it matter?

Which brings up the question of whether any of this matters.  Two wars drag on in foreign lands, the economy remains moribund, candidates for top office become weirder by the year, the Obama Administration has locked the public out of its own malpractice database and everyone with a DVR missed the last few minutes of The Good Wife because a ball game ran over.

There are those who think this fascination with gadgets that are really, when you get right down to it, little more than toys is just something folks use to take their minds off weightier matters.

You know what?  They might be right.

Joyce, of Brooklyn, N.Y., met who she thought was the “perfect man” on Match.com. From New York, like her, he had a wonderful profile and “model” good looks. Though they had never met in person, romance quickly blossomed.

“He told me he is a sergeant in the army and is in Iraq,” Joyce told ConsumerAffairs.com. “This went on for a month; the romancing, the love letters and texts and instant messages. Then, he couldn't come home as planned since he was going to Afghanistan.”

But the man told Joyce he had a very special gift for her that would arrive by U.S. Army courier. He sent Joyce the contact information for the courier, with instructions to email him when he arrived in the States.

But the courier called Joyce first. He was stuck at at airport in Ghana and could not leave the country without a special stamp that cost $3,000. Could Joyce send the money?

Her heart broken, Joyce hung up the phone, realizing immediately that there was no man in love with her, only a scammer trying to steal $3,000.

Joyce was lucky

Despite the heartache, Joyce is lucky she saw the scam for what it was before she had sent thousands of dollars to a stranger. Others aren't so fortunate.

A British study, led by researchers at the University of Leicester, reveals that over 200,000 people living in Britain may have fallen victim to online romance scams – far more than had been previously estimated. The study is believed to be the first formal academic analysis to measure the scale of this growing problem.

In the online romance scam criminals set up fake identities using stolen photographs - often of models or army officers - and pretend to develop a romantic relationship with their victim. This is often done using online dating sites and social networking sites.

At some point during the relationship they pretend to be in urgent need of money and ask for help. Many victims have been persuaded to part with large sums of money before their suspicions are aroused.

Under-reported crime

Researchers found that 52 percent of people surveyed online had heard of the online romance scam when it was explained to them, and that one in every 50 online adults know someone personally who had fallen victim to it.

"Our data suggests that the numbers of British victims of this relatively new crime is much higher than reported incidents would suggest,” said Monica Whitty, co-author of the study. “It also confirms law enforcement suspicions that this is an under-reported crime, and thus more serious than first thought.”

The British study would also suggest that there are hundreds of thousand of U.S. victims as well. Law enforcement officials caution anyone using an online dating site to be very careful in dealing with people you know only through written communication.

Keep in mind that scammers will spend weeks – even months – setting up their victims until they feel the time is right to ask for money.

The Federal Communications Commission's (FCC) new rules maintaining Net neutrality have been challenged from an unlikely source.

Though major telecommunications firms don't like the concept, they have yet to express their objections in court. Instead, the activist group Free Press has been the first to file a legal challenge, a week after the Federal Register published the new rules.

The group filed the action in the First Circuit Court of Appeals in Boston, asking for a review of the FCC's December 2010 Open Internet order. Free Press is challenging what it called “the arbitrary nature” of rule provisions that provide less protection for mobile wireless Internet access than they do for wired connections.

"When the FCC first proposed the Open Internet rules, they came with the understanding that there is only one Internet, no matter how people choose to reach it,” said Matt Wood, Policy Director of Free Press. “The final rules provide some basic protections for consumers, but do not deliver on the promise to preserve openness for mobile Internet access. They fail to protect wireless users from discrimination, and they let mobile providers block innovative applications with impunity.”

No discrimination

Under the FCC's Net neutrality rules, networks are not allowed to discriminate against content, charging one provider more than another because of the nature of the content. But because telecommunications companies argued wireless networks, by their nature, have limits on their bandwidth, the rules provide more leeway for managing wireless networks. Wood says the distinction isn't real.

"Our challenge will show that there is no evidence in the record to justify this arbitrary distinction between wired and wireless Internet access,” he said. “The disparity that the FCC's rules create is unjust and unjustified. And it's especially problematic because of the increasing popularity of wireless, along with its increasing importance for younger demographics and diverse populations who rely on mobile devices as their primary means for getting online.”

The FCC proposed the rules last December. FCC Chairman Julius Genachowsk said they were based on more than 100,000 comments collected from all types of interested parties.

