Fed proposes new rules to protect gift card users from fees

The Federal Reserve today proposed new rules that would protect gift card users from fees and other unexpected restrictions.

Gift cards have been the most-requested holiday item for the last several years, but many shoppers complain about the fine print, which can include hefty charges and quick expiration dates. According to the Fed, more than 95% of Americans have received or bought gift cards.

Under the proposed rules, gift cards would not expire until at least five years from the purchase date. Service and inactivity fees could only be charged once a month and only after a card had been inactive for at least a year.

“Concerns have been raised regarding the amount of fees associated with gift cards, the expiration dates of gift cards and the adequacy of disclosures,” the Fed said.

“Consumers who do not use the value of the card within a short period of time may be surprised to find that the card has expired or that dormancy or service fees have reduced the value of the card. Even where fees or terms are disclosed on or with the card, the disclosures may not be clear and conspicuous.”

The Fed said the new provisions would be slated to take effect Aug. 22.

The proposal includes retail gift cards that can be used at a single merchant or affiliated group of merchants, and “network-branded” gift cards that can be redeemed at any store that accepts the card brand.

-- Andrea Chang

David Lazarus: Watch out when signing up for online services

David Lazarus' latest column, "Real estate company's pitch leads to unexpected bill," is a cautionary tale about a problem that consumer advocates say is becoming all too common: people signing up for one thing online and inadvertently signing up for something else that comes with recurring monthly charges.

Here's an excerpt:

Maria Casanova, an assistant professor of economics at UCLA, toyed with the idea earlier this year of buying a foreclosed property near the Westwood campus. She signed up for a prominent listing service called RealtyTrac.

Casanova, 31, canceled her subscription not long after. Yet a few days ago she discovered that some other real estate company she'd never heard of has been billing her almost $45 a month for the last eight months.

Here's a video from Lazarus on the subject:

So has this kind of stealth co-registration happened to you? Do you worry when you sign up for paid services online that you'll end up with a little extra something that you didn't bank on?

-- Nancy Rivera Brooks

Toys R Us introduces layaway program

Toys R Us rolled out a layaway program today aimed at helping shoppers budget their spending during the holidays.

The program, which is available in Toys R Us and Babies R Us stores nationwide, allows shoppers to pick out gifts early and make a series of small payments over an extended period.

“The program offers added convenience and flexibility, providing customers another option for budgeting their holiday spending and allowing them to make smaller payments over time,” said Jerry Storch, chief executive of Toys R Us.

Toys R Us layaway categories include:
 
•     Bikes
•     Battery-powered ride-on vehicles
•     Dollhouses
•     Play kitchens
•     Outdoor play equipment and play sets, including metal gym sets, wood gym sets, trampolines, houses, teeter-totters and climbers
•     Pools and water slides
•     Preschool ride-ons, such as cozy coupes, horses, metal tricycles and wagons
•     Basketball systems
•     Karaoke machines
•     Keyboards and other musical instruments for toddlers to teens
•     Televisions
•     Indoor table games, including air hockey, foosball and table tennis

Babies R Us layaway categories include:
 
•     Infant and toddler furniture
•     Car seats
•     Highchairs
•     Play yards
•     Strollers and travel systems
•     Bassinets
 
Placing a product on layaway requires a deposit of 20% of the total purchase, including all applicable taxes, and a $10 service charge. Payments may be made at the store at any time in the form of cash, check, credit card, debit card or gift card. Merchandise will be made available within seven to 10 days of final payment, so items must be paid for in full by Dec. 6 to ensure that the gift is available for pickup before Christmas.

-- Andrea Chang

Mattel reaches settlement over recalls of lead-tainted toys in 2007

Mattel Inc. says it has reached an agreement to settle "virtually all" U.S. claims related to its 2007 toy recalls.

The world's largest toy maker recalled millions of toys that year because they contained excessive levels of lead or had design problems, such as hazardous magnets. Mattel said the class-action settlement was subject to court approval.

"Safety of our products remains Mattel's top priority," the El Segundo-based company said in a short statement Tuesday.

According to a statement by plaintiff law firm Whatley Drake & Kallas, the settlement "provides tens of millions of dollars in monetary relief as well as significant injunctive relief."

Consumers who participated in the recall will receive a check for 50% of the total vouchers they sent in or $10, whichever is greater, the law firm said. Those who did not participate in the recalls but who have a recalled toy or proof of purchase of a recalled toy will receive a check or a voucher in the amount of the price paid for the toy. Click here for additional details.

