Consumer Fraud Archive

Flip Side of Lawn Mower Lawsuit: Briggs & Stratton Earnings

April 22nd, 2010. By AbiK

A few of you had commented on the Lawn Mower Class Action settlement post about the impact that the settlement would have on the companies (defendants) involved, including engine maker Briggs & Stratton.

Today, Briggs & Stratton reported fiscal third quarter earnings, and—no surprise—the company said earnings were down due to the lawsuit. Five percent down, according to AP. Briggs & Stratton earned $24.1 million, down from $25.4 million a year ago. The company reported it would have earned 85 cents per share had it not been for the lawsuit; rather, it reported 48 cents per share, down from 51 cents per share a year earlier.

According to Briggs & Stratton, revenue rose 3 percent to $694.6 million from $673.8 million a year ago. The increase was attributed to engine shipments rising 6 percent over 3Q 2009—but the company stated the increase was offset by lower average prices.

Now, although this was a consumer fraud lawsuit and Briggs & Stratton admitted no wrongdoing, they did settle 65 class action horsepower-related lawsuits in February, agreeing to pay $31 million along with agreeing to change how they would label the horsepower of their engines for the next ten years. (And of course, the rest of the lawn mower settlement details you can read about over at the initial story we posted.)

Though 3Q earnings were down, the company stated that it would have earned 85 cents per share without the lawn mower lawsuit settlement. The reason for this was rising engine sales, particularly in the lawn and garden market.

According to AP, the adjusted earnings exceeded Wall Street expectations where analysts had expected 67 cents per share.

The postscript: Briggs & Stratton was up 35 cents (1.6 percent) to $22.21 in reports on afternoon trading.

Tags: Briggs & Stratton, Lawn Mower, Lawn Mower Class Action
Posted in Consumer Fraud, Settlement | 5 Comments »

Don’t Get Lipodissolve to Get that Bikini Bod

April 21st, 2010. By AbiK

The countdown is on baby! There’s about 5 weeks till the official kick-off to summer season—Memorial Day weekend—is upon us and that means millions—yes, millions—of women are doing things like dieting, jogging, zumba, spinning, tanning (fake, out of a tube, hopefully), and heading to cosmetic surgeons and medispas in hopes of seeing an improved version of themselves in the mirror. Quickly.

Unfortunately, a number of women will look to some cosmetic treatments that maybe promise a bit more than they deliver. Case in point: Lipodissolve.

The FDA recently sent out warning letters to six medical spas in the US for making false or misleading statements about lipodissolve. The statements included things like claiming lipodissolve is safe and effective; claiming lipodissolve has an outstanding safety record; and stating that lipodissolve is superior to other fat-loss procedures, including liposuction.

Lipodissolve is a cosmetic procedure that’s touted as a less-invasive cousin to liposuction. It’s liposuction, minus the suction, so to speak. Lipodissolve patients receive a series of drug injections (typically, phosphatidylcholine and deoxycholate) that aim to dissolve and permanently remove small pockets of fat from the body.

I don’t really want to know what happens once the fat “dissolves” and, like, where does it go? or what form is it in? Questions I sense have queasy-feeling-inducing answers to them. Be that as it may, I guess the fat is supposed to go someplace better than one’s saddlebags, love handles, tummy bulges, arm flaps…

So what’s the FDA’s beef? For starters, the fact that the FDA never evaluated or approved the products for use in lipodissolve. That should be your first clue that maybe you ought to be a little gun-shy around the ol’ lipo needle.

Beyond that, here’s the list of FDA issues with lipodissolve: 

• The FDA is not aware of evidence supporting the effectiveness of the substances used in lipodissolve for fat elimination
• The safety of these substances, when used alone or in combination, is unknown
• The FDA is not aware of clinical studies to support medical uses of lipodissolve

In addition, FDA has reports of unexpected side effects in people who’ve undergone the lipodissolve procedure. These side effects include:

• permanent scarring
• skin deformation
• deep, painful knots under the skin in areas where the lipodissolve treatments were injected

In terms of the warning letters that were sent out, they went to…

Monarch Med Spa in King of Prussia, PA

Spa 35 in Boise, ID

Medical Cosmetic Enhancements in Chevy Chase, MD

Innovative Directions in Health in Edina, MN

PURE Med Spa in Boca Raton, FL

All About You Med Spa in Madison, IN

The FDA has requested written responses from the companies—and they should be due by next week.

Tags: FDA, Lipodissolve
Posted in Consumer Fraud | No Comments »

The EnergyStar-Approved Gas-Powered Alarm Clock

April 1st, 2010. By Hunter West

Remember that fridge you bought with the EnergyStar label? Oh, y’know it may have even cost a bit more than other models that lacked the label. But it’s worth it, right? You’re using less energy…saving on hydro, and being the good environmental steward that you are. 

