Common Law - The FindLaw Consumer Protection Law Blog

April 2010 Archives

New York lead and asbestos safety inspector Saverio F. Todaro is under fire after admitting in federal court that he turned in asbestos and lead reports to hundreds of buildings which he never inspected. In each case, Todaro certified that the buildings were safe from asbestos and lead, despite the fact that some of the buildings had already been demolished.

As the investigation continues to develop, regulators are wondering whether the asbestos safety inspector worked with others, perhaps taking bribes and participating in a conspiracy. So far, officials are not released the locations of the buildings involved.

William K. Rashbaum of the New York Times reports that this is only the beginning. "Todaro’s guilty plea is not the end of the story," said the Manhattan United States attorney, Preet Bharara. "This investigation is very much ongoing."

However, it appears that Mayor Michael Bloomberg finds the potential risks to be minimal. His office released a statement, downplaying the potential exposure to lead and asbestos. City regulators have found no evidence that either the fraud or risks are widespread, Marc La Vorgna, a spokesman for Mayor Michael R. Bloomberg told The Times.

"We can always look for new ways to improve our process," he said. "D.E.P. is going to start increasing audits, which is the right step to ensure inspections are being completed properly."

Despite the damage control by the mayor's office, this case will have serious consequences. Asbestos exposure can cause cancer. Lead exposure can interfere with vital organs including the heart, kidneys, intestines, reproductive and nervous systems.

An internal investigation is already underway. Once the dust settles, expect billions of dollars in lawsuits to be filed against the city and the safety inspector.

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Is the RNC Breaking the Federal Census Mailer Law?

As written about previously on this blog, some groups received criticism for sending out mailers that were made to look like the census forms from the federal government, but were actually used for soliciting donations. A law was passed in March of this year that prohibited such mailings.

According to TPMMuckraker, the Republican National Committee, one of the groups whose faux census-style mailings pointed up the need for the new law, is still sending out mailers that the report says will be confused with the census forms. TPMMuckraker reports that the RNC mailers it obtained have the words "Census Document" and "DO NOT DESTROY/OFFICIAL DOCUMENT" printed on the outside of the envelope. In smaller letters it also says: "This is not a U.S. government document."

The law requires that among other things, mailers like the one sent by the RNC have the name and address of the sender on the outside of the envelope. According to TPMMuckraker, the RNC mailer does not appear to comply with this requirement.

The law prohibiting the mailers that could confuse consumers about whether they were actually official census mailings from the government received strong bi-partisan support. In fact, at the time the law was passed, Rep. Darrell Issa (R-CA) said about the deceptive mailers, "Nothing could be more wrong."

Democrats who supported the law made their feelings known as well. "What is with these guys?," said Rep. Carolyn Maloney (D-N.Y.), to TPMMuckraker. "We pass a law in record time, with unanimous bipartisan support in both houses of Congress, to reduce confusion about the real Census-- knowing that every census form that isn't returned costs taxpayers money and hurts accuracy. But there goes the RNC again, right back to trying to make a buck on the Census!"

In response, RNC spokesman Doug Heye told TPMMuckraker: "We simply looked at the new law, saw that it did not apply to our mailer and continued with the mail pieces."

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CPSC Announces Recall on Coby Rechargeable Batteries

Yesterday, the CPSC in conjunction with Coby Electronics Corp., of Lake Success, N.Y., announced the recall of the rechargeable batteries sold with Portable DVD/CD/MP3 Players. According to the CPSC, the rechargeable batteries can overheat, posing a fire hazard to consumers.

Coby Electronics has received 22 reports of the batteries overheating, some of which have resulted in property damage ranging from minor up to $9,650. The products under recall are the Coby DVD/CD/MP3 players with product numbers TF-DVD 1020 and TF-DVD 8501. "Coby" is printed on the front cover and the product number is on the bottom of the unit. The serial numbers on the recalled rechargeable batteries are printed on a label on the following batteries:

  • TF-DVD 1020 DG240043D503000001-1006 Swivel screen
  • DG240006D503000001-400
  • DG240039D603000001-3000
  • DG240111D603000001-2000
  • DG240143D602000001-3000
  • DG240106D602000001-2000
  • DG240106D702000001-2000
  • DG240183D942000001-100
  • DG240071DB02000001-1400
  • DG240115D702000001-2500
  • TF-DVD 8501 Begin with "HY" 8 ½ inch screen

The products recalled were sold at discount, electronics, music, toy, office supply stores and distributors of electronic products nationwide. The TF-DVD 1020 units were sold from May 2007 through July 2008, for about $168.The TF-DVD 8501 units were sold from January 2007 through September 2009, for between $140 and $275.