-- Andrea Chang

As airlines roll out holiday fares, Southwest blacks out key dates

Although Southern California is still enjoying shorts and T-shirt weather, airlines have already started to roll out discount fares for Thanksgiving, Christmas and New Year’s travel.

This is great news for bargain-hunting travelers, but it signals growing desperation among U.S. airlines
that have seen revenues drop 26% in June compared with the same month last year, according to the Air Transport Assn. of America, the industry trade group that represents most passenger airlines in the U.S.

“Everybody is fighting for your buck,” said Tom Parsons, chief executive and founder of Bestfares.com, an Internet discount travel website. “It’s definitely a fliers market.”

But Parsons takes exception with the tactics of one airline that has joined the discount fare war: Southwest Airlines.

When Southwest unveiled its Fall Savings deals — offering one-way fares from $59 to $109 for flights between Sept. 9 and Jan. 7 — it included some small-print exceptions that Parsons insists should have been made clear in bold lettering.

The deals included blackout dates from Nov. 24, 2009, to Dec. 1, 2009, and Dec. 18, 2009, to Jan. 4, 2010. That’s a grand total of 26 blackout days clustered around all the major fall and winter holidays.

On his website, Parsons called it a “Bah Humbug air fare sale” because, he said, the blackout dates make it nearly impossible for families with school-age children to take advantage of the deals.

A spokeswoman for Southwest, however, insisted that bargain fares can be found during those blackout
periods, depending on availability. But because the airline cannot promise those deals across the board, she said Southwest decided to list only the specific dates when the bargain fares are more certain.

“We are trying to be as honest and straightforward as possible with our customers,” said airline
spokeswoman Brandy King.

So, how do travelers know if the discount rates are available during the holiday season?
King suggests travelers visit the airline's website, punch in the date that they want to fly and see what rates
pop up.

“In other words, we should just poke around,” Parsons said sarcastically. “I think they just shot
themselves in the foot.”

-- Hugo Martin

Photo: Jay L. Clendenin / Los Angeles Times

FDA requires additional labeling for several over-the-counter drugs

The Food and Drug Administration said today that makers of over-the-counter pain relievers and fever reducers will be required to revise their labeling. Under the new rules, labels must include warnings about potential safety risks such as internal bleeding and liver damage associated with the use of these drugs.

Products included in the FDA's decision include acetaminophen (such as Tylenol) and nonsteroidal anti-inflammatory drugs. Commonly known as NSAIDs, nonsteroidal anti-inflammatory drugs include aspirin (such as Bayer), ibuprofen (such as Advil) and naproxen (such as Aleve). The revised labeling applies to all over-the-counter pain relievers and fever reducers, including those that contain one of these ingredients in combination with other ingredients, such as in cold medicines.

In addition to prominently displaying the active ingredients of these drugs on the packages and bottles, new labeling must also warn of the risks of stomach bleeding for NSAIDs and severe liver damage for acetaminophen.

The new rule requires all manufacturers to relabel their products within one year.

-- Andrea Chang

Photo: An assortment of NSAIDs, which will be relabeled along with acetaminophen. Credit: Getty Images

Better Business Bureau warns of social networking ad scams

Old scams never die, they just move to new venues.

The Better Business Bureau put out an alert Thursday that many of the dubious ads that have long popped up in e-mails and on websites are now invading online social networks, such as Facebook.

“Ubiquitous ads for weight loss products, work-at-home opportunities and offers for ‘free’ computers can
cost shoppers more than they bargained for in the long run," the BBB states.

Last month, the Federal Trade Commission alleged that phony offers for individual grants from the federal
economic stimulus package were cropping up on Facebook. The social network agreed to search them out and kick them off the service.

The ads that the BBB warns about are going strong, however.

They include acai berry weight-loss ads that lead consumers to websites that have fake blog
testimonials and offers that can cost more than $80 a month if not canceled before the trial period ends.
An ad headlined “Learn how I make $67,000 a year being a stay-at-home Mom!” also can lead to hefty payouts.

“In 2008 alone, BBB received more than 3,500 complaints from people who signed up for offers to learn how to work from home but were ultimately disappointed,” the organization said.

As for the “free” computer, the BBB pointed out it can cost $1,000 and more because a purchase — or many purchases — could be required before “free” happens.

