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Washington State Attorney General Rob McKenna has announced a settlement with three California-based businesses that resolves allegations they installed software that took control of a consumer’s computer by launching aggressive and persistent pop-ups that demanded payment for a movie download service. The software was installed after users signed up for a seemingly anonymous free trial for the service.

“Under this settlement, Movieland.com and its associated companies agree to cease offering anonymous free trials to Washington consumers for their movie download service,” said Attorney General Rob McKenna “Additionally, the defendants must receive express consent from Washington consumers before installing any billing software on the user’s computer, disclose whether the software will cause any pop-ups and clearly state all important contract terms in any advertisement.”

The state filed its original lawsuit last summer following an investigation by the Attorney General’s Consumer Protection High-Tech Unit. The suit accused the following of violating Washington’s Computer Spyware and Consumer Protection acts: Digital Enterprises of West Hills, doing business as Movieland.com; AccessMedia Networks of Los Angeles; Innovative Networks of Woodland Hills; and Alchemy Communications of Los Angeles.

Allegations against Alchemy were subsequently dismissed and the state reached a stipulated agreement with the remaining defendants that was filed today in King County Superior Court. Two company officials, Digital Enterprises’ Easton A. Herd, and Alchemy’s Andrew M. Garroni, are also parties to the settlement, which does not include a finding or admission of wrongdoing.

The defendants agreed to pay a total of $50,000 to resolve the allegations. They also agreed to provisions that limit their business practices.

According to the state’s complaint, the defendants promoted a movie download service through Web sites including movieland.com, moviepass.tv and popcorn.net that offered consumers a free three-day trial. Billing software was then downloaded onto the personal computers of consumers who accepted the offer.

After the trial period, defendants remotely activated the billing software, causing a popup window to appear that indicated the trial period had expired. Consumers who clicked on a “Continue” link on the pop-up were then shown a 40-second video that recurred hourly and told them that they were legally obligated to purchase a subscription. A statement on the company’s Web site also indicated that failure to pay “may result in an escalation of collection proceedings that could have an adverse effect on your credit status.”

The Attorney General’s Office is offering a refund program for consumers who believe they have been subject to the defendants’ practices. Washington residents who believe they are eligible for a refund should file a complaint with the Attorney General’s Consumer Protection Division online at www.atg.wa.gov or call 1-800-551-4636 (number only available in-state) to request a complaint form.

Posted under Privacy

Consumers may think of children’s toys with detachable magnets as a choking hazard, but in the case of Magnetix Magnetic Building Sets, the issues have become far more serious.

Working with the manufacturer, the United States Consumer Product Safety Commission has issued a recall of 4 million units of the toy. The government agency has discovered at least two dozen cases of children ingesting the magnet. One of the children died and nearly all required surgery.

This is the second recall for the toy and by far the most sweeping. The toy contains more than 100 detachable pieces, some of which can cause serious injuries to a child’s digestive system or even be aspirated into a lung. What makes this issue so unusual is the age of the children involved. Although the hazard was initially thought to be a problem primarily for children younger than six, it has since been learned that at least ten injuries involved children between the ages of 6 and 11 years old.

“CPSC is deeply concerned about the dangers that small, powerful magnets can pose to children if swallowed,” said CPSC Acting Chairman Nancy Nord. “In order for any product recall to be effective in protecting consumers, we must significantly reduce incidents and injuries from occurring after the recall is announced.” Mega Brands has been cooperative in this expanded recall, according to the CPSC.

Consumers should stop using the recalled magnetic sets immediately and contact Mega Brands for a comparable replacement toy. If consumers are uncertain as to whether their product is being recalled, they can contact Mega Brands at (800) 779-7122 between 8 a.m. and 6 p.m. ET Monday through Friday.

The CPSC is also asking consumers to immediately report any incidents of loose magnets to the CPSC Hotline at (800) 638-2772 or to the CPSC Web site at www.cpsc.gov.

