Common Law - The FindLaw Consumer Protection Law Blog

February 2010 Archives

Caveat Emptor! New Credit Card Fees, Tactics on the Way?

What's wrong with the current credit card bill? Well, for starters, the new credit card rule which went into effect this week could wipe billions of dollars from the revenues of major credit card companies.

Okay, but what's the bad news in that?

Answer: Did you really think that the major credit card companies would go down without a fight?

As discussed in this blog, on Monday, major portions of the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) went into effect, amending the Truth in Lending Act and providing some legislative relief to consumers. The CARD Act, shields consumers from some deceptive trade practices employed in the consumer credit industry, particularly by credit card companies.

Of course, credit card companies are balking at the prospect of shelling out billions under this new law.

Here's card companies might do in order to recuperate their losses:

  • Raise Rates. There was no blanket rule in the legislation to prohibit the major credit card companies from raising rates. There were just limitations, including the requirement to notify cardholders 45 days in advance. Remember those little notices you receive in the mail, from time to time? The ones that tell you that there has been a change in your credit card terms-and-conditions? Well, maybe you should read it, because if you don't agree, you could cancel your card and pay off your remaining balance at your old terms.
  • New credit card fees. There laws leaves the door open for a variety of new credit card fees. Some of these may include: fees for paper statements, fees for overseas transactions (i.e. even on online purchases made with a foreign seller), fees to reinstate your rewards and fees to transfer your balance... even fees for not using your card.
  • Stingy rewards. Many credit card companies will start becoming more stingy on rewards plans, according to CNN. And some have gone as far as removing your rewards if you're late to pay, allowing you to reinstate the rewards by paying a fee.
  • Stingier credit. Credit card companies will be cracking down on credit extension. It may start becoming more difficult to get a credit card or to have your credit limit extended.

There are probably many things you can do to protect yourself, such as paying your balance on time, for starters. But one of the most important things for consumers to know is that they must be in the know. Consumers should take every effort to read the terms and conditions of their credit card agreement. They should also make sure to read the letters the card companies send in the mail, detailing any change to the credit card services. These notices will tell you when the companies are introducing new fees.

Remember, those notices can be your ticket out of your credit card, if you're not happy with their new fees.

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Massive Debt Negotiation Scam Shut Down

Watch out for get-out-of-debt schemes!

One of the largest debt negotiation scams in the United States has finally landed in hot water. On Wednesday, the Attorney General of Alabama, Troy King, and the Alabama Securities Commission announced the permanent shutdown of Allegro Law, LLC and Allegro Financial Services LLC.

The lawsuit was filed by King and the Securities Commission Director, Joe Borg, seven months ago. At the time, the suit halted operations and froze the assets of the company.

The main complaints received with regards to the company were its lack of effectiveness in reducing debts and its false representations. The Alabama Deceptive Trade Practices Act is a consumer protection law that has the aim of protecting consumers from unfair and deceptive trade practices. Allegro was found in violation of this Act by making false claims and providing misleading representations to consumers. The company advertised that the services provided would be supervised by an attorney. The company told customers to stop paying their debts, in hopes of making the debt "uncollectible" in the books of debtors, thus allowing for easier settlement. According to the complaint, this practice did not yield good results for customers.

Furthermore, customers made monthly payments to Allegro -- payments which they falsely believed were being applied to their debt and which were, in fact, being applied to the payment of Allegro's fees.

"People who were in desperate circumstances came to Allegro for help, and instead, they suffered greater harm," said King. King also mentioned that steps are being taken to compensate and restore those who were victims of Allegro. Former clients of Allegro will be contacted by the receiver, Louis Colley.

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Docs Want Warning Labels on Foods Likely to Choke Kids

Anyone who has bought a toy in the past 10 years knows we have regulations that require warning labels on toys that present a choking hazard to young children. But what about the one thing they put in their mouths the most? On Tuesday, CNN reported the American Academy of Pediatrics estimates at least one child in the United States dies every five days from choking on food. The Academy rates choking as the leading cause of death among children 14 and younger. This largest group of pediatricians in the U.S. is calling for regulations requiring warning labels for foods that present the biggest choking hazard to children.

Dr. Gary Smith, a pediatrician and immediate past chairman of the Committee on Injury, Violence and Poison Prevention of the American Academy of Pediatrics, tells CNN that there is an extensive system of regulation, labels and recalls in place for toys that pose a choking hazard. He feels that food should have similar requirements.

Dr. Smith says there are certain types of food that present the highest risk of choking. "For example, foods that are round or cylindrical in shape and are roughly the diameter of the back of a child's throat -- these types of foods can completely block the child's airway," he says. Foods that present the biggest hazards are: hot dogs, grapes, raw carrots, apples and peanuts. Children 4 and under only have front teeth, so are at an even higher risk for choking since they have no back molars with which to grind their food.

While the Academy urges action in labeling foods, here are some immediate steps they recommend to help parents lessen the risk of choking:

  • Cut hot dogs lengthwise and grapes in quarters. This changes the dangerous shape of the food, which can block throats of young children and even teenagers.
  • Avoid giving toddlers other high-risk foods such as hard candy, nuts, seeds and raw carrots.
  • Never let small children run, play or lie down while eating.

The Academy of Pediatrics' new policy statement on foods that pose a high-choking danger for children 14 and under is scheduled for publication in the journal Pediatrics in March.

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Toyota Denies Electronic Defect

Emotions ran high at the Toyota Congressional Hearing, yesterday.

Accusations ran high, too.

"They misled the American public, by saying that they and other independent sources had thoroughly analyzed the electronics systems and eliminated electronics as a possible cause of sudden unintended acceleration when, in fact, the only such review was a flawed study conducted by a company retained by Toyota's lawyers.”

These harsh wordswere spoken by House Representative Bart Stupak yesterday at the Congressional Hearing, where Toyota executives fended for themselves.

Amidst these harsh accusations that Toyota Motor Corporation misled the public, Toyota could only be one thing: apologetic.

Indeed, the auto giant was apologetic for the defects in its products, and vowed to fix the problems. Toyota has been front and center in a controversy involving the sudden acceleration of their vehicles. The problem have been linked to several fatal accidents around the United States.

Although Toyota was sorry, they also denied a large allegation -- that there was a defect in the electronic throttle system.

Researchers who testified at the hearing begged to differ.

Sean Kane, the President of Massachusetts-based Safety Research & Strategies Inc., testified before Congress yesterday with his report in hand- - a 51 page report alleging that an electronic flaw prevented the car's onboard computer system from detecting and stopping certain short circuits that would trigger the sudden acceleration.

Kane's research was attacked, as both Toyota's executives and interested House Representatives attempted to discredit Kane's research.

House Rep. Steve Buyer (R-Ind), questioned Kane's motives, asking him if he'd been paid by lawyers to do his research. Indeed, Rep. Buyer was an interested party in the Toyota hearings, as his electoral base, corporate campaign sponsorships and subsequent re-election stood to be greatly affected by any closure of the Toyota plants in his district.

The question of a defect in the elctronic throttle on some Toyota vehicles is still unanswered and may not be answered for a long time. For now, consumers should take caution and attempt to take all reasonable efforts in seeing their Toyota dealers for any potential problems.

Related Resources

CARD Act Part 2: Key Credit Card Reform Takes Effect

Yesterday, Phase Two of the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) came into effect. This should theoretically be putting the brakes on some bad behavior by credit card companies.

Said President Barack Obama: "[T]oday, we are shifting the balance of power back to the consumer and we are holding the credit card companies accountable."

