Hurricane Ike Scams Prompt FTC Warning

In the aftermath of Hurricane Ike, the Federal Trade Commission (FTC) is urging victims of the disaster to beware of home repair and identity theft scams. The FTC is also urging consumers to be cautious when making donations to help the victims of the disaster. Scam artists tend to take advantage of natural distasters by creating bogus fundraising and home repair operations or engaging in identity fraud.

If your home was damaged by a hurricane, flood, or other emergency, you probably want to rebuild as soon as possible. The FTC says don’t rush into an agreement with a contractor. Check references, get at least two bids in writing, and don’t pay more than the minimum in advance. Most important, never sign an insurance check over to a contractor.

If you’re recovering from the effects of a hurricane, you’ll need to share your personal information to get relief benefits or replacement documents from government agencies. Be cautious. Some scam artists claim to be government officials. So check their ID before you share yours. And remember that the government never charges application fees.

If you’re thinking of ways to help victims of weather emergencies, the FTC says give wisely. Watch out for charities that have sprung up overnight. They don’t have the experience or means to deliver assistance. Don’t send cash; and beware of charities that use names that sound or look like those of respected, legitimate organizations.

Lawsuits likely after financial giants’ meltdown

An attorney who represents many clients currently involved with lawsuits against failed financial organizations said more are certainly likely following the collapse of some of this country’s most well-known giants.

Jeffrey Zwerling (Zwerling, Schachter and Zwerling LLP, New York City) said small investors will lose millions and will look to recover some of their investments based on these companies publicly misrepresenting them.

For months, if not years, firms that have recently failed have said an investor’s money is safe with their company.

The attorney, in a release, said “The people who invested in these stocks or mortgage-backed securities weren’t high-stakes gamblers. They’re like you and me. They invested a dollar and expected to receive a dollar’s worth of value in return.”

Zwerling said executives at these failed firms treated investor money and their business as their “own personal casino” and investors were robbed of their money.

FBI investigating companies at heart of credit fallout

Associated Press has learned the Federal Bureau of Investigations is investigating the four companies behind President Bush’s $700 billion bailout plan.

The FBI is investigating fraud by mortgage finance firms Fannie Mae and Freddie Mac, and insurance firm AIG (American International Group Inc.). The AP also learned Lehman Brothers Holdings Inc. is also under FBI scrutiny for fraud.

These additions brong the total number of financial institutions under FBI investigation to 26.

FBI Director Robert Mueller said his agency is looking into whether any of these financial institutions misrepresented their assets. He, at that time, did not name any of the individual companies.

The FBI is already investigating financial organizations at the center of the subprime mortgage fraud scandal.

The House and Senate are now charged with approving Bush’s $700 billion bailout plan for some of these failed financial corporations.

Homeowners falling prey to foreclosure fraud

Nearly 1 in 11 consumers is behind on house mortgage payments or are already in foreclosure, according to This equates to millions of Americans, and they are all at risk of falling victim to an ever-growing scheme which claims to offer a bail-out to desperate homeowners.

These “foreclosure rescue scams” have been reported across the country and, according to the report, police in Portland, Ore., warn homeowners who enter foreclosure that they’re likely to be swarmed with firms willing to aid in getting them out of financial straits.

In Maryland, a firm ripped off hundreds of homeowners for more than $60 million in home equity.

According to the report, there are two different types of common foreclosure fraud:

“There’s a simple fee-based racket, in which the criminal offers to help the homeowner stave off foreclosure, collects an up-front fee and then disappears. But the more lucrative scheme involves seducing homeowners into complicated transactions that allow the middlemen to steal equity in the house or walk away from the closing table after netting thousands in phony payouts.”

Massachusetts Adopts Tougher Consumer Data Rules

In the wake of a series of alarming data breaches which put thousands of Massachusetts consumers at risk for identity theft, the Boston Globe reports that state regulators released new rules yesterday ordering businesses to better safeguard consumers’ personal information.

The regulations, issued by the Massachusetts Office of Consumer Affairs and Business Regulation, require companies that handle personal information such as credit card accounts and Social Security numbers to encrypt data stored on laptops, monitor employee access to data, and take other steps to protect customer information, beginning Jan. 1. Governor Deval Patrick also signed an executive order requiring state agencies to take similar measures, the Globe reports.

“This is necessary because of the growing concern among consumers about the large number of breaches of data containing their personal information,” said Daniel Crane, undersecretary of Consumer Affairs and Business Regulation.

Framingham-based TJX Cos., which operates TJ Maxx and Marshalls stores, said last year that at least 45.7 million cards were exposed in a computer breach. In March, supermarket company Hannaford Bros. reported a breach, potentially exposing 4.2 million credit and debit card accounts to fraud. This month, mortgage company Countrywide Financial Corp. said more than 45,000 Bay State consumers could be affected by a security breach, and Bank of New York Mellon revealed that a data breach in May may have put at risk personal information from more than 400,000 Massachusetts residents, twice the original number reported.

Shortly after the TJX incident, Patrick signed sweeping legislation requiring companies to notify the state of future security breaches and ordering the consumer affairs agency to craft new regulations. Since then, companies have reported nearly 320 security breaches to the state, affecting more than 625,000 residents. Many involved stolen laptops and hard drives. In three of four cases, the data were not encrypted or protected by a password.

After business groups raised objections to an early draft of the rules, Crane said, the agency made several changes. For instance, he said the agency tweaked the definition of encryption and removed a requirement ordering companies to do an audit trail of where they keep personal data.

