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July 2009 Archives

Food Safety Act Passes the House

Legislation to overhaul the way the Food and Drug Administration (FDA) regulates food safety has passed the House. The large scale changes to FDA food regulation now move to the Senate.

One new power the FDA would have under this legislation is the power to order the recall of tainted foods.

You might have thought they could already do that, but currently they are only allowed to ask companies to voluntarily issue recalls.

The bulk of the enhanced food safety upgrades relate to the inspection of food processing plants. In the wake of recent tainted food crises, critics have complained that plants often go many years without a visit from the food safety inspector.

Currently, food processing plants get inspected every 10 years. As the New York Times reports, under the new Food Safety Act, infrequest inspections would no longer be the case.

Most importantly, processing plants deemed high-risk by the FDA would be inspected every 6 to 12 months. High-risk plants would include plants processing foods that spoil quickly and plants that have had food safety problems in the past. Lower risk processing plants would be inspected every 3 years.

The cost of these inspections is to partially be covered by annual fees of $500 for food processing plants.

Beyond inspections, the Food Safety Act would require food processing plants to come up with detailed safety plans to mitigate and contain any problems that arise.

The food safety rules applicable to US food producers would also apply to food importers under the new rules.

Though we'll have to wait and see what form it would take, the FDA would be requireed to come up with a system to better track food ingredients, in order to better trace future food related outbreaks.

Tanning Beds Cause Cancer, Says Cancer Authority

The International Agency for Research on Cancer (IARC) has put tanning beds in its highest risk category: "carcinogenic to humans." This echoes a growing chorus of experts calling for increased attention to tanning bed use. The question is what to do next: simply issue stronger warnings or actually restrict their use?

"Carcinogenic to humans" is Group 1 within IARC's 5 levels of danger. Tanning beds got bumped up from "probably carcinogenic to humans." IARC's decision came after analysis of 20 epidemiological studies which concluded that risk of melanoma increases 75% if tanning bed use starts before age 30. According to the American Cancer Society, melanoma causes a large majority of all skin cancer deaths.

Dan Humiston, president of the Indoor Tanning Association (ITA), has played off the upgrade as no big deal. US News & World Report quotes him as saying that "UV light from a tanning bed is equivalent to UV light from the sun, which has had a group 1 classification since 1992. Some other items in this category are red wine, beer and salted fish."

Incidentally, mustard gas, plutonium and arsenic in drinking water are also on the list.

On the point of sunshine being dangerous too, not too many people are setting up shop in strip malls to sell us concentrated sunshine. Tanning salons, on the other hand, turn large profits by selling customers a service increasingly shown to be terribly unhealthy.

The next question is: what will change?

Health groups have long advocated against the use of tanning beds, and against over-exposure to the sun. As pointed out by U.S. News, tanning beds are currently regulated by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). The FDA controls what labels and warnings must be put on tanning beds. The FTC regulates advertising claims about them.

Currently, the FDA requires a warning on all sun-lamp or tanning bed products which reads:

DANGER—Ultraviolet radiation. Follow instructions. Avoid overexposure. As with natural sunlight, overexposure can cause eye and skin injury and allergic reactions. Repeated exposure may cause premature aging of the skin and skin cancer. WEAR PROTECTIVE EYEWEAR; FAILURE TO MAY RESULT IN SEVERE BURNS OR LONG-TERM INJURY TO THE EYES. Medications or cosmetics may increase your sensitivity to the ultraviolet radiation. Consult physician before using sunlamp if you are using medications or have a history of skin problems or believe yourself especially sensitive to sunlight. If you do not tan in the sun, you are unlikely to tan from the use of this product.

Since 2007, the FDA has been considering changes to the required warning (which dates back to 1985).

Changing the warning label might not be enough for some health advocates. With the most harmful effects happening when use begins under 30, some are calling for restrictions on minors' use of tanning beds.

'Cash for Clunkers' Scams Abound

Like all too many government programs, CARS (a.k.a. Cash for Clunkers) has attracted scam artists looking to turn a cheap buck. Do not give personal information to websites claiming to help you utilize the program.