Indeed, major credit card companies have engaged in what many would argue are unfair and deceptive practices for years. But the relentless lobbies of the major credit card companies and the banks have helped these companies evade legislative reform for decades.

Now, the tide of credit card reform may have shifted.

For a breakdown of the provisions which took effect last August, including the requirement to give customers advance notice of significant changes in the terms of their accounts, see our previous post about phase one of the implementation of the CARD Act.

The changes that went into effect yesterday include:

  • Interest rates: Credit card companies can no longer raise rates on existing credit card balances, with certain important exceptions. Furthermore, if you open a new account, the credit card company can't raise the rate for 12 months. This, of course, is pending certain conditions. However, amongst the shady rate hikes that will no longer be allowed is the infamous "universal default," the practice by which card companies kicked on-time customers into penalty interest rates if they fell behind to an unrelated creditor (such as by missing a car payment, mortgage payment, payments on other cards, etc.).
  • No more (of certain) fees. That's right- credit card companies are no longer allowed to charge you certain fees, such as fees for paying your card over the phone. However, new fees could likely be looming.
  • How your bill payments are applied: Remember when you would send your payment in, only to have it applied to the part of your balance with the lowest interest rate? No more! Card companies must now apply your payment to the balance with the highest interest rate.
  • Bye Bye two-cycle billing! Credit card companies can now only calculate your interest on your current cycle's balance.
  • Enhanced disclosures regarding minimum payments: The companies must now show you exactly how long it will take to pay off your card if you pay with only the minimum balance.

Although these credit card changes signal relief for credit card holders, legislative news isn't always so one-sided. The new rate limitations, for example, will lead credit card companies scrambling to recuperate the lost income by circumventing the restrictions and becoming more aggressive in areas where they have some breathing space. Furthermore, the limitation in fees could just mean more aggressive tactics in figuring out new fees which escape the legislative limitations.

The effect on the consumer credit industry has yet to be seen in the wake of this new legislation. It will be interesting to see how major credit card companies respond to the CARD Act's credit card reform, and to see if the new law deters the unfair and deceptive practices many feel have long pervaded the industry.

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Internal Memo From Toyota Raises Questions

An internal memo from Toyota is raising questions about whether Toyota had safety in mind when they did their floor mat recalls. Reuters reports that the internal memo from Toyota lauded the recall due to floor mats as an inexpensive way to stave off federal investigations into the sudden acceleration problems in their vehicles.

The internal document, which is dated back to 2009, reveals that Toyota's Washington D.C. staff spoke of how the recall would save Toyota more than $100 million because it would end a federal investigation that commenced in 2007 about sudden acceleration complaints in Toyota vehicles.

While Toyota maintains that it is always looking out for its consumers' safety, there are others who say that Toyota has been slow to address problems with their vehicles. We wrote about how Toyota has been accused of playing down defects in their vehicles in FindLaw's Injured blog. This internal memo is basically adding fuel to those accusations. Reuters quotes the U.S. Department of Transportation's spokeswoman Olivia Alair as saying, "Unfortunately, this document is very telling."

Toyota is claiming that its internal memo does not capture the whole story about its focus on safety. Toyota released a statement on Sunday which was quoted by Reuters: "Our first priority is the safety of our customers and to conclude otherwise on the basis of one internal presentation is wrong."

Toyota's President Akio Toyoda is set to testify before Congress this week. Many experts are saying that his testimony is a make or break moment for the embattled automaker. Mr. Jeffrey Sonnenfeld, a Yale School of Management senior associate dean told Reuters: "Congress is doing him a favor. He can be apologetic and be contrite and take responsibility and acknowledge that there have been some stress points in growth of the company." It seems that if he does, then Toyota will have a better chance to recover from all of the bad publicity over the recent recalls of their cars. Toyota stock has dropped 19% over the past month.  

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In her keynote address given February 17, before the International Consumer Product Health and Safety Organization (ICPHSO), Consumer Product and Safety Commission (CPSC) Chair Inez Tenenbaum covered a wide range of topics regarding the work her Commission has accomplished in the past year and hopes to accomplish in the future. Specifically, Chairman Tenenbaum had particular remarks of interest to consumers affected by the recent toy and crib recalls.

First, despite what may seem to consumers like a year overwhelming product recalls, Chairman Tenenbaum noted that in 2009, there was a 75 percent decline in toy recalls versus 2008, and an 80 percent decline in toy recalls due to lead violations. Additional improvements last year included the opening of an office in Beijing, China and a home CPSC budget for 2010 that is double what it was 4 years ago.

Chairman Tenenbaum discussed the many accomplishments and changes in the CPSC over the last year, including the extensive work it has done on the drop side crib recalls, attempts to "move[] swiftly to get ahead of the emerging issue of cadmium in children’s jewelry," and the work to hold companies like RC2, Fisher-Price, Mattel and Target, "accountable for lead in paint violations tied to the major recalls of 2007 and 2008."

Most importantly, one of the major goals Chairman Tenenbaum set out for 2010 is to carry out a "Safe Sleep Initiative" for babies and toddlers in the U.S. Ms. Tenenbaum described the initiative in part saying, "In response to the completely unacceptable number of [crib] recalls, deaths and near-deaths in recent years, we are taking action. Our Safe Sleep initiative is a holistic, multipronged approach. In 2010, CPSC staff will propose a final rule mandating new performance standards for cribs."

The Chairman emphasized her promise to develop a new federal safety standard for cribs this year. Ms. Tenenbaum then when on to pointedly say to crib manufactures that she finds it unacceptable for companies with products under recall to point fingers at parents who have lost a child. Sounding like she is squarely on the side of the consumer in this issue, she said, "Take responsibility and show respect to the grieving family, yes, even if they are pursuing litigation. Those who tread into this arena when CPSC has found your product to be defective will be called out. Make no mistake about it."

Ms. Tenenbaum concluded by promising to better protect consumers by transforming the CPSC "from what some have described as a 'teething tiger' into the world’s leading lion of consumer protection." We look forward to a productive year ahead for the CPSC.

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More rumblings can be heard from the troubled auto maker Toyota about Toyota issues with its popular Corolla and Matrix. Many consumers are complaining about problems with Matrix and Corolla power steering.

As reported by the New York Times, the National Highway Traffic Safety Administration has initiated an investigation into the reported power steering problems that could affect around 500,000 2009 and 2010 Toyota Corollas and Matrixes.

According to Reuters, Toyota has no plans for yet another recall, and will initiate a recall only if the power steering problem is found to be a safety threat. Another recall by Toyota could prove to be another blow to the reputation that the auto maker once had regarding the quality and safety of its vehicles.

As the LA Times reports, Toyota's executive vice president, Mr. Shinichi Sasaki said that the company was ready for the NHTSA to discuss the issues with its Corolla model. He said that Toyota was "ready to respond" to any information regarding the popular car model.

The Corolla was the second most popular vehicle in the country trailing Toyota's Camry model. Toyota sold close to 300,000 Corollas last year in the United States, according to Autodata Corp. The investigation of the Corolla and Matrix by the NHTSA is the fifth open investigation of a vehicle by Toyota.  

For more information about Toyota recalls, investigations, and other information, you can visit our FindLaw Toyota webpage. For more general information, please visit our Related Resources.

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States Weigh In, But Is the Jury Still Out on BPA?

Since the federal government has yet to act, states are stepping in to fill the void on legislation to control or eliminate the use of the chemical BPA, especially in products for babies and young children. Bisphenol A, commonly known as BPA, is a chemical used to harden plastics and until recently, was often found in products such as sippy cups, baby bottles and lining the cans of food products.