The CPSC asks consumers to immediately stop using the players with the recalled batteries and contact the company to arrange for free replacement batteries. After removing the recalled batteries from the unit, consumers can continue to use it with the AC or DC power adapter.

For additional information, contact Coby Electronics toll-free at (866) 945-2629 between 8 a.m. and 5 p.m. ET Monday through Friday or visit the firm’s Web site at www.cobyusa.com.

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Protecting Privacy Online: Facebook Opt-Out Not Enough?

One of the top stories of the weekend: the growing calls for regulation of Privacy on Facebook.

Last week, Facebook rolled out an update and implemented some new features. As the Electronic Frontier Foundation reports,

Friday morning Facebook changed its privacy settings layout, making it a bit more challenging to opt out completely. As before, unchecking the "Allow" box is not sufficient because you need to block each Instant Personalization website to fully opt out.

The EFF has a list of steps you can take in order to fully opt-out of Facebook's new Instant Personalization feature. However, this latest controversy has re-ignited the debate over protecting privacy online -- specifically privacy when using social media.

Adam Ostrow of Mashable.com writes:

On Sunday, Senator Charles Schumer of New York penned a letter to the FTC, urging them to create privacy guidelines for Facebook and other social networking sites. The heart of the issue, in Schumer’s eyes, is that Facebook’s new features put the onus on users to opt-out, as opposed to asking them if they want to opt-in.

Facebook disputed this position in an interview with ABC news, stating, "...none of these changes removed or reduced people’s control over their information.”

This controversy raises two major issues. First, as Senator Schumer stated, the new policies make opting out "complicated and confusing." While Facebook has extensive tools for setting your privacy level, the reality is that many users do not use them.

The second major issue, is that of Facebook making changes to the way the site works and then automatically opting users in and forcing them to opt themselves out.

At the moment the internet is buzzing with sites instructing users on how to opt out of Facebook's new features.

This issue is certain to be ongoing, stay tuned as we will keep you posted as it continues to develop.

The Food Safety and Inspection Service (FSIS) of the USDA recently announced a recall of approximately 140,000 pounds of fully cooked assorted meat products. Westlake Food Corporation, a Santa Ana, Calif., company, is recalling approximately 140,000 pounds of fully cooked assorted meat products because they contain an undeclared allergen, wheat starch. Wheat is a known allergen and it is not declared on the products' label.

The FSIS has listed the following products as under recall:

  • 14-ounce packages of "GIO LUA TAY HO PORK MEAT LOAF WRAPPED IN BANANA LEAVES FULLY COOKED."
  • 13-ounce packages of "BO VIEN TAY HO BEEF MEAT BALL FULLY COOKED."
  • 14-ounce packages of "DOI GIO HEO TAY HO CURED PORK HOCK SAUSAGE WITH ONION WRAPPED IN PORK SKIN FULLY COOKED."
  • 15-ounce packages of "CHA CHIIEN TAY HO FRIED PORK PATTIE FRIED IN VEGETABLE OIL FULLY COOKED."
  • 13-ounce packages of "BO VIEN GAN TAY HO BEEF MEAT BALL WITH BEEF TENDON FULLY COOKED," produced between April 15, 2009 and April 14, 2010.

Each package bears the establishment number "EST. 1627A" inside the USDA mark of inspection. The assorted meat products were produced between January 1, 2010 and April 14, 2010, unless otherwise noted above. These products were distributed to restaurants and retail establishments nationwide. To view a pdf of the labels, click here.

The problem was discovered by FSIS during a routine inspection. FSIS and the company have received no reports of illness or adverse reactions due to consumption of these products.

Consumers with questions about the recall can contact Oanh Dam at (714) 973-2286. The toll-free USDA Meat and Poultry Hotline 1-888-MPHotline (1-888-674-6854) is available in English and Spanish and can be reached from l0 a.m. to 4 p.m. (Eastern Time) Monday through Friday.