“Of course, not all ads on social networking sites are misleading,” BBB spokesman Steve Cox said. “The
point, though, is that it’s important that people always read the fine print carefully before giving their
credit card information online.”

—David Colker

Finally: Exercise equipment for the obese

For obese people, joining a gym can be daunting — what if they can't fit through the turnstile? What if the exercise machines aren't sturdy enough to hold them? What if people stare?

Another option is to exercise at home, although opportunities are limited there as well. But one company is offering equipment strong enough to hold up to 500 pounds, and it may spark a trend.

LivingXL is a catalog geared to larger folks (it's an offshoot of the big and tall men's catalog Casual Male), offering products such as camping gear, bathroom scales and towels. Early on it also carried bike helmets and bicycle seats for larger people, but as the company's chief executive soon found out, more was needed.

"We got inundated right away about exercise equipment," David Levin said. "People said, 'There's nothing for me,' 'We need to exercise,' and 'The stuff out there today is not designed for our size and weight.' "

Since much wasn't available on the market, the company had to find other sources, which it did. New York-based Worksman Cycles makes the catalog's heavy-duty bicycles for men and women, plus an adult tricycle, all of which hold up to 500 pounds. From Theracycle there's the Motorized Total Body Workout Machine, a souped-up stationary bike that will hold up to 550 pounds. Exercise accessories in LivingXL include a belt and weights for pool workouts; the belt extends to fit a 61-inch waist.

Prices are not cheap — those Worksman cycles are $550 to $1,350, and the motorized stationary bike is a whopping $5,000. It makes that aqua exercising set seems like a steal at $80.

Levin is aware that those prices are high, especially in today's economy: "We're trying our best to source new products so we can get to more affordable prices. We're in the early stages of this ourselves."

Worksman has been making industrial-grade bicycles and tricycles for years for use in places such as movie studio lots and factories, but when they started selling to the public they discovered another fan base: overweight people. "The e-mails we got confirmed that people were so glad there was something they could ride and not feel left out," said company President Wayne Sosin. "They felt confident and safe."

These aren't the only options for the overweight. Star Trac's consumer and commercial cardio machines are built to handle up to 350 pounds. But while the trend in consumer and commercial exercise equipment is toward high-tech machines, will gear also be built tougher to accommodate a larger population?

"I wouldn't be surprised if the industry saw the opportunity to provide exercise machines and equipment for these populations to make exercise more accessible for them," said Kara Thompson, a spokeswoman for the Boston-based International Health, Racquet & Sportsclub Assn., a fitness industry trade organization. "Clubs would be looking at a huge return on their investment because they'd see a huge increase in traffic, and people would feel comfortable and welcomed."

-- Jeannine Stein

Photo of Living XL's Women's Heavy-Duty Bicycle courtesy of LivingXL

We had to ask: What's up with the Amish space heaters?

The Super Bowl makes us think about commercials, and this year, we are thinking about the one product we hoped to see promoted zanily during the big game, since we see them advertised everywhere else: Those "Heat Surge miracle heaters" with mantles handmade by the Amish.

Depending on how you consume your media (with a spoon!) you could have seen the oddly intriguing ads on TV, in the newspaper or in Rolling Stone magazine. Many of the spots picture what they say are "real Amish" -- complete with beards, suspenders and bonnets -- working on the mantles, though the Rolling Stone ad features two shirtless blond women in a bed together, warming themselves beside the miracle heater with a bottle of champagne on the special mantle. (Really. See above.)

The ads tout the miracle heaters (which supposedly give the peaceful flicker" of a real fire, without any flames or ashes) as well as the mantles surrounding the fireplaces -- made by "soft-spoken Amish craftsmen" who have imposed a limit of two per household. And even stranger, the ads tell consumers they can get two free heaters by calling at a certain time (Californians, we are in the "cold zone," which means we should start calling at 8:30 a.m. At least we don't live in Idaho, which is in the "frigid zone," which can start calling at 8 a.m.

The ad brags that "The Heat Surge miracle heater is a work of engineering genius from the China coast so advanced, you simply plug it into any standard outlet." (Cue the Amish: What's an outlet?) The mantles are "beautifully hand-rubbed, stained and varnish" and "actually roll[s] from room to room" (without a buggy, we assume).

You can buy the heater insert alone for $249. But, if you buy the $348 oak mantle, or $388 cherry mantle, the heater is "free"!