As detailed in our sister blog, the Car Allowance Rebate System (CARS) recently launched. Commonly referred to as "Cash for Clunkers," it is a $1 billion program designed to help people get out of old inefficient cars and into new greener wheels. It's billed as a win-win-win, for consumers who get a discount on a new car, car dealers who sell some new cars, and for the environment (through fewer emissions and less oil consumption).

Some are trying to add a fourth "win" to that list: folks who throw up a quick website and scam people out of personal and even bank account information. Obviously, this not only hurts the individuals who might find their identities stolen, but also the Cash for Clunkers program.

These sites typically offer to "register" a person for Cash for Clunkers, or to get them a "voucher."

Keep in mind, however, that there is no registration involved in the program.

Another tip, the government refers to this program as CARS (Car Allowance Rebate System), not Cash for Clunkers. Big banner ads boasting help with CASH FOR CLUNKERS should tip you off that a website should be treated with suspicion.

According to Consumer Affairs, Karen Aldana, a spokeswoman for the National Highway Traffic Safety Administration says that, "Consumers should be wary of anything on the web that isn't"

The program also involves no vouchers. The way it works is that participating dealers apply the discount when a buyer turns in an eligible vehicle. The dealer is then reimbursed by the government for the amount of the discount.

Participating dealers can be found using the dealer locator on, or by calling your local dealer.

Overdraft Fee Bonanza

Will aggressive overdraft fee practices be curbed?

With banks desperate for income, consumers have seen ever-rising overdraft fees. Bank practices in adminstering the fees have drawn lawsuits and calls for reform.

To banks, overdraft fees are part of overdraft service, which customers automatically get when they open an account. The "service" protects the customer from having their transactions blocked when they dip below zero balance.

Instead of the transaction being refused, you get an overdraft fee. And then another, for each purchase (no matter how small) made while the account is in the red. Consumers who don't keep a vigilant eye on their balance can rack up hefty fees before knowing they had insufficient funds.

As the Charlotte Observer points out, overdraft service made much more sense (to consumers) when people wrote more paper checks. An overdraft fee was better than the bank blocking the check, and having both bank and merchant slapping you with a fee for bouncing the check.

But in the days of debit cards and ATM machines, many consumers assume payment machines will prevent them from using their bank card to spend money that's not in the bank.

An FDIC report released at the end of 2008 found overdraft fees to range from $10 to $38, with a median fee of $27. And that was based on data from 2006.

Young consumers (18 -25) were the most likely to draw overdraft charges.

Those with many overdraft fees represented a vast majority of all fees charged. Customers with 20 or more overdraft fees in a year (4.9% of consumer accounts) represented 68% of all overdraft fees paid.

According to a consulting firm cited by the Observer, banks and credit unions "earned" almost $37 billion in revenues from consumer overdraft fees last year. According to the FDIC, 75% of all service fees banks got from deposit accounts came from overdraft fees.

As reported by the USA Today, one firm that consulted to most of the country's largest banks may have advocated for purposefully maximizing the number of overdraft fees. How? By slowing down the clearing of deposits, say by not clearing them for up to 5 days if received in a non-bank envelope, or removing time saving bar codes from bank issued deposit envelopes.

Methods such as these, or the order in which a bank chooses to clear transactions (which may maximize fees), have bee the subject of multiple lawsuits seeking class action status.

In terms of reform, the Federal Reserve is considering two primary options:

  • Force banks to give notice to not clear an overdraft transaction unless the consumer has been warned and consented; and
  • Make customers opt-in to receive overdraft service, rather than automatically sign them up.

These proposals would apply only to ATM machine and point-of-purchase debit card transactions. Current overdraft policies would still apply to checks and to scheduled electronic payments (such as bills).

The new rules would also prevent temporary holds from forcing a person into overdraft. Merchants such as rental car companies can require a temporary hold of hundreds of dollars. These holds can take days to clear, causing consumers to run closer to zero than they know, as pointed out by Consumer Reports.

Electronic Cigarettes: Toxic According to the FDA

The FDA released a warning last week to consumers and health care professionals about the dangers of electronic cigarettes ("e-cigarettes"). Electronic cigarettes sampled by the FDA were found to contain known toxins, including one commonly found in anti-freeze and other known carcinogens.