Major network providers have been staunchly opposed to most Net neutrality provisions. Broadband providers pushed to include language in the policy that would not encumber them when it comes to managing their networks or charging different prices for different levels of service. Wireless network providers objected to being lumped in with wired networks under any Net neutrality rules.  

Trilegiant is one of those companies that handle those promotional “free” offers on the Internet that end up charging your credit card each month for something you didn't ask for and don't want. John, of Wurstboro, Conn., has just realized that Trilegiant has been charging his credit card each month for several years.

“I called my credit card company and they told me the only way to get this fraud to stop was to cancel the card they were charging and they would send me a new one,” John told ConsumerAffairs.com. “I did that. They showed up on my next bill with the new card. I finally contacted the Connecticut Better Business Bureau who assured me that this nonsense would cease. I'm now monitoring my bills much more closely. Shame on me for not doing it sooner.”

John is right to feel sheepish for not noticing the unauthorized charge sooner, but he is mistaken if he thinks the Better Business Bureau can do anything about his problem. It can't. But maybe a call to Connecticut Attorney General George Jepsen's office might help. And as for the charge showing up on the new credit card, that probably happened because the credit card company didn't change the number on the account. In a fraud case, they should have.

Smelly food

Kathryn, of Nashville, Tenn., feeds her cats Fancy Feast Tender Beef Classics because one cat is diabetic and it's all he can eat. Lately, Kathryn says the food has a much different smell, but says Purina told her nothing has changed.

“My other cat will not even come near the food,” Kathryn said. “I used to give her a little bit of it every morning - and she won't even come near it now. Thank god my other cat is still eating it and he is fine - but I just want to know why this smells the way it does now. This is the only thing my cat can eat. If they've changed something, I need to know!”

Kathryn needs to take a can of the food, with the label listing the ingredients, to her vet and get a professional opinion. And if any other cat owners have some advice for Kathryn on this topic, let us know.

Strange one

We get lots of complaints about mortgages. This one, about Response Mortgage Services, is a little different.

“Two weeks prior to closing I was instructed to pay for a home inspection,” Charles, of College Place, Ore., told ConsumerAffairs.com. “Several days later I tried to inform the loan officer of the results and found that the loan officer switched employers and cancelled my loan. Never notified anyone, accused her employer of the action and has been unavailable ever since. The two banks she worked for have made it clear that this was her action alone.'

This is indeed odd, but appears to be the action of one individual. Surely Charles is entitled to knowing why his mortgage, which obviously had been approved, was suddenly cancelled. If no good reason is forthcoming, he should be able to complete the process with another loan officer.

Not what he thought it was

We're not big fans of cell phone insurance policies, but as expensive as these devices are, we understand why people buy them. Only some people don't realize what they're actually buying. George, of Bordentown, N.J., says he bought his wife an iPhone 4 back in May at Best Buy, and was talked into buying the Best Buy insurance, with the sale rep telling him theirs was superior to Verizon's because they replace phones with new ones, not refurbished ones.

“Well my wife's ihome button stopped responding,” George said. “So I took it to Best Buy and explained to them what happened. They in turned told me I have to give it to GeekSquad for repair. When I told them about the insurance they said I was misinformed and they don't replace phones, they send them out to be fixed. They said I would also have to pay $150 as a deposit for a loner phone. When I asked to see that phone I was shown a flip phone. Are you kidding me!! A $600 phone, and you give me a four year old flip phone that is free? I spend 16 bucks a month for this insurance policy, and for what?”

That would have been a question to ask before buying the insurance. Keep in mind that $16 a month over a two year contract is $384. That would go a long way toward purchasing a new phone.

The ads for Reebok EasyTone and RunTone shoes made it sound like toning your body is as easy as lacing up a pair of sneakers. The Federal Trade Commission (FTC) says it isn't, and has brought deceptive advertising charges against the apparel maker.

As a result, the FTC says Reebok has dropped the claims and has agreed to a $25 million settlement with the agency.

“This settlement is a big benefit for consumers who bought shoes based on claims that they would result in a stronger body,” said David Vladeck, director of the FTC's Bureau of Consumer Protection.

Vladeck said much of the $25 million will go to a fund to offer refunds to consumers who bought EasyTone and RunTone shoes. If you think you might be eligible for a refund, the FTC has set up a website to explain the refund process. 