Posted under Recalls

Consumer Help Web has long given high marks in reviews of various Intuit products, including two of their flagships: Quicken and TurboTax. Members of our staff have even participated in beta testing with the company, and the company agreed those years not to review the products.

Intuit’s once legendary customer service had fallen on hard times in recent years. Consumers complained about product activation (although in reality, Intuit had found a huge percentage of tax preparation was done with “borrowed” copies of TurboTax). Customer service and tech support also became difficult, with the company often charging customers for basic issues. But the consumer community was whispering that Intuit was changing its ways.

Those whispers proved true last week when the company announced it would provide more than $10 million in refunds to consumers after a late glitch in its TurboTax program caused taxpayers to miss the deadline. While we would be the first to criticize a company that didn’t acknowledge its responsibilities with such an important piece of software, we were delighted to see the company proactively reach out to the Internal Revenue Service and save trouble for its customers. The government agency agreed to extend the tax deadline for those customers by another two days.

“We deeply regret the frustration and anxiety this caused our customers,” said Steve Bennett, president and chief executive officer of Intuit. “This is not the experience customers have come to expect from Intuit. It’s not acceptable to us, and we will do right by our customers who were impacted by this delay.”

Those are usually words written by Marketing in a last ditch effort to save face. In this case, the company did do right and deserves praise.

Posted under Customer Service

Reports are coming in that Richwood Meat Company is recalling over a third of a million pounds of ground beef because of E.coli contamination fears. The meat was sold in large Western and Mid-Atlantic states, including California, Pennsylvania and Virginia.

Included in the recall is 107,000 pounds of meat sold in the Western states by Richwood Meat under a variety of names. According to the USDA, consumers with questions should call (209) 722-8171, extension 14, if they have questions about the recall.

Posted under Recalls, Safety

New York Attorney General Andrew M. Cuomo announced the first legal action against a school in his nationwide student loan investigation. Cuomo announced a notice of intent to sue Drexel University in Pennsylvania over its revenue sharing agreements with Education Finance Partners. This week, Education Finance Partners (EFP) agreed to Cuomo’s College Loan Code of Conduct and would end revenue sharing agreements. Cuomo also announced settlement agreements with three more schools: Salve Regina in Rhode Island, Pace University and the New York Institute of Technology. Salve Regina and Molloy College both had revenue sharing agreements with Education Finance Partners.

Previously, Fordham University, St. John’s University, and Long Island University all agreed to cease their revenue sharing agreements with EFP and reimburse students on a pro rata basis for the money received through those agreements.

Drexel received over $124,000 from its revenue sharing agreements with EFP and accrued $126,000 more through March 2007 that has not been paid. Under Drexel’s agreement with EFP, dated April 1, 2006, Drexel agreed to make EFP its “sole preferred private loan provider.” In return, Drexel was to receive 75 basis points (.75 percent) of the net value of referred loans between $1 and $24,999,999; and 100 basis point (1 percent) of all loan amounts of $25,000,000 or greater. Drexel had an earlier revenue sharing agreement with EFP that began in May of 2005 under which Drexel received 75 basis points (75%) of all referred loans. EFP was a non-exclusive preferred lender under the earlier contract. Since 2005, Drexel University has sent over $16 million in loan volume to EFP.

Drexel solicits and corresponds with students from New York, and New York students and their families rely on Drexel’s representations about preferred lenders; the New York Attorney General therefore has jurisdiction over Drexel in this matter.

“This investigation is a two front battle: lenders and schools. We have proceeded against lenders and now we are proceeding against schools. There is no reason for a school not to adopt the Code of Conduct,” Cuomo said. “This office has been clear to schools: settle or we will commence litigation. Either way we will get justice for students.”

Salve Regina, Pace University, and NYIT agreed to the Attorney General’s Code of Conduct, after the Attorney General’s investigation that revealed various practices at each university could have potentially created conflicts of interest.

