Complain about a product or service

Consumer News & Alerts

April 9, 2007

ROAD TO RUIN
Wall Street is beginning to worry that subprime lending, currently unraveling in the mortgage industry, will deliver a double whammy to the economy as more and more consumers, who financed their cars with subprime loans, default. If it happens, consumer activists say banks and car dealers only have themselves to blame.

"Car dealers are destroying their market, with phony loan documents and hidden charges that are driving their subprime customers into default," says activist Duane Overholt, a shady car dealer's worst nightmare. In the business for 25 years, Overholt stood up and blew the whistle in 1997. At the time, by his calculation, he had swindled consumers out of $33 million. Today, he says, abuses at auto dealerships are even worse.

"In 1997, the average rip-off that I could identify, because I did it, was about $1,200 a car. Today it's over $4,000 per automobile." Get all the gruesome details in this week's cover story, Road to Ruin: Subprime Auto Lending.

It Didn't Work Not only has the rash of subprime mortgages caused big trouble for lenders and troubled homeowners, it also didn't accomplish its purpose -- there was no net increase in home ownership despite the blizzard of reckless and undocumented loans, a study finds. The rising number of foreclosures is also putting a dent in pending home sales, according to a recent report.

A Hard Lesson College students and their families put their trust in their schools' financial aid advisors but a nationwide investigation finds that trust may be misplaced. Under pressure from New York Attorney General Cuomo, a number of schools have pledged to make reimbursements and eliminate kickbacks and other favoritism. Citibank has agreed to fund an education effort. A number of school lending officers have reportedly been suspended or put on leave as the probe continues.

VONAGE VERSUS VERIZON
Vonage, the Internet telephone provider, has always portrayed itself as a giant killer. But the giants just struck back. Verizon convinced a jury that Vonage had infringed on its patents and a judge ordered Vonage to stop signing new customers -- a virtual death sentence, since existing customers bail out at a good clip. But an appeals court has temporarily stayed the trial judge's order pending an appeal.

There are two ways to look at this -- as a case of the little guy being stomped by the big bully monpolist or as a slick start-up skimming investors and customers while swiping technology from established players. Take your pick. We've been using Vonage in our Los Angeles office for years and find it quite satisfactory, though hardly cheap. Our personal favorite is Skype -- amazingly inexpensive and very easy to set up. Note, though, that Skype is not intended to be your primary telephone and does not include any kind of 911 service.

Georgia Suspends Buzz While Vonage likes to present itself as cutting edge, Buzz Telecom is one of the last of the free-standing long-distance providers, still up to such old tricks as signing seniors to overpriced plans. Or so we're told by the George Public Service Commission, Indiana Attorney General and others.

"FAILURES AT EVERY LEVEL"
The nationwide outbreak of pet poisonings has consumers snarling at the pet food manufacturers and the public employees whose job it is to ensure the safety of animal -- and human -- food. The animal rights group PETA produced a timeline showing what it said were "failures at every level" of the FDA's attempt to handle the situation.

Those who aren't snarling are worried about what happens next. Just a review of recent gastronomic disasters is enough to make anyone sick:

• Peanut butter
• Chicken stips;
• Taco John's;
• Tomatoes;
• Lettuce;
• Spinach;
• Carrot juice;

Don't even think about Mad Cow disease, which has an incubation time of years instead of hours.

Why doesn't Congress do something? Well, the last Congress -- the most corrupt in recent memory -- tried to pass something critics dubbed the "Food Industry Protection Act", which would have overruled state laws including restaurant hygiene codes, milk pasteurization requirements, and even some states' warnings to pregnant women about drinking alcohol or consuming fish high in mercury. Fortunately, that industry-written measure didn't pass and the current Congress is at least looking at the problem of a food safety net that is, at best porous.

Dog Dish Back to pet food for a minute ... China says it is looking into the allegations that contaminated wheat gluten is responsible for the pet deaths. But in a country where food poisoning is rampant, it's not likely anyone will get too worked up about it. Meanwhile, the pet food recall has been expanded to include American Bullie Pet Chews, Sunshine Mills Dog Biscuits and some Del Monte pet foods and snacks.

Just Don't Tell Them Many if not most food scientists, doctors and public health types will tell you that irradiation would eliminate a lot of food poisoning but some activists fear it would cause weird changes that would sap food of its nutrients and encourage an already dirty industry to be even sloppier in its sanitation practices.

The FDA has come up with a novel answer to the dilemma. It proposes allowing food processors to zap certain foods without labeling them as irradiated and to come up with a new name -- something friendlier and, you know, nicer, than irradiation -- for other foods. "Pasteurization" has a nice ring to it, some supporters of the notion think. Americans don't seem to get very upset anymore about government lies, secrecy and deceit so why upset them with the truth, seems to be the thinking behind this disingenuous proposal.

KILLER STOVES
While we all know you shouldn't stand too close to a glass-topped Martha Stewart patio table, who would think the everyday kitchen range presented a potential for fatal accidents? Public Citizen says that ever since oven makers started using cheaper grades of steal, their appliances have been top-heavy, prone to tip over when the oven door is open. Think about it. If your range suddenly tips over, boiling liquids can go flying and, even worse, the whole contraption can crush children, pets and smaller adults standing nearby. The risk has been fully documented but, complains Public Citizen, the Consumer Product Safety Agency has been remarkably unconcerned about it.

Speaking of Martha ... we see she supplied a take-out meal for Microsoft billionaire Charles Simonyi who blasted off on a space junket over the weekend. As always in this season of renewal and rebirth, Martha's glass-topped tables are celebrating Spring as they do every year -- by exploding in a fusillade of tiny glass droplets. You would think that someone, maybe Matha, might eventually try to rein things in a bit but apparently she's just too busy to be bothered.

GAS PRICES SPROUT WINGS FOR SPRING
Like weeds shooting from the soil, gas prices are on a spring fling, with the nationwide average price up 13 cents over this time last year, when gas prices set new records. In fact, a few spots in California are just a penny away from hitting the magic $4 per gallon mark. The latest ConsumerAffairs.com survey found no prices below $2.

Hybrids Rebound With a summer of high gas prices ahead, consumers are once again turning their attention to hybrids and small cars. The Prius supply has finally caught up with demand, which is making it easier to negotiate a decent price for the leading hybrid. Other automakers are racing to get into the game, with Ford pinning its hopes on a plug-in hybrid, hoping to find or develop an improved battery.

Watch the Mirror Lots of attention has been paid to front- and side-impact protection, airbags and so forth but amazingly little has been done to provide improved protection in rear-end accidents. With neck injuries being the most common traffic injury, it's time to get serious about decent head restraints, says the Insurance Institute for Highway Safety.

CHEMICAL IMBALANCE
If you can believe this, mighty Monsanto wants the federal government to protect it from those rotten dairies who are labeling their milk as free of bovine growth hormones. It's not that the claim is untrue, whines Monsanto, but it gives the impression that it's unhealthy for humans to drink milk produced by hormone-addled Guernseys. Farmers like the Monsanto chemical -- called rBST -- because it makes cows give about ten per cent more milk. But many consumers fear it causes cancer and premature puberty. So to settle the matter once and for all, Monsanto wants its friends in Washington to order the dairies to just shut the hell up about the whole affair.

The Spykes are Spiked Remember those cute little juice boxes your kids drank out of when they were small? Anheuser-Busch remembers too. Its latest contribution to alcoholism is something called the "Spykes Liquid Lunchable" -- little two-ounce drink containers with names like Spicy Mango, Hot Melons, Spicy Lime, and Hot Chocolate. But the Spykes aren't juiceboxes, they're malt liquor with more than twice the alcohol concentration of beer. Consumer groups are outraged and are demanding a recall and investigation. Prison would be more appropriate.

Drug Desperation Pfizer is hooked, all right -- hooked on the fat profits it makes from Lipitor, one of the most widely-prescribed cholesterol-lowering drugs. But now that cheaper generics are available, some health plans are pressing doctors, druggists and patients to forgo the high-priced spread. News reports say Pfizer has been running a stealth campaign, providing "suggested" letters that doctors can use to justify their choice of Lipitor, which can cost $1,000 more per year than the generics.

Forgetfulness Not Always Bad No question there are lots of things we'd all like to forget but seniors sometimes worry about memory blips, fearing they're the precursor to Alzheimer's or other dementias. But in this week's Healthy Geezer column, Fred Cicetti says that's not always so.

IRS LOSES TAXPAYER DATA
The IRS got a taste of its own medicine -- it was audited by the Treasury Department's Inspector General, who found that the agency lost no fewer than 490 computers between 2003 and 2006, putting the personal information of nearly 2,400 taxpayers at risk. Oh, the audit also found that the IRS had poor security practices for protecting its machines and the data they hold.

Just a few days before, a GAO report had found that the IRS was, you guessed it, not doing enough to secure data on the taxpayers who keep it in business. Heads should roll every time a government agency loses the data entrusted to it by the taxpayers, but that hardly seems likely, now does it?

More privacy notes ...

• Data Thieves Hit University of California-San Francisco Intruders make off with student records including Social Security numbers, payroll and bank account info.

• Former Morgan Stanley Employee Arrested On Data Theft Charges Service rep pilfered hedge fund client identities, feds allege.

• Texas Cites RadioShack for Exposing Customers to Identity Theft Texas store left customer documents unprotected in trash cans, state charges.

• FCC Strengthens Rules For Phone Privacy New rules intended to curb "pretexting." The FCC also said no to airborne cell phones, refusing to lift its ban on airborne blather, at least for now.

• Microsoft Issues Patch To Plug Seven New Windows Holes "Critical" update needed to close animated cursor vulnerability.

SCAMS & OUTRAGES

• "Pervasive" Tax Fraud Jackson Hewitt tax preparers claimed bogus deductions, took kickbacks from clients, government charges.

• Restaurant Chains Settle Gift Card Charges Olive Garden, Red Lobster, Smokey Bones, Bahama Breeze Agree to Refunds

• Feds: Most Web Scams Originate in U.S. Secret Service finds vast majority of Web scams are home-grown.

RECALLS

TAXPAYERS EMANCIPATED
Not only can't the IRS keep track of all its computers, it can't keep track of all the holidays, which is very unusual indeed for a federal agency. The IRS was aware that April 15 falls on a Sunday this year but it failed to note that April 16 is a holiday -- Emancipation Day -- in the District of Columbia. That's a little ironic since D.C. is not exactly emancipated, having no representation in Congress and enjoying home rule in name only. But under federal law, tax deadlines must abide by legal holidays in the District -- so the next time you're in Washington, thank the locals for giving you an extra day to file your taxes this year. You can dawdle around until Tuesday April 17 this year.

Back to the top |