Current Events in November 2011

This seems to happen a lot. A consumer purchases an expensive item, like a major appliance or a large screen TV. Shortly after the manufacturer's warranty expires, the product breaks down, requiring a major repair.

“Shortly after the one year warranty expired on our Kenmore 400 Washer, it began tearing holes in items,” Layne, of Los Angeles, told ConsumerAffairs.com. “The washer seems to enjoy eating jeans, boxer shorts, shirts, my wife's bras, and our blankets. After 14 months the washer no longer functions as it was described. I tried to reach out to the manufacturer, but to no avail.”

Layne says the best he could get from the manufacturer was the offer of a $50 gift card. The fact that the problems occurred just outside the warranty period just seems to make the matter worse.

Extended warranties have limitations

While some consumers seek to protect themselves by purchasing expensive extended service contracts, there are problems with that. One alternative is to make the purchase with a credit card that automatically provides extended coverage. In fact, this may be the most overlooked consumer protection available.

American Express has offered this kind of coverage for years. According to American Express, charge your covered purchases to the card and Extended Warranty will extend the terms of the original manufacturer's warranty for up to one additional year on eligible purchases. For example if you have a six-month manufacturer's warranty, we will add another six months. If you have a one-year manufacturer's warranty we will add one additional year.

The American Express coverage is good for the amount charged to your card for the item or $10,000, whichever is less, not to exceed $50,000 per cardmember account per policy year. Significantly better than a $50 gift card.

If Layne had purchased the washer with an American Express card, he would simply lot into the company's claim center and file a claim.

Other cards work too

Don't have an American Express card? Visa has a very similar extended warranty. To take advantage of this service a Visa credit card user only needs to use their Visa card to purchase an item that has its own warranty coverage and send in the warranty card.

When the item is out of warranty, the Visa warranty kicks in for an identical period of coverage. If the product breaks or is found to be defective, Visa will credit the purchase price back to the consumers credit card.

Mastercard's Peace of Mind Protection Plan offers very similar coverage on some – but not all - of its cards. In addition, it also provides a satisfaction guarantee.

Target won't accept your return? If you become dissatisfied with a product you purchase using your eligible MasterCard card within 60 days of purchase, and the store will not accept a return, you may be eligible for a refund for the cost of the product up to $250.

If find out if your card contains this coverage, read the credit card agreement that came with your card or call Mastercard's customer service department.

We were reminded that it's a good practice to hold onto receipts when you purchase any kind of electronic device or appliance. Even if it works right out of the box, there are no guarantees it will keep working, and while some stores have very lenient return policies, others do not.

“I purchased a Sunbeam microwave about four or five months ago,” Linda, or Aurora, Ill., told ConsumerAffairs.com. “I didn't keep my receipt as I've never owned a microwave that just died like this one did. It was more than 90 days so the store I bought it from couldn't get me a copy of the receipt. And I was told they couldn't help me without it. I bought it from a SuperTarget so I can't narrow down a transaction as I do all my grocery shopping there.”

The problem with keeping receipts, of course, is what to do with them. One trick we've often heard about is putting a basket or jar on your desk or bill paying area and routinely placing receipts in it. When you need to make a return, you can find the receipt with a little searching.

Trouble

Taking out a mortgage is a serious undertaking and should be done with care. Steven, of Colo., thought he was doing all the right things but he wasn't.

“I received a voice mail from First Mortgage West regarding very competitive mortgage loans rates,” Steven said. “I contacted them and spoke with Michael. He was very professional, offered the terms for high income, high credit rating applicants. Before processing the re-finance loan I checked them out on-line and with the BBB. Their product was new, but was reviewed with favor from all of those who had completed the loans and filed a review.”

But Steven was in for a nasty surprise.

“As of September 27, I was advised that funding for the loan would occur around October 5 and that I would be contacted with the time and date of closing,” Steven said. “I have not heard from them since after repeated attempts to contact them. They have approximately $12,000 of 'seasoning' funds outstanding.”

By that, Steven means that he paid an advance fee of $12,000 to the company. You never do that. A mortgage company might assess a small application fee but all other fees are collected at settlement. We're not sure where Steven got his information about First Mortgage West, but when we checked the Los Angeles BBB web site, we found the company had received a rating of “F.” Additionally, the BBB has issued an alert on the business, saying “the Bureau confirmed that the 1150 South Olive Street, Suite 2000 Los Angeles, CA 90015 address provided for this company is not a physical location. This is a virtual office.”