Salve Regina University: Salve Regina University is located in Newport, Rhode Island. The Attorney General’s investigation found that during the period of 2005-2006, Salve Regina received over $7,800 pursuant to a form of revenue sharing with EFP, which was one of the Salve Regina’s preferred lenders. Between January 2004 and March 2007, certain lenders, some of whom appeared on Salve Regina’s preferred lender lists, provided printing costs or services to the university and/or paid for meals and lodging for university employees at loan workshops, conferences, and/or advisory board meetings. Salve Regina agrees to accept the OAG Code of Conduct and will reimburse the affected students $7,839.74.

Pace University – Pace University is in Westchester, New York. The Attorney General’s investigation found that Pace hired Sallie Mae to staff financial aid call centers, and the Sallie Mae employees wrongfully identified themselves as Pace University employees. Additionally, a Pace administrator who oversaw student loans and advised Pace to drop the federal direct lending program and enter into contracts with Sallie Mae subsequently went to work for Sallie Mae after leaving Pace. This administrator may have had an inappropriate relationship with Sallie Mae while employed by Pace.

New York Institute of Technology: The New York Institute of Technology has three campuses, two on Long Island in Old Westbury, Central Islip, and one in New York City. The Attorney General’s investigation found that NYIT accepted payment from certain lenders, some of whom were on NYIT’s preferred lender lists, including payments for sponsorships of University events and scholarships. When composing its preferred lender list, NYIT considered whether or not lenders had made such contributions or offered Opportunity Loan funds as a criterion. Additionally, some preferred lenders including Sallie Mae, Citibank, College Loan Corporation and AFC paid for meals and trips to student loan conferences for financial aid officers.

Molloy College: Molloy College is in Rockville Centre, Long Island. The Attorney General’s investigation found that Molloy had a revenue sharing agreement with EFP. Molloy received over $1600 from EFP as a result of this arrangement. Molloy has returned this money to EFP and requested that any future revenue due to it under the EFP agreement go towards reducing student loan payments.

The Code of Conduct includes:

1. Colleges are prohibited from receiving anything of value from any lending institution in exchange for any advantage sought by the lending institution. This severs any inappropriate financial arrangements between lenders and schools and specifically prohibits “revenue sharing” arrangements. Lenders can no longer pay to get on a school’s preferred lender list.

2. College employees are prohibited from taking anything of more than nominal value from any lending institution. This includes a prohibition on trips for financial aid officers and other college officials paid for by lenders.

3. College employees are prohibited from receiving anything of value for serving on the advisory board of any lending institution.

4. College preferred lender lists must be based solely on the best interests of the students or parents who may use the list without regard to financial interests of the College. This ensures that preferred lenders will be those the school has determined should be preferred by students as opposed to preferred by the school.

5. On all preferred lender lists the College must clearly and fully disclose the criteria and process used to select preferred lenders. Students must also be told that they have the right and ability to select the lender of their choice regardless of the preferred lender list.

6. No lender may appear on a preferred lender list if the lender has an agreement to sell its loans to another lender without disclosing this fact. In addition, no lender may bargain to be a preferred lender with respect to a certain type of loan by providing benefits to a College as to another type of loan.

7. Colleges must ensure that employees of lenders never identify themselves to students as employees of the colleges. No employee of a lender may ever work in or provide staffing assistance a college financial aid office.

Posted under Uncategorized

The Federal District Court in Oregon has frozen the assets of Beaverton-based Merchant Processing, Inc. (MPI), its owner, and affiliated companies. The court ordered a temporary halt to claims the Federal Trade Commission alleges are deceptive, and appointed a receiver to temporarily take control of the business. The FTC alleges that the defendants used deceptive tactics to sell credit and debit card processing services to thousands of small businesses across the county. The Washington State Attorney General’s Office also has sued the defendants.