First of all, what's an electronic cigarette? They are marketed as reducing the pollution and carcinogens involved in smoking by involving no smoke. Instead, nicotine in a cartridge is made into a vapor which users inhale. They are also promoted as an aid to quit smoking. They look like cigarettes, with some even lighting up at the end.

The problem is, however, that they appear to contain seriously harmful toxins.

The FDA sampled e-cigarettes from two of the top sellers of e-cigarettes. One sample contained diethylene glycol, a toxin commonly found in antifreeze. The others contained levels of known carcinogens including nitrosamines.

Because no maker or seller of electronic cigarettes has sought FDA approval, the FDA did not have complete access to information for any e-cigarette producer. This leaves consumers with a lack of information about what could be toxic products. They contain no health warning, unlike cigarettes and quitting aids, which must warn about health risks.

Beyond the risks toxic e-cigarettes themselves pose, another danger is that they lure youngsters into smoking. With sparkling lights on the tip, along with candied flavors like chocolate, cherry and mint, some argue that unregulated e-cigarettes (even if they weren't toxic) serve to hook kids on nicotine.

Bad credit is no fun, and with the record number of foreclosures, bankruptcies filed, and loan defaults seen over the past eighteen months of the recession, many consumers may find themselves staring at the bottom of a bad credit barrel.  And suddenly, those spam email messages, junk mail fliers, and telemarketing phone calls promising to whisk away bad credit, wipe the slate clean, and give you a new lease on life, and qualify for one on a new car---seem especially tempting.

Desist, resist, and be wary of inflated claims from less-than-qualified sources.  You may end up spending precious funds on a goose chase to a credit Camelot that doesn’t exist.

The Federal Trade Commission (FTC) warned consumers against engaging one of the dime-a-dozen credit repair companies in its newsletter published last year, “Credit Repair: How to Help Yourself”.  The sound advice serves well now as sunny skies may be peeking through the economic storm clouds and people are looking for way to get their finances back on track.  The FTC says to guard against empty promises of quick and permanent removal of bad credit history, considering that no person or organization can legally remove negative and current information from your credit report that is accurate. 

And in exchange for your cash and piece of mind, credit repair companies could leave you with legal liability to contend with.  It is a federal crime to lie on a loan or credit application, misrepresent your Social Security number, and obtain an Employer Identification Number from the IRS under false pretenses.  And, a person using mail, telephone, or internet to apply for credit using false information can be charged for mail or wire fraud.

The Credit Repair Organizations Act was written to protect Americans from sketchy credit repair schemes.  It requires credit repair organizations to give consumers a copy of their federal rights before signing on for their services.  In case you get dizzy from fine print, the FTC lists a few choice actions that a credit repair company is prohibited from engaging in.

A credit repair company cannot:

  • make false claims about their services
  • charge you until after they complete the promised services
  • perform any services until they have your signature, and the 3-day waiting period (during which time you can cancel) has passed.

Avoid trading one set of credit woes for another, and think of credit repair as a marathon not a sprint.  Take smart, sensible steps to fix your credit, read the FTC’s advice, and eventually you will find your way to credit stability.

Related Resources:

The primary provider of arbitration services for credit card and other consumer debt disputes is quitting the game. The National Arbitration Forum (NAF) won't handle any new consumer cases due to investigations and lawsuits from numerous city and state governments, plus class action lawsuits challenging its arbitration practices and its neutrality.

Many consumers have learned the hard way that if you have a dispute with your credit card company, a debt collector, or an increasing variety of merchants, there's a good chance that a mandatory arbitration clause applies. This means that instead of suing the company in court, you must resolve the matter through binding arbitration. The decisions in such arbitrations are extremely difficult to challenge in court, if you can challenge them at all.

Some consumers wonder when they signed on to mandatory arbitration. They should take a magnifying glass to their credit card agreement, their cell phone contract, the back of their cruise ship ticket, the user agreement they clicked through to use eBay or Amazon, and the list goes on.