Newer not necessarily better

Shopping for a new washer and dryer? Maybe you should look at yard sales or a secondhand store.

“Our LG washer/dryer is less than five years old,” Ralph, or Mesa, Ariz., told ConsumerAffairs.com. “We bought these top of the line machines since we are getting older and wanted to trouble free for the foreseeable future. This year we had to replace both circuit boards on the dryer. Then after that the drum would not turn and motor just buzzed. So we had to have replaced the motor too. A little reading on the Internet and it seems that many people have had the same problem with the centrifugal switch on the motor, and circuit boards needing replacement is common as well. Now the washing machine has started to make a loud squeaking sound when it runs. My old washer/dryer combo was purchased in 1986 and was still working perfectly in 2007 when we bought the LG units. We paid a premium for top of the line, but we sure didn't get top of the line reliability.”

We're not sure why newer appliances don't seem to be as reliable as their predecessors, but it might have something to do with the sophisticated electronics they all seem to have. Maybe the best rule of thumb for appliances is “the simpler the better.”

More than 40 people die every day from overdoses of prescription pain relievers like Vicodin, methadone, OxyContin, and Opana, according to the Centers for Disease Control and Prevention, which said the death toll from overdoses of prescription painkillers has more than tripled in the past decade.

“Overdoses involving prescription painkillers are at epidemic levels and now kill more Americans than heroin and cocaine combined, ” said CDC Director Thomas Frieden, M.D., M.P.H. “States, health insurers, health care providers and individuals have critical roles to play in the national effort to stop this epidemic of overdoses while we protect patients who need prescriptions to control pain. ”

The increased use of prescription painkillers for nonmedical reasons, along with growing sales, has contributed to the large number of overdoses and deaths, the CDC said.

In 2010, 1 in every 20 people in the United States age 12 and older—a total of 12 million people—reported using prescription painkillers nonmedically according to the National Survey on Drug Use and Health. Based on the data from the Drug Enforcement Administration, sales of these drugs to pharmacies and health care providers have increased by more than 300 percent since 1999.

“Prescription drug abuse is a silent epidemic that is stealing thousands of lives and tearing apart communities and families across America, ” said Gil Kerlikowske, Director of National Drug Control Policy.  “All of us have a role to play. Health care providers and patients should be educated on the risks of prescription painkillers. And parents and grandparents can take time today to properly dispose of any unneeded or expired medications from the home and to talk to their kids about the misuse and abuse of prescription drugs. ”

Action plan

In April, the Administration released a comprehensive action plan to address the national prescription drug abuse epidemic to reduce this public health burden.  

The plan includes support for the expansion of state–based prescription drug monitoring programs, more convenient and environmentally responsible disposal methods to remove unused medications from the home, education for patients and healthcare providers, and support for law enforcement efforts that reduce the prevalence of "pill mills" and doctor shopping.   

Already, 48 states have implemented state–based monitoring programs designed to reduce diversion and doctor shopping while protecting patient privacy and the Department of Justice has conducted a series of takedowns of rogue pain clinics operating as “pill mills. ” 

For the analysis, CDC reviewed state data on fatal drug overdoses, nonmedical use of prescription painkillers, and sales of prescription painkillers to pharmacies and health care providers.

The study found:

• State death rates from overdoses (from 2008 data) ranged from a high of 27.0 deaths per 100,000 people in New Mexico to a low of 5.5 deaths per 100,000 people in Nebraska.
• Nonmedical use of prescription painkillers ranged from a high of 1 in 12 people aged 12 and older in Oklahoma to a low of 1 in 30 in Nebraska. States with more nonmedical use tend to have more deaths from drug overdoses.
• Prescription painkiller sales per person were more than three times higher in the highest state, Florida, than in the lowest state, Illinois. States with higher sales per person tend to have higher death rates from drug overdose.

From the reports filed by distressed homeowners, it's clear that many foreclosures over the last few years might not have been necessary.

For example, Miranda, of Eugene, Ore., reports that she called her mortgage company, Bank of America, when she knew she was going to be late on a payment. Miranda said she was receiving the money to make the payment, it was just that she wouldn't be able to make it on time.