According to USA Today, the FDA had originally found BPA to be safe, but has recently issued an announcement that in the light of new studies, it now has "some concerns" about the chemical's potential effects on brain development of fetuses, infants and children. It did not say BPA is unsafe.

USA Today reports that last year, Connecticut and Minnesota became the first states to ban BPA in products intended for children 3 years of age and younger. Today, Oregon's Statesman Journal reports that a ban on BPA has just missed passing the Oregon State Senate on a tie vote of 15-15, taken Tuesday. However, a ban is not yet out of the question, a similar bill is also pending in the state House of Representatives.

As also reported Tuesday, by the Journal Sentinel, in Wisconsin, the state Assembly voted by a wide margin (95-2) to ban BPA in products for children 3 and under. This follows a passage by the state Senate of an identical bill. Some law makers told the Sentinel, that they were moved to further investigate a ban on BPA due to a extensive series of investigative reports the paper has done regarding the influence of chemical industry lobbyists on the federal position regarding the chemical.

All in all, USA Today reports that Washington state has recently passed a ban, and in addition to the laws in Organ and Wisconsin, bills are currently pending in Maryland, Missouri, New Jersey, New Mexico, New York, Pennsylvania, Vermont and Washington, D.C. Canada has already become the first country to ban the chemical for use in baby bottles.

Industry spokesmen like Steve Hentges, a BPA specialist at the American Chemistry Council, oppose the bans. He tells USA Today that research shows BPA is safe. Despite this, some manufactures have voluntarily stopped using the chemical. If you wish to avoid products with BPA, here are some recommendations by the Department of Health and Human Services:

  • Plastic containers have triangular recycling codes on the bottom. Some numbered 3 and 7 may contain BPA. Those numbered 1, 2, 4, 5 and 6 very likely do not.
  • Do not put warm or hot liquids into BPA containers.
  • Do not use them if scratched.
  • Most baby bottles are BPA-free because of voluntary changes by major manufacturers. Pacifiers and toys use materials without BPA.

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Hold the Salami: Lunch Meat Recall Expanded by FSIS

On February 16, the Food Safety and Inspection Service of the USDA announced it is expanding, for the second time, the salami recall originally announced January 23, 2010. The recall is being expanded due to a new positive test result for salmonella.

The company, Daniele International Inc., an establishment with operations in Pascoag and Mapleville, R.I., is expanding the recall due to discovery of salmonella in an unopened salami product tested by FSIS. These products were not included in the original recall as they are not sausage products that contain black pepper on their surface, nor were they packaged with those products. The black pepper was believed to be the source of the salmonella outbreak that sickened 230 people in at least 44 states according to Consumer Reports Safety Blog. Based on preliminary testing by the FSIS, the company believes that crushed red pepper may be a possible source of the salmonella contamination.

According to the announcement by the FSIS, the products under recall have sell-by dates ranging from February 3, 2010, through May 26, 2010, and were distributed to retail establishments nationwide. Each individually packaged product bears a label with establishment number "EST. 459" inside the USDA mark of inspection.

For a complete list of the recalled products by Daniele International provided by the FSIS, click here.

The CDC has posted information about the multi-state outbreak on its website: http://www.cdc.gov/salmonella. The FSIS will provide updates on its website as they become available and asks all consumers with these products in their homes to dispose of them right away.

Consumers with questions about the recall should contact the company's Hotline at (888) 345-4160.

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The Buzz On Google: FTC Privacy Complaint Filed

There's a lot of buzz about Google Buzz.

A Washington DC area nonprofit group has filed a complaint with the Federal Trade Commission against Google Buzz. In their complaint, the Electronic Privacy Information Center (EPIC) invokes Section 5 of the Federal Trade Commission Act, claiming that the business practices of Google are Unfair and Deceptive, therefore subject to review by the FTC.

The 16-page complaint, dated February 16, effectively requests the FTC to investigate the business practices of Google with regards to their new social networking product, Google Buzz. The social networking feature was launched in February 9 as part of GMail. The feature was added to existing GMail accounts without giving notice to the users and without providing users with an opportunity to opt-in.

And that is exactly what the Google Buzz privacy complaint calls for -- that the FTC require GMail to provide users with an "opt-in" preference.

Of course, that is not the only allegation in their complaint. EPIC also claims that the change in Google's business practices was a violation of user privacy expectations, that it diminished user privacy and that it contradicted Google's own privacy policy.

But that's not all. The complaint even goes one step further, stating that Google may have violated Federal wiretap laws. Furthermore, Canadian Office of the Privacy Commissioner is also looking into the potential privacy breach, according to CBC.

The Buzz feature automatically searches the user's most frequently emailed contacts and adds them as "followers," potentially exposing the user's sensitive communications.

Google Buzz privacy concerns come on the heels of a lawsuit filed against Google Buzz's biggest competitor, Facebook. A class action lawsuit was filed against Facebook yesterday regarding unfair and deceptive business practices and breach of privacy issues.

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Facebook Changes Face, Gets Slapped With Class Action

Facebook's continuous morphing has been a point of contention for its millions of users but now, the shape-shifting has landed the company into some hot water.

A class action lawsuit was filed in U.S. District Court for Northern California against the social networking giant, based on the changes to the privacy settings made by the company last November and December, claiming that Facebook mislead its users into believing that their information would be better protected.

The Facebook lawsuit alleges that the changes to the new Facebook privacy settings reduced the privacy of the social networking site's users. This was contrary to the company's claims that the changes would actually increase privacy. In addition, the suit claims that the new settings are making it easier to access the personal information of the users, leaving them vulnerable to "identity theft, harassment, embarrassment, intrusion and all types of cybercrime."

According to Computerworld, the suit alleges that the information provided to users about the privacy settings changes was "misleading, confusing and disingenuous."

These Facebook changes were introduced at the end of last year, after Facebook had settled another privacy suit. The changes included privacy configuration wizard which would allow users to set their privacy preferences. The big problem with the change is that the default settings are now vividly more public. Prior to the changes, only a relatively small amount of personal information was available by default, such as the user's name and the networks the user belonged to. Now, the new default settings include a plethora of personal information including photos, friend's listing and various other information.

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No Free Ride: CPSC Recalls Britax Folding Strollers

Parents and caregivers will surely be aware by this time that folding strollers can pose a risk to children's fingers when being opened or closed. However, the CPSC has announced one more voluntary stroller recall, as of February 10, in conjunction with Britax Child Safety, Inc., of Charlotte, N.C.

The strollers under recall are the Britax “Blink” single Umbrella Strollers. As with the other folding strollers recalled, the Britax stroller’s hinge mechanism poses a fingertip amputation and laceration hazard to the child when the consumer is unfolding/opening the stroller. As of this time, no incidents have been reported.

The Blink models under recall are as follows: U261813, U261814, U261815, U261816, U261817, U271813, U271817 and U271815. The strollers were manufactured between May 2009 and September 2009. The model number and manufacturing date can be found on a white label on the stroller frame, near the bottom of the stroller basket. In addition, “Blink” is printed on the metal frame on both sides of the stroller, below the hand grips.

The strollers were sold at Buy Buy Baby and other juvenile product and mass merchandise retailers nationwide in the U.S. and Canada and on the Web at www.Amazon.com, www.babiesrus.com, www.Target.com and www.Diapers.com from July 2009 through February 2010 for about $150.

The CPSC asks that consumers immediately stop using the recalled strollers and contact Britax to receive free stroller hinge covers. More information from Britax can be found by calling the Britax company toll-free at (888) 427-4829 between 8 a.m. and 5 p.m. ET Monday through Friday, or on the firm’s website at www.BlinkRecall.com.

