Consumer News & Alerts   |   April 16, 2007

A FRESH FACE
Americans spend billions each year on cosmetics -- shampoos, face creams, eyeliners and just about everything else you can think of. It makes us feel good, presumably, never mind about those animals used in testing.

But do cosmetic preparations actually do anything? Officially, the answer is no. The U.S. Food and Drug Administration (FDA) doesn't regulate cosmetics for the simple reason that the agency considers them "topical products that do not affect the structure or function of the skin." They don't do anything, in other words.

As the recent round of pet poisonings reminds us, many seemingly innocuous products can -- and do -- cause great harm without anyone in government getting very excited about it. The same could very well be true of cosmetics, since they are not only unregulated and untested by government but also not subject to recall. Sound strange? Perhaps, but as Tom Glaister reports in this week's cover story, Cosmetics: A Fresh Face or Just a Waste?, the more you know about cosmetics, the more you wonder why we spend so much on them.

IN THE DOG HOUSE
A few weeks ago, as families were burying their elderly loved ones killed by salmonella-infected peanut butter, we predicted that the fast-developing outbreak of dog and cat poisoning would arouse consumers as nothing had before. Sure enough. Americans are understandably up in arms over the poisoning of their pets, especially when they learn just how lackadaisical their government really is when it comes to policing the purity of dog and cat food. Their fears were not put to rest by last week's Senate hearings, at which a parade of industry lobbyists, apologists and federal bureaucrats congratulated themselves for not much of anything.

Sorry, boys, the game is up. The voters are irate and the '08 elections are getting closer every day. Congress can't afford to sit idly by while entire kennels are wiped out. Look for strict new regulations to emerge, followed by the usual lack of enforcement once the din dies down.

Meanwhile, the FDA warns that some recalled pet food may still be on store shelves, so be careful. The same is true of peanut butter. One of our editors shopping at a Bloom supermarket in the Washington area found a jar of Peter Pan peanut butter with the dread "2111" number on the lid.

In other pet poisoning developments ...

• Recall Expanded Menu Foods and Nutro expanded earlier recalls. Nutro's CEO said consumers are "fed up" with confusing information from pet food companies.

• Sell-Out It was revealed that a top Menu Foods executive sold a major portion of his shares in the company just a few weeks before the recall. A coincidence, he insisted. Meanwhile, one estimate places the cost of the recall to consumers at $20 million.

• Body Count So just how many cats and dogs were harmed by the calamity? Good question. No one really knows, but one estimate, from the Banfield chain of veterinary clinics, puts it at 39,000.

• A Short Leash A new consumer group is planning a nationwide series of marches to honor dead pets and demand stricter regulation of pet food.

HUMAN HAZARDS

• FDA Warns of Contaminated Olives Olives imported from Italy and sold under various brand names could cause Botulism, a potentially fatal disease.

• Listerine Kids Mouth Rinse Listerine Agent Cool Blue's preservative system not up to the task, company discovers.

SUMMER IN APRIL
Yes, we know, the weather's still lousy in much of the country but gas prices are rapidly reaching summer levels -- inching towards the $4 mark in California and over $3 nationwide. The 61 cent price rise since February is the quickest increase since 2000. It's not unusual for gasoline prices to rise in the spring but the latest increases are unusual. They also come at a time when refiner profit margins are the fattest they have been since Hurricane Katrina hit in August 2005.

What's the answer? Other than moving next door to the office, what can you do about the price of gas? In the not-too-distant future, you may be able to plug your car in and charge it up, eliminating gas entirely for trips around town. Today's batteries aren't quite up to the challenge but at least one California utility is all charged up about the idea.

HOME PRICES SAG
Realtors are a pretty optimistic group but the National Association of Realtors swallowed hard and conceded that home prices are likely to decline slightly this year, the first time there has been a nationwide year-to-year decline since the Great Depression. Reason? The collapse of the subprime sector has shut a lot of would-be buyers out of the market while a rising tide of foreclosures is putting lots of existing homes on the block at bargain-basement prices.

Bankruptcy Loopholes When the last Congress reworked the bankruptcy laws at the behest of the banking lobby, it tried to close what the bankers considered "loopholes," meaning not one drop of blood was to remain once the hapless bankruptee had been drained. Now consumer groups are saying Congress did such a good job taking care of big campaign contributors that families driven into bankruptcy by subprime loans and other calamities have next to no chance of saving their homes. The groups estimate that $164 billion in home-based equity will wind up on the auction block unless Congress acts.

Foreclosure Moratorium Civil rights groups, meanwhile, are calling for a moratorium on foreclosures. They say that "payment shock" from variable-rate subprime loans is decimating black and Latino neighborhoods, driving families out of homes many have owned for decades.