Proponents of arbitration draw attention to the expense and time required to resolve disputes through the courts. They note that arbitration allows faster, cheaper resolutions. The argument goes that the company's cost savings are passed on to consumers. In the case of consumer debt arbitrations, the argument is that by allowing the many complaints to be more easily resolved, more people have access to credit on better terms.

Increasingly, however, consumer groups, municipal and state governments have questioned whether these arbitrations have allowed consumers enough opportunity to present their cases, and whether the arbitrators have been too cozy with the debt collection companies.

Now, one of the biggest arbitration firms in the land ironically finds itself in court -- in many courts actually.

As reported by the Boston Gobe, NAF is pulling out of consumer debt cases due to allegations that it denied consumers a fair shake and that it concealed close ties to the debt collection industry. According to a complaint filed by Minnesota's Attorney General, NAF failed to disclose to consumers that it was financially affiliated with a hedge fund group (the "Agora" funds -- meaning Forum). The "Agora" funds allegedly invested $42 million in NAF and obtained governance rights.

The problem is that (according to the complaint) the "Agora" funds also bought one of the nation's largest debt collection agencies -- now named Axiant, LLC. Debt collection companies within Axiant, LLC allegedly represented almost 60% of the 214,000 consumer debt cases decided by NAF in 2006.

All the while, NAF billed itself to consumers as a completely neutral arbiter.

In the words of Minnesota's Attorney General, NAF was actually "part of one big debt-collection conglomerate."

So, what happens now? NAF won't arbitrate consumer debt disputes, and the American Arbitration Association (the world's largest arbitration forum) has said it won't take these cases either. It wants to wait until new rules are set out regarding the arbitration of debt collection cases.

This could mean a return to the courts for many cases that for years have been forced into arbitration.

It could also mean reform of mandatory arbitration. The House Subcommittee on Domestic Policy, headed by Dennis Kucinich, has taken up the issue in hearings that began yesterday. Congress is considering multiple bills to crack down on mandatory arbitration.

An Ohio man recently reached his tipping point when it came to extended auto warranty scams. Unfortunately, the airing of his grievance ended with him looking at a possible 4 years in prison for making terrorist threats.

In our continuing coverage of the menace posed by robocalling auto warranty scams and the misleading policies they sell, it seems necessary to point out one wrong way to go about combatting them. That way was illustrated by Charles W. Papenfus. His anger was justified. Threatening to burn down their office, kill employees and their families, however, has proved problematic and has caused him some legal troubles. For a rundown of his case, see this post in FindLaw's Blotter.

So, what should we do to deal with unwanted telemarketers and junk mailers?

  1. Put your name on the Do Not Call Registry. It's easy and quick to do. If you are unsure whether your number is on the list, check and see.
  2. Unfortunately, there is no federal Do Not Mail Registry (but momentum for one may be growing). There is, however, a service set up by the Direct Marketing Association called DMA Choice. It allows you to set preferences for types of direct mail (what some call junk mail) you wish to receive or not receive.
  3. Register to stop receiving pre-appreoved credit card offers in the mail for up to 5 years at, or by calling 1-888-5-OPTOUT (567-8688). This is a service offered by the credit bureaus.
  4. If you continue to receive unwanted calls from telemarketers, ask them to remove your number from the list they are using. Politely inform them that you are not interested. If they persist, hang up.
  5. Never give personal information to an unknown telemarketer.
  6. Don't threaten to burn anything down or kill anyone.

Health Warnings on Hot Dogs?

A cancer group has sued some of the biggest hot dog producers in the country, seeking to force them to put warning labels on their dogs. The group contends that just like cigarette companies must warn about the health effects of their product, hot dog companies should be forced to warn about the cancer increasing effects of processed meat.

According to the AP, the Cancer Project's suit is aimed at Kraft Foods (who makes Oscan Meyer dogs), Sara Lee, Nathan's Famous and the makers of Hebrew National and Sabrett brands.

It is a consumer class action suit, brought by the Cancer Project on behalf of individuals who bought hot dogs without being made aware of the health risks associated. The warning label sought would read: "Warning: Consuming hot dogs and other processed meats increases the risk of cancer."

