NEW! We are now providing a digest of consumer protection-related press releases from state and territorial attorneys general and a selection of federal consumer-related releases on ConsumerResources.org, NAAG’s consumer-facing website.
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB or Bureau) warned landlords and consumer reporting agencies to report rental information accurately as the federal eviction moratorium ends on July 31. In releasing a compliance bulletin, the Bureau stated it will be paying particular attention to consumer reporting agencies’ and furnishers’ compliance with their accuracy and dispute obligations under the Fair Credit Reporting Act and Regulation V with respect to rental information.
The CFPB took action against fintech company GreenSky for enabling merchants and home repair companies to secure loans for consumers without their authorization. The settlement requires GreenSky to refund or cancel up to $9 million in loans and pay a $2.5 million civil penalty.
The CFPB released an online tool to help renters and landlords impacted by the pandemic to easily find and apply for payment assistance for rent, utilities, and other expenses. The Rental Assistance Finder, available at www.consumerfinance.gov/renthelp, connects renters and landlords with the state and local programs that are distributing billions of dollars in federal assistance nationwide to help renters stay housed during the pandemic.
Federal Trade Commission
Online lender LendingClub Corporation agreed to pay $18 million to settle Federal Trade Commission (FTC) charges that the company deceived consumers about hidden fees that it charged and whether their loan applications were approved. In addition, the settlement bars LendingClub from making misrepresentations to loan applicants and requires that the company clearly and conspicuously disclose the amount of any prepaid, up-front, or origination fee and the total amount of funds that borrowers will receive.
The FTC announced that two Florida companies and their CEO will be permanently barred from offering payment-processing services in a settlement of allegations that they aided a criminal student debt relief scam that bilked $62 million from thousands of students and their families. According to the FTC’s complaint, Moneta Management, LLC, Moneta Management, Inc., and their CEO Michael Todd Greene knowingly provided false or deceptive information to credit card and ACH processors to obtain merchant processing for the scam operated by Brandon Frere and his three companies. Frere and his companies reached a settlement with the FTC in November 2020 and also pleaded guilty to federal criminal charges in 2019. The proposed final order also imposes a monetary judgment of $28.6 million on Greene and his companies, which will be partially suspended after payment of $20,493 due to the defendants’ inability to pay the full amount.
The FTC obtained a permanent ban against the operators of a business opportunity scheme, Digital Income System, Inc., who, according to the settlement, falsely promised consumers could achieve big earnings selling memberships to websites. The settlement also imposes a judgment of more than $3.6 million against Digital Income Systems and owners Derek and William Foley and $217,426 against promoter Jennifer Hedrick. The judgments are partially suspended due to the defendants’ inability to pay.
The FTC settled allegations that operators of the online coloring book app Recolor illegally collected kids’ personal information. The FTC alleged that Toronto-based Kuuhuub Inc., along with its Finnish subsidiaