Archive for the ‘Busted’ Category

Capital One is a Capital Ofender

December 7, 2007

Fee harvesting is the latest ploy by credit card companies

People with damaged credit have a new bull’s-eye on their backs. The nation’s banks are doing mailings for MasterCards and Visas that are just awful. They’re offering cards with low credit limits of a few hundred dollars. The catch is that they charge fees to get the card that nearly equal the credit limit they’ve given you. This tactic has been called “fee harvesting” by the National Consumer Law Center. That’s because there’s a multitude of subtle fees that they load on. These can include an annual fee, a setup fee, a program fee and a participation fee. The New York Times reports that Capital One and CompuCredit are some of the worst offenders. Except for the annual fee, all of these other fees are completely bogus. You think they’re doing you a big favor by taking you on as a customer. But they eliminate all their risk by hitting you upfront with huge ridiculous fees. This practice is diabolical but pretty clever in a sad sort of way. So beware if you’re suddenly getting an offer for a card and nobody else has wanted you — it could be a fee harvesting ploy coming your way.


Why I hate Credit Bureaus

December 5, 2007

Credit bureaus reluctant to correct credit-reporting errors


What you don’t know about your credit report can hurt you. But what can really hurt you even more is when you report errors to the credit bureaus and they don’t care to update them. Accuracy costs money; the bureaus are only too happy to sell somewhat accurate reports. More than 1 in 4 people have errors on their reports that can lead to higher interest rates, denial of a job and worse. A Florida woman recently sued Equifax because her file was married with someone else’s who had bad credit. She repeatedly provided documentation to clear her name. Equifax refused to do anything about it and the company’s negligence cost the woman $220,000. When the case went to trial, the jury awarded the woman $2.9 million! Equifax has vowed to appeal, according to The Orlando Sentinel.


The laws governing the bureaus don’t have enough teeth in them. People should not have to go to the mat and fight repeatedly to get their credit cleared. The problem is that these bureaus are not focused on you and me; they just want to deliver higher value to shareholders. So they won’t be accurate unless they’re required by law. The sad truth is that there is no way to force bureaus to be accurate — short of the Florida woman’s method. I hope the bureaus get knocked around in the courts so much that their bottom line is damaged and they’re forced to change their ways.

Citibank is at it Again

December 4, 2007

Citi/Macy’s issuing new CCs to 3.5 million inactive accounts

I’ve been hearing from people who say they’ve received a new unsolicited credit card in the mail. The complaints stem from Citibank buying Macy’s credit portfolio and mailing out MasterCards to some 3.5 million inactive accounts. This is outrageous, disgusting and it should be illegal. Citi is contributing to account and ID theft by its behavior. A report in The Boston Globe states that Citi says they’ve received positive feedback from customers about these new cards. Citi also goes on to claim that they informed customers about how to decline these new cards, and that there are no privacy or security issues of concern. Lies, lies and more lies. What’s really going on is that Macy’s now has created another credit line for people — also lowering your score, by the way — by reducing the aging on your credit accounts and issuing you a new major credit card when you might not have wanted one. So if you get one of these pieces of trash in the mail, cut it up. And if you do other business with Citi, don’t use their cards. This is the power the marketplace affords you to punish a company that has done the wrong thing.

Acceleerated Mortgages…Don’t Do It

December 2, 2007

Accelerated mortgages are a rip-off



People are wondering if these offers are a new kind of scam. Scam may be too strong a word but I do think this is a serious rip-off — and I want to show you how to avoid it! First, let’s take a look at the offer. It arrives as a friendly letter inviting you to pay off your mortgage years quicker than you normally would. The deal is that you have to pay your bank or an appointed marketing company $200-$400 to set you up on a bi-weekly payment plan. It also stipulates that you’ll be billed another couple bucks each time you make a payment, or alternately that you’ll pay nothing up front but every bi-weekly payment will be assessed a fee. This plan will have you paying half your monthly mortgage payment every two weeks. That’s equivalent to 26 half-payments in a year. At the end of year, the marketing company on behalf of your bank makes one additional payment toward your mortgage. So the end result is that you pay 13 months in a 12-month period. But because you probably paid an initial fee to set this up, the bank held some of your money all year long and got rich off the interest.

Here’s what you should do instead. I want you to keep making monthly mortgage payments and add one-twelfth extra in the additional principal box on your monthly coupon. So if your monthly payment is $1,200, pay $1,300 instead. That way you’ll do for free what your bank wants to charge you for — and you’ll bring your principal down quicker. There’s one more possible bank rip-off related to your mortgage that you should avoid. They’re going to try to sell you “croak and choke” insurance — otherwise known as mortgage life and disability insurance. It states that if you buy their policy and die, they’ll pay your mortgage. But I see two problems here. First, you’re paying an insurance premium to protect the bank. At the time of your death, there may be better uses of your money for your heirs. So you’re better off with a standard term life insurance policy. Second, the bank charges a premium that’s about 10 times as much as your plain old life insurance policy. Sometimes I wonder where the ethics in banking have gone!

Insurance Sales Fraud

November 28, 2007

Beware of bogus insurance salespeople

There are a lot of pseudo health insurance companies out there selling fake plans to employers and individuals. The Wall Street Journal reports that some 200,000 businesses have been taken in these kinds of rip-offs. Small businesses crushed by high premiums are very susceptible to the lure of cheaper health care. But when somebody gets sick, the insurance card comes back as a fake and all the bills go unpaid. This has been happening in state after state. Insurance is regulated by the states, not the feds, so the rip-off artists can just bounce around from state to state pulling their scams. What do you need to know to stay safe? First off, be wary if you get a pitch for a great deal with drastically lower premiums. But don’t let your skepticism stop there. Contact your state insurance department and ask if a prospective company is licensed to do business in your state. Make sure the name matches exactly because sometimes the rip-off artists will use a name that’s very similar to that of a legitimate business. Seniors also have to be especially careful of fake prescription plans. Once again, call your state insurance department to verify if a health insurance salesperson represents a legitimately licensed company. Preventative steps are the best medicine for your wallet.

Best Buy…Worst Buy

November 27, 2007

Electronics retailers ripping you off with backup discs

Best Buy and Circuit City have come up with a new way to rip off customers buying computers — and it has nothing to do with extended warranties. According to PC World, these retailers are now trying to get customers to pay for Windows recovery discs. The backup discs are rarely needed, but the retailers have found a way to boost profits by tapping into the “What if?” fear of consumers who may not know a lot about computers. It turns out that you can make these discs yourself or buy them from the manufacturer for half of what the stores charge you.

PC World got so fired up over the whole issue that they sent in secret shoppers to get the real scoop. The shoppers found that Circuit City pushed them hard to pay an extra $30 for the store-made recovery discs. But at Best Buy, 3 out of 5 stores outright told the shoppers that it’s not possible to make the backup discs yourself. Meanwhile, several of the top computer manufacturers say that their notebook models come with instructions and software for creating the recovery discs. Best Buy tried to explain its way out of the situation by telling PC World that it was all just a miscommunication between the secret shoppers and the sales associates. But you have to understand that electronics retailers have really had their profit margins crushed, so they’re desperate to push extra stuff on unwitting consumers. One last word on extended warranties on computers: Don’t get them! Computers develop so quickly that there’s no sense in insuring what may be obsolete in a year or two. When you’re shopping for a laptop, just make sure you get one that has at least one gig of RAM for the memory.

That’s a No No, Nancy Nord

November 4, 2007

Acting Consumer Product Safety Commission Chairman Nancy Nord is under more pressure today in the wake of revelations that industries regulated by her agency have paid for her travel.

The Washington Post reports Nord has traveled to China and other destinations with various industries picking up the tab. According to the report, both Nord and her predecessor, Hal Stratton, took dozens of trips paid for by the toy, appliance and children’s furniture industries and others they regulate. The Post cited internal CPSC documents it said showed the connections.

The records reportedly show that Stratton, and then Nord, made nearly 30 trips since 2002 that were at least partially paid by trade associations or manufacturers. In some cases, the Post reports, some industries paying for travel – such as the toy industry – have been involved in huge recalls of dangerous products.

The Post revelations brought an angry response from Capitol Hill.
Sen. Robert Menendez (D-NJ) said such arrangements should be illegal. He said he would introduce legislation that would “prohibit officials at federal regulating agencies from taking travel funded by the industries under their jurisdiction.”

Sen. Richard Durbin (D-IL) he will offer an amendment to a reform bill that would add provisions along the lines suggested by Menendez. “Regulators should not and must not accept travel from those they regulate — period,” Durbin said.
The new revelations may increase calls for Nord’s resignation. A leading consumer group, along with the Speaker of the House, have said she should be fired or forced to step down.

Rep. Edward J. Markey (D-MA), a member of the House committee with key oversight of CPSC, also called for an end to the practice of regulatory officials accepting travel from regulated industries. “Under the Bush administration, the CPSC has become an industry lapdog, instead of an industry watchdog it is supposed to be,” Markey said.

Public Citizen, yesterday called on Nord to step down.
Public Citizen President Joan Claybrook said it’s more than odd that, in a year that has seen an unprecedented number of recalls of unsafe products, the head of the agency designed to protect consumers is calling on lawmakers to reject legislation that would double its budget, beef up its authority and expand its staff. She also says the CPSC’s problems are nothing new. “For far too many years, the Consumer Product Safety Commission has failed to properly protect consumers, hiding behind the excuse that it was underfunded and understaffed,” Claybrook said. “While there was some truth to that statement, it has been ineffective as a shield from criticism because of the very real connections between the CPSC and industry. Claybrook says the ties between the agency and the industries it regulates were underscored by the administration’s recent nomination of Michael Baroody for the CPSC’s top job.

Baroody was then the executive vice president for the National Association of Manufacturers. “The would-be new chairman had spent most of his professional life as a lobbyist and political operative on behalf of corporate interests, an unreasonable choice for a pro-consumer leadership position,” Claybrook said. The long-time consumer advocate says it’s apparent to her that the agency is now avoiding any strengthening of the commission if it means that it will interfere with serving corporate interest groups.
She points out that Nord was a corporate lawyer and an official at the United States Chamber of Commerce before joining the CPSC.

Nord drew consumer fire this week when she testified before the Senate Commerce Committee and withheld her support for S. 2045, a measure Claybrook says would greatly strengthen the agency. Claybrook says its apparent the administration doesn’t want that to happen. “Nord has failed a critical litmus test by proving she is no friend to consumers, Claybrook said. “She does not belong in a position of power and authority and should resign immediately or be relieved of her duties.”

Ebay Eghad

October 31, 2007

Much attention has been paid to the recent recalls of high-profile middle-class toys like the Fisher-Price “Go Diego Go” boat toy or Mattel’s Barbie Doll and Tanner.News crews rush out to find stores that still have the offending items on their shelves. Politicians and government appointees huff and vow to enact new laws that will make life safer for children and their parents.

But the truth is, many recalls accomplish little. The recalled items may disappear, at least for awhile, from store shelves but there is at least one place where recalled goods live forever, uninterrupted by fears of lead paint, strangulation or ingestion of magnets.

That wonderland of e-commerce is eBay, the original darling of the online age.

eBay’s highly-paid executives are quoted breathlessly by the trade press and lionized as visionaries who are single-handedly building a brave new e-community where happy consumers blissfully buy and sell forever.

The reality is somewhat different. Leaving aside for a moment the never-ending horror stories involving goods that are never sent, arrive broken, etc., the simple truth is that eBay seems to be the place where recalled products live forever.

Ebay was paid a visit yesterday, looking for dangerous children’s products recalled this year. Six items were picked more or less at random from recent recalls and entered their descriptions in the eBay search box.

Shopping list

Sure enough, all six — still on sale, many described as brand new. Here’s the shopping list:

Football Bobble Head Cake Decorations Recalled Oct. 25; excessive lead. Still for sale on eBay Oct. 29.

‘Hannah Montana’ Boots Recalled Oct. 18; zippers can tangle, causing falls. Still for sale on eBay Oct. 29.

Fisher-Price GeoTrax Train Set Recalled Sept. 4; excessive lead. Still for sale on eBay Oct. 29.

Parents Magazine Cell Phone Recalled May 3; choking hazard. Still on sale on eBay Oct. 29.

Mattel’s Barbie Doll and Tanner Recalled Aug. 14; excessive lead. Still on sale on eBay Oct. 29.

Unfair to eBay?

An unfair test, you say? There’s no way eBay could be expected to monitor all the thousands of recalled products?

The computer experts consulted don’t agree. The eBay Web site, like most Web sites, is database-generated. Product names and descriptions are entered by sellers and located by potential buyers through the site navigation and search functions.

It took about three minutes to verify that all six items that were checked for were indeed in the eBay database — and it was done the old-fashioned way, by hand. The database engineers consulted agreed that eBay could automate the process of checking government recall databases against items submitted by sellers.

“Entries that rang the “Watch It!” gong could then be examined briefly by a human,” said one engineer. “Nobody wants to use humans but we are talking about children’s life, after all, so perhaps eBay could make an exception, just this once.”

Some critics would even go so far as to suggest that the attorneys general and federal agencies that so fervently track down sex offenders who dare to peruse public profiles on Facebook or MySpace should take a look at the deadly items being brazenly sold to unwary consumers.