According to the Cancer Project, Americans wolfed down 1.5 million pounds of hot dogs in 2006. This year, in ballparks alone, there are 21 million dogs expected to be sold (according to a survey by the National Hot Dog and Sausage Council).

On its website, the group cites a report from the American Institute for Cancer Research stating that regular consumption of processed meat leads to increased risk of collorectal and other forms of cancer.

Some grim statistics they cite:

  • 62% of Americans will eat some form of processed pork each year;
  • The average American eats 32 pounds of it a year; and worst of all
  • one serving of processed meat per day increases risk of collorectal cancer by 21%.

As Neal Barnard, M.D., president of the Cancer Project put it: "[j]ust as tobacco causes lung cancer, processed meats are linked to colon cancer. ... Companies that sell hot dogs are well aware of the danger, and their customers deserve the same information."

Consumer Financial Protection Agency Delayed in House

The House Financial Services Committee delayed action on proposed legislation to create a centralized Consumer Financial Protection Agency (CFPA). The legislation mirrors much of what the Obama adminisration has proposed to regulate financial products like those that led to much of our current situation. Pressure from financial industry organizations, as well as current regulators who don't want to cede power, caused the delay.

Elizabeth Esfahani, spokeswoman for the House Financial Services Committee said that the bill has been delayed because "[w]e want to give consumer groups and their allies time to engage in the same amount of lobbying as their opponents on Capitol Hill."

What lobbying is she talking about? The full court press put on by the financial services industry to put the breaks on the proposed CFPA. As CNN reported, financial services industry lobbyists see stopping this agency as their number 1 goal.

Elizabeth Warren, chairwoman of the Congressional committee overseeing bailout expenditures, is credited with the idea for the new agency. It would outlaw the riskiest financial products, and require clear explanation of terms -- such as page and a half credit card agreements that simply state the key terms. This would allow consumers to quickly compare, and to know how much risk they are taking.

Supporters see it as simply regulating potentially harmful financial products just like we do food, drugs and other consumer goods.

The financial services industry, however, has called from the rooftops that the new agency could stifle financial innovation.

Innovation as king remains a mantra in virtually all industries. We're used to thinking that new ideas, new products and new services are the way to go, because often that's right. The words "stifle innovation" make oone think of red tape preventing the cure for cancer.

But will people in these times (people in Congress particularly) buy the innovation at all cost argument for financial products?

Further, how much of what we're talking about is actually innovation? Is it really innovation to cook up new ways to pile up short term profits while making risks seem to disappear? Are new concoctions from investment bankers and ingenious new traps from credit card companies really the lifeblood of our economy?

Auto Warranty Robocall Scam Class Action

In Illinois man has filed a class action suit against two companies at the center of the auto warrranty robo-calling harassment which has drawn attention from federal and state governments. While a recent Federal Trade Commission (FTC) suit involved the millions of people robo-called despite being on the Do Not Call Registry, this suit involves what actually happens if you buy one of the warranty policies. Spoiler alert: the policies in addition to the sales tactics appear to have some problems.

At this point, one might be hard pressed to find someone who has not received one of there automated calls pretending to be affiliated with their car dealership, and warning that warranty coverage is about to expire. These folks have gotten in deep dutch for showing incredible disregard for the national Do Not Call Registry, as well as inappropriately calling people's mobile phones.

According to the suit filed by Jonathan J. Sahim on behalf of himself and others similarly situated, at least with Dealers Warranty LLC (a.k.a. Federal Auto Protection) and Warranty Finance LLC, the problems don't end with shady telemarketing practices.

He claims that he purchased a policy from Dealers Warranty in 2007, with flat monthly payments to last 60 months. On cancelling his policy, he was charged hundreds of dollars in "interest" and "marketing" fees that he claims were undisclosed. These fees totaled 25% of the value of the policy.

So, in addition to protecting yourself from the car warranty robo-calls, also remember to protect yourself from the potentially misleading policies they are actually selling.