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On April 21, the Food Safety and Inspection Service of the USDA announced a beef recall. Beltex Corporation, a Fort Worth, Texas, company is recalling nearly 135,500 pounds of beef trim products that may be contaminated with E. coli O157:H7.

The contamination was discovered by FSIS during a routine Food Safety Assessment performed at Beltex. According to the FSIS press release, the company's methods for analyzing samples for E. coli in their beef products raised concerns about the safety of the product. The meat products under recall were produced on Oct. 28, 2009, Nov. 20, 2009, Feb. 19, 2010, or on April 2, 2010, and were distributed to wholesalers and other federal establishments in the states of Georgia, Louisiana, Ohio, Oklahoma, Texas, Washington and Wisconsin.

Each box containing the recalled beef bears the establishment number "EST. 07041B" inside the USDA mark of inspection on the label. For the full list of the types of Beltex beef the FSIS has recalled, click here. No illnesses associated with this meat have been reported to the FSIS.

The FSIS reminds consumers to safely prepare their raw meat products, both fresh and frozen, and to only consume ground beef that has been cooked to a temperature of 160° F. The only way to ensure beef is cooked to a high enough temperature to kill harmful bacteria such as E. coli is to use a food thermometer and measure the internal temperature of the meat.

For questions regarding the recall, consumers should call the company's main line, (817) 624-1136. The toll-free USDA Meat and Poultry Hotline 1-888-MPHotline (1-888-674-6854) is available in English and Spanish and can be reached from l0 a.m. to 4 p.m. (Eastern Time) Monday through Friday.

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Movie Rights: Amazon Sues to Protect Customer Privacy

Online retailer Amazon is in Federal Court in North Carolina, not to defend, but to file a suit. The seller of books, movies and other "expressive content" says it is going to court to protect the privacy of its customers from the North Carolina Department of Revenue (DOR).

According to Reuters News Service, the internet company was disturbed by the request from the state's DOR that Amazon supply them with not only the name and address of nearly every North Carolinian who purchased anything from the company since 2003, but information regarding exactly what each customer purchased and how much they paid for it.

On its face, this can seem to be a reasonable demand. Like most other states, North Carolina has been hit with declining tax revenues in the tight economy. Reuters reports the state Department of Revenue is now looking for ways to increase tax revenues and are considering the option of taxing out-of-state Internet retailers such as Amazon. New York has already done so, passing just this type of tax law in 2008.

As things stand, states like North Carolina do require individuals to report and pay taxes for their online purchases, but, simply stated, many people fail to comply with this obligation. By seeking the information from Amazon directly, North Carolina is likely trying to identify purchases that should have been subject to taxes payed by the purchasers.

Amazon, however, is concerned with a governmental request it sees as a massive invasion of customer privacy. The company says it has already provided quite a bit of information to the DOR which would not violate the privacy of its customers. "The DOR has no business seeking to uncover the identity of Amazon's customers who purchased expressive content, which makes up the majority of the nearly 50 million products sold to North Carolina residents during the audit period," the company said in the court filing.

There does seem to be a justifiable concern when a state agency demands to know what its citizens are reading and watching and likely, there are other ways for the DOR to complete its audit without reviewing every book and movie choice made by its residents. There is also a question regarding whether this demand from the DOR does not violate the federal Video Privacy Protection Act of 1988 (VPPA). That law prohibits the release of movie rental information that can be linked to an individual's identity, except in certain limited situations which often require the permission of the individual involved.

Amazon says it is cooperating fully with the DOR audit to ensure its compliance with state sales and use tax laws.

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The FDA May Require Food Companies to Pass on the Salt

Your mother used to say, "taste it first before you put salt on it," right? Now the federal government would like to you to do the same thing. The FDA is planning a major undertaking which will limit the amount of sodium in the American diet by placing federal limits on the amount of salt that can be added to processed foods. At this time, since salt is "generally recognized as safe" there are no limits on the amount manufacturers may add. Salt consumption has increased to the point where most adults consume nearly twice the recommended daily amount.

According to The Washington Post, 77 percent of the salt in an adult diet comes from processed food. In comparison, only 6 percent is actually added at the table. Working with food manufacturers, the government would set limits for salt, designed over a period of years to gradually lessen sodium consumption. Studies at Columbia and Stanford universities and the University of California at San Francisco found that cutting salt intake by 3 grams a day could prevent tens of thousands of heart attacks, strokes and cases of heart disease.

