Center for Consumer Protection Monthly October 2017
The following is a compendium of information that may be of interest to our AG offices who are dealing with consumer protection issues. Neither the National Association of Attorneys General nor the National Attorneys General Training & Research Institute expresses a view as to the accuracy of the matters, nor as to the position expounded by the authors of the hyperlinked materials.
Consumer Chief of the Month:
I am honored to be the second “Chief of the Month” although a bit nervous as Parrell Grossman is a difficult act to follow. I have been in the Maine Attorney General’s office since 1988. I was hired shortly after I graduated from the University of Maine School of Law by then Maine Attorney General James E. Tierney. Some of you may know him.
Article of the Month
Automatic Renewal Provisions in Consumer Contracts
Benjamin Golden, Assistant Attorney General, Office of the Attorney General, Massachusetts
Consumer contracts today frequently include a provision stating that the contract shall automatically renew unless the consumer takes some affirmative, prescribed step to cancel. Unsurprisingly, these provisions – commonly referred to as automatic renewal provisions, and sometimes referred to as evergreen clauses – have drawn the attention of regulators and politicians alike. The purpose of this article is to explore the current regulatory landscape, and to encourage state attorneys general to protect consumers against unfair and deceptive auto-renewal practices.
Attorney General News
- Alabama Attorney General Steve Marshall announced that a Montgomery credit repair company has been permanently closed by court order at the request of his office. The order was part of a settlement the Attorney General’s Office reached with Scott’s Credit Repair and its owner/operators John C. Scott and Krystal Scott. Under the terms of the settlement, the Defendants are prohibited from engaging in any activity in the credit repair or consumer finance industries, and from owning or managing any business, either in the State of Alabama or involving Alabama consumers from another location or online.
- Arkansas Attorney General Leslie Rutledge has held Florida-based Capital Credit Solutions Inc. and its ownerWillie J. McKenzie accountable for false and misleading representations made to Arkansans in order to entice them to purchase credit repair services that are actually available for free.
- California Attorney General Xavier Becerra announced a lawsuit against Curacao, a retail store chain that ranks among the 50 largest electronics and appliance retailers in the United States and has nine locations in Southern California. The company actively markets its products to members of the Latino community – specifically low-income individuals, Spanish speakers, and immigrants – who lack credit history and have minimal experience with credit card and retail payment plans. In the lawsuit, which follows an investigation carried out in conjunction with the Los Angeles County Department of Consumer and Business Affairs, Attorney General Becerra alleges that Curacao engages in numerous and pervasive unlawful, unfair, and fraudulent business practices.
- General Motors Company (“GM”) and 50 attorneys general, including Delaware, have settled allegations GM concealed safety issues related to ignition-switch-related defects in GM vehicles, resulting in changes to the way the company represents cars to be “safe” as well as payments to the states.
- Florida Attorney General Pam Bondi’s Office filed a complaint against HOA Problem Solutions, Inc., as well as several related companies, for using deceptive and unfair practices to acquire properties from financially distressed homeowners.
- The Colorado seller of bottled water products that include “drinkable sunscreen” and mosquito repellent mouth sprays must reform what Iowa Attorney General Tom Miller alleged in a consumer fraud lawsuit were deceptive and unfair practices, through a court-enforced agreement reached in Iowa.
- Kansas Attorney General Derek Schmidt has joined with 24 other state attorneys general in urging the Trump Administration to reject efforts by student loan servicers and debt collectors to secure immunity from state-level oversight and enforcement.
- Maryland Attorney General Brian E. Frosh announced that his Consumer Protection Division has issued a cease and desist order finding that H&S Marketing, LLC; Client Processing Services, LLC; Henrique Silva; Melissa Haddad; Cimar Scaff; and Gail Ghada Haddad, collectively doing business as Student Loan Counsel, violated the Consumer Protection Act, the Maryland Credit Services Businesses Act, and the Maryland Debt Settlement Services Act. The order requires Student Loan Counsel to return all of the money collected from Maryland consumers, and to pay any damages suffered by Marylanders who were affected by their illegal conduct.
- Mississippi Attorney General Jim Hood announced he joined 36 other attorneys general in urging consumer reporting agencies Experian and TransUnion to immediately stop charging fees to consumers who want to put credit freezes on their accounts in light of the massive data breach at the consumer reporting agency Equifax.
- During the month of October, the Nebraska Attorney General’s Consumer Protection Division is joining with the Department of Homeland Security’s Stop. Think. Connect. ™ Campaign and its partners across the country to recognize National Cyber Security Awareness Month and highlight the importance of online safety. Relatedly, the Nebraska Attorney General’s Office offers the following reminders to both consumers and businesses that may be impacted by a data breach.