“I was advised that I was pre-approved for a mortgage modification program, but wouldn't qualify until I missed two payments,” Miranda told ConsumerAffairs.com.

Didn't really need a modification

So even though she could afford to pay her mortgage, Miranda followed the bank's advice, was late on a payment, and was invited to apply for the modification program.

“By the time I was eventually denied for the program, it had been two months and it was the day after they sent my mortgage into foreclosure,” Miranda said.

Miranda's, and as many as four million other foreclosures, may receive independent reviews under enforcement actions by the Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision.

So far, the OCC says 14 large mortgage servicers have been required to correct deficiencies in their servicing and foreclosure processes and to engage independent firms to conduct a multi-faceted independent review of foreclosure actions that occurred in 2009 and 2010.

Independent review

Independent consultants have the job of evaluating whether borrowers suffered financial injury through errors, misrepresentations, or other deficiencies in foreclosure practices and determining appropriate remedies for those customers.

Where a borrower suffered financial injury as a result of these practices, the consent orders require remediation to be provided.

"The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions," said acting Comptroller of the Currency John Walsh. "These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions."

Watch for a letter

If you are one of the eligible homeowners, be on the lookout for a letter from your mortgage company that will explain how you can request a review of your case.

If you don't receive a letter but feel you qualify for such a review, the OCC has set up a special website where you can get more information about the process.

From the many reports received by ConsumerAffairs.com over the last three years, it is clear that many homeowners believed they were following the rules and providing needed documentation for a modification when they suddenly learned their homes were about to be sold at foreclosure.

After looking around and finding itself alone, Bank of America is canceling its plan to charge $5 per month for customers who use their debit cards to make purchases.

The plan enraged consumers.  Thousands said they had canceled or planned to cancel their Bank of America accounts.  

BA's surrender comes after SunTrust and Regions Banks joined Chase and Wells Fargo, which earlier canceled their plans to charge for debit cards.

“Consumers have the power to make the big banks back down from unfair practices if they raise their voices and vote with their feet and their dollars,” said Norma Garcia, manager of Consumers Union’s financial services program.  “In the end, Bank of America understood that it risked losing too many valuable customers by charging an unfair debit card fee.”

The fee, announced a month ago, was intended to make up the revenue Bank of America thinks it will lose from the new lower swipe fees. But it set off a firestorm of protest from customers who had had just one fee too many from an institution many believe is still in existence only because of the American taxpayer.

Consumer backlash

“President Obama gave those banks billions of our tax dollars and they turn around charging us more fees,” said Mary, of Decauter, Ga. “This is right down illegal and Bank of America will fall hard. They always say that the bigger they are, the harder they fall. I can't wait for that day.

“As the fees go up at the bank, customer service is declining,” Lisa, of Lillington, N.C., told ConsumerAffairs.com. “Is it only important to take care of customers with large sums of money and not the middle class? I will definitely be moving to another bank that takes care of all the account holders. If you are looking for a new bank and don't want to pay large fees for your savings account and checking accounts, do not chose this bank.”

Apparently the consumer outrage resonated in the executive suite. Bank of America today issued a brief statement declaring it would not implement its announced debit card fee, citing the customer feedback it had received.

Bank of America blinks 

"We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee," said David Darnell, co-chief operating officer. "Our customers' voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so."

The ill-fated debit fee was a result of this year's long-running battle between banks and retailers over how much lenders should charge for each debit card transaction. In the end, retailers won out, with the Federal Reserve lowering the “swipe fee” from 44 cents to 24 cents. 

“The public backlash over debit card fees should serve as a big wake up call to banks that they can’t arrogantly take their customers for granted,” said Pamela Banks, senior policy counsel for Consumers Union. “While banks may come back with other fees in the future, they’ll be gauging public reaction carefully.  Consumers should be on the lookout for new fees and remember that if they’re not happy with how they are being treated, they should shop around for a bank or credit union that can offer them a better deal.”

Retailers celebrate

The Retail Industry Leaders Association (RILA), which lobbied hard for the lower rate, declared Bank of America's retreat was “proof-positive” that consumers will be the winners with the lower swipe fee.

“Bank of America and its big bank peers are no longer free to fleece merchants and consumers at will,” said Katherine Lugar, RILA executive vice president of public affairs. “This outcome is just what consumers deserve, what reform advocates predicted and what we will fight to extend to the credit card market.”