Despite the seemingly strong scientific evidence supporting the benefits of cutting back on salt consumption, Morton Satin, director for technical and regulatory affairs at the Salt Institute does not necessarily agree that science supports the health benefits of less salty foods. Satin would even describe the proposed regulations as a "disaster for the public."

New Yorkers have been among the first to brave the potential disaster of less salty food. The Post reports that in January of this year, the city began a campaign urging food manufacturers and chain restaurants to voluntarily reduce sodium by 25 percent in their products nationwide over the next five years. Baltimore, Boston, Los Angeles, Chicago and the District of Columbia also support the New York program.

Food manufactures say they voluntarily have been working on limiting the amount of salt in prepared food, but according to The Post, an expert panel convened by the Institute of Medicine concludes that those attempts have failed. The industry is now preparing for the next move from the FDA in conjunction with the USDA.

Despite the success or failure of the FDA undertaking to set government restrictions on salt in processed foods, consumers can take measures into their own hands. The government already requires the amount of sodium in prepared food be listed on the package. If you are unsure of the amount of sodium you may be ingesting, be sure to read before you eat.

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Toyota Recalls 2010 Lexus GX 460

Shortly after the hard hit by Consumer Reports rating the Lexus 2010 GX 460 a "don't buy" product, Toyota announced on April 19 they would formally recall the SUV. When Consumer Reports said the car was a "safety risk," due to the possibility of a roll-over accident in some emergency driving situations, the company moved quickly to evaluate and address the potential safety issues with the car's stability control system.

According to a Bloomberg report, the car company released an emailed statement announcing its plans to fix software in the 2010 SUV’s stability control system. About 13,000 GX 460s will be repaired, including 9,400 in the U.S. and the rest in other countries including Russia, Oman, Saudi Arabia, the United Arab Emirates and Canada. The company says Lexus dealers will have the software fix available by the end of the month and that the repairs should only take about one hour. Owners with recalled vehicles will be notified by mail beginning in early May.

According to Bloomberg, Toyota engineers were able to replicate the tests performed by Consumer Reports and identify the problems. Tests were conducted on all Toyota and Lexus SUVs, but the software flaw was found only in the GX 460 and Land Cruiser Prado models, which share the same stability control system.

“From the moment we heard about this issue, Lexus and our dealers acted quickly to resolve the situation,” Mark Templin, Lexus group vice president and general manager, said in the company's statement. “Our dealers will now personally reach out to customers to set up appointments to make this modification.”

Toyota has agreed to pay the $14.6 million dollar fine levied by the federal government for failing to report what it knew about the problems with sudden acceleration in its vehicles last fall. However, the company released a statement in which it “denies NHTSA’s allegation that it violated the Safety Act.”


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The Department of Agriculture Office of the Inspector General has released a new report saying the government agencies responsible for ensuring the meat consumers buy is free of contamination from are not doing a particularly good job. According to the report, disagreements between agencies and lack of general oversight are leading to meat contaminated with high levels of residue from metals, antibiotics and pesticides possibly finding their way onto dinner plates across the country.

The Consumerist reports that although the responsibility for testing for bacterial contamination lies with the FSIS, the FDA and EPA together share responsibility for setting the federal limits on residues of antibiotics, pesticides and metals, something they have failed to do. The report specifically says, "Together, FSIS, FDA, and EPA have not established thresholds for many dangerous substances (e.g., copper or dioxin), which have resulted in meat with these substances being distributed in commerce."

Possibly increasing concerns about the safety levels of meat supposedly approved by these government agencies, The Consumerist reports a worrying incident. One shipment of beef headed to Mexico was turned away by that country's inspectors due to reportedly high levels of copper. Since federal limits on metal residue from copper have not been set, there would be nothing to prevent the same meat being sold to U.S. consumers.

Further failures of cooperation between FSIS and the EPA are included in the report. One specific issue involves the number of pesticides tested for by the FSIS. Although the report states the two agencies together have determined several pesticides would be health risks to consumers, FSIS continued to test for only one kind of pesticide due to limited resources and lack of limits set by the EPA on the other varieties of pesticides.

