Your Money's Worth

Hoodia-winked

Using a federal law designed to protect consumers from cross-border fraud and deception, a U.S. District Court in Illinois has ordered key players in an international spam ring to give up $3.7 million that they made by sending out illegal e-mail messages pitching bogus hoodia weight-loss products and a “human growth hormone” pill they claimed reversed the aging process.

In action brought by the Federal Trade Commission, the court found that the five defendants, located in Canada and St. Kitts, participated in the spam operation. The court order bars the defendants from making false or unsubstantiated claims about the health benefits of any food, drug, or dietary supplement.

The case, filed by the FTC in October 2007, is significant because international spam has been difficult to track down, allowing marketers to find safe havens outside U.S. borders. This marked the first time the FTC invoked the US SAFE WEB Act, a federal law passed in 2006. The Act enhances the agency’s ability to exchange information with foreign counterparts and helps protect consumers from cross-border spam and spyware distribution.

The FTC’s complaint charged eight defendants – Spear Systems, Inc., three other corporate defendants, and four individuals – with using spammers to drive traffic to Web sites selling an extract of the hoodia gordonii plant it claimed would cause significant weight loss, and a “natural human growth hormone enhancer” it claimed would reverse the aging process. The FTC alleged that these claims were false or unsubstantiated, and charged the defendants with deceptive advertising. It also alleged that the spammers sent e-mail that contained false “from” addresses and deceptive subject lines, and that they failed to provide a required opt-out link or physical postal address.

Digital help

Following publication of my column on the problems some consumers who use antennas for TV reception are having, I came across a little-publicized service offered by the Federal Communications Commission: techies who will provide at-home assistance is setting up for digital converter box and antenna. One reader who took advantage of the offer said the DTV contractor, as they'r known, came to his house and had the system working in 15 minutes.

The contractor provides these basic home installation services free of charge. These services are paid for by the FCC, and an FCC contractor will not request any payment from you for their services. Here's the link: www.dtv.gov/dtv_contractors.html

 

Pump prices peaked???

If you listen to AAA, gasoline prices have peaked and won’t go higher during this year’s summer driving season. In fact, its been all downhill since prices peaked on June 21 at $2.693 a gallon nationally, $2.584 in the Bergen-Passaic area, according to daily surveys for AAA.

 

Area prices rose for 51 consecutive days, starting on May 1, but then fell for nine days in a row until Tuesday, when they have held steady for three days at $2.56 a gallon.

 

But that's only part of the story. The spread between unbranded and major national brand stations has grown wide this week, often 20 cents a gallon or more. One colleague paid $2.27 a gallon at a station on Teaneck Road in Teaneck, and I have spotted a number of stations in Central Bergen with pump prices of $2.35 or less. Shop around and you could easily save $2 to $3 on a fill-up.

To tax or not to tax

That is the dilema facing online and mail order merchants handling interstate purchases. Usually the rules are clear: If the buyer lives in a state in which the merchant has a physical presence (i.e, a store, warehouse or office), the merchant should assess the tax according to the tax laws of that state. If the merchant has no physical presence, the merchant does not charge tax.

 

But sometimes the rules get complicated, as this e-mail from a reader shows.

 

"Last week, I placed an online clothing order (clothing only, keep in mind).  After I received the "your order has been submitted," I noticed I was charged a tax, though nominal, there was a tax. 

 

"I called them immediately.  (As you know, living in NJ & having items shipped to NJ, you do not get charged a tax and I never have until now).  After I explain that I should not have been charged a tax, I am told that they charge tax on Shipping & Handling.  When I say I've never heard of that before & I've never had that happen before, they proceed to tell me because there is a "brick & mortar" in the state of NJ, they are allowed to charge tax on the shipping.  

 

"Naturally, I ask to speak to a supervisor.  She eventually gets on the phone, gives me the same schpeal & then says 'in order for us to refund you the tax, you need to find me that information from your state that says we are not to charge tax on shipping.'  At one point I remember saying 'I'm sure I'm not the first to complain about this.'  Only to be told 'no, we have a lot of customers in NJ.'   

 

"Of course, I went further & went to the state of NJ's Web site & low & behold, there it was right in front of me.  Since October 1, 2005, NJ residents are EXEMPT from paying tax on shipping.  I call back immediately, ask to speak to the same supervisor, I then proceed to inform her that I now have the information she is looking for in order to refund me.  She tells me to fax it to [the company's] Clients Specialist (who happens to be on vacation--what a coincidence).  After I do that, I also send the same fax to their headquarters in NYC.

 

"I am emailing you because I am appalled that I had to inform this large company of the tax laws for the state of NJ.  I am also appalled that nothing has ever been done about this for close to 4 years & that consumers in NJ (and who knows how many other states) are being charged & paying for something they shouldn't!"

                                                                                                                         Marina Znidaric

 

Znidaric sent me the link -- www.state.nj.us/treasury/taxation/emailfaqs.shtml -- and the answer is there, under FAQ's for sales and use taxes. Prior to 2005, "handling" could be taxed because it was considered a service provided prior to the shipment. However, starting that year, handling charges were included within the definition of delivery charges, and were therefore exempt from tax whether or not they are separately stated to the purchaser. A year later, however, the exemption was repealed for taxable goods and service.