In its complaint, the FTC alleges the operation falsely promised that it would save the small businesses money and that it would buy out the merchants’ existing equipment leases, often worth thousands of dollars. The FTC also charged the defendants with failing to disclose fees and concealing pages of fine print from the merchants until after they had already signed contracts. The FTC charged MPI, its owner, Aaron Lee Rian, and affiliated companies Vequity Financial Group and Direct Merchant Processing with violating the FTC Act.

According to the FTC’s complaint, the defendants’ sales representatives call and visit small businesses around the United States and promise they can save them hundreds to thousands of dollars a year in processing fees by offering lower rates than the merchants’ current credit card processing service. They also tell the merchants that the credit card swipe equipment they currently are using is outdated or incompatible with their systems, or that the merchants will need to replace their systems in order to get the special low rate.

Many merchants already are under a contract to lease their card swipe equipment, but the defendants claim they will buy out the merchants’ current leases if they sign a new, usually more expensive, lease. With the claimed lower processing rates, the sales agents promise overall savings despite the higher lease payments. The FTC alleges the defendants’ agents then have the merchants sign third-party equipment leases and processing agreements while concealing pages of fine print. According to the FTC, the sales representatives often don’t leave copies of the agreements with the merchants.

The merchants soon find their fees are not lower, and they end up paying additional fees that they weren’t told about. MPI does not buy out their previous equipment leases, so merchants often end up paying on two leases or spending thousands of dollars to get out of the old lease. Then, to cancel the new, more expensive processing service, the merchants must pay a substantial, previously undisclosed cancellation fee.

The FTC also is seeking preliminary and permanent injunctions halting the deceptive claims and unfair practices, and refunds for the small businesses.

Posted under Customer Service

McNEIL-PPC, Inc. has voluntarily recaled all lots of the GLACIER MINT™ and BUBBLE BLAST™ flavors of LISTERINE® AGENT COOL BLUE™ Plaque-Detecting Rinse after the Company determined that the preservative system is not adequate against certain microorganisms. The Company is recalling all bottles of AGENT COOL BLUE™ Plaque-Detecting Rinse, an estimated 4 million, from both retailers and consumers.

The Company conducted a thorough assessment and concluded that the risk of illness in healthy individuals following use of this product is very low. However, there could be a significant health risk to individuals with weakened or suppressed immune systems. To date, there have been no consumer adverse health events reported that are related to this issue.

The recall affects all existing bottles of AGENT COOL BLUE™ Plaque-Detecting Rinse. Consumers should discontinue using and properly discard the product, and may obtain a full refund through calling the Company’s toll free consumer line 1-888-222-0249 and mailing in the back label, including the UPC code.

Consumers can readily distinguish this product by the cartoon character on the front of the bottle. Only AGENT COOL BLUE™ Plaque-Detecting Rinse products are affected by this action. No other LISTERINE® branded products are affected and they remain safe and effective for use as directed.

AGENT COOL BLUE™ Plaque-Detecting Rinse has been sold to consumers through supermarkets, drug stores, mass merchants and other retail outlets, and is sold to dental professionals’ offices nationwide. The Company is contacting dental professionals and retailers directly as part of their recall notification process.

Posted under Recalls

FDA is advising pet owners that recalled pet food may still be on the shelves in some retail establishments. FDA urges retailers across the country to be vigilant in removing all products associated with the pet food recall, which began on March 16, 2007.

To verify the effectiveness of the recall, FDA has conducted approximately 400 checks of retail stores across the country. Based on the checks, FDA believes most companies have removed the recalled product; however, some have not. FDA will continue to monitor retailers’ efforts to remove these items from the shelves.

“FDA’s priority is to make sure that cats and dogs have safe food to eat, said Stephen Sundlof, D.V.M., director of FDA’s Center for Veterinary Medicine.” Many of us are pet owners and animal lovers, and we want pet owners to feel assured that we are doing everything we can to make sure that all contaminated food is off the shelves.”