Don’t bet on it. As revealed last week in The New York Times and in the contents of a government report issued March 26^th, the EnergyStar program can’t be trusted. Okay, well maybe now that the proverbial dung has hit the fan things will improve. But for anyone who has bought anything bearing the blue EnergyStar seal in recent years—well, you really don’t know what you’ve got. 

Because EnergyStar may not know what you have, either. 

EnergyStar is run by the Environmental Protection Agency (EPA) in tandem with the federal Energy Department. A great idea, with lofty goals. As a consumer, you can be assured that by purchasing an appliance with the blue seal you are buying the very best, most efficient item in that class, on the market. 

Or are you? 

Audits are wonderful things. And when the Government Accountability Office (GAO) did a nine-month investigation, the auditors uncovered some interesting factoids: 

• A manufacturer can download the coveted EnergyStar logo from the government website as soon as they are registered as an EnergyStar partner. Many simply pasted the logo on items that had never been submitted for approval.  
• Many approvals are handled by an automated system. EnergyStar officials claim that final approvals are always vetted by a human being, and that the automated system is only used for screening. But this is allegedly not the case in all matters. 
• Many EnergyStar appliances actually use more power than others not carrying the EnergyStar logo. 

In what would make excellent fodder for a movie, the GAO set up four fictitious companies as part of its audit and submitted to EnergyStar various products seeking the EnergyStar seal of approval. Most products just existed on paper. However energy consumption data was issued as if the products were, indeed real. Figures submitted in some cases were 20 percent less than the best-performing appliances out there. That’s quite a feat. 

No red flag. They were approved. 

An air purifier was submitted for approval. Basically it was an electric space heater with a feather duster on top (see photo). 

Approved. 

And here’s the best one…a gasoline-powered alarm clock. An item I suppose for those who are into backwoods Read the rest of this entry »

Tags: EnergyStar, EPA, GAO
Posted in Consumer Fraud | 3 Comments »

Seagram’s Sisters Lawsuit Makes Start-up Funding Look Easy

March 26th, 2010. By AbiK

pssst…looking for some start-up funding? I may have your angel. The Seagram’s sisters—aka, Clare and Sara Bronfman. Yes, the daughters of mega mogul Edgar Bronfman, Sr. They’ve already plowed millions (we’re talking close to $100M) into an investment scheme of self-made self-help wannabe whiz, Keith Raniere—and lost them. Where was that psychic they were talking to? So maybe they’ll be looking for a new opp—esp. now that word on the street is that daddy Bronfman is a bit pissed.

Clare and Sara apparently got a bit “taken in” by Raniere and his NXIVM group-awareness seminar company. So much so that their daddy refers to it as a “cult”. Here’s what Clare Bronfman has to say about Raniere on her—rather low-budget-looking considering she could afford a web guy—website:

Keith Raniere – Keith is my teacher and my best friend. My life is so profoundly different from when I first met him words can’t describe my gratitude. The depth of his caring for the individual people, with whom he works, as well as humanity collectively, is remarkable to me. His dedication to helping people experience more joy in their lives through self discovery and understanding has been an incredible gift to so many of us. Through his ongoing commitment to live an ethical existence, dedicated to doing what is right for all of humanity, he continues to inspire me.

So what’s NXIVM? —if helps if you can first pronounce it, which the NY Post kindly shares as NEX-EEUM. NXIVM was founded by Nancy Salzman who seems to have a hefty CV though you’d be hard-pressed to actually find her credentials—i.e., the ones that include abbreviations like “B.A.”, “M.S.”, “PhD”, Read the rest of this entry »

Tags: Bronfman, Edgar Bronfman Sr, Keith Raniere, Nancy Salzman, NXIVM, Seagram's
Posted in Consumer Fraud, Emerging Issues, Financial, lawsuits, Securities, Totally Tortelicious | 6 Comments »

Reminder: CARD Act goes live Monday

February 20th, 2010. By AbiK

Monday, February 22 is the day we finally see the new credit card rules go into effect. For those of you who missed all the news on this last fall, the new rules come as a result of the Card Accountability, Responsibility and Disclosure Act—aka CARD Act for short.

We outlined what the CARD Act will mean to you in an earlier post—and we wrote about some of the credit card pitfalls you should look out for—but just to recap:

Limits on Interest Rate Hikes: Interest rate increases on existing balances would only be allowed under certain conditions, such as when a promotional rate ends, there is a variable rate, or if the cardholder makes a late payment. Interest rates on new transactions can increase only after the first year. Significant changes in terms on accounts cannot occur without 45 days’ advance notice of the change.

No more Universal Default: “Universal default,” when interest rates are raised based on customers’ payment records with other unrelated credit issuers (such as utility companies), would end. 

More Time to Pay Monthly Bills: Credit care issuers will have to give card account holders “a reasonable amount of time” to make payments on monthly bills. That means payments would be due at least 21 days after they are mailed or delivered.

Clear Due Dates and Times: Credit card issuers would no longer be able to set early morning or Read the rest of this entry »

Tags: CARD Act, Credit Card
Posted in Consumer Fraud | No Comments »