This recall is in effect in Canada as well. Information can be found on Health Canada’s press release, at http://cpsr-rspc.hc-sc.gc.ca/PR-RP/recall-retrait-eng.jsp?re_id=971.

For the full text of the CPSC announcement, go to: http://www.cpsc.gov/cpscpub/prerel/prhtml10/10137.html.

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There are many Toyota customers who are getting red in the face over declining blue book values they feel have been caused by the recalls recently plaguing Toyota. Some are suing the carmaker over their economic loss.

ABC News reports that P. Tim Howard, a Northeastern University law professor, wants to gain class action status for various lawsuits that are pending against Toyota for the dip in Toyota resale value. He told ABC News that the economic loss sustained by Toyota owners is estimated at more than $2 billion dollars in resale value. He said that there have been over a dozen economic loss lawsuits filed so far.

And these owners may be just the beginning of a wave of lawsuits.

According to Kelley Blue Book's Director of Vehicle Valuation, Mr. Juan Flores, the recalls were predicted to cause a drop in Toyota resale value. He said: "On the used-car values side of the business, Kelley Blue Book's kbb.com would not be surprised if there was some incremental softening in Toyota values among the models that are two or three years into their product cycle and in need of a refresh."

ABC News reports that there will be a hearing on March 25, 2010 in order to decide whether or not to consolidate the lawsuits into one class action lawsuit against Toyota. Consolidating the lawsuits into one class action is a way for plaintiffs to merge their efforts and minimize the workload on the courts. Richard Cupp, a law professor at Pepperdine University told ABC News: "If plaintiffs lawyers can band together, that gives them a lot more resources to pool their strengths and ... fight closer on the same terms than a big manufacturer like Toyota could."

So far, Toyota has not commented on this effort to seek class action status. 

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2009 a Banner Year for Verdicts Against Big Co's

Here is one more effect of a struggling economy: big results in the courtroom against corporate defendants. Whether it is the general mistrust of corporate greed, personified for the public by Madoff and Wall Street banks in general, or resentment against corporations of all types for layoffs and losses in stock value, jurors are were more open to the idea of handing down the big verdicts against corporate defendants, according to a report in BusinessWeek.

2009 saw an overall up-tick in most types of verdicts against corporations. Drug companies lost several battles, with verdicts of $78 million and $34 million coming in against pharm co. Wyeth, over cancer risks caused by hormone replacement drugs. This trend may continue to increase as cases against drug companies proceed after the Supreme Court ruling last March in Wyeth v. Levine, found there was no product liability protection provided to companies from the FDA approval of its drug side effect warning labels.

Corporations in other sectors faired badly as well. Ford had a difficult year, losing at least four defective vehicle cases, each worth at least $10 million, according to data gathered by Bloomberg. The company is appealing two of the verdicts and has settled the others, reported Ford spokesperson Marcey Evans. "Because of the mess with the banks, and Bernie Madoff, people have less respect for companies,” said Randy Barnhart, an Englewood, Colorado, lawyer who won a $4.5 million verdict against Ford Motor Co. for a seat-belt defect. “The jurors were more willing to listen to our side.”

Big tobacco was also in difficulties this year, but mostly because the largest jury verdict in U.S. history, the class action against the industry by Florida smokers with its $145 billion verdict was overturned, causing plaintiffs to take up their cases as individuals. These trials kicked off in '09 and plaintiffs won 8 of the ten trials. Forty more are calendared for this year.

Before you become too concerned over the plight of the country's major corporations, the news was not all bad for our corporate citizens. Punitive damages, levied to punish "bad" behavior and deter its repetition, were down. Reports show the ten largest punitive damages awards last year were down to less than $1 billion for the second year in a row.


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Pharm Settlement: Merck Settles Shareholder Suits

The drug company Merck & Co., maker of the much litigated drug Vioxx, has entered into a settlement of all shareholder suits over the company's actions related to that drug. Reuters news service reported on February 10 that Merck will pay up to $12.2 million in attorney's fees and make several changes to its corporate governance structure and code of conduct as part of the agreement.

According to Reuters, this settlement resolves all shareholder derivative litigation brought by owners of Merck & Co. stock. The shareholder suits were brought in addition and are unrelated to those personal injury suits from former Vioxx users who claimed the drug caused their heart attacks or strokes. Those suits were were settled by Merck in 2007, for about $4.85 billion.

Merck has agreed to several organizational changes under this settlement. Reuters reports that the company will create internal committees to address potential safety issues with its products, fill the position of chief medical officer and register its clinical trials with the government. "The company will adopt these measures, which supplement policies and procedures previously established by the company," Merck spokesman Ron Rogers said, noting that the settlement does not constitute an admission of wrongdoing.

Although the settlement has been given preliminary approval by a New Jersey court, final approval must still be granted. A hearing on the final approval has been scheduled for March 22, in New Jersey Superior Court in Atlantic City.

Merck took its drug Vioxx off the market in 2004 after a study confirmed it increased the rate of heart attack and stroke in long-term users of the medicine.

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CPSC Settles with Toy Co Over Lead Paint Violation

On February 4, the CPSC announced that it reached an agreement with Schylling Associates Inc., of Rowley, Mass., in which the company has agreed to pay a $200,000 civil penalty. This settlement resolves the allegations by CPSC staff that the company imported toys for sale in this country that violated the federal limits on lead paint.

The original lead paint ban when into effect in 1978, and prohibited toys and other children’s articles from having more than 600 part per million (ppm), by weight, in paints or surface coatings. The regulatory limit was reduced to 90 ppm on August 14, 2009, as a result of the Consumer Product Safety Improvement Act of 2008.

In 2001 through 2003, Schylling Associates imported spinning tops and toy pails with Thomas & Friends, Winnie the Pooh, Curious George and Circus graphics that exceeded the federal lead paint limits.

Although it eventually reported these toys to CPSC in 2007, Schylling knew or should have known by 2002 that most of the toys did not comply with the lead paint ban, and it failed to report this information to the government in a timely manner. Instead of notifying CPSC immediately, in 2002, Schylling conducted a unilateral recall of the distributed toys by seeking their return from affected retail businesses.

Within weeks of being notified of each of these violations in 2007, CPSC announced the firm’s voluntary recall of the products first in August and for additional toys in November of that same year.

CPSC Chair Inez Tenenbaum reminded importers that, “Manufacturers, importers, distributors and retailers have a legal obligation to ensure that no banned products are introduced into or distributed in the U.S. marketplace, and to inform CPSC as soon as they become aware of information that must be reported under our laws. We will continue to penalize companies that do not follow these basic requirements.”

Schylling admits to no wrongdoing under the terms of the settlement.

Related Resources:

CPSC Recalls Generation 2 Cribs

On February 9, the CPSC announced more drop side crib recalls, this time involving all Generation 2 Worldwide and “ChildESIGNS” cribs. The CPSC staff urges parents and caregivers to stop using these cribs immediately. Do not attempt to fix these cribs.

The plastic hardware on the recalled cribs can break which may cause the drop side of the crib to detach from a corner of the crib. When the drop side detaches, it creates a space in which an infant or toddler can roll and become wedged or entrapped, causing a risk of suffocation or strangulation. In addition, the crib’s mattress support can detach from the crib frame, creating a hazardous space in which an infant or toddler could become entrapped and suffocate or strangle. The CPSC has received reports of three infants who suffocated when they became entrapped between the crib mattress and the drop side when the drop side detached.

CPSC has also received reports of 20 other drop side incidents, 12 of which involved the drop side detaching in a corner of the crib as well as 8 reports of mattress support detachment in these cribs.