We hear the Amish are moving away from farming and into small business, but this ad seemed odd for many reasons: Don't Amish hate being photographed? Why can I only get two heaters? Who calls California a cold zone? So we checked in with Chris Pugh, multimedia communications specialist for Arthur Middleton Capital Holdings, who represents Heat Surge.

Here's the skinny: The heating units are made in China, while the real-wood mantles are made by the Amish from two separate Amish communities near Heat Surge headquarters in Canton, Ohio. The men dressed as Amish in commercials are real Amish and agreed to the photographs under the condition that the pictures "focus on the quality of the product." The blond women in the Rolling Stone ad? Not Amish.

As for the strange household limit and calling rules, "our production is limited, in part, because the mantles are handmade," he said. Further, the call times are staggered so that the company can "manage production schedules of the Amish craftsmen." Having people in different zones call 30 minutes apart allows the company to ensure fast delivery, Pugh said.

Oh, and despite a picture in the ads featuring Amish on a buggy in the snow with a heater in the back, Pugh says the heaters are delivered via UPS.

We aren't the only ones mystified by the ads: The Better Business Bureau said it has received 39 complaints about the company's advertising (in addition to 56 it received about customer service issues and 54 regarding service issues). The BBB was able to verify that the Amish in the ads are real but asked the company to change a few other parts of the ads, including a claim that the heater uses the same amount of energy as a coffee maker. The BBB gave the company an "F," though a note on its website says the BBB met with Heat Surge representatives on Sept. 11, 2008, and the company has taken some steps to address consumers' complaints.

Reviews of the fireplace online have been mixed, though the ads have inspired satires on YouTube (choice line: "order a dozen and we'll thrown in a puppy"), which is surely a sign of success. So should you buy a miracle heater to cuddle up near during those cold California nights? Heat Surge is owned by the same company that advertised free digital converter boxes in June, but as our reporter Jim Puzzanghera discovered, they weren't really free.

Maybe, if you're looking for something to cuddle up with on those cold California nights, you should just buy a puppy. Or find those girls in the ad and buy them some champagne.

-- Alana Semuels

Photo credit: HEAT SURGE/ROLLING STONE

Don't forget to pencil in the L.A. Pen Show

We know you have lots of important events to keep you busy: The Grammys, the Super Bowl, the Oscars. But you would only be filled with regret if you let your busy social calendar keep you from the 21st Annual L.A. Pen show, which takes place Valentine's Day weekend in Manhattan Beach.

"This is a great opportunity to bring your Valentine to a pen show!" the website says. "For some reason, pens bring people closer together."

Is this truly the "write" place to bring your Valentine? Well, Saturday the 14th features nine separate seminars on pens, writing and calligraphy, including "Get to the Point" and "So you want your pen to write properly."

As if that were not enough amusement for you, on Feb. 17, Part I of the Clavius Collection of exceptional writing instruments goes on sale. Although this phrase probably makes you think of your clavicle, which is a very important bone, or a clavichord, which apparently is an instrument, the Clavius Collection is in fact "the finest single owner collection of modern writing instruments to be publicly offered in more than a decade" (they clearly don't count crayons).

How much can one expect to pay for such exceptional writing instruments? If you're set on buying a Grayson Tighe pen crafted of intergalactic matter from a section of the Gibeon meteorite, you'll have to shell over $3,000 to $5,000. A Dragon Series pen, crafted of titanium, diamonds, sapphires and/or emeralds, will cost $2,000 to $4,000. We hope that thing is mightier than the sword.

You can buy the whole Dragon Series, or save your money for the Dunhill-Namiki Sakura Rose, which sounds like a toddler with a terrible name, but is in fact a $50,000 pen that has lots of lacquer work. Or the Mont Blanc "White House" pen, which depending on your taste (or lack thereof) can feature white gold columns, an eagle with sapphire eyes or an American flag rendered in diamonds and rubies ($10,000 and up).

The pens, being sold by Bonhams & Butterfields, are part of the collection of an unidentified California entrepreneur, who named the assemblage for Christopher Clavius, who designed the Gregorian calendar and standardized modern time (why couldn't you give us more weekends, Christopher?). They'll be on display at the Pen Show (as if you needed another reason to go) and for sale in Bonhams' L.A. showroom after that.

-- Alana Semuels

Photo: But is it mightier than the sword? Credit: sonictk via Flickr