Consumers may want to take note of one other issue in the Inspector General's report. After meat enters the marketplace, the FSIS must be able to prove that a single serving of the contaminated meat would cause harm to anyone consuming it before they can issue a recall.

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NY AG Moves to Shut Down Phony Breast Cancer Charity

On April 14, the Attorney General of New York, Andrew Cuomo, announced his office has won a temporary restraining order to shut down what he says is a fake charitable organization purporting to raise funds to fight breast cancer. The New York AG is suing to stop the Long Island based Coalition for Breast Cancer Cures, Inc., (“CBCC”) from soliciting any further funds, collecting money, or destroying documents.

According to the Attorney General's press release, the suit alleges that David and Mindy Winston of Great Neck, New York, and other members of their family, collected $500,000 from New Yorkers with their scam. Instead of going to fund breast cancer awareness or research, the funds allegedly were used for luxury shopping, travel, restaurants, and other personal living expenses. Some examples of the items the suit claims the funds were spent on include: more than $7,700 in retail purchases at stores such as Louis Vuitton, Victoria’s Secret, Home Depot, Best Buy, Costco, CVS, Loehmann’s, and Target; more than $8,000 for sorority dues and other university expenses and fees; more than $1,300 for a spring break travel package and thousands of dollars on groceries, Netflix, and cable television.

The suit goes on to allege that the Winstons solicited donations to the phony charity by phone and mailings and would often continue to make unauthorized charges on a donor's credit card once they were given the number. To lend the charity the proper legitimacy, the Winstons claimed the CBCC was recognized by the IRS as a tax-exempt 501(c)(3) organization and included a fake “Non-Profit Tax-ID Number” on all correspondence with donors.

The Attorney General's office says that neither the Winstons nor their cohorts are authorized to solicit charitable contributions in New York. CBCC is not registered with the Attorney General as a charitable organization and the Resource Center is not registered with the Attorney General as a professional fundraiser, as required by law. The suit, filed in Nassau County, NY, asks the court to shut down the CBCC completely and seeks restitution and damages from the defendants.

The press release states this case is part of Attorney General Cuomo’s ongoing initiative to fight charitable fundraising scams and to safeguard donors. Donors who suspect they have been a victim of charitable solicitation fraud should contact the Attorney General’s office at www.charitiesnys.com or by calling (212) 416-8402.

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Often, this blog reports on recalls issued by the various government agencies tasked with protecting consumers from dangerous products (or by product makers kindly requested to do so by those government agencies). However, due to an April 13 article from Consumer Reports, issuing an unusual "don't buy" warning on the 2010 Lexus GX 460, Toyota itself has suspended sales of the car.

According to The New York Times, the Lexus division of Toyota halted sales just hours after the Consumer Reports article was made public. A company statement said they are “taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified.” While Toyota has stopped short of a formal recall, it has said it will provide a replacement car to any concerned customers while the problems are being addressed.

The specific problems with the Lexus were identified by the Consumer Reports team when testing the car with what they like to call "real world" driving. The test involved driving the car through a turn and then having the driver suddenly remove his foot from the acceleration pedal, as drivers might do when finding a turn on a freeway ramp too tight for the car's current speed. During the test, the Lexus "slid out until the vehicle was almost sideways before the electronic stability control system was able to regain control." This situation could lead to a roll-over accident, according to the CR team.

CR says it performed the same test on every one of the 95 SUV's currently tested by the publication. CR writes, "No other SUV in recent years slid out as far as the GX 460, including the Toyota 4Runner, which shares the same platform as the GX."

Not only Toyota, but NHTSA is taking this report seriously. It is in communication with both Consumer Reports and the car company, according to The Times. The Agency has said it is “in the process of testing” the Lexus to “better understand the results obtained” by Consumer Reports. NHTSA has also said it is pleased by Toyota's quick action in dealing with this new problem.

Consumer Reports reminds readers that the "don't buy" designation is a rare one. The last time it was issued was with the 2001 Mitsubishi Montero Limited, in the August 2001 issue of Consumer Reports magazine.

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On April 8, a small amount of good news finally came to a few of the beleaguered homeowners who have been dealing with the real estate and alleged health problems caused by the Chinese drywall their homes are constructed with. Seven Virginia homes will be fixed with the $2.6 million New Orleans U.S. District Judge Eldon Fallon ordered Taishan Gypsum Co. to pay to the plaintiffs.