Due to the fact that Generation 2 went out of business in 2005, the CPSC has limited information about the cribs. Please note the following information available to the Commission about the recalled cribs:

  • The years of production are unknown, but the CPSC believes there were more than 500,000 of these cribs sold to consumers.
  • Some of the known model numbers are: 10-110X, 10-210X, 21-110X, 20-710X, 64-315X, 26-110X, 90-257X, 20-810X, 46-715X, 64-311X, 74-315X, 21-815X, 21-810X, 20815X, 308154 and 54915. (The “X” denotes where an additional and varying numbers may appear at the end of the model number.)
  • All Generation 2 Worldwide and “ChildESIGNS” drop side cribs are included in this recall, including those with other model numbers.
  • The name “Generation 2 Worldwide” appears on a label affixed to the crib’s headboard or footboard.
  • Some labels identify the place of manufacture as Dothan, Ala. Others identify China as the country of manufacture. The name “ChildESIGNS” appears on the teething rail of some of the cribs.

The CPSC would like to remind parents and caregivers of important rules for safety when using a drop side crib. Do not use any crib with missing, broken, or loose parts. Make sure to tighten hardware from time to time to keep the crib sturdy. When using a drop side crib, parents should check to make sure the drop side or any other moving part operates smoothly. Any disengagement can create a gap and entrap a child. In addition, do not try to repair any side of the crib, especially with tape, wire or rope.

For the full text of the CPSC recall, please go to: http://www.cpsc.gov/cpscpub/prerel/prhtml10/10134.html.

If you would like to report an incident or injury with this product, go to: https://www.cpsc.gov/cgibin/incident.aspx.

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Hit Me One More Time: Another Honda Recall

Following in the unfortunate footsteps of fellow car-maker Toyota, Honda has announced a second round of recalls today. After a recall of the Honda Fit for problems with the master power-window switch, Honda has now expanded its recall for airbag malfunctions on some 438,000 vehicles, according to a report by the Christian Science Monitor.

In its press release, the auto maker says it initially announced the recall of certain 2001 and 2002 model-year vehicles to replace the driver's airbag inflator. The expanded recall now includes an additional 378,758 vehicles in the U.S including: some 2001 and 2002 Accord, Civic, Odyssey, and CR-V models and the 2002 Acura TL models. One Honda Pilot and one Acura CL vehicle, produced in late 2002, are also included.

The cars are being recalled for problems with the vehicles' driver's side airbag inflator which can deploy with too much pressure, causing the inflator casing to rupture. According to the Monitor, the resulting metal shards can pass through the airbag cushion and have caused 12 incidents, including one fatality.

According to Honda, of the two processes used to create the airbags, only one could verify the correct amount of pressure within the airbag."We have decided to recall all inflator assemblies that were not confirmed by 100-percent automatic inspection during production because we cannot be absolutely certain they will all perform as designed, even though recent testing of units from this production process performed correctly," the company states in its press release.

Honda confirms that the company will contact affected car owners by mail. However, to determine whether their car is included in the recall, Honda owners can click here, or call (800) 999-1009. Acura owners can clich here, or call (800) 382-2238.

The company encourages all owners of recalled vehicles to take their car to an authorized dealer as soon as they receive notification from Honda that it is affected. Notification to customers will start this month.

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Toyota is coming under fire because more and more agencies are coming out of the woodwork claiming that the car manufacturer knew about unintended acceleration problems in their vehicles years before the recent recalls. The Detroit News reports that State Farm Insurance told federal regulators that there was a rise in claims due to unintended acceleration.

The insurance company also reported that the incidents involved Toyota vehicles. The insurance company notified the National Highway Traffic Safety Administration (NHTSA) in a letter that was dated Sept. 7, 2007 in regards to a crash involving a Toyota Camry. The NHTSA responded to these claims by State Farm Insurance by saying that it led its own independent investigation of that crash; which led to the first recall on Toyota vehicles because of its floor mats.

According to Reuters, there has been documentation that indicates that Toyota has been aware of unintended acceleration issues in its vehicles for years. For example, back in 2004, the company worked with the NHTSA to get rid of incidents of unintended acceleration that occurred for a few seconds, or when the driver would hit the brakes on the vehicle. In 2007, the NHTSA opened a formal investigation into the Camry crash that ultimately lead to the first recall of Toyota's vehicles.

2007 is also the year that former Toyota attorney Dimitrios Biller claims that he found "numerous" instances where the car maker hid evidence from the courts and the U.S. government about safety issues. We wrote about Toyota's possible concealment of safety issues in FindLaw's Injured Blog. As a result of this timeline, safety issues, and consumer concerns, the House Oversight and Government Reform Committee will meet this week for a hearing on Toyota safety. They have also pushed the Senate to hold hearings about the issue as well.

George LeMieux, R-Fla, is quoted by the Detroit News as saying, "The American public needs to know the level of risk associated with operating affected vehicles, and Congress needs to know whether federal regulators have fulfilled their proper roles. This is a matter of public safety. There's a lot of missing information right now about who knew what and when and we ought to expose that information to the public."

For more information, please visit our Related Resources.

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Discount Buyer Beware of Health Discount Programs

In a time of rising healthcare costs, discount health programs sound like a good thing. However in California, state agencies have had numerous complaints about healthcare discount programs that overstate their services or misrepresent themselves as insurers. According to the Los Angeles Times, consumers have lodged complaints against more than 150 unlicensed discount health and dental plans over the last four years. This has prodded the California Department of Managed Health Care to consider new licensing regulations.

According to the Times, the industry describes its function as to offer mainly "ancillary" services such as dental, vision or chiropractic care. In some cases, insurance companies or employers themselves offer health discount programs as an additional benefit to their members or employees. The benefits of purchasing through such programs appear considerable, the discount companies say they accept members with existing medical conditions, have no limits on use and can slash healthcare costs as much as 80% by negotiating discounts with providers.

The Times reports that in California, two of the companies that have complaints allegedly lodged against them are the Care Entrée discount program, which regulators say falsely promised members unrestricted access to medical providers, and a plan offered by the Consumer Resource Association. Care Entrée has now agreed to become licensed with the state.

On the other hand, two major insurers have successfully offered discount programs in the state and have had no complaints lodged against them; Vital Savings, a product of Aetna, and OptumHealth Allies, an arm of UnitedHealth Group.

California has only recently begun to aggressively enforce licensing regulations and consistently oversee the industry due to a squabble between agencies as to whose responsibly such oversight was. "There is no question that essentially ceding jurisdiction . . . was in fact an invitation [for discount plans] to come to California," Cindy Ehnes, the department's director told the Times. "Consumers deserve a fair product and deserve not to be ripped off."

Discount plans operate in all 50 states. In 21 states, a license is required. Now, state agencies in California may go beyond the licensing requirement and try to better oversee the industry and protect consumers.

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We've all seen the commercials, with the annoying jingles and hopeless band. A band of credit-rejected boys sing about the woes of bad finances and about their regrets for not enrolling in freecreditreport.com.
Note that the first word in the company's website is "free."

"F-R-E-E/That spells free/Credit report dot com baby!"

Well, unfortunately for their parent company, Experian, the company's commercials are now centerfold in a class action lawsuit filed in California.

Erica Possin, a Wisconsin college student, filed the suit as the lead plaintiff in the class action, claiming that she signed up for a supposedly "free" credit report and was dinged with a monthly fee of $14.95 for a surreptitious credit monitoring service.

