Consumer Protection

WASHINGTON - Hall of Fame quarterback Joe Montana said they improved his strength and posture. Celebrity Kim Kardashian boasted they allowed her to ditch her personal trainer. But federal and state officials said the rocker-bottom Shape-ups and other toning shoes made by Skechers USA Inc. don't live up to the hype from the company and its high-profile endorsers. On Wednesday, the Manhattan Beach company agreed to pay $50 million to settle false-advertising allegations by the Federal Trade Commission and the attorneys general of 44 states, including California, as well as the District of Columbia.

WASHINGTON — The Consumer Financial Protection Bureau is considering new rules on mortgage fees, including banning origination charges based on the size of the loan. The agency, which said the new rules would make it easier for potential home buyers to understand and compare mortgages, also is proposing that brokers and loan officers undergo criminal background checks and go through special training. The preliminary proposals, unveiled Wednesday, also would prohibit incentives to steer consumers into higher priced loans.

A federal administrative judge ruled that pomegranate juice maker Pom Wonderful used deceptive advertising when it implied its products could treat or prevent serious diseases and other medical conditions. Judge D. Michael Chappell upheld much of a 2010 Federal Trade Commission complaint against the Los Angeles company owned by Lynda and Stewart Resnick. The judge said in his decision issued Monday that Pom used "insufficient" evidence to back its claims that Pom products "treat, prevent or reduce the risk of heart disease, prostate cancer or erectile dysfunction.

Does the Consumer Financial Protection Bureau have the power to trump theU.S. Supreme Court? That's the intriguing question raised by a seemingly routine announcement last week that the watchdog agency is seeking public comments on "how consumers and financial services companies are affected by arbitration and arbitration clauses. " "Arbitration clauses are found in many contracts for consumer financial products," the bureau's director, Richard Cordray, said in a statement.

First of three parts Tiffany Lee wanted a car. She was weary of the two-hour bus ride to her job at a UCLA Health System clinic. She hated having to ask friends to drive her 7-year-old son to his asthma treatments. But as a single mother with three children, bad credit and a $27,000-a-year salary, she couldn't find a bank or dealership willing to give her a loan. Then a friend steered her to Repossess Auto Sales in Hawthorne. Another buyer might have balked at the deal she was offered.

Atty. Gen. Bill Lockyer warned Tuesday that the timing of new federal protections against identity theft threatens to expose California consumers to the very scams the laws were designed to prevent. Some of the new federal safeguards in a law signed earlier this month by President Bush will take effect in June, others on Dec. 1. However, the law prohibits states from enacting stricter protections in the field of consumer credit than those approved by Congress, a practice known as preemption.

Jesus Rodriguez knew he was going to come up short on his bills, so on a recent Friday afternoon he took his accustomed trip to a Baldwin Park strip mall. The produce-truck driver walked into a payday lending business nestled alongside a Chinese fast-food joint and a dental office. He wrote out a personal check for $300 and walked out with $255 cash. The 33-year-old Mexican immigrant basically gave away $45 to get the advance, but he said he didn't see a lot of other options.

In a nationwide crackdown on credit repair companies, the Federal Trade Commission said Thursday that 30 firms were being targeted, including a Woodland Hills company that had its assets frozen. Success Credit Services was accused in an FTC civil suit of violating the Credit Repair Organizations Act by contending that it could quickly clean up credit reports by removing legitimate negative items, such as late payments, bankruptcies and tax liens.

The federal government is unwrapping its most potent weapon yet in the battle to keep businesses from defrauding consumers: a powerful new agency designed to police nearly every type of transaction in hopes of avoiding another financial crisis. The Consumer Financial Protection Bureau, opening Thursday, is the first major agency launched in Washington in nearly a decade and the first since the early 1970s that is specifically focused on American consumers. Its controversial creation — still opposed by most Republicans and much of the financial industry — is the culmination of years of efforts by consumer advocates to get the government to play a greater role in overseeing credit cards, mortgages and other financial products.