 

What that means is that you can be taxed on shipping for taxable items, such as furniture or electronics (because the merchandise is taxed in the state) if the merchant has a presence in the state, but not for shipping exempt items, such as clothing, whether or not the merchant has a physical presence here.

 

In most cases, the dollar amount is small, but you could easily get hit for an extra $10 or more on expensive or heavy items.

More bank oversight

In a key victory for consumers, the U.S. Supreme Court ruled today that states can apply some of their own laws to big national banks operating within their borders. Until now, local regulators were nearly powerless to deal with violations of state laws.

 

While a state attorney general is still prohibited from issuing a subpoena against a bank that has branches in that state and others, the court ruled in a 5-4 decision that an attorney general can go to court to enforce some state laws under the National Banking Act. That means that New Jersey and other state can do their own investigations of a national bank, as long as they can convince a judge that investigations are needed.

 

The court was ruling on New York's attempt to have the Supreme Court overturn a federal appeals court decision that blocks states from investigating the lending practices of national banks with branches within its borders. It was supported by the other 49 states. Federal judges had ruled that New York could not enforce its fair-lending laws against national banks or their operating subsidiaries.

 

The decision created a highly unusual voting bloc with Justice Antonin Scalia, in a rare break from his conservative colleagues, joining the court's four more liberal members and writing the majority opinion.

 

Cashing in on M.J.

You've got to admire American ingenuity that can turn a tragic event into a money-making situation. That's what has happened this weekend, as less than 24 hours after Michael Jackson died, street vendors had set up shop outside the Apollo Theater and other Manhattan locations to see Jackson T-shirts and posters.

If history is a guide, this is just the start. Expect to see all sorts of Michael Jackson products in the weeks ahead, commemorative coins, ceramic dolls, and other "collectibles." If you want them, for whatever reason, fine. But don't think they'll have any value beyond what you have to pay. There will be so much junk on the market.

Remember Jackson and his special music, but don't consider a purchase of memorabilia as an investment. 

FiOS takes aim at iO

The battle between Verizon and the region's cable companies was ratcheted up this week when the phone company launched local news channels on its television service in North Jersey and Long Island -- the very heart of the Cablevision operations. This is a direct attack on what has been a big advantage the cable company has enjoyed in the marketing wars.

With its News12 New Jersey, and similar programs in Long Island and six other New York counties, along with 24/7 local traffic and weather reports, Cablevision has had a strong selling point for its Optimum service . As the tag line goes, "Only on cable. Not on phone company TV . . . or anywhere else." That is still the case, at least with News12, but Verizon's FiOS1 New Jersey and FiOS1 Long Island and their 'hyper-local content that includes news, regular traffic and weather reports, and other programming" are certainly alternatives to the local programming offered by Cablevision, Comcast and Time-Warner. Cablevision can still claim its news channel is better, but FiOS has taken away (or at the very least minimized) a big Cablevision advantage.

Cablevision's response was predictible, considering the fierce battle it has waged with Verizon:

"Cablevision's News 12 is the local news leader for New Jersey and across the New York metropolitan area, with an award-winning history that began in 1986 as the nation's first 24-hour local news channel.  We don't believe a phone company news channel will be in any way comparable to the authoritative information available from News 12 and News 12 Traffic & Weather, and thought the most interesting thing about the phone company's recent announcement was that it included a significant entry level price increase for new customers."

The FiOS programming will be a bit different from News12, with more emphasis on high school and Rutgers sports and more joint programming from the Star-Ledger and New Jersey Network, but with both we're talking primarily of local news shows.

Pump prices plummet

As quickly as they went up, gasoline prices have started to come down, at least at a handful of Brand X stations around the area. Although the Bergen-Passaic average has eased off to $2.57 a gallon after dropping a fraction of a cent in each of the past five days, you can find stations selling regular for  $2.35 or less at stations at a number of stations, including the Delta on Queen Anne Road and the Power Gas on River Road in Bogota and the Enrite on Cedar Lane in Teaneck.

These stations are traditionally among the low-price leaders in the area, and my guess is they are at the forefront of a developing trend. The timing couldn't be better as we prepare for the Fourth of July getaway and the heart of the summer driving season.

On-line shopping

How often do you start shopping on line, but abandon your cart without making a purchase? Evidently, you would not be alone in doing so, and that is a major concern for online merchants.

A PayPal survey released today revealed that 45 percent of online shoppers have abandoned their carts multiple times in the past three weeks due, leaving behind an average order of $109. The No. 1 reason is high shipping costs, which ranks high for me, followed by security concerns and lack of convenience.

Another factor, cited by a third of respondents who baled out is that they didn’t plan for all of the expenses, while more than 25 percent left the site to search for a coupon. Leaving the site doesn't necessarily mean the consumer has give up, however, as one-third of shoppers later returned to the same site to buy. But another 20 percent used the online site to do research before making a purchase at a traditional brick-and-mortar store or another Web site.

“Merchants who don’t welcome back abandoners with open arms are leaving hundreds of dollars per shopper on the table,” said Eddie Davis, a PayPal official. “Merchants need to remember the items that customers abandon and make it easy for them to buy when they return. Sweetening the deal with free shipping, coupons and special discounts is also a great way to encourage online shoppers to complete their purchases.”

TV converter woes

Had problems getting television reception through your new converter box since June 12, when the nation's television signals went all digital? Please let us know your experiences and how you've dealt with it, in comments to this blog or e-mails to demarrais@northjersey.com.

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