Possin has filed a claim for compensation for the thousands of consumers allegedly deceived by Experian. She's claimed fraud. Possin was allegedly suckered into Experian's scheme after seeing an advertisement on television. After she discovered the unwanted charges, she promptly called Experian to have the charges refunded, which they refused to do, according to Possin. The charges are not for the credit report, but rather for a credit monitoring service called Triple Advantage. As explained by Possin's complaint, while attempting to obtain the "free" credit report, the user unwittingly clicks a consent to sign up for the credit monitoring service. In the complaint, the class alleges that none of the commercials make any mention of this credit monitoring service.

The Fair and Accurate Credit Transactions Act, also know as FACTA, requires the big credit reporting bureaus, including Experian, to issue a free credit report per year to a requesting person. Incidentally, this is not done on Experian's advertised site but rather, on www.annualcreditreport.com, a site created by the nation's three largest credit reporting agencies, Equifax, Experian and TransUnion.

In the complaint, seeking both injunctive and monetary relief, the class alleges fraud, false advertising, unfair competition, willful deception, negligence and unjust enrichment.

What's the lesson to be had in all of this? What's in a name is not always as simple as it sounds, and the next time you see a commercial with a solemn-faced curly haired singer and his band, take it for what it is -- entertainment with some catchy jingles.

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Don't Kiss This Frog: CPSC Recalls Princess & Frog Jewelry

Last Friday, the CPSC and FAF Inc., of Greenville, R.I., announced a recall of the Disney "The Princess and The Frog" pendants because of high levels of the toxic metal cadmium, an unprecedented action that reflects concerns of an emerging threat in children's jewelry. Earlier in the year, Walmart pulled several types of jewelry, including these recalled items, off the store's shelves due to similar concerns over the levels of cadmium reported to be in the toys.

The CPSC recall announcement includes the jewelry sold at Walmart nationwide, from November 2009 through January 2010, for $5. The recalled items are shaped as a metal crown or frog pendant on a metal link chain necklace in a crown hinged box. The model and UPC numbers are: Crown Model # 4616-4187 UPC # 72783367144; Frog Model # 4616-4190 UPC # 72783367147.

The Atlanta Journal Constitution reports Walmart's statement that it continues to actively participate in the CPSC investigation, and that it has taken "swift action" when it removed the cited items on Jan. 11.

For its part, Disney has instituted a "zero tolerance" policy on the presence of the toxic metal in any of it products, according to the Journal Constitution. In a letter sent to its vendors and licensees last week, the company is now requiring testing for cadmium in all products bearing the Disney name. This exceeds the current requirements set by the federal government which as of this time, does not have set limits on the amount of cadmium a product can contain. "Any detectable levels of cadmium will be deemed a product failure," wrote Manuel G. Grace, Disney Co.'s senior vice president for product integrity.

Unfortunately, the CPSC asks that caregivers take all of the recalled jewelry away from children immediately. However, consumers can return the recalled jewelry to any Walmart store for a full refund or a free replacement product. For additional information, contact F.A.F. Inc. at (800) 949-3311 between 8 a.m. and 4:30 p.m. ET Monday through Friday, or visit the firm's Web site at www.faf.com.


For the complete text of the CPSC recall, please go to: http://www.cpsc.gov/cpscpub/prerel/prhtml10/10127.html.

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On February 4, Toyota expanded its company investigation of the Prius breaking system problems to a "cousin" of that car, the Toyota Lexus hybrid. Despite the early reports from Japan yesterday, at this time no recalls are planned for either the Prius or the Lexus.

According to a report by the Los Angeles Times, a Toyota spokesman says that the breaking systems on the Prius and Lexus are quite similar. In fact, the mechanical parts that compose the breaks in the 2010 Prius are identical to the ones used in the Lexus. The difference between the two systems lies in the software. "If you've got an issue with the Prius, then you are going to look at the [Lexus] HS 250h too," said Toyota representative Brian Lyons. "The two cars have the same components, so we are looking at both cars despite the difference in their software tuning."

The Times reports that the Japanese government has ordered Toyota to investigate the possible problems with the Prius breaking system after receiving 14 complaints about the performance of the car's breaks. In the U.S., the National Highway Transportation Safety Administration has received more than 100 complaints about the Prius breaks. Two of the NHTSA complaints and one received by the Japanese government involved reports of accidents resulting in injuries.

At this time, company has not received any complaints about the breaking system in the Lexus, which is built in Japan. The Lexus HS 250h has been sold in Japan since last July and in the U.S. since last September.

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Stop It: 2010 Prius Found to Have Braking Problems

Earlier today, the government announced it is looking into problems with yet one more Toyota product: the 2010 Prius. According an announcement reported by USA Today, The National Highway Traffic Safety Administration (NHTSA) said it will look specifically at whether the Prius brakes stop working momentarily after the car hits a bump.

This afternoon, MSNBC writes that reports coming from the Nikkei News Service say that Toyota will begin a recall on the affected Prius cars. However, the U.S. arm of the company can not confirm the report at the time of this post. "We have no information on any decision to recall the Prius," said John Hanson, a Toyota spokesman at the company's U.S. sales arm in Torrance, Calif.

USA Today writes that according to the NHTSA's Office of Defects Investigation, the Administration has received 124 complaints about Prius brakes from consumers, including four reports in which crashes are alleged to have occurred. Investigators have spoken with consumers and conducted pre-investigatory field work, the agency said.

Unlike eight other Toyota models, the Prius has not had problems with its acceleration, or at least has not been included in any of the recalls linked to those issues.

According to a report by the AP, Toyota spokeswoman Ririko Takeuchi spoke about the design issues on the Prius. She has said the issues were identified and corrected for Prius models sold since late January. At this point, the company is still considering what to do about buyers who have already bought the Prius.

USA Today notes that the Prius brakes are different than on most cars because they are regenerative, drawing power from the friction of stopping the car to recharge the car's battery for its hybrid engine. Prius is considered to be one of Toyota's most important cars, giving the company a reputation as a leader in green auto technology. The Prius sedan gets about 50 miles a gallon.

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Button Start Cars May Mean More Car Safety Checks

There are concerns about the safety of button start cars because of the complicated systems that they use. This may mean federal agencies will be doing car safety checks eventually.

The number of models that are started with a button rather than a key as standard or optional equipment has quadrupled in the last five years. With the numbers of button start cars growing, consumers need to become more educated about how the new technology works.

While the button start cars seem simple enough, the Los Angeles Times reports that most drivers do not fully understand how the push button start systems work. When drivers do not understand how to turn off their car in the middle of an emergency, it can quickly turn into trouble.

While most car keys work the same, the new car push button technology works differently depending on the make and model of the car. Some make and models require the driver to push down the button for one second; others requires a full three. Sometimes pushing down the button does not work. Some cars require the driver to tap the button a few times in order to shut down.

So what can you do as a consumer?

  • Ask the dealer to show you how to use all of the new technology features in your vehicle. That way you know how to turn on and turn off your car, use the power locks, and even work your security system.
  • Take a gander at that User's Manual. It is there to help you learn how to fully utilize your vehicle and help troubleshoot if you run into problems with your vehicle.
  • Understand how to lock your car properly. With the new technology, some cars do not lock if they are in the wrong gear. This means thieves can stroll into the car, push a button, and drive away.

If you have questions about car safety issues, please visit our Related Resources links.

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Salmonella Settlement: Outbreak Victims Receive $12 Mill

The Atlanta Journal Constitution reports that over the next few months, victims of the 2008 salmonella outbreak will begin to see their money from the $12 million dollar settlement struck with the insurer of the now defunct Peanut Corp. of America. The Lynchburg, Va., based company was found to be responsible for the outbreak that affected more than 700 people in 44 states between September 3 and December 31, 2008.