Astroturfing: Fake Reviews Cost Lifestyle Lift

In New York, the cosmetic surgery corporation Lifestyle Lift will pay $300,000 to settle claims regarding fake online reviews it posted about itself. No stranger to fights over online reviews, Lifestyle Lift illustrates the ongoing problem of astroturfing -- creating a false sense of grass roots support. Increasingly, business and political entities use social media to build false buzz or support.

Lifestyle Lift offers its own brand of (or at least its own branded) face lift. As its website encourages: "Now you can look as good as you feel! Regain that more youthful and confident appearance. Face your day with renewed confidence."

Unfortunately, the company found itself unhappy with the state of its own appearance online. Maybe the confident glow that accompanies mass marketing cosmetic surgery lost some luster once dissatisfied reviews began popping up on various review sites.

Maybe feeling old and saggy caused a cantancorous Lifestyle Lift to sue multiple websites for trademark infringement (and lose) simply because they hosted boards where Lifestyle Lift customers griped.

Maybe there were allegations (confidentially settled) that once Lifestyle Lift lost the bounce in its step, it instructed its employees to pose as patients and post positive Lifestyle Lift reviews on (one of the sites Lifestyle Lift sued for trademark infringement).

Well, when you've lost that glow, you've gotta do something about it, right? And when your online rep is showing serious wrinkles? Then, as Lifestyle Lift's former president told employees, it's time to "[p]ut on your wig and skirt and tell them about the great experience you had," right?

Actually, no. This is a classic example of the pervasive and troublesome menace known as astroturfing. It runs a wide spectrum, including but by no means limited to:

  • blogs that benefit from giving good reviews to certain products;
  • fake customer reviews;
  • creating illusory communities for "customers" to share product opinions (which are actually tightly controlled by the company itself, as Lifestyle Lift chose to do); and even
  • creating entire organizations to give a veneer of third party objectivity to what is actually self-interested promotion.

Though the lines between what is allowed and what is illegal can become blurry, behavior like that of Lifestyle Lift crosses a number of legal barriers, most notably unfair competition laws.

As reported by the New York Times, the company will pay New York $300,000 to settle allegations of false advertising, deceptive commercial practices and fraudulent conduct under federal and New York commercial protection laws.

Unless New York's pursuit of Lifestyle Lift represents a trend, the fine may do little to discourage astroturfing.

With the internet increasingly populated by less then sincere takes on all manner of goods and services, at least one old rule remains true: buyer beware (of the review too).

Thane H20 Mops Recalled

Thane International, Inc. of California is recalling over half a million units of its steam cleaner -- the H20 Mop. They are being recalled due to problem power cords, which can wear down unexpectedly, causing risk of shock and burns to users.

According to the recall notice, Thane sold the defective mops between June 2007 and December 2008 for about $100 each. They were sold directly to customers through infomercials, Thane's website and on QVC. Now Thane is recalling about 580,000 units.

According to a testimonial on Thane's website, one H20 Mop user gushes: "I don't have to scrub or bend, or do anything." Unless, that is, you are one of the 18 who have formally reported being shocked or burned by the vac. Then you might need to seek medical attention.

The model numbers affected are 808.092 and OEM-TV-001. The recall includes only H2O Mops with the following reference numbers printed on the back of the product: 200709198 to 200803148 or H20M1000 to M-H20M1198.

Because frayed power cords on products that use water are no joke, anyone who has purchased an H20 Mop will want to see if it's included in the recall.

Thane is offering to send a repair kit to those affected.

For additional information, contact Thane at (800) 485-0017 or visit their recall website:

To report any problems or injuries related to this or any other product, contact the U.S. Consumer Product Safety Commission at

Prison Phone Jam? Consumer Group Urges No

Digital rights advocacy group Public Knowledge has come out against recent proposals to jam cell phone signals in prisons. While cell phones have become a top listed security concern for prisons, the risks that go along with allowing phone jamming could outweigh any safety benefit to be had.

As detailed in this Wired article, cell phones in prisons have become a security problem both in the US and abroad. Amongst the threats that have been reported: use of phone to threaten and harass witnesses or victims, ordering hits from within prison and calling in bomb threats.