- New Jersey Attorney General Christopher S. Porrino and the Division of Consumer Affairs have filed a Complaint alleging that a Monmouth County contractor used deceptive practices to obtain more than $230,000 in federal relief funds from four homeowners who sought to have their damaged homes rebuilt, elevated and/or repaired after Superstorm Sandy.
- North Carolina Attorney General Josh Stein announced that he has taken retailer eRummagers to court to stop the company’s alleged unlawful conduct including deceptive business practices. The North Carolina Department of Justice brought the suit against eRummagers after receiving consumer complaints of unfair and dishonest conduct. Attorney General Stein won a temporary restraining order in the Wake County Superior Court.
- North Dakota Attorney General Wayne Stenehjem’s Consumer Protection Division has initiated an investigation relating to Spa D’Athena in Bismarck. Investigators have contacted the business to discuss what occurred and its ability to make refunds to those holding gift cards. Attorney General Wayne Stenehjem also is highly concerned about attempts by Spa D’Athena to limit the claims process, including any implication that consumers may be waiving certain rights they have if they respond to or send an email to the company.
- New York Attorney General Eric T. Schneiderman announced that he filed a motion for civil and criminal contempt of court against Jason Briere, a Syracuse home improvement contractor, for his continued operation of a home improvement contracting business in violation of a prior court order. In other New York news, Attorney General Eric T. Schneiderman announced an agreement between his office and credit card servicer and marketer Continental Finance Company, LLC, resolving allegations that the company failed to prominently disclose fees to consumers in marketing materials for its “Surge” credit cards. As part of the agreement, Continental Finance has agreed to improve the disclosures in the direct mail marketing of its "Surge" credit cards and refund the initial annual fee of $125 to more than 150 New Yorkers who activated the card after receiving a written solicitation.
- Ohio Attorney General Mike DeWine announced a lawsuit against a Toledo headstone maker for performing shoddy work such as misspelled names on headstones, and failing to deliver other headstones and grave markers.
- Pennsylvania Attorney General Josh Shapiro filed a lawsuit against the nation’s largest servicer of federal and private student loans, Navient Corporation, and its subsidiary Navient Solutions, LLC, over widespread abuses in their student loan origination and servicing business.
- South Dakota Attorney General Marty Jackley is warning South Dakotans to be cautious of misleading websites that falsely appear to be representing governmental agencies. The Attorney General’s Consumer Protection Division has received numerous complaints from businesses in and out of South Dakota who have received emails and/or links to what appears to be from legitimate South Dakota governmental agencies.
- Texas Attorney General Ken Paxton announced that his office filed an action against Jason Spencer, the operator of an alleged student loan debt relief scam called Student Loan Relief, LLC. Spencer allegedly engaged in false, misleading or deceptive practices in violation of the Texas Deceptive Trade Practices Act and Texas Finance Code, including providing unauthorized services, falsely advertising online, and charging premature or unauthorized fees.
- Virginia Attorney General Mark R. Herring announced that his office reached a settlement with Investment Evolution Corporation d/b/a Mr. Amazing Loans to provide refunds and debt forgiveness to nearly 200 consumers as a result of the company's alleged violations of the Virginia Consumer Protection Act.
- Washington state Attorney General Bob Ferguson released his second annual Data Breach Report. His report finds that between July of 2016 and July of this year, data breaches affected nearly 3 million Washingtonians — more than six times the number impacted in the previous 12 months.
- Wisconsin Attorney General Brad Schimel, on behalf of the Department of Financial Institutions and the Department of Agriculture, Trade and Consumer Protection, obtained a temporary injunction against Vision Property Management (VPM), a South Carolina-based property management company and its many affiliates. In June, the state filed a lawsuit against VPM alleging that the company used misleading and deceiving business practices to induce Wisconsin consumers to lease, rent, or purchase uninhabitable properties in violation of Wisconsin landlord-tenant and mortgage banking laws.
Federal Consumer Protection News
- The Consumer Financial Protection Bureau issued an interim final rule and a proposed rule to provide mortgage servicers more flexibility and certainty around requirements to communicate with certain borrowers under the Bureau’s 2016 mortgage servicing amendments.
- The Commodity Futures Trading Commission’s LabCFTC released, “A CFTC Primer on Virtual Currencies.” This primer is the first of a series that LabCFTC will release to provide fundamental, and essential, information about financial technology (FinTech) innovation.