According to the The Journal Constitution, the proceeds to fund the settlement will not be coming from the bankruptcy or sale of assets from the now defunct Peanut Corp., but from the insurance policy the company held, issued by the Hartford insurance company. The Blakely plant was found to be the source of the salmonella outbreak which killed nine people sickened more than 700 after they consumed peanuts or peanut products such as paste or peanut butter originating from that facility.

As discussed in a prior post in this blog, several health code violations and illegal practices were discovered at the Peanut Corp's Georgia plant. This included at least 10 examples of batches of peanut products testing positive for salmonella contamination. The batches were retested until negative results came back and then shipped to distributors.

The settlement will be apportioned among the 123 victims who filed their claims by the October 31, 2009, deadline. The highest payments will of course go to the family members of those who died as a result of the salmonella outbreak. An additional $750,000 from the Hartford settlement will go toward paying administrative costs and lawyers’ fees.

The Journal Constitution reports that there are still cases pending against companies that used Peanut Corp.’s products, including big names such as Kellogg Co. and King Nut Co.

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After Transportation Secretary Ray LaHood warned millions of Toyota drivers to "stop driving it" regarding recalled Toyotas, he subsequently backed off a little bit. NPR reports that Ray LaHood concedes that he spoke in haste. He still says that Toyota drivers should take their cars to a Toyota dealership and repair the gas pedal defect.

According to NPR, LaHood's final say about Toyota issues with safety is this: "What I meant to say or what I thought I said was, if you own one of these cars or if you're in doubt, take it to the dealer and they're going to fix it."

In the meantime, the National Highway Transportation Safety Administration is looking into Toyota's throttle control systems for an electromagnetic interference. Toyota claims that the problems with its vehicles are related to floor mats and gas pedals.

Ray LaHood slammed down hard against Toyota earlier. In remarks during a house appropriations hearing, LaHood said that if he had one of the recalled Toyotas, he would “stop driving it, take it to a Toyota dealer because they believe they have a fix for it.”

LaHood has been a very outspoken figure in this whole Toyota safety problem. We covered how he criticized Toyota's response to safety concerns about its vehicles. He said that Toyota needed federal intervention in order to halt sales of their defective cars. He told Chicago radio station WGN: "The reason Toyota decided to do the recall and to stop manufacturing was because we asked them to."

Mr. LaHood may have backed off his statement to "stop driving it," but he did mention that the government is considering civil penalties for Toyota's slow response to safety issues this past Tuesday.

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Bad Fairy: Tinkerbell Jewelry Recalled by CPSC

Captain Hook will be pleased to hear this one; his arch enemy is in a spot of trouble with the CPSC. Yesterday, the Commission announced a recall on charms sold with the Tiny Tink and Friends toy jewelry sets. In conjunction with the importer, Playmates Toys, of Costa Mesa, Calif., about 252,000 units are being voluntarily recalled for amounts of lead in excess of the federal standards.

As reported by the Consumer Reports Safety Blog, the Tiny Tink and Friends jewelry sets come with a charm attached to a cord using a metal ring and cylinder included with the sets as a separate accessory that children can attach to the toy necklace, bracelet or key chain. The cylinder is the issue here. The CPSC says that the connector on a charm can contain levels of total lead in excess of 300 ppm, which is prohibited under federal law.

The item numbers and names of the jewelry sets being recalled are as follows:

  • 74634 Tinker Bell's Lil’ Tinker Bracelet
  • 74641 Tinker Bell's Lil’ Tinker Bracelet
  • 74631 Rosetta's Rosebud Key Chain
  • 74632 Silvermist's Water Lily Necklace

Charms that have plastic tabs instead of metal rings and cylinders are not included in this recall.

The jewelry sets were sold at retailers nationwide from November 2008 through November 2009, for between $6 and $8, so may have been given as gifts this past holiday season.

You may want to be prepared for a few tears as the CPSC recommends that caregivers take the jewelry away from children immediately and discard it. However, much like the tooth fairy, you may give something in return and contact Playmates Toys for a replacement charm accessory. For additional information, contact Playmates toys at (888) 810-1133 between 9 a.m. and 5 p.m. PT Monday through Friday or visit the firm’s Web site at www.playmatestoys.com.

For the full text of the CPSC recall announcement go to: http://www.cpsc.gov/cpscpub/prerel/prhtml10/10131.html.

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The New York Times reports that the Transportation secretary Mr. Ray LaHood told Toyota drivers that they should stop driving their recalled Toyota vehicles until they can be repaired at a Toyota dealership.

According to the New York Times, Mr. LaHood was very strong in his words about the defective Toyota vehicles. He told the panel: “We need to fix the problem so people don’t have to worry about disengaging the engine or slamming the brakes on or put it in neutral."

The words come after news that the Japanese government has requested Toyota to investigate brakes on their Prius hybrid models. Those particular vehicles seem to stop braking if they are driven at low speeds. As a result of this possible investigation, Mr. LaHood made it very clear that he would like to have a talk with the president of Toyota, Akio Toyoda. Mr LaHood is quoted by the New York Times as saying, “I’m going to take the initiative to have a conversation with Mr. Toyoda very soon, to talk to him about how serious this is, and to make sure that he understands. I think he understands, but I’ve never talked to him. I just feel like I need to have a conversation with him.”

Toyota has recently come under fire for its cars suddenly accelerating. As a result, there are class action lawsuits pending that claim that Toyota's electronic throttle is to blame for the accidents. In fact, Representatives Henry A. Waxman and Bart Stupak have sent a letter to Mr. James E. Lentz III, the President of Toyota Motor Sales USA which requests that Toyota provide documents that illustrate that the computer systems on the defective cars are not at fault.

Toyota claims that it will do whatever it can in order address concerns with its vehicles. Toyota's spokeswoman, Martha Voss told the New York Times: “We will of course cooperate with the committee’s inquiry.”

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Don't Pay to Borrow Your Own Money - Avoid Tax Refund Loans

With that warm and wonderful time of year- tax time - rapidly approaching, the Attorney General of California is reminding taxpayers to avoid the expensive tax refund anticipation loan. These loans, sometimes advertised as "early tax refunds" are not refunds, they are loans with sometimes triple digit interest payments and numerous fees associated with them.

According to a News Release by the office of the CA Attorney General, the refund anticipation loan is a short-term loan secured by a taxpayer's anticipated income tax refund. To obtain a tax refund loan, taxpayers file electronically with a tax preparer who works directly with a bank to advance the refund as a loan, minus tax-preparation costs, a loan fee and other charges. The Internal Revenue Service (IRS) then sends the taxpayer's full refund to the bank.

According to the National Consumer Law Center (NCLC) and the Consumer Federation of America (CFA), loan fees can range from $34 to $130 and other add-ons alternately referred to as application, administrative, e-filing, service bureau, transmission, or processing fees, can range from $25 to several hundred dollars. According to the NCLC, new figures reveal that refund anticipation loans drained the refunds of about 8.4 million American taxpayers in 2008, costing them in the neighborhood of $738 million in loan fees, plus over $68 million in other fees. The country's most financially vulnerable taxpayers, those from low and moderate-income families, lost about $800 million from their refunds in the last year.

Even companies with well-known names have been under scrutiny for their refund anticipation loan practices. In January 2009, CA Attorney General Jerry Brown secured a $4.85 million settlement with H&R Block that prohibits the company from marketing refund-anticipation loans as early tax refunds.

The IRS will provide your actual tax refund free of charge. Taxpayers who file electronically and have their refund directly deposited by the IRS into their bank account will usually have their refunds in 8-15 days.