A consumer's experience

Tonia, of Berkley Heights, N.J. May be one of those seeking a refund. She complained about Reebok EasyTone last year, saying they weren't very good shoes.

“I paid $100 for a pair of sneakers in which the pod literally deflated after two months of wearing approximately an hour a day,” Tonia told ConsumerAffairs.com “I emailed Reebok directly and got a the run around from various people in their customer service department.”

Reebok’s EasyTone walking shoes and RunTone running shoes have retailed for $80 to $100 a pair, while EasyTone flip flops have retailed for about $60. Ads for the shoes claimed that sole technology featuring pockets of moving air creates “micro instability” that tones and strengthens muscles as you walk or run.

Unsupported claims

According to the FTC complaint, Reebok made unsupported claims in advertisements that walking in its EasyTone shoes and running in its RunTone running shoes strengthen and tone key leg and buttock muscles more than regular shoes.

The FTC’s complaint also alleges that Reebok falsely claimed that walking in EasyTone footwear had been proven to lead to 28 percent more strength and tone in the buttock muscles, 11 percent more strength and tone in the hamstring muscles, and 11 percent more strength and tone in the calf muscles than regular walking shoes.

Beginning in early 2009, Reebok made its claims through print, television, and Internet advertisements. The FTC says the claims also appeared on shoe boxes and displays in retail stores. One television ad featured a very fit woman explaining to an audience the benefits of Reebok EasyTone toning shoes. She picks up a shoe from a display and points to a chart showing the muscles that benefit from use of the shoes, while a video camera continues to focus on her buttocks. She says the shoes are proven to strengthen hamstrings and calves by up to 11 percent, and that they tone the buttocks “up to 28 percent more than regular sneakers, just by walking.”

“The lesson for advertisers is don't make claims that can't be substantiated,” Vladeck said.

An agency of the U.S. Department of Health and Human Services (HHS) has admitted that it is concealing from public view a publicly-owned malpractice database and admits that it is doing so to protect physicians' "privacy," at the expense of the patients and taxpayers whose tax dollars were used to compile the information and who expect their government to provide them with the information they need to protect themselves from unscrupulous and incompetent physicians.

"Federal law mandates that information about individual physicians remains confidential," Martin Kramer, a federal employee who works as a spokesman for the Health Resources and Services Administration (HRSA), told Medscape Medical News, a trade journal for healthcare professionals. "We have a responsibility to make sure federal law is being followed."

In fact, the database in question --  the National Practitioner Data Bank (NPDB) -- does not reveal information about individual physicians.  It was established by an act of Congress at taxpayer expense in 1968 to give hospitals, insurers, state medical boards, and other government entities a way to check up on physicians, dentists, and other licensed healthcare professionals.

Although the database does not reveal physicians' names or other "confidential" information but reporters and other investigators have sometimes managed to put together information from various sources to identify information about specific doctors.

“We are troubled that the Obama administration appears to have placed the interests of physicians ahead of the safety of patients,” Association of Health Care Journalists President Charles Ornstein said.  in a news release. “Attempting to intimidate a reporter from using information on a government website is a serious abuse of power.”

Slipshod oversight

More commonly, reporters, patient advocacy groups and activists have used data from the NPDB to highlight the failures and, occasionally, successes of the state licensing organizations that are supposed to oversee physicians and protect the taxpayers who own the data in the NPDB from harm.

An incident that apparently contributed to the HRSA decision was an investigative story in the Kansas City Star by reporter Alan Bavley, about the death of Maribeth Chase, an elderly Kansas woman who did not know the neurosurgeon who operated on her had been sued at least 16 times by his patients.

Chase went into a community hospital for relatively routine surgery to remove blood pooling on her brain.  She awoke paralyzed and unable to speak and died a few days later, the Star reported.  The surgeon settled with Chase's family for $1 million.

While consumer groups and journalism organizations have protested HRSA's decision to make public information private, one notable fan of the action is the American Medical Association (AMA).

AMA supports cover-up

The AMA said it considers the NPDB an unreliable source of information about the overall qualifications of physicians.

"The AMA has long opposed public access to the National Practitioner Data Bank and welcomes the decision to stop posting its public data file online to prevent breaches of physician confidentiality in the future," AMA President Peter Carmel said in a written statement to Medscape Medical News. "Duplicate entries, inaccurate data, and inappropriate information in the NPDB provide, at best, an incomplete and haphazard indicator of a physician's competence or quality."