However, one proposed tool to combat prison cell phones has drawn concerns from the telecom industry, safety groups and digital rights advocates. That proposal: to jam the cell phone signals in prisons.

Currently, doing so would be illegal. The Telecommunications Act of 1934 forbids the jamming of radio signals (which includes cell phone signals).

Legislation has been introduced to allow the Federal Communications Commission to grant waivers that would allow phone jamming in prisons.

As reported by the New York Times, officials from no less than two dozen states recently recently signed South Carolina's request to the FCC that it be allowed to phone jam its prisons.

Telecom companies fear the ability to do so without interrupting the service of paying customers nearby.

Additionally, Public Knowledge outlined these 4 reasons why prison phone jamming would be a bad idea:

  1. Cell phone jamming may not work as planned. Many jammers can be defeated by tin foil. Further, the same guards that smuggle most phones into prison may also be able to disable jammers.
  2. It would likely interfere with legal communications, including: outside safety frequencies, outside cell phone users and prison personnel phone calls.
  3. Opening a loophole for phone jamming devices will make it easier and more likely for the wrong people to get ahold of them.
  4. Other technologies can be used to allow only approved communications, perhaps involving coordination with cell network operators.

Public Knowledge also points out that the majority of calls from prison cell phones go to prisoners' families. Increasing the ability for prisoners to keep up with family (without pricey collect calls) might decrease demand for contraband phones.

Libipower Plus Recalled over ED Ingredient

Libipower Plus, a "dietary supplement" marketed by Haloteco, has been voluntarily recalled nationwide because it contains tadalalafil, the active ingredient in many erectile dysfunction drugs.

Tadalalafil can pose particular risks to those taking nitrates (to treat heart problems, for example). When combined, the two can lower blood pressure to dangerous levels.

According to a Food and Drug Administration press release, Haloteco announced the voluntary recall after the FDA found the presence of tadalalafil, which is not named on the products packaging.

Consumers who still have Libipower Plus should stop taking it immediately and seek medical attention for any problems that may be caused by it.

This isn't the first supplement to be recalled over not disclosing erectile dysfunction related ingredients. Last month, Hi-Tech Pharmaceuticals, Inc. had to recall Stamina Rx because it contained benzamidenafil, which like tadalalafil is used in the treatment of erectile dysfunction. It also poses heart risks to people taking nitrates.

Supplements like Libipower and Stamina Rx run into problems on multiple fronts, including what they contain and how they are advertised.

Here, they both contain an ingredient normally reserved for prescription drugs, and which poses significant health risks to certain users.

In the case of Stamina Rx, if not also Libipower Plus, the FDA found that due to effects advertised, the "supplement" was actually a drug. Further, it was a drug not recognized as safe under the condition advertised for its use.

The FBI released its annual mortgage fraud report, detailing trends seen in data from 2008. It reads much like last year's report with additions to the every-growing cast of schemes being employed. With real estate markets predicted to experience further decline, the report warns that the upward trend in mortgage fraud will likely continue.

The upshot of the 2008 Mortgage Fraud Year in Review is that depressed rea estate markets breed new ways for people to commit mortgage fraud. And commit it they do, in increasing numbers. The FBI reports that mortgage fraud filing from financial institutions increased 36% from 2007 to 2008.

The top states for mortgage fraud include California, Florida, Georgia, Illinois, Michigan, Arizona, Texas, Maryland, Missouri, New Jersey, New York, Ohio, Colorado, Nevada, Minnesota, Rhode Island, Massachusetts, Pennsylvania, Virginia, and the District of Columbia.

For purposes of the FBI's report, mortgage fraud is defined as any material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan.

The FBI break mortgage fraud down into two types: "for property" fraud and "for profits" fraud. The first is committed by people intending to occupy the property in question -- perhaps by inflating their financial profile in the loan paperwork. "For profit" fraud, on the other hand, typically involves more complex schemes to gain illicit proceeds from real estate sales.

With way more inventory of properties on the market than demand to purchase them, "for profit" schemes are going gangbusters.

