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Scams, Shams and a Few Bright Spots

As the year ends, here’s a look at some developments on the consumer front that occurred in 1993--with thanks to the readers who brought some of them to our attention.

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Allow us to protect you . . . from our competitors: Business groups, citing a need to “protect” consumers, successfully lobbied for legislation to impose burdens on competitors. At the urging of the California Poultry Federation, the Legislature passed a “truth-in-labeling” law to make it difficult for out-of-state processors to sell fresh chicken at low prices in California. The California Pharmacists Assn., citing a need to reduce adverse reactions to drugs, backed legislation that could drive up costs for their archrivals, the out-of-state, mail-order pharmacies.

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Moooving up: Concern for consumers also figured in the California Department of Food and Agriculture’s decision to boost raw milk prices 14.3%, an action condemned by Consumers Union. The department said it was motivated in part by a desire to protect “California’s adequate milk supply.”

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Looking for the loopholes: Some businesses found ways to get around laws intended to protect consumers. A federal revision of cable television rules was supposed to lower rates, but subscribers around the country said their rates were going up. This led to congressional inquiries. Credit repair companies in California converted to not-for-profit status, maneuvering around a law intended to protect consumers from abuses by for-profit firms.

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Strange bedfellows: Consumer advocacy groups teamed up with some of the consumer services they monitor to produce “consumer education” literature. Bankcard Holders of America teamed up with American Express. Call for Action joined forces with Visa. Consumer Action connected with Sprint. The National Coalition for Consumer Education linked up with Mastercard. The consumer organizations get funds; the businesses get credibility; consumers get a confused message.

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Low-price promises: With California’s economy mired in recession, low prices sounded good. Two “low-price” promotions that caught our eye were from Lucky and Sav-On, both owned by American Stores. Lucky said it slashed prices on 2,500 items to give a break to residents of Los Angeles, Orange and four other counties, but we found that those “new lower prices” were up to 23% higher than what Lucky charged its even luckier shoppers in the Inland Empire. Sav-On claimed it had lowered prices on “thousands of prescriptions,” though the reductions applied to only 300 drugs. What’s more, readers told us that their prescription costs at Sav-On went up, not down.

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Brand bashing: Prices on some consumer products plummeted as manufacturers moved to regain customers lost to cheaper store brands. The price-slashing affected cigarettes, disposable diapers and beer, among other items. Meanwhile, supermarkets brought out premium store labels, such as Ralphs’ Private Selection or Vons’ Royal Request, that cost more than no-frills labels but compete directly with premium national brands.

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Food labeling: Federal regulations intended to reform food labels haven’t eliminated the need to read them closely. Frito-Lay has a “thin” corn chip that contains more fat than a regular chip; Snapple’s “real brewed tea,” the California Department of Health Services says, is made from a real brewed concentrate; Frito-Lay boasts that its Ruffles ranch-flavored chips contain “10 widely recognized nutrients,” including fat and sodium. And finally, Hunt-Wesson’s single-serving bag of popcorn contains 2 2/3 servings.

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Scams: Authorities said unscrupulous firms mailed businesses solicitations that looked like bills for Yellow Pages ads or for help-wanted classified ads that were never ordered. It is believed that many businesses unwittingly paid the “bills.” In another scam, con artists posing as telephone company employees called consumers and asked them to accept long-distance charges to assist a fraud investigation.

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Just when you thought things were getting worse: Consumers won a few. The state Department of Consumer Affairs fined Winston Tire and ordered it to return $450,000 to customers after an undercover investigation found it overcharged for repairs. The state Department of Insurance ordered Transamerica Occidental Life Co. to tell insurance applicants that they would be tested for cancer with an unproven blood test. Transamerica had been telling applicants they were being tested for tumors, which are not always cancerous, and had not informed the applicants that the test results could be in error. Gov. Pete Wilson signed a law prohibiting so-called secret automobile warranties. It requires auto makers to notify car owners about programs to repair or fix for free defects unrelated to safety. Federal law already requires car makers to notify consumers of safety-related recalls.

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Unfinished business: The state Public Utilities Commission significantly boosted basic residential telephone rates in September, then canceled the increase two weeks later, after evidence surfaced that a Pacific Bell employee had written parts of the decision. A final rate decision is expected to come early in 1994. Continuing complaints about arbitration programs for disputes involving new cars is prompting calls for reform from Motor Voters and other consumer organizations. The U.S. Department of Agriculture set April 15, 1994, as the deadline for safe-handling labels on meat. A federal judge in Texas prohibited the change from taking place this year. The labels are a response to an outbreak of food poisoning that killed three children and sickened 600 other people who ate contaminated, undercooked hamburgers from Jack in the Box restaurants.


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