The action by Bank of America follows decisions by competitors to drop customer trials of the new fees. SunTrust Banks Inc. and Regions Financial Corp. also said they will stop charging customers for debit-card transactions.

Two more banks -- SunTrust and Regions -- have seen the face of consumer outrage and withdrawn from the field of battle, withdrawing fees for customers who make purchases with debit cards.

Wells Fargo and Chase withdrew their fees last week, after witnessing the mass outrage directed at Bank of America, which at last word will still clinging to its $5 monthly fee.

The four banks that have withdrawn the fees operate about 15,000 U.S. branches and account for more than $2.2 trillion in deposits, more than 20% of the industry total, The Wall Street Journal reported.

US Bank, Citigroup, PNC, Key Bank have remained on the sidelines throughout, not advancing a plan to levy charges on debit-card users.

Banks backtrack

"We believe banking is a relationship business and recognize the importance of responding to client preferences," said Brad Dinsmore, Consumer Banking and Private Wealth Management executive at SunTrust. "We've listened to our clients' feedback and will provide the convenience and security of check cards at no additional charge as part of all of our checking accounts."

Clients will not need to take any action to receive their refund - it will automatically take place in the next 30 days, Dinsmore added.

"We are committed to providing an exceptional customer experience and are continually adapting our products and services in response to the needs and preferences of our customers," said John Owen, head of consumer services for Regions Bank. "We have heard from our customers and are responding to their feedback by eliminating the monthly fee for CheckCards."

Customers who previously incurred a CheckCard fee will not need to take any action to receive their refund and it will be credited to their account on Nov. 4.

Bank Transfer Day

Consumer dissatisfaction with Bank of America's $5 monthly debit-card fee has sparked a nationwide movement to urge consumers to move their accounts from large banks to smaller community banks or credit unions.

Kristin Christian, a Los Angeles businesswoman, is credited with organzing "Bank Transfer Day," scheduled for November 5.

Christian launched the movement after getting fed up with her bank. She's moving, and is urging others to join her. In the wake of Bank America's decision to add a fee for using a debit card for purchases, many other consumers appear ready to join her. Others have expressed a wide variety of grievances.

San Francisco U.S. District Judge William Alsup has given the green light to city authorities to require that retailers distribute fact sheets about cell phone radiation to their customers.

CTIA: The Wireless Association, the cell phone industry’s leading trade group, filed suit two years in a row in an effort to block city ordinances  requiring that this kind of information be made available to cell phone buyers at the point of sale.

“CTIA continues to shamelessly fight tooth and nail to keep cell phone customers in the dark on potential cell phone hazards,” said Renee Sharp, senior scientist and director of the Environmental Working Group's California office. “New science is pointing to the possible risks of cell phone radiation exposure, particularly for children. It is important for consumers to know what steps they can take to minimize their exposure.”

Judge Alsup’s ruling allows San Francisco to require that retailers distribute informational fliers supplied by the city to customers who consider purchasing a cell phone. He dismissed the industry’s claim that the ordinance conflicts with the Federal Communications Commission’s (FCC) authority to regulate cell phone radiation.

“Nothing in the federal statutes or FCC regulations bars local disclosure requirements like those now required in San Francisco,” Judge Alsup wrote. Underscoring a basic point in the debate over potential health hazards from the ubiquitous technology, he added that, “The FCC has never found that cell phones are absolutely safe.”

Ongoing battle

EWG called Alsup’s decision a landmark decision in the ongoing battle to ensure that the public is kept up to date on the evolving science of possible cell phone radiation hazards.

“This is a true victory for the public’s right to know,” said Sharp. “Alsup’s decision marks the first time that any US government body will be allowed to require cell phone retailers to tell consumers about the potential health risks of using their products, and more importantly, what they can do about it if they are concerned.”

The judge ordered minor changes in the city’s proposed informational fliers for greater clarity and rejected provisions of the ordinance that required stores to display informational posters and stickers.

CTIA has used a variety of backroom tactics and legal maneuvers to limit public access to information about legitimate concerns over cell phone safety, EWG said.

EWG uncovered documents showing that CTIA officials met with the FCC about San Francisco’s original right-to-know ordinance, which was struck down, and that shortly thereafter the agency made changes to its website that softened earlier statements about the potential hazards of cell phone radiation.