The FBI report reiterates that increased foreclosures, declining house prices and decreased demand all put pressure on home sellers, builders and lenders to engage in fraudulent schemes. Schemes noticed previously by the FBI, including fraudulent flipping schemes, builder-bailouts, short sale scams, and fraudulent foreclosure rescues, continued in 2008. For an explanation of these schemes, see the FBI's descriptions in last year's mortgage fraud report.

Some of the emerging schemes identified this year: reverse mortgage fraud, credit enhancements, condo conversion scams, loan modification scams, and pump and pay schemes. For a breakdown of these emerging scams, take a look at the FBI's descriptions in this year's report.

Adding insult to injury, mortgage fraudsters appear to be targetting government programs recently enacted to help band-aid the foreclosure wounds.

The Check Spent a Lot of Time in the Mail in Early 2009

If the U.S. economy is on the mend, then a new report may be proof that the first months of this year were rock bottom. Consumers fell behind on credit card bills and home equity and car loans at a record pace in the first quarter of 2009.

The bad news comes in the latest Consumer Credit Delinquency Bulletin from the American Bankers Association. That report shows that a record 4.75 percent of all credit and bank card accounts were delinquent in 2009's Q1, with the balances on those delinquent accounts reaching 6.6 percent of all outstanding credit/bank card debt, also a record. (Note: the ABA classifies a delinquency as a scheduled payment that is overdue by 30 days or more).

Under the ABA's "composite ratio", which follows delinquencies across eight different types of installment loans (like home equity loans, car loans, and personal loans), U.S. consumers were late on 3.23 percent of accounts in the first quarter of 2009. That's a nudge up from the previous "composite ratio" delinquency record: 3.22 percent at the end of 2008.

Here are some more details from the Consumer Credit Delinquency Bulletin, as set out in a News Release from the ABA:

  • Home equity loan delinquencies were up from 3.03 percent to 3.52 percent.
  • News on car loans was mixed: direct car loan delinquencies were up (2.03 percent to 3.01 percent), while indirect delinquencies were down slightly (3.53 percent to 3.42 percent).
  • Personal loan delinquencies increased to 3.47 percent, from 2.88 percent.
  • Home improvement loan delinquencies were actually down (to 1.46 percent from 1.75 percent).

As Reuters notes, the report shows that Americans still turn to high-interest credit cards as a temporary solution that can have long-lasting consequences: "more cardholders relied on plastic to meet day-to-day expenses" in early 2009, and meanwhile "U.S. consumers ended March with $939.6 billion of revolving credit outstanding."

Things may not get much better until the job market rights itself. "Borrowers are struggling as the nation's jobless rate sits at a 26-year high of 9.5 percent, with 6.5 million jobs having disappeared since the recession began in December 2007," Reuters reports.

If your student loan balances make you feel like a member of the Class of Forever, help may be here. It's not exactly a bailout, but a number of federal student loan rule changes that went into effect this week are aimed at lightening the repayment load for overburdened borrowers.

Lower Interest Rates. As of this week, people with older student loans will catch a bit of a break. For federal loans issued before July 1, 2006, the interest rate will be reduced to 2.48 percent, down from the current 4.21 percent rate. And the interest rate on new subsidized federal Stafford loans will fall to 5.6 percent (down from 6 percent), as the Chicago Sun-Times reports.

Relaxed Loan Forgiveness for Public Service Jobs. If your job relates to public service -- if you work for the government, teach in public schools, or are employed by a qualifying non-profit, for example -- you may be able to have your entire student loan obligation forgiven (erased) after 10 years. This is down from the previous 25-year forgiveness standard, according to Reuters.

Income-Based Repayment. A new income-based federal student loan repayment option also went into effect this week. It lets borrowers set up a monthly student loan repayment that is as low as 15 percent of their adjusted gross income for the year. As CNN points out, while the income-based option can make payments significantly lower, the loans themselves could take longer to repay, meaning more interest is paid. But the trade-off may be worth it for some borrowers.

Many of the new federal student loan rules going into effect this week are part of the College Cost Reduction and Access Act, which was signed into law in 2007. On top of the features outlined above, the Act extended federal Pell and TEACH Grant funding, and increased income protection allowances for many students.