The data that the AMA and HRSA want to hide from the public includes such "confidential" information as:

• Payments in medical malpractice cases (settlements as well as jury awards)
• Adverse actions on licensure, clinical privileges, and membership in professional societies
• Adverse actions taken by the Drug Enforcement Administration
• Exclusion from Medicare and Medicaid
• Criminal convictions

Journalism group posts the info

A Los Angeles law firm has filed a class-action lawsuit on behalf of consumers alleging that various dairy companies and trade groups slaughtered more than 500,000 cows to help inflate the price of milk.

The suit filed by Hagens Berman alleges that the National Milk Producers Federation, Dairy Farmers of America, Land O’Lakes, Inc. and Agri-Mark, Inc. combined to form Cooperatives Working Together (CWT) in order to fix the price of milk in the United States.

CWT is a massive trade group representing dairy producers throughout the country who produce nearly 70 percent of the milk consumed in the United States.

The lawsuit, filed in the United States District Court for the Northern District of California, alleges that between 2003 and 2010, more than 500,000 cows were slaughtered under CWT’s dairy herd retirement program in a concerted effort to reduce the supply of milk and inflate its price nationally.

According to the complaint, the increased price allowed CWT members to earn more than $9 billion in additional revenue. The case was initially researched and developed by Compassion Over Killing, a national animal protection organization.

Shameful killing 

“We believe this case serves two important causes,” said Steve Berman, managing partner of Hagens Berman. “A resolution to this case will protect consumers from artificially-inflated milk prices and also will prevent the unnecessary and shameful killing of tens of thousands of cows each year.”

“The dairy industry has consistently shown its lack of regard for animal welfare and the environment,” said Compassion Over Killing general counsel Cheryl Leahy. “Now it’s milking its own consumers by unlawfully jacking up prices. The dairy industry must be held accountable for these illegal profits.”

The complaint further alleges that the program, which paid smaller farm owners to kill their entire dairy cow herds, unfairly increased the profits of agribusiness giants.

Effects last years 

Dairy herd retirement ended in the summer of 2010, but CWT’s tactics may affect the price of milk for years, according to the lawsuit. The end of the program came shortly after Land O’Lakes agreed to pay $25 million to settle a class-action lawsuit filed against the United Egg Producers and its members.

That case alleged that egg producers were encouraged to reduce their flock size as part of a program disguised as an animal welfare initiative.

Compassion Over Killing (COK) is a nonprofit animal protection organization based in Los Angeles and Washington, D.C. Since 1995, COK has worked to end the abuse of animals in agriculture through undercover investigations, public outreach, litigation, and other advocacy programs. COK is on the web at COK.net.

We all know that health care costs are going up, but consumers who receive benefits through their employers might not realize how much.

The employee's portion of the cost is deducted from her paycheck, and might not be that noticeable on a regular basis. The employee may be oblivious to the employer's portion, but rest assured the employer is aware and considers it part of the employee's compensation package.

The Kaiser Family Foundation and the Health Research & Educational Trust (HRET) track the costs of employer-sponsored health plans and now put the average annual cost of family coverage at more than $15,000, the equivalent of a new Ford Fiesta. Employer-sponsored insurance covers about 150 million people in the U.S.

Key findings

The key findings from the 2011 survey, conducted from January through May 2011, include increases in the average single and family premiums, as well higher enrollment in high deductible health plans with savings options (HDHP/SOs).

The 2011 survey includes new questions on the percentage of firms with grandfathered health plans, changes in benefits for preventive care, enrollment of adult children due to the new health reform law, and the use of stop-loss coverage by firms with self-funded plans.

The average annual premiums for employer-sponsored health insurance in 2011 are $5,429 for single coverage and $15,073 for family coverage. Compared to 2010, premiums for single coverage are 8 percent higher and premiums for family coverage are nine percent higher. That nine percent rate compares to a three percent increase in 2010.

Up 113 percent since 2001

According to Kaiser, average premiums for family coverage have increased 113 percent since 2001. Betty, of Marina, Calif., has found her Aetna policy is rapidly going up in price.

