CONSUMER NEWS & ALERTS

February 5, 2007

OUT OF INDIA
American corporations may finally be getting the message that outsourcing call centers to India is an idea that looks good on paper but doesn't do much to keep customers happy. Wanting to leave no stone unturned, we assigned our foot-loose Tom Glaister to penetrate an Indian call center and report back to us.

Tom somehow managed to work not only a beach but also a bikini-clad young Hindu lady into the story. He didn't manage to get himself hired but he did a good look inside a typical call center. His report provides some valuable background for those who complain about how hard it is to understand "those foreigners" on the phone. Hint: They have the same problem. Read more in this week's cover story: Out of India: Outsourcing Call Centers to India Losing Its Luster.

PAYBACK TIME
It's been a long time since Congress showed any regard for the financial plight of everyday consumers, so it was refreshing to hear Sen. Christopher Dodd (D-Conn.) putting the credit card industry on notice. Dodd, chairman of the Senate Banking Committee, said that now would be the right time for banks and card issuers to voluntarily abandon their more odious practices.

"If you currently engage in any business practice that you would be ashamed to discuss before this Committee, I would strongly encourage you to cease and desist that practice," Dodd warned. A Harvard economist testified that banks use "tricks and traps" to extort money out of their customers, slapping exorbitant fees on every transaction imaginable and even charging interest on balances already paid off.

Debit Cards Lead to Overdrafts Meanwhile, a new report finds that consumers are more likely to overdraw their accounts with debit cards than with checks. "What banks are calling 'bounce protection' is starting to look more like a 'protection racket,'" said Eric Halperin, director of the Center for Responsible Lending's Washington office and a co-author of the report. "Banks are raking in fees from unwitting customers who would not overdraft if given a choice," he said.

Banks could prevent debit card overdrafts at checkouts and ATMs by denying the transaction or warning the customer, but doing so would eliminate the opportunity to charge overdraft fees that average $34.

AN AARP ANNUITY
After decades of selling just about every kind of insurance imaginable, it seems only logical that AARP should be in the annuity business, and now it is. The boomer-obsessed organization will make its membership rolls available to New York Life, which will be selling and underwriting the "AARP Lifetime Income Program."

Annuities have gotten a bad name because of the many unscrupulous con artists and supposedly reputable financial advisors who sell seniors annuities that lock up their money until they're 90 or so. The AARP program, on the other hand, offers so-called "immediate" annuities; they begin paying out as soon as you transfer money into the annuity. Annuities are worth looking into but it's a decision that should include a talk with your tax advisor as well as an independent, fee-based financial advisor who does not stand to profit one way or the other from your decision. We have a primer on annuities that will help you get up to speed.

Don't Overlook Index Funds Yes, annuities have their advantages but depending on your situation, the stock market also offers long-term growth, greater liquidity and, in some cases, less tax exposure. Index funds are an easy and inexpensive way to invest but they're often overlooked by smaller investors who tend to stash their money in mutual funds that may or may not perform all that well and that may include some very expensive management fees. Fred Yager examines the nuts and bolts of index funds and explains why, for many, "passive" investing may be the way to go.

Cuomo Widens Student Loan Probe New York's probe of conflict-of-interest in the student loan business is spreading to more states. New York Attorney General Andrew Cuomo wants to know if there's a conflict of interest behind the recommendations universities make to students seeking loans.

Telephone-Tax Refund Requests Nearly everyone has an income tax credit coming this year for the finally-repealed long-distance telephone excise tax but many of us aren't going to get it because of filing errors, the IRS warns. We have a few tips for getting it right.

IDENTITY THEFT ON THE WANE?
The public relations machine is working overtime to promulgate the notion that the threat of identity theft is lessening. Suddenly, all manner of studies, reports and prognostications are emerging, assuring us that the worst is over and everyone can go back to sleep. This is basically a smokescreen intended to provide cover for Congress as it moves to exempt businesses from liability for being negligent with customers' data.

We heard a lot of talk about how things would change when Democrats took control of Congress. What has changed, in this case, is that it's now Democrats moving aggressively to preempt tough state laws in favor of wimpy federal legislation that takes business off the hook. San Francisco-based Wells Fargo underwrote one of the identity theft studies and, sure enough, Sen. Dianne Feinstein took it to heart, just as she jumped when the record industry barked about the supposed threat posed by satellite radio.

In other privacy news ...

• TJX Sued for Loss of Consumer Data Banks are reporting a wave of fraudulent transactions following the massive TJX hack, resulting in at least one class action lawsuit on behalf of T.J. Maxx and Marshalls customers.

• Data Breach Hits Canada's Club Monaco The Canadian high-end retailer learned of the possible data theft last year but in typical fashion didn't bother telling anyone. Even the Royal Canadian Mounted Police had to learn about it from a local police department.

• Advertisers Fined for Deceptive Use of Adware In a settlement with New York, Priceline, Cingular, Travelocity agree to clean up their act.

• Sony BMG Settles FTC "Rootkit" Charges Consumers whose computers were damaged are eligible for up to $150. The agreement is similar to those reached with several states earlier.

MORE SPARK PLUG SPITTERS
We keep reading how many problems Ford has. Oh poor Ford. Now let's talk about how many problems Ford customers have, like those whose 2003 trucks have picked up the same bad habit that plagues trucks made from 1997 to 2002 -- namely, they spit spark plugs. When one of these trouble-prone engines blows a plug out of its aluminum head, the consumer faces a repair bill that can run into the thousands, while Ford sits idly by, claiming it's never heard of the problem.