EBay said recently that it was placing links on various product category pages that will link to the company’s recalled items policy. According to the announcement, “eBay also messages sellers directly when they are selling items that may be affected by recent recalls.”

It said the procedure was intended “to ensure a safe and successful buying experience online.”

Martha Stewart and Her Amazing Exploding Patio Tables

October 20, 2007

As if owning a shattered Martha Stewart patio table isn’t bad enough, it appears that the table’s warranty may now be worthless because the manufacturer, JRA Furniture, has filed for bankruptcy.The company possibly filed for bankruptcy to avoid responsibility in a pending class action lawsuit, said lead counsel on the case, Richard Doherty from Horwitz, Horwitz and Associates in Chicago.

“There’s no way to know for sure, but I think the facts speak for themselves,” Doherty said.

The nationwide class action seeks restitution from Martha Stewart’s company, Omnimedia, Kmart, which is owned by Sears, and JRA. However, the bankruptcy filing likely means that JRA will not face any meaningful liability.

JRA Furniture was essentially a shell company for JRA Century, a company based in Taiwan that actually manufactured the tables, Doherty said. The company continuously denied any connection with JRA Century even after the Court ordered it to produce documents which included an “Agency Agreement” between the two JRA’s.

JRA Century recently dissolved and Doherty said he doesn’t believe it’s a coincidence the two companies collapsed within days of each other.

Although JRA’s website is still active, no one is answering its two customer service numbers and an e-mail to its customer service department bounced back.

“I was sitting at my computer when I heard this tremendous crash,” said David Potts of Marietta, Ga. “I went outside to see what it was and it looked like my patio was covered in ice. It was the glass from the table top.

“I got a couple of slivers of glass in my fingers while I was cleaning it and here I am a year later and I can still feel pain in the tips of my fingers,” Potts said.

Since September 2003, at least 515 readers have shared stories about their Martha Stewart glass tops spontaneously shattering.

No Recall

Despite the numbers, the Consumer Product Safety Commission (CPSC) has not issued a recall.

A Freedom of Information Act (FOIA) request to the agency revealed their own thick stack of complaints and letters from the CPSC to Kmart/Stewart’s lawyer, Eric Rubel.

In a letter to Rubel dated July 14, 2006, CPSC Deputy Director Marc Schoem states that Kmart and Martha Stewart had “indicated that it has voluntarily implemented actions to address reports of the tempered glass shattering.”

The explanation of those actions takes up three lines of text in the letter but was redacted because of FOIA exemptions that protect trade secrets.

Although this shows that Omnimedia has been aware of the problem for at least a year, it’s unclear whether anything has been done to remedy it as the number of complaints from consumers who recently purchased the tables from Kmart, continue to pour in.

The stack of documents uncovered from the CPSC’s investigation does not reveal why the agency did not implement a recall and CPSC spokesman Scott Wolfson said there is no longer any investigation.

Although JRA is bankrupt, the tables are still widely sold at Kmart under Stewart’s name and at the Home Depot under the “Hampton Bay” line of furniture.

“When Martha entered into this agreement with Kmart back in 1997, analysts looked at it as an effort by Kmart to upgrade its image by offering higher-quality, reputable, brand name goods unavailable anywhere else,” Doherty wrote in an e-mail.

“Well, come to find out that the tables are not high quality, not reputable, defective, made by a company that went bankrupt as soon as its liability into the case became apparent and the goods aren’t exclusive, either, given that you can by JRA-manufactured tables at places like the Home Depot, too. This is the quality image sought by Kmart and Martha Stewart?”

No Comment

Omnimedia and Sears representatives did not reply to two e-mails requesting comment on what the companies are doing to remedy the problem and whether or not either company will honor the defunct warranty.

Sears spokesman Christian Brathwhaite said Kmart would “work with” its customers whose tables have exploded.

“Given JRA’s recent chapter 7 filing, JRA will likely be unable to honor its manufacturer’s warranty,” Brathwaite noted. “As a service to our customers, Kmart intends to work with our customers to attempt to resolve issues that would have otherwise been covered by that manufacturer warranty.”Brathwaite said customers should visit Kmart Customer Care or call toll-free 866-562-7848.

Doherty said that although JRA’s bankruptcy may slow the case’s progress, he is still going forward and that consumers whose table tops explode should:

• Keep a sampling of the glass in a bag for proof;

• File complaints with the U.S. Consumer Product Safety Commission, the Federal Trade Commission, your state attorney general, and Consumer Affairs.Com; and

• Contact Kmart and Omnimedia to remind them how dangerous their tables are.