If you are considering taking out a refund anticipation loan, you can receive advice from IRS support programs including the Volunteer Income Tax Assistance Program (VITA) Program and The Tax Counseling for the Elderly (TCE) Program. More information on these programs can be found at: www.irs.gov/individuals/article/0,,id=107626,00.html.

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The FDA is asking for a significant increase in its budget to meet the ever increasing demands placed on the agency, according to their News Release of February 1. The Food and Drug Administration is asking for a total of $4.03 billion from the President’s fiscal year 2011 federal budget. This would represent a 23 percent increase over the agency's current budget of $3.28 billion. The proposed budget would be comprised of an increase in $146 million from the budget and $601 million in industry user fees.

According to the FDA, their main priorities for the next fiscal year are in the areas of food safety, the Protecting Patients program, advancing FDA regulatory science work and overseeing tobacco. The improvement in food safety work is a priority set by President Obama to increase the safety of the country's food supply. Here, the FDA will focus on such areas as implementing a track and trace technology pilot program, strengthening its import safety program, and improving data collection and risk analysis.

The Protecting Patients program will increase the FDA's efforts to ensure the safety of drugs, devices, and vaccines, as well as the nation’s blood supply.

The efforts of the administration in the area of tobacco products propose to be funded by an increase in tobacco user fees. The FDA will continue its efforts to promote the public's understanding of the harmful effects of tobacco products and to develop the foundation of science for regulating tobacco.

Some are critical of the new budget aims. According to the Washington Post, the budget may be too optimistic because it depends on $250 million in user fees from food producers that have not yet been approved by Congress. In addition, the FDA's work on improving food safety may require more than an infusion of funds. Rena Steinzor, who teaches at the University of Maryland Law School and is president of the Center for Progressive Reform tells the Post, "No one knowledgeable about the FDA thinks it can do a credible job improving food safety in the U.S. without a far larger increase in funding ... and without dramatically strengthened legal authority."

For the full FY2011 budget for the FDA, go to: http://www.hhs.gov/budget/docbudget.htm.

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Fit For the Road? Honda Recall on the Fit

Honda announced that there will a Honda recall on its Fit model. The Christian Science Monitor reports that there has been a Honda recall on its Fit subcompact cars because of a possible fire hazard when there is too much liquid exposure to the driver's master power-window switch. It can overheat and cause a fire.

According to U.S. News & World Report, there has been a fatal accident already because of the fire hazard posed by the Honda Fit. BusinessWeek reports that the fire with the Honda Fit occurred in South Africa back in September of 2009. As a result of the incident, Honda conducted an investigation of its Fit cars. There have currently been seven fires caused by short-circuited power window switches reported in the United States. No one was harmed.

USA Today reports that the recall of the Honda Fit will affect approximately 140,000 vehicles in the United States. Honda spokeswoman Christina Ra told The Christian Science Monitor that Fit drivers should be conscious about just how much liquid gets on the switch. Ms. Ra did note that it takes "extreme" amounts of liquid in order to short circuit the switch. Honda is advising Honda Fit owners to keep their windows rolled up in cases of precipitation.

Honda currently does not have the required parts sent out to dealers in order to deal with the recall yet. The Christian Science Monitor reports that it seems like only 10% of Honda Fit vehicles will need new switches while the remaining vehicles affected by the recall with most likely require the installation of a water tight skirt in order to keep the switch from being exposed to liquid.  

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Toyota Fix for Sudden Acceleration Is Unopposed by Feds

The National Highway Traffic Safety Administration (NHTSA) reviewed the Toyota fix on its sudden acceleration problem and has decided to raise no objections to the plan. Reuters reports that the Toyota fix includes installation of new parts in existing accelerator systems or an entire overhaul via replacement.

According to a press release by the NHTSA, the Toyota fix will include: an accelerator pedal that will be reconfigured by dealers, replacement pedals in the spring for certain models, new all-weather floor mats and installation of a brake override system on certain models. The brake override system will ensure the vehicle will stop if both the brake and the accelerator pedals are both engaged.

The NHTSA says that the they have no reason to object to the Toyota fix. Reuters quotes the agency as saying: "Toyota has announced its remedy and based on its current knowledge, NHTSA has no reason to challenge this remedy."

The NHTSA has notified consumers that they take out all removable floor mats on the driver’s side or ensure that any mats are properly secured.  The agency has confirmed that 5 individuals, in 2 incidents, have died as a result of pedal entrapment in the recalled vehicles. We wrote about these deaths from sudden acceleration in a previous post on FindLaw's Injured blog. There have been two recalls instituted by the automaker since these reported deaths. In October, Toyota recalled 3.8 million vehicles for accelerator pedal entrapment. The recall has expanded to include another million vehicles. Toyota has also halted sales of certain makes and models of its vehicles until they can be sure that they are free from defects.

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According to press releases from the Office of the Texas Attorney General and from the U.S. Embassy in Haiti, reports of a scam targeting Haitians attempting to bring family members from Haiti to the U.S. have emerged.

The U.S. Embassy in Haiti reports on its website that the scammers are posing as workers for the U.S. Consulate. The scammers contact persons who might wish to move family members from Haiti and request advance payment of fees using a wire transfer service such as Western Union, SogeXpress or CAM. The scammers are careful to make the fraud sound legitimate and even provide call-back numbers to verify the information. According to the Texas AG's office, scammers also hand out fliers to reach potential victims. The victims are asked to provide at least $500 in fees in exchange for documents that will allow them to by-pass the usual government process and bring five family members to the U.S.

The Embassy site warns that embassy and consulate employees are never permitted to contact potential applicants for immigrant visas and payment for immigrant visa application fees should never be made to any entity other than the National Visa Center in the U.S., or at the official cashier inside the Consulate at the time of interview. Potential applicants are reminded never to wire money to unknown persons.

The Embassy asks that if you have been contacted about one of the advance payment scams, or know of someone who has, please contact the Consulate at 222-0200, x8684 or via email to PAPrso@state.gov or PAPfraud@state.gov. If you would like to relocate family members from Haiti to the U.S., contact the U.S. Citizenship and Immigration Services at (800) 375-5283 or online at www.uscis.gov.

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Once More Around the Block: Third Stroller Recall from CPSC

You might feel you have heard this all before, and you would be correct. Unfortunately, that does not lessen the safety issues still surrounding folding strollers and that precipitated the Maclaren and Graco recalls. The same dangers to children's fingers have caused the CPSC and Regal Lager Inc., of Kennesaw, Ga., to recall the Ruby, Onyx and Topaz models of Cybex umbrella strollers. Note that “CYBEX” is printed on the side of the strollers.

As with the other strollers recalled, the stroller’s hinge mechanism poses a fingertip amputation and laceration hazard to the child when the consumer is unfolding/opening the stroller. The company has received one report of a child breaking a finger in the hinge mechanism. The recalled Cybex strollers were sold at department and juvenile product stores nationwide between August 2009 and November 2009, for between $140 and $260.

The CPSC asks consumers to stop using the strollers immediately and contact Regal Lager to receive a free hinge cover retrofit kit. Consumers can contact the company at the Company Service Center at (800) 593-5522 between 8:30 a.m. and 5:30 p.m. ET Monday through Friday or visit the firm’s Web site at www.regallager.com/recalls - consumers can also email the firm at info@regallager.com.

The CPSC still interested in receiving incident or injury reports that are either directly related to this product recall or involve a different hazard with the same product. Please tell the Commission about it by visiting https://www.cpsc.gov/cgibin/incident.aspx.

Information on the Canadian Cybex recall can be found at: http://cpsr-rspc.hc-sc.gc.ca/PR-RP/recall-retrait-eng.jsp?re_id=953.

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