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Washington consumers filed 18,354 complaints with the Attorney General’s Office in 2006. Consumers reported fewer complaints about online auctions while communications companies and retailers, which have held the No. 1 and No. 2 spots for at least the last six years, continued to top the list.

The Attorney General’s Consumer Protection Division released its annual Top 20 list of consumer complaint categories this month. At the same time, Attorney General Rob McKenna acknowledged the division’s work in recovering $12.5 million for consumers through litigation, complaint mediation, and the Lemon Law program during the 2005-2006 fiscal year.

Online auctions slipped in the rankings from No. 6 to No. 19. Consumers reported 319 complaints about online auctions last year, compared to 774 in 2005 – the first year in which data was available.

Conversely, consumer complaints concerning electronic shopping shot up from No. 9 in 2005, when 532 complaints were reported, to No. 5 last year, when 819 were reported. The category held the No. 3 spot in 2004 and 2003.

Consumer Protection Division staff said the data seems to suggest that more people are shopping online, but the online auction frenzy is waning. A longer period of time is needed to positively identify trends, however; and some of the difference can be attributed to how complaints were categorized. The Attorney General’s Office also noted that complaints about online auction fraud outnumber all other issues reported by Washington state consumers last year to the FBI’s Internet Crime Complaint Center.

“Complaints received by our office suggest that consumers are becoming more careful about bidding for merchandise in online auctions,” McKenna said, “but risk is still there. The Internet is ripe for fraud and some consumers are blindly shopping on sites they are not familiar with. Shoppers should only visit reputable sites in order to ensure trouble-free transactions and reduce the likelihood of becoming victims of identity theft.”

“Last year, the Attorney General’s Office ramped up our enforcement efforts in a number of important areas including fighting high-tech fraud,” McKenna added. “We started the year by filing our first case under Washington’s Computer Spyware Act and ended the year by settling for $1 million. We’ve since filed four other cases under the anti-spyware statute.”

Also in 2006, the Consumer Protection Division:

* Settled its first federal anti-spam law with two companies accused of blanketing the Seattle School District and nonprofit organizations with junk e-mails.
* Reached a $325 million multi-state settlement with Ameriquest Mortgage Company concerning predatory lending allegations.
* Settled an important case in the area of consumer health and fitness with the operators of LA Weight Loss diet centers. The substantial increase in consumer complaints about health and diet clubs can be attributed to this settlement, as consumers were encouraged to file complaints with the Attorney General’s Office in order to be eligible for refunds.

The office also expanded its outreach efforts:

* Consumer protection staff made 195 presentations to consumer groups in 2006, reaching more than 13,375 attendees. Identity theft was the most frequently requested topic.
* McKenna created LEGIT, Washington’s Law Enforcement Group against Identity Theft, last year. The group is working on several initiatives to reduce identity theft.
* McKenna also convened two statewide Latino Consumer Education Conferences, bringing together expert consumer advocates and a diverse group of participants with a shared goal of helping protect Washington’s Latino consumers from fraud. Following that success, Norma Chavez, of the Consumer Protection Division, recently conducted two workshops in Spanish in South Seattle in conjunction with National Consumer Protection Week.
* The Attorney General’s Office, AARP, Microsoft and the Federal Trade Commission teamed up in 2006 to present a Cyber Safety Campaign to educate the public about online hazards such as phishing scams, viruses and spyware.

The Consumer Protection Division is focusing its enforcement efforts on ten key areas considered the most critical to consumers: Internet commerce; privacy and identity theft; senior fraud; automobile sales and the Lemon Law; credit and financial industries; health and drugs; telecommunications issues; charitable solicitations; emergency home repair contractors and emerging marketplace issues.

Top 20 Complaint Categories for 2006

Rank	Industry	Total Complaints	Percent of Total Complaints	2005 Rank	2005 Total Complaints
1	Communications	1,468	8.00%	1	1,680
2	Retail Sales	1,398	7.62%	2	1,318
3	Collections	1,307	7.12%	3	1,270
4	Auto Sales	934	5.09%	4	1,017
5	Electronic Shopping	819	4.46%	9	532
6	Contractors	818	4.46%	5	844
7	Health & Diet Clubs	785	4.28%	20	199
8	Books/Magazines & Directory Publishers	653	3.56%	8	596
9	Credit Card Issuers	584	3.18%	7	664
10	Auto Repair	486	2.65%	10	522
11	Health Care	454	2.47%	12	399
12	Internet Service Providers	443	2.41%	11	409
13	Consumer Lending & Transfer Agents	420	2.29%	14	317
14	Commercial Banking	398	2.17%	11	409
15	Telemarketing	392	2.14%	15	288
16	Cable Networks & Program Distribution	376	2.05%	18	246
17	Insurance	339	1.85%	16	287
18	Mortgage Lending	324	1.77%	19	229
19	Online Auctions	319	1.74%	6	774
20	Travel	318	1.73%	13	320

Posted under Privacy

Cox ranks highest in satisfying high-speed Internet customers, while SBC Yahoo! ranks highest among dial-up Internet providers, according to the J.D. Power and Associates 2005 Internet Service Provider Residential Customer Satisfaction Study(sm) released yesterday.