Congress, meanwhile, is beginning to talk about Wall Street sharing the pain of the fall-out from the predatory lending binge of the last few years. Investors in mortgage bonds should accept some of the liability for the deceptive and undocumented loans lenders made, say the ranking members of the House Financial Services Committee. Reps. Barney Frank (D-Mass.) and Rep. Spencer Bachus (R-Ala.) are introducing legislation that would do just that, letting some of the losses trickle down just the way the profits did a few short months ago.

Payday Lender Sued Payday lenders are taking almost as much flak as subprime lenders. The latest assault takes the form of a class-action suit in Pennsylvania against Direct Financial Solutions of Utah. The suit alleges the company has unlawfully charged Pennsylvania consumers interest rates in excess of 2000% APR and has violated the state's usury laws.

In a recent editorial, The Wall Street Journal defended payday lenders, saying they were performing a valuable service by keeping consumers out of the hands of loan sharks. Hmmm ... how's that again?

SALLIE MAE ANTES UP
The giant student lender has agreed to pay $2 million and adopt a new code of conduct to settle an investigation by New York Attorney General Mario Cuomo. Cuomo has been investigating the often-cozy relationship between lenders and college financial aid officers. Besides lenders, Cuomo's probe has zeroed in on college financial aid officers, who allegedly steered students to lenders who had, ahem, made it worth their while.

HAZARDOUS TO YOUR HEALTH
As we know, all kinds of things are hazardous to your health, like being overweight. But now a study finds that dieting's not good for you either. Why? Well, most folks just put the weight back on as soon as they go off the diet and this on-again, off-again routine isn't good for you. Exercise is the key to keeping the weight off, say researchers.

Oh but wait -- another study finds that for at least some of us, obesity may be in the genes. A different set of researchers say they've found a link between a specific gene variation and a higher risk of obesity. One in six people may have this unusual genetic makeup and have as much as 15 percent more body fat than people without the gene variation.

A REAL PAIN ...
It's pretty hard keeping track of which pain killer is beneficial and which one is dangerous, since the line-up seems to change daily. Here are some of the latest developments:

• Aspirin A small daily dose of aspirin can help prevent heart attacks in high-risk consumers. But researchers were surprised to find that fewer than 41 percent of at-risk adults are taking aspirin daily.

• Ibuprofen A new study finds it may increase heart attack risk. Researchers say ibuprofen may interfere with the beneficial effects of aspirin.

• Vioxx Replacement An FDA panel voted 20-1 against approval of Arcoxia, Merck's latest hope for a Vioxx replacement.

Dealing with Arthritis Arthritis sufferers are a big part of the market for pain-killers. That's fine but the Healthy Geezer, Fred Cicetti, reminds us that self-diagnosis is a bad idea. There are several kinds of arthritis and all require different treatment.

VONAGE'S TROUBLED VOYAGE
Things are looking bleak at Vonage. After it lost a patent-infringement case to big, bad Verizon, the company's stock dipped even more precipitously. The company ousted its CEO and installed founder Jeffrey Citron as interim CEO and prepared to jettison about 100f its staff. Regardless of how the legal appeals turn out, it's a sad day in VoIPville, as start-up Internet phone companies learn the hard way that the big guys have a century of experience in manipulating the legal and regulatory landscape to their advantage.

FreeConference.Com Freed, For Now Another interloper that is likely to face uphill sledding is FreeConference.Com. As its name implies, it provides free -- or nearly free -- conference calling to non-profits, community groups, etc. But oft-convicted AT&T says FreeConference.Com is actually a "scam" that is illegally skirting telco regulations. The Federal Communications Commission will referee the dispute.

• Wireless Broadband Competition Consumer groups argue that an upcoming spectrum auction creates an opportunity for FCC to push the telecom companies away from the trough and create some real competition in wireless broadband.

• OnStar Goes Digital The nationwide conversion to a digital cellular system leaves some 50,000 OnStar subscribers by the side of the road.

BUSH MAY VETO AIRPORT SCREENING BILL
Congress has allocated $7 billion for new baggage-screening machines at airports. The machines would save time and automate the bag-screening process, while -- at least theoretically -- lessening the threat of airborne terrorism. But President Bush is threatening to veto the measure because it would allow TSA screeners to unionize. Unions are worse than terrorism, as the White House sees it.

More travel notes ...

• Air Travelers Association Opposes Passenger Bill of Rights Proposed new rules would only make matters worse, ATA argues.

• ATA Deal Could Trigger Multiple Airline Mergers Mergers often translate to fewer flights, higher fares.

• Rowdy Pilot Yanked Off Northwest Flight Flight canceled after pilot, perhaps a Don Imus fan, goes ballistic when passengers oject to his invective-laced cell phone call.

RECALLS

SCAMS & OUTRAGES

• Phony Fraud Settlement Scam Targets are told they're "big winners" in a class action settlement.

• Cross-Border Con Artist Scam targeted senior citizens with bogus bond pitches, unfilled promises of quick profits.

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