The World Health Organization has classified cell phone radiation as possibly carcinogenic, a finding supported by long-term epidemiological studies. EWG’s own investigation of available science from around the world came to a similar conclusion. While the research continues, simple, inexpensive measures such as using a headsetcan help consumers reduce their exposure.

When JetBlue Flight 504, bound from Fort Lauderdale to the New York area, was diverted to Hartford, Conn. by the weekend snowstorm, the plane sat on the tarmac at Bradley International Airport for more than seven hours before passengers reached the terminal.

While federal aviation authorities will investigate to see if the airline violated new rules designed to prevent these strandings, there may also be an inquiry to determine what exactly was happening on board the jet, and whether passengers were in danger.

Recordings of radio transmissions between the pilot of Flight 504 and the tower suggest a grim and possibly dangerous situation.

Pilot: If you try to come on with a jetway now and flash a trooper's uniform on the plane, it's not going to be good, it's not going to be pretty. They've (the passengers) calmed down a little bit, I told them we're waiting for a tug and a tow-bar and it's only a matter of seconds, so DO NOT BRING ANYONE ON BOARD THIS PLANE! So don't even put the airstairs up there.

Tower: OK, roger that.

Moments later it was apparent the situation had changed and the pilot had changed his mind.

Pilot: I've got a problem here on the airplane. I'm gonna need to have cops on board. There's some cops sitting right in front of you. I need some airstairs brought over here and cops brought on board the airplane.

Tower: JetBlue 504, roger.

At one point in the recording, the captain reports the situation has calmed a bit but that he is concerned about the passengers, especially one who is wheelchair bound and another who is diabetic.

He recounted for the tower the timeline of his flight, noting his plane had been in the air for three hours and on the ground at the airport for over seven and a half hours. He then thanked the tower crew for their help.

Pilot: Listen, I just want to put my two cents in, for whatever it's worth, thank you very much...because I think we got more help from you guys than our own people.

Tower: JetBlue 504, you're welcome, it's our pleasure.

People who have trouble controlling their weight are often tempted to try more “exotic” solutions. If they are tempted to try choriornic gonadatropin (hCG), a prescription hormone, there are plenty of health experts who advise that they don't.

According to the website WebMD, hCG is used to aid proper sexual development in both boys and girls. Those who advocate its use for weight loss also prescribe a very low-calorie diet, as few as 800 calories per day. Doctors say it is the restriction of calories, not the hormone, that causes weight loss.

Not approved for weight loss

The Food and Drug Administration has not approved hCG for weight loss, and in fat requires a “black box" warning on the prescription labels clearly stating that fact. Despite that, many people continue to use it, often obtaining the hormone through Internet pharmacies.

Many, like Jennifer, of the Bronx, N.Y., who thought she was getting a “free sample of hCG from Power Health Brands, end up paying a lot more than they expect.

“I ordered the trial bottle but my account was charged $84.95,” Jennifer told ConsumerAffairs.com. “I returned the product by First-Class Mail and requested that my account be credited. To date, my account has not been credited nor has there been an explanation as to why not despite repeated emails to them.”

Texas takes action

Texas Attorney General Greg Abbott has reached agreements with several weight-loss clinics and a distributor of a weight loss product in Texas that were marketing hCG for weight loss uses. Under the agreement, the businesses must significantly alter the way they market their services and/or products.

The clinics all advertised hCG for weight loss and the distributor advertised and sold a homeopathic version of hCG as a weight loss product, according to Abbott.

The following businesses have agreed to stop advertising hCG for weight loss:

• Biohealth of Texas, LLC, which operated in at least a dozen north Texas cities;
• Weight Control of Texas, Inc., based in San Antonio;
• Gulf Coast Plastic Surgery, P.A. of Houston; Dragon’s Breath Massage of Keller; and
• Optimum Health Care, LLC of Pantego. Professional Health Products Southwest of Arlington agreed to stop advertising and distributing homeopathic hCG.

Although physicians are generally allowed to prescribe products for non-FDA-approved purposes, drugs cannot be marketed or advertised for a medical use unless that purpose has been approved by the FDA. As a result, physicians and weight-loss clinics may not advertise hCG for weight loss in part because the FDA has stated there is no substantial evidence indicating that hCG leads to weight loss, beyond that which stems from severe dieting.

There are, in fact, no approved homeopathic or over-the-counter hCG products.