In related news, Menu Foods, Inc., a private label manufacturer based in Streetsville, Ontario, Canada, expanded its recall on Tuesday, April 10, to cat food not previously subject to the recall. The varieties of cat food in the United States and Canada now being recalled are included in the list below. A complete list of Menu Foods’ recalled products, including the new items, can be reviewed at www.menufoods.com.

The company acted after receiving information from FDA, which had confirmed test results it received from a laboratory at University of California, Davis. The UC-Davis lab found that canned cat food which had not been included in Menu Food’s earlier recalls tested positive for melamine, a chemical used as a fertilizer and in the manufacture of cutlery and kitchenware.

The company informed FDA that it had shipped wheat gluten purchased from China and contaminated with melamine from its Emporia, Kansas plant to its plant in Streetsville. Some of the products produced with the contaminated wheat gluten also were shipped to the United States. FDA investigators and officials with the Canadian Food Inspection Agency were in the Ontario facility on April 11.

Since March 16, recalls of pet food products, including certain varieties of dog food, have been conducted by Menu Foods, Inc., Hill’s Pet Nutrition, P&G Pet Care, Nestle Purina PetCare Company, Del Monte Pet Products, and Sunshine Mills, Inc. Extensive information about the current pet food situation can be found at the FDA Web site, www.fda.gov. There is now a single list of all recalled pet food located at http://www.fda.gov/ora/fed_state/recalls/Recall.xls which will be updated with any new recall information when announced.

LIST OF NEWLY RECALLED PRODUCTS:

Posted under Recalls

Sears and the United States Product Safety Commission have issued a hazard warning for the company’s well known circular saw.

The company says the logo (pictured left) can partially detach and expose a portion of the blade. Sears reported that they knew of two such incidents, one of which caused an injury requiring 12 stitches.

The recall involves a 7-1/4-inch circular saw. The model numbers included are: 172.108550, 172.108560, 172.108650, and 172.108660. The model number is located on the circular saw’s upper motor housing. Model numbers 172.108560 and 172.108650 have a gray body housing and a gray blade guard. Model numbers 172.108550 and 172.108660 have a black body housing and a gray blade guard. “Craftsman” is written on the label on the upper blade guard.

The organizations said that consumers should immediately remove the Craftsman label from the upper blade guard. For additional information, call Sears at (800) 659-7026 between 7 a.m. and 9 p.m. CT Monday through Friday.

Posted under Recalls

The consumer group representing people aged 50 or older and their spouses came out swinging this week against the government’s proposed Medicare Advantage rates.

“AARP believes inflated payments to Medicare Advantage plans are unfair and fiscally irresponsible. Congress should ensure that traditional Medicare and Medicare Advantage compete on a level playing field,” said AARP Director of Government Affairs David Sloane.

Last month, the independent Medicare Payment Advisory Commission (MedPAC) found that reimbursements to Medicare Advantage plans are 12 percent more than reimbursements to Medicare’s traditional fee-for-service program. All taxpayers and all Medicare members—not just the 18 percent of Medicare members enrolled in private MA plans – are funding these inflated payments.

“Right now Medicare payments clearly favor the MA program over traditional Medicare, which is unfair to the majority of beneficiaries who participate in the traditional program. The federal government should be financially neutral with regard to Medicare reimbursement,” continued Sloane.

Medicare Advantage plans were supposed to provide the same benefits as fee-for-service more efficiently—not at greater cost to the program. In the past, they were able to provide extra benefits to beneficiaries through the greater efficiencies achieved by managed care (e.g., care coordination, negotiated prices, provider networks). Today, because of the excess payments to the plans, they have no incentive to achieve these efficiencies.

According to the nonpartisan Congressional Budget Office (CBO), the federal government could save $65 billion over five years and $160 billion over 10 years, if Medicare Advantage plans were paid at the same rates as traditional Medicare providers.

Posted under Customer Service