Some data are exempt. Specifically, the regulations only cover “personal information” – defined in the law as a resident’s first and last name in combination with a Social Security number, driver’s license number, or financial account number. The legal definition does not apply to Social Security numbers or credit card numbers alone.

However, David Murray, a lawyer for the consumer affairs agency, said the new rules could still expose companies to greater liability from civil lawsuits if they don’t fully safeguard credit card numbers and other data not explicitly covered by the law, because lawyers could point to the requirements as an example of the minimum care companies must take to protect sensitive data.

Prepaid Phone Card Bill Backed by FTC

The Federal Trade Commission (FTC) is urging Congress to approve legislation to protect consumers from abusive sales tactics when it comes to pre-paid phone cards, Consumer Affairs reports. The agency told the U.S. House Subcommittee on Commerce, Trade and Consumer Protection that a pending bill would be helpful to the FTC’s efforts in that area.

FTC Chairman William E. Kovacic told the committee that the Commission would continue to conduct consumer education programs and bring law enforcement actions involving deceptively marketed prepaid phone cards. In two cases filed this spring against major distributors of prepaid calling cards, the FTC alleged that the defendants marketed their cards to recent immigrants, misrepresented the number of calling minutes provided by their cards, and failed to disclose adequately fees and charges associated with their cards.

The FTC said it conducted tests on the cards before it filed the suits. In the first lawsuit, the cards delivered, on average, less than 43 percent of the advertised calling minutes. In the second suit, the cards delivered, on average, only 50.4 percent of the minutes advertised.

A dozen indicted in Atlanta mortgage scheme

A dozen men have been indicted on charges they ran an elaborate mortgage fraud scheme in Atlanta’s West End.

According to a report from the Atlanta Journal Constitution newspaper, Fulton County District Attorney Paul Howard Jr. is accusing 12 men of selling nine homes using false appraisals more than double its actual value.

These homes are situated in an Atlanta neighborhood where homes have been sold and foreclosed numerous times, according to the Journal Constitution. That, according to an Atlanta Police detective, is a sign of suspected mortgage fraud.

Police report that while this bust included on nine homes, and the 12 men are accused of walking away from the scheme with $212,000, there are potentially thousands more homes tied to mortgage fraud schemes in Atlanta, alone.

Five of the 12 arrests have been made, but seven others indicted remain on the loose.

Fidelity to Buy Back $300M in Auction-Rate Securities

Fidelity Investments yesterday agreed to buy back from customers about $300 million in auction-rate securities, the Boston Herald reports.

Fidelity was pressured by Massachusetts Secretary of State William Galvin and New York Attorney General Andrew Cuomo to make the repurchases, the Herald reports.

“Fidelity’s involvement with auction-rate securities is very different than the role of investment banks and underwriters with whom you have settled previously,” wrote Lawson, referring to past agreements with Citigroup, Merrill Lynch, Bank of America and others to repurchase billions of dollars of securities.

“Unlike those investment banks and underwriters, Fidelity did not act as an issuer, underwriter or sponsor of these securities,” wrote Lawson. Fidelity didn’t admit wrongdoing and wasn’t fined.

Barry E. Silbert, CEO of Restricted Stock Partners, said what makes the “settlement notable is that it is the first with a non-primary distributor” of auction-rate securities.

Meanwhile, Attorney General Martha Coakley said Citigroup agreed to buy back $20 million in auction-rate securities from the Massachusetts Water Pollution Abatement

Gardasil approved for more cancer treatments

Gardasil, the controversial vaccine manufactured by Merck Inc., has now been approved to prevent more cancers by the Food and Drug Administration.

The FDA approved Gardasil to prevent the onset of some types of vulva and vaginal cancers in girls and women from 9 to 26.

The vaccine which has been linked to numerous, and some severe side effects is already approved to prevent certain strains of the human papillomoavirus (HPV). Some strains of the HPV virus have been known to also cause vulvar and vaginal cancers.

Such cancers are rare, but the FDA felt compelled to approve Merck’s request.

Gardasil first gained FDA approval in 2006 and since then has been a source of much controversy, including being linked to the death of one woman who received the vaccine treatment.

The vaccine has been mandated in some U.S. states, meaning all girls are to have it much like they would the early childhood vaccines.

This, combined with mountains of positive press, have garnered Merck millions in profits in just a few short years.

Merck, since gaining the initial FDA approval, has pushed to have it be a vaccination treatment for other types of cancer, including men.

Some girls and women who get the vaccine report swelling and tenderness at the injection site, and a growing number of women also report fainting following the shot.

Merck is criticized for rushing Gardasil to the market when it was realized a clinical trial was only conducted for two years prior to it being available to the U.S. public.

Enron payouts could begin soon

Shareholders of former corporate giant Enron could soon start receiving payments as part of their record $7.2 billion lawsuit.

This settlement represents the largest in U.S. history, topping the $6.1 paid out in WorldCom litigation.

A U.S. District Court Judge has approved a plan by a California-based law firm which represents the shareholders to begin disbursing the payments.

A spokesperson for the firm said in a statement: “We continue to be hopeful that we can make a distribution before the end of the year, and the order approving the plan of allocation is a big step toward that goal.”

The firm will receive $688 million in fees. The suit was originally filed in the fall of 2001.

To be eligible for the payout, shareholders had to buy stock between Sept. 9, 1997, and Dec. 2, 2001. Those who bought before and after those dates are not eligible for the settlement reward.

Those eligible for the settlement had to file paperwork they received via mail by April 30, 2007. People who are eligible but did not file this information can still do so, but have no guarantee of receiving payments.