- The Federal Trade Commission, along with 11 states and the District of Columbia, announced “Operation Game of Loans,” the first coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams. In other FTC news, the FTC is mailing 227,000 refund checks totaling more than $9.8 million to people who bought “fat burning” and “weight loss” products and other dietary supplements, DVDs, or skin creams, including Pure Green Coffee Bean Plus and RKG Extreme, from Health Formulas LLC and related companies. The average refund amount is $43. Also, The FTC has obtained a court order against two men for their roles in an alleged scheme that lured consumers with fake rental property ads and deceptive promises of “free” credit reports into signing up for a costly credit monitoring service. The two settling defendants will pay a total of $762,000 to resolve the agency’s claims.
- The Securities and Exchange Commission charged three individuals who defrauded investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co. In other SEC news, the Commission charged Mohammed Ali Rashid, a former senior partner at Apollo Management L.P., with defrauding his fund clients by secretly billing them for approximately $290,000 in personal expenditures, including his family vacations, visits to a hair salon, and purchases of designer clothing and high-end electronics.
- A New York businessman was arrested for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, which he allegedly sold to his clients, who then allegedly provided this information to telemarketers.
- In light of the tragic event in Las Vegas, Nevada Attorney General Adam Paul Laxalt announced that his office has begun diligently investigating reports of sham charities purportedly collecting donations on behalf of the victims. Additionally, Attorney General Laxalt continues to remove web pages and investigate reports of sham charities purportedly collecting donations on behalf of the victims. Also, the coalition of attorneys general offices assisting the Las Vegas victims has grown.
- New York Attorney General Eric T. Schneiderman issued a statement on the federal prison sentence of John Thomas Burch, Jr., president and founder of the shuttered National Vietnam Veterans Foundation. In November 2016, Attorney General Schneiderman shut down the National Vietnam Veterans Foundation, (the “NVVF”), and reached settlements with its former President and Founder, John Thomas Burch, Jr., and its Vice President, David Kaufman, after an investigation showed that NVVF was raising money through fraudulent misrepresentations.
- The West Virginia Attorney General's Office says to be careful when donating to third-parties that claim to represent a well-known charity. The office says that they've recently received reports of individuals soliciting donations in Morgantown, claiming they will benefit the American Red Cross.
- District of Columbia Attorney General Karl A. Racine has introduced legislation to temporarily prevent the major credit-rating bureaus from charging to freeze a consumer’s credit.
- Illinois Attorney General Lisa Madigan called on the Illinois General Assembly to override Governor Rauner’s veto of the Illinois Student Loan Bill of Rights.
- The Montana Department of Justice’s Gambling Control Division reminds Montana nonprofit organizations that changes made by the 2017 Legislature to ease several restrictions on gambling-related nonprofit fundraising went into effect October 1, 2017.
- The Senate on Tuesday voted to scrap a rule adopted by a federal consumer agency headed by former Ohio Attorney General Richard Cordray which allowed Americans to join class-action lawsuits against their financial institutions.
Veterans and Military News
- The Federal Trade Commission and Victory Media, Inc. have reached a proposed administrative consent agreement resolving allegations that Victory Media violated Section 5 of the FTC Act in connection with its promotion of post-secondary schools to military consumers.
- Illinois Attorney General Lisa Madigan filed a lawsuit against the Association for Wartime Veterans (AAWV) and Atlantis Marketing Solutions Inc., as well as AAWV’s owner and president and the company’s regional director for steering veterans and their families into costly insurance products they did not need.
Just for Fun
- From Boo To Sue: Are Haunted Houses Liable For Scaring Their Visitors?
- Top 10 Legal Cases that Will Spook you!
- There's a haunted house in Orange County that is so scary, you have to sign a waiver to get in.
Give Wisely to Help Shooting Victims
The FTC has heard from people about suspicious requests for donations. A little research will help consumers avoid a scam and ensure that any gift goes to a reputable charity that will use the money as the consumer intends.
Blake Bee, Program Counsel for the Center for Consumer Protection, is the editor of Center for Consumer Protection Monthly, a compendium of information that may be of interest to the attorney general community and others interested in consumer protection. Neither the National Association of Attorneys General (NAAG) nor the National Attorneys General Training & Research Institute expresses a view as to the accuracy of the matters, nor as to the position expounded by the authors of the hyperlinked materials. Any use and/or copies of this newsletter in whole or part must include the customary bibliographic citation. NAAG retains copyright and all other intellectual property rights in the material presented in this publication. For content submissions or to contact the editor directly, please email email@example.com or call (202) 326-6263.