The April 8 ruling is but the tip of the iceberg. As Bloomberg reports, there are more than 2,100 homeowners with suits filed in U.S. federal courts over the problems allegedly caused by Chinese drywall. As extensively discussed in previous blogs, the Consumer Product Safety Commission (CPSC) and other government agencies have been flooded with complaints from homeowners about the chemicals and odors given off by the imported drywall. A range of problems linked to the drywall have been reported including corrosion of wiring, metal materials and appliances throughout homes, as well as complaints about health issues ranging from headaches and nosebleeds to asthma and more serious conditions.

As discussed in a previous post, on April 2, the CPSC in conjunction with the Department of Housing and Urban Development (HUD) released their recommendations to homeowners whose homes were built with imported Chinese drywall. The CPSC recommendations amount to a major undertaking for these homeowners, suggesting "consumers remove all possible problem drywall from their homes, and replace electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms." For its part, HUD will provide block grants to aid homeowners with paying for these repairs and is encouraging mortgage lenders to provide affected families with some form of loan relief.

Bloomberg reports that Judge Fallon, who is charged with overseeing federal drywall cases nationwide, has said that his ruling in this suit may provide guidance for determining the extent and cost of home repairs required in other defective drywall cases.

The Taishan Gypsum Co. did not contest the suit.

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Smoking Gun Toyota Email Warned Execs to "Come Clean"

What looks to be a smoking gun Toyota email was found among the 7,000 documents supplied by Toyota to NHTSA relating to its investigation of the car company over problems with sudden acceleration or sticking accelerator pedals in its cars. In an email to executives, Toyota's vice president of environmental and public affairs, Irv Miller, said the company ought to "come clean" about the acceleration pedal problems the Toyota vehicles had been experiencing.

According to the Free Press, Miller sent his email five days before the company announced its U.S. recall of 2.3 million cars. On January 16, he wrote, "WE HAVE A tendency for MECHANICAL failure in accelerator pedals. We are not protecting our customers by keeping this quiet. The time to hide on this one is over (emphasis original)." Miller went on to note that since company representatives Yoshi Inaba, Toyota's top U.S. executive, and U.S. sales chief Jim Lentz were meeting with the National Highway Traffic Safety Administration, "We better just hope that they can get NHTSA to work with us in coming to a workable solution that does not put us out of business."

As noted in a previous post, NHSTA has hit Toyota with the largest fine against a car company ever for a recall. The NHSTA has said it believes Toyota knew as early as September 29 that they would have to deal with the complaints about sticking accelerators and unintended acceleration and yet did not report problems to regulators within the five day time period required by law. In fact, when the recall was announced, months later, the company revealed the first complaints of sticking pedals had been heard from customers as far back as 2007.

None of these revelations will be helpful to the car company in the dozens of lawsuits over the sudden acceleration problems still on-going.

Mr. Miller has since retired from Toyota.

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Toyota Fined $16 Mil: Small Number, Big Implications

On Monday, the National Highway Traffic Safety Administration (NHTSA) announced it would be fining Japanese car maker Toyota nearly $16.4 million for a failure to report problems with accelerator pedals in its cars. The government says it has evidence Toyota knew of the problem as early as September 2009, but did not act to recall any vehicles until January, 2010.

According to a report by The Detroit News, the $16 million plus fine is the largest the government could legally levy against the car company since Congress increased the penalties in 2000. Previously, the largest fine levied to date was a $1 million penalty against General Motors in 2004 for failing to disclose a defect with windshield wipers. With this fine, federal authorities are hoping to send a message that they believe the automaker deliberately concealed safety information from them. "We now have proof that Toyota failed to live up to its legal obligations," Transportation Secretary Ray LaHood said. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families."

While to the average car buyer, $16 million is a great deal of money, to a car maker, it is simply not. Toyota's revenue came in at $209 billion last year alone. So could there be any deterrence effect in such a relatively small fine? If not in the numbers, perhaps in the consequences. As noted in the Wall Street Journal Law Blog, the fine and government statements that Toyota knowingly hid defects from officials and consumers will only serve to bolster plaintiffs' claims in the wide array of suits against the company. The WSJ Blog notes a report that the government findings could even reinforce allegations made under the RICO (Racketeer Influenced and Corrupt Organizations) Act that Toyota went as far as conspiring to mislead consumers and the federal government about the extent of its safety problems.