Shocking disclosure: Your editor is tired of getting emails complaining about how we are supposedly picking on Ford and other domestic manufacturers. Rest assured, when we start hearing about Hondas, Kias and Volvos spitting spark plugs, you'll know it. Personal note: Your editor, who has never owned an Asian auto, drives a General Motors product assembled by United Auto Workers Union members in Kansas City, Kansas, and likes it very much, thanks. There's nothing personal in our choice of topics.

Gasoline Prices Poised to Climb A cold snap in the Northeast is driving up the cost of crude oil and gasoline prices are sure to be close behind. When crude oil prices went down, it took gas prices a while to follow but we're betting they'll go back up a lot more quickly. The Senate, meanwhile, is opening debate on fuel economy, with only Honda supporting higher mileage standards.

YOU CALL THIS A VACATION?
We all like to get away once in a while but going to India for heart surgery? Or slipping away to Thailand for a kidney transplant? It happens everyday. In fact, an estimated half a million Americans go abroad for surgery each year. The primary motivation is to save money, since not many heart transplant recipients are going to feel like like visiting the local attractions during their trip. Is this a good idea? Our Fred Yager looks at the pros and cons and suggests a few details you might want to nail down before leaving home (like how you get back if things go very wrong).

On the Street Where You Live There's no question that air pollution -- specifically, certain bits of particulate matter -- is very bad for you, longevitywise. What may be surprising is that a new study finds that which street you live on may be a lot more important than what city or part of the country you call home. Live on a busy four-lane street with lots of cars and buses passing by each day? Not a recipe for a long, healthy life.

Study Confirms Passive Smoke Link To Cancer Further confirming that smoking is not just something one does to onself, researchers found a 24 percent increase in lung cancer among those exposed to second-hand smoke.

DO SENIORS NEED MORE SLEEP?
If you notice Grandpa snoozing through the afternoon (or if you are Grandpa), you might think that older people need more sleep. But columnist Fred Cicetti says this isn't necessarily the case and he has some simple steps older folks can take to be sure they're getting enough sleep ... and getting it at the right time.

Does Your Colon Need Cleansing? Whenever colon cleansing is mentioned, we get a flood of vituperative emails from its adherents, who presumably are squeaky-clean both inside and out. But our Dr. Henry Fishman cautions that living organisms are pretty much self-regulating and aren't really meant to undergo the equivalent of spring cleaning. Colon cleansing, he says, is expensive, dangerous and completely unnecessary.

More health news ...

• Impotence Affects 18 Million American Men Age, other health problems, physical inactivity are Cupid's main culprits.

• Popular Weight-Loss Supplement May Have Nasty Side Effects Research raises questions about safety of CLA.

• Coke, Nestle Sued Over Enviga Claims Weight-loss, energy-burning claims are nonsense, suit argues.

• Burger King Testing Trans Fat-Free Cooking Oils But any widespread change is at least two years off.

• FDA Promises To Improve Drug Safety Says new procedures will help prevent future Vioxx disasters.

BIG BEN's BIG BUCKS
First it was the tea tax, now this. The United Kingdom has imposed a $250 tax on long-haul flights into and out of London. To compound matters, it has also hiked the tax on continent-hopping flights. All this suddenly makes London a very expensive point of entry to Europe and beyond. Many Americans, our Dan Schlossberg reports, would be better off flying into Amsterdam, where taxes are much lower and connections are just as numerous.

Frustration Grows for Frequent Flyers Like rising gas prices or worsening traffic congestion, this is hardly a new story but it's worth taking into consideration. Fact is, it's getting harder and harder for frequent flyers to redeem the miles they so loyally accumulate, as airlines ruthlessly take away available seats, pile on more restrictions and find one excuse after another to squirm out of the goodies they so wantonly proferred just 30,000 miles ago.

More travel ...

• Panama to Welcome Wider Cruise Ships No, this is not a story about bigger, wider Americans requiring wide-load cruise ships. It's about the widening of the Panama Canal, expected to be finished within, oh, a decade or so. The expansion will open up all kinds of new cruise routes that are now closed to the new floating pleasure palaces.

• Cell Phones Invade Qantas, Emirates Air No cell phones on U.S. airlines yet, but that could change. Some observers are suggesting separate cabins for inveterate yakkers.

• Smokers Win Atlantic City Gamble Going against the tide, Atlantic City declines to outlaw smoking in public places. The casinos persuaded the city fathers they would strangle if the air got too clear.

SCAMS & OUTRAGES

• Widespread Shill Bidding on eBay This is news? The Sunday Times of London reports with a straight face that its investigation found individuals and companies using shills to drive up bids.

• Credit Card Rate Reduction Scam Canadian scam claimed it could save consumers thousands in credit card interest, FTC charges.

• Telemarketer Fined $1 Million The Broadcast Team violated Do Not Call rule millions of times, FTC charges.

• Abusive Debt Collectors Florida-based defendants operated under a variety of names.

• MBIA Settles Fraud Charges New York State, SEC charge company with deceiving investors.

• "Fertil Male" Ads Feds seek contempt citation against Lane Labs.

• Romance Scams Heating Up Broken heart, empty wallet just a mouse click away.

• Adult "Entertainment" TJ Web allegedly spammed consumers and didn't include postal or return e-mail address.

TEEN CLUBS - HOW SAFE ARE THEY?
Across the country, nightclubs are hosting special events dubbed as "teen nights" that are promoted as a way for teenagers to indulge in clean and safe fun and where no alcohol is served. But the syndicated TV show Inside Edition found salacious activities in supposedly safe clubs. Its hidden camera investigations found scantily clad girls, raunchy contests and sexual acts being performed in public at teen clubs in several states including New York, Massachusetts and New Jersey.

RECALLS

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