Now in its eighth year, the study measures customer satisfaction with Internet service providers based on seven factors. They are: performance and reliability; cost of service; image; customer service/technical support; billing; e-mail services; and offerings and promotions.

Cox records the most improvement in the study, increasing 20 index points from 2004. Cox receives the highest ratings in the high-speed segment in performance and reliability and customer service. Following Cox in the rankings are Verizon, BellSouth and Bright House, respectively.

SBC Yahoo! receives particularly strong ratings from its dial-up customers in offerings and promotions and cost of service. SBC Yahoo! is followed in the rankings by AT&T Worldnet and EarthLink, respectively.

The study finds that dial-up accelerators are having a big impact on the number of hours dial-up users spend online. Overall Internet usage among dial-up customers has increased from 15.6 personal hours per week in 2004 to 17.8 in 2005. Among those using dial-up accelerators, Internet usage averages 19.9 hours—10 percent higher than broadband users, who average 18.1 hours per week. Customers using dial-up accelerators also report spending less on Internet service than the dial-up average—$19.35 per month compared to $20.04 for all dial-up users. Reflecting increasingly competitive pricing, high-speed users report spending less on average in 2005—$43.83 per month in 2005, down from $44.12 in 2004.

“Speed is the name of the game in the Internet world, and customers who use accelerators are more likely to switch to broadband products like DSL and cable modem down the road,” said Steve Kirkeby, senior director of telecommunications research at J.D. Power and Associates. “With nearly one-third of dial-up users saying they intend to switch to a high-speed connection in the next six months, dial-up accelerator users are more likely to switch to their current providers’ high-speed product, retaining them as customers for the long term.”

Although DSL subscribers are significantly more satisfied than cable modem users for a second consecutive year, cable modem providers are increasing market share at a faster pace than DSL. In 2005, cable modems account for 28 percent of Internet subscriptions—up from 24 percent in 2004. Sixteen percent of Internet service subscriptions are for DSL service—up just 1 percent from 2004. However, among the 32 percent of dial-up subscribers who say they will definitely or probably switch to high-speed in the next six months, 47 percent intend to go to DSL. Only 30 percent intend to switch to cable modem.

High-speed subscribers are more price sensitive than dial-up in deciding when and where to switch, whereas connection speed is much more important for dial-up than high-speed subscribers. The effects of discounted packaging of services are also evident, with this issue having factored into the decision of 62 percent of subscribers who switched to high-speed versus 39 percent to dial-up.

“Price competition among high-speed providers is increasingly prevalent,” said Kirkeby. “Although service interruption is considered by more than one-half of high-speed service subscribers as important, price is the No.1 reason to switch. Long term, however, product performance will be the main reason they stay.”

The 2005 ISP Residential Customer Satisfaction Study is based on responses from 6,313 residential customers of Internet service providers nationwide.

Posted under Customer Service

The Federal Trade Commission is considering a change to its “Do Not Call” regulations that would allow consumers to receive pre-recorded messages. Those types of calls are currently not allowed, but companies reportedly claim they need pre-recorded calls to reach consumers with whom they have done business.

More than 80 million telephone numbers are now on the “do not call” registry that took effect one year ago. Media reports indicated that the FTC claims that telemarketers now have to remove numbers from their calling lists within 31 days instead of the previous three months.

ExpressNewsline.com reports that the FTC is also proposing a rule change that will allow consumers to place their name on a list that prohibits even the first call from being made to them by a business. Those regulations would also curtail the use of techniques used to circumvent caller-id systems.

The FTC released its Quarterly Enforcement Update for telemarketing fraud and deceptive practices on January 28. The government agency initiated 22 separate enforcement actions, some of which dealt with the Telemarketing Sales Rule, or “do not call legislation”. Typical of those actions was the FTC’s December 10, 2004 complaint against FGH International Corporation. The original complaint charged the company with deceptive sales practices, but has been ammended to include violations of the Telemarketing Sales Rule.

State lawmakers are quickly introducing their own legislation. In Alaska, Rep. Kurt Olson is proposing legislation to ban recorded messages whose subject mater includes political candidacy or advocacy for legislation. Across the country, Connecticut representative Donald Sherer is advocating a bill that would create a do not call registry for cell phones and fax numbers.

The proposed changes after only one year and the mobilization to complicate legislation even more is troubling. The FTC’s actions against only 22 firms last quarter seems to be a small number. In an editorial titled Golden Dial Tones published after the “do not call” registry went live, Consumer Help Web quoted a telecommunications executive who complained, “When only the bad guys can call, the only sales pitch you may hear is from a bad guy.”

Meanwhile, legitimate businesses continue lobbying efforts to keep calling.

Posted under Privacy