Beyond the slight money issue and the legal ramifications, there is also the ripple effect on the company's public image. The Detroit News writes that although March sales for Toyotas were strong, that could change if the public becomes convinced the company actively hid the truth. "If it was done knowingly," said, Mike Rozembajgier, director of recalls for Expert- RECALL, a consulting firm that helps manufacturers conduct product recalls, "then it certainly becomes a game-changer for consumers."

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Since a Federal District Court ruling last December, a certain type of whistleblower suit has surged with more than 130 filed in the last four months. The court's decision has allowed the fines for companies found guilty of "false marking" patent claims on product labels to increase from the previously set $500 per offence, to thousands or millions, depending on the number of units sold.

The National Law Journal reports false marking is the practice of labeling a product with a patent number that is expired, or does not apply to the product label it is on. This practice, according to attorneys for plaintiffs, is misleading to the public. The Public Patent Foundation at Cardozo School of Law has five pending suits based on the whistleblower statute, including one against the company that produces the product Cold-EEZE cold-remedy lozenges. According to the Foundation, the packaging shows expired patent numbers listed on the products. The foundation filed the cases because "there's a whole basket of public harms that are caused by this lying by companies," said executive director Daniel Ravicher.

The whistleblower suits are unusual because they allow those bring the suit to retain one half of any damages awarded by the court against the defendants. Those defending companies say the so-called whistleblowers are merely bounty-hunters, out to make a buck at a company's expense.

However you may view the increase in these suits, as actions on behalf of consumers, or nuisance suits against honest businesses, the boom may soon be curtailed. According to The Journal, two upcoming cases in the federal courts could seriously affect the number of cases filed. One case may result in the removal of the right to sue from whistleblowers, and limit it to those actually damaged by the false marking, such as direct competitors. A second may change the way a court determines a company's intent to deceive consumers.

Currently, the Senate is considering legislation that would include limiting false marking suits to competitors as well.

In the meantime, good advice to companies from Wisconsin attorney Justin Gray: a quick Google patent database, or U.S. Patent Office search, will tell you if your patent is current or not. Good advice to consumers, judge a product on its merits not on company claims, even those right on the label.

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Two new online companies especially active in Texas are putting forth a new work from home idea, or rather, a work from your street idea. They say they want to pay you for writing down the license plate numbers of cars in your neighborhood. Why? The first company, the blatantly named Narc Technologies Inc., is going to sell the database of information to lenders and their little assistants, the repo men. The second company, Data Network Affiliates, says it just wants to sell the information to whoever will buy it.

But, worker beware. According to a report by MSNBC's Red Tape Chronicles, these companies are dipping their toes into the narrow legal pond that separates the multi-level marketing (MLM) set up from a good old fashion pyramid scheme. In a MLM structure, there is an actual product associates can purchase and sell in addition to signing up new recruits. In a pyramid scheme, all or the vast majority of your money comes from signing up next brick in the pyramid.

The Red Tape Chronicles reports that these online companies maintain they are collecting information that is valuable and can be sold. However, associates get paid a whopping $2 per 20 plates recorded per month for collecting the numbers themselves. The majority of pay comes from, you guessed it, signing up your friends and neighbors. While the companies seem to be following the letter of the law, prospective associates should use caution before signing up to join the Narc team or Data Associates.

The Dallas branch of the Better Business Bureau has reported 20,000 inquires regarding Narc Technologies since January. They have given the business their lowest grade, an F, due to a "pattern of complaints" which were mostly resolved after the BBB got involved. BBB spokeswoman Jeannette Kopko says this about Narc Technologies, "Also we are concerned whether this is multi-level marketing that would be in compliance with the law or ... a pyramid scheme. They say their product is information that's collected. But is there a market for that?"