Flexing newfound muscle as consumer protector, the Federal Reserve on Thursday banned ATM and debit card overdraft fees unless customers have opted to pay to ensure that balance-busting transactions go through. The new rules, which take effect July 1, mean that if you don't have overdraft protection, any debit card purchase or ATM cash withdrawal will be rejected if it exceeds the amount of money in your account. And if you do want overdraft protection, your bank will have to give you a notice explaining the service and its fees before you can accept it. Overdraft fees typically range from $10 to $38 for each transaction, according to a 2008 study by the Federal Deposit Insurance Corp.

The Obama administration's consumer financial watchdog wants to undo a limit on some upfront fees on credit cards, prompting criticism that it could hurt borrowers with poor credit. The Consumer Financial Protection Bureau is backing away from restrictions on what the industry calls fee-harvester cards. Issuers of these cards make such customers pay a large fee before they can receive cards with very low credit lines. The agency indicated that its decision stemmed from a court ruling saying the fee cap appeared to be barred by "plain and unambiguous" language in the applicable law. Lobbyists and the public have until June 11 to file comments or objections before a final decision is made.

WASHINGTON - The federal government's consumer finance watchdog is considering tough new rules on banks to provide homeowners with more - and clearer - information about their mortgages. Banks could be required to make monthly statements easier for customers to understand. And they may have to provide borrowers with warnings before their interest rates adjust. In addition, the rules could make it easier for homeowners to avoid foreclosure. Richard Cordray, director of the Consumer Financial Protection Bureau, will outline the possible measures Tuesday as part of an effort to bring greater transparency to the mortgage-servicing industry.

Senate leaders have averted, for now, a showdown over a group of President Obama's judicial nominees, reaching a tentative agreement that would allow the chamber to pick up the pace on confirmations. The truce comes after Senate Majority Leader Harry Reid (D-Nev.) took the unusual move of trying to force a vote Wednesday on 17 nominees who had bipartisan backing but faced opposition from some Republicans trying to stall the president's picks for the federal courts. Under the agreement, the Senate will instead work to confirm 14 judicial nominees by May 7 - not as many as Democrats sought, but a schedule that would require about three confirmation votes a week while the Senate is in session, more than has been the norm.

Acting on complaints about high overdraft fees on checking accounts, the new consumer bureau launched a broad inquiry into bank practices and is seeking public input on a special disclosure box about the fees on monthly statements. The Consumer Financial Protection Bureau said Wednesday that it also is starting a campaign called "What's your overdraft status?" to encourage people to learn if they have chosen overdraft protection and to understand the fees involved. In 2010, the Federal Reserve enacted rules that prevent banks from automatically enrolling customers in overdraft protection plans, which charge $30 to $35 for each use. Consumer advocates, however, are still complaining about the fees, which are overseen by the new agency.

Pamela Johnson of Orange is one of many people who have recently received notices from a debt collector called West Bay Acquisitions over supposedly unreturned Hollywood Video DVDs. The video-rental chain's parent company, Hollywood Entertainment, was purchased by an outfit called Movie Gallery in 2005. Five years later, Movie Gallery went out of business, selling its portfolio of outstanding customer obligations to West Bay Acquisitions. Johnson, 68, said she was "dumbfounded" to receive a notice the other day saying she owes $24.43 for several DVDs that she rented from Hollywood Video in 2009 and never returned.

The agency protecting consumers in the financial marketplace plans to increase its budget 26% next year as it ramps up to full operation, but the newly installed director was short on details about where the money is going - raising the ire of Republicans. The Consumer Financial Protection Bureau, which has started monitoring banks and related institutions for compliance with consumer laws, said it plans to spend $448 million next year, compared with $356 million it has budgeted for expenses this year.

American doctors who treat people with insomnia say they are perplexed by the British government's decision last week to withdraw the popular sleeping drug Halcion from the market, citing a high risk of potentially dangerous side effects. According to several veteran sleep-disorder experts, the tales of violent behavior and paranoia that some patients have blamed on Halcion are not supported by American doctors' extensive experience in prescribing the drug or by clinical studies.

Life Alert, whose catch phrase, "I've fallen and I can't get up!" was a staple of late-night television commercials, has settled a consumer protection lawsuit by the state for $1.35 million, Atty. Gen. Daniel Lungren announced Thursday during a stop in Costa Mesa. The state took issue with Life Alert's claim that its emergency response system was superior to other emergency systems and the company's high-pressure sales tactics on the elderly, the state attorney general's office said.