“I received a notice a few months ago that my son's insurance premium was being increased $25,” Betty told ConsumerAffairs.com. “The increase started July 2011. I just received a letter on August. 20, 2011 that his insurance premium is being increased again $27, beginning in November 2011.”

With health policies continuing to rise, it becomes a problem for consumers, like Betty, who haven't had a raise in a while.

“Our wages have not increased for at least the last 3 years,” Betty said. “We are barely able to pinch pennies now.”

Arnett, of Norfolk, Va., says he went to his Wells Fargo branch to withdraw money from his acount. A few days later, he noticed his account balance was minus $36.

“I didn't understand how I could overdraft by pulling money out with a teller,” Arnett told ConsumerAffairs.com. “A few days after that I noticed my account was -$71.00. I called the bank's customer service number and got a women named Donna. I asked her why was my account overdrawn $71.00 and she explained that I had withdrawn more than I had in the account. I asked how could I take money out that wasn't there to begin with and why would the teller not just tell me the funds I was requesting were not there. Donna said it was up to me to know what I had in my account and not the teller's job.”

Arnett thinks he was set up by the bank so it could collect an overdraft fee. Another explanation could be there was money in the account when he made the withdrawal, but that subsequent checks posting later that day put him over. Whatever happened, that wasn't a particularly helpful handling of his inquiry.

Three weeks too late

There's nothing more aggrevating than having your new appliance go down three weeks beyond the warranty date. Should companies show some leniency? It's clear consumers think they should.

“I called to find out if they could assist me with my Whirlpool dishwasher,” said Connie, of Liverpool, N.Y. “The only thing they would assist in was arranging a fill cost repair. No other suggestions. I would of meet them half way paying half the bill but nothing, just I'm sorry and we can't help. Not standing behind there product.”

Connie's dishwasher is beyond the warranty date so Whirlpool is well within its rights to deny any coverage. However, it seems that if companies would show a little leniency – especially when the product is just days out of warranty – it would go a long way in building customer loyalty.

Capacitor plague

Kevin, of Scottsdale, Ariz., is another victim of “capacitor plague,” the habit of capacitors in LCD flat screen TVs to fail.

“I bought a 40" Samsung LCD (LNT4069F) in 2008,” Kevin told ConsumerAffairs.com. “I started having the clicking/starting problem a few weeks ago. Did some research and saw that it's most likely a defective capacitor used by the manufacturer. Call Samsung. Their response? We don't cover this problem, good luck. This TV is barely 5 years old, obviously defective, and the company won't fix it? Unacceptable. Will not be doing business with this company in the future.”

Actually, Kevin is lucky to have gotten five years of trouble-free viewing. Very often this type of failure occurs just out of warranty. The good news for Kevin is this should not be an expensive repair. TV service people are very experienced at swapping out capacitors.

As California goes, so goes the nation.  Well, so it's said anyway.  

And just to prove it, California is going to start collecting sales tax from online retailers, a move Gov. Jerry Brown says will "create tens of thousands of jobs and inject hundreds of millions of dollars" into the state's moribund economy and spur the rest of the nation to follow in its footsteps.

How will more taxes create more jobs, you may ask.

Well, as the man once known as Gov. Moonbeam explains it, the measure will "level the playing field between online retailers and California's brick-and-mortar businesseses."

The California Board of Equaliziation has estimated that the state loses more than $1 billion a year from uncollected sales tax on online purchases, some $83 million of that from Amazon alone.

A compromise

Earlier this year, you may recall, Amazon threatened to pull out of California, closing any offices or distribution centers there and jettisoning its 25,000 online affiliates in California, independent Websites who sell Amazon products through ads on their sites.  The measure Brown signed into law last Friday is a compromise measure that is more to Amazon's liking.

But back to the jobs question.  How will raising taxes create jobs, other than jobs for more state bureaucrats?

Well, as Gov. Brown explains it, the state law -- authored by Assemblyman Charles Calderon -- really is intended to spur Congress into action, the theory being that when Congress sees California taking action, it will fall in behind.

So how does that create "tens of thousands of jobs?"

Well, see, the state won't actually begin collecting the new online sales tax until Sept. 15, 2012.  And in exchange for that one-year window, Amazon has promised Gov. Brown it will create 10,000 full-time jobs and hire 25,000 seasonal employees by the end of 2015.

Just what those jobs will be and where they will be located is -- we guess -- in the cloud somewhere but no one down on earth seemed to have an answer today.