According to the Red Tape report, to help anyone considering joining such a business, The Texas Attorney General's Office has posted guidelines for helping consumers recognize a pyramid scheme, including the following:

  • Ask about average monthly product sales for reps. If sales are disproportionately low, you’re probably talking about a pyramid scheme rather than a multi-level marketing company.
  • Ask about product returns policies if you are required to pay upfront for merchandise. Laws vary, but in Texas, the firm must be willing to refund 90 percent of your inventory cost.
  • Be wary of any firm that requires you to pay money to get a job.
  • Be wary of high-pressure “business opportunities” in hotel seminars or meetings at a person's home. In Texas, and many other states, "regret laws" allow consumers to cancel contracts signed at such events for up to 72 hours.

Is this a golden opportunity to make a buck, or a mini-Madoff wave just waiting to break? Think it over before getting your feet wet.

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Since October of 2009, the CPSC has been investigating the many reports from homeowners relating to problems in homes built using drywall imported from China. Homeowners in many states, but most notably in the Southeast, have suffered wire and metal corrosion problems in their homes and many have reported health issues they also believe may be linked to the drywall as well.

On April 2, HUD and the CPSC have announced their new guidelines for homeowners who have Chinese drywall in their homes. To review the Commission's protocol on identifying problem drywall, click here. If your home does have the Chinese drywall in it, the CPSC recommends, "consumers remove all possible problem drywall from their homes, and replace electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms."

This is a very complicated and expensive process. The CPSC further recommends that homeowners be very careful when choosing a contractor to do the repair work. In a December 2009 Consumer Alert, the FTC suggested homeowners check a contractor’s references, qualifications and background before agreeing to hire them.

Financing such massive repairs, especially to a home that has lost value due to the problem drywall, can be daunting. The CPSC has the following financing information:

  • In December, HUD announced to cities, counties and states that the funds they receive from HUD’s Community Development Block Grant program may be a resource to help local communities combat the problem drywall. These Block Grant funds are given to communities which decide how to spend them ... Homeowners should contact their city or county to see if they have programs that can help.
  • HUD has encouraged its FHA mortgage lenders nationwide to consider extending temporary relief to allow families experiencing problems paying their mortgages because of problem drywall, to allow the homeowner time to repair their homes. Families with FHA-insured loans should contact their mortgage lenders directly. HUD also is encouraging non-FHA lenders to give affected families the same consideration.

“Our investigations now show a clear path forward,” said CPSC Chairman Inez Tenenbaum. “We have shared with affected families that hydrogen sulfide is causing the corrosion. Based on the scientific work to date, removing the problem drywall is the best solution currently available to homeowners. Our scientific investigation now provides a strong foundation for Congress as they consider their policy options and explore relief for affected homeowners.”

For the full text of the CPSC announcement, HUD recommendations and investigative history, go to: http://www.cpsc.gov/info/drywall/hud10068.html.

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Floundering under the weight of an unusual type of "emergency," Florida Governor Charlie Crist directed a letter be sent to FEMA requesting emergency funding for the substantial group of Floridians suffering damage to health and property due to the Chinese drywall their homes were built with. Unfortunately for the Governor, FEMA took all of two days to devise a reply: no.

According to a report by the Herald-Tribune, FEMA regional manager, Major P. May, summed up the agency response to Governor Crist like this, "conditions experienced by individuals from a consumer product safety matter, such as the degradation of imported drywall, does not constitute an emergency or major disaster incident."

As overblown as a request for FEMA aid may seem, the state is dealing with some wide-ranging problems all allegedly due to the imported drywall. The Herald-Tribune reports that 530 homes in the state meet the Florida Department of Health threshold for being impacted by the drywall which appears to cause serious metal corrosion in those houses containing it. Further, in a state still staggering under the effects of a collapsed real estate market, an additional 2,505 homes have had their values further reduced due the presence of the Chinese made drywall.

As government agencies are sometimes want to do, in its rejection letter, FEMA directed the state to seek help from yet another government agency. "The U.S. Consumer Product Safety Commission (CPSC) is the lead Federal agency investigating reported health and safety issues blamed on the imported drywall, and they are working closely with state law enforcement and health authorities," read the letter.

The Herald-Tribune writes the state will now try other options for aid, including possibly appealing FEMA's decision, said Lauren McKeague, a spokeswoman for the state's emergency management division.

When in doubt thought, perhaps some assistance can be found in the judicial system. A trial to determine what kind of repairs and monetary damages manufacturers of the tainted Chinese drywall are responsible for is under way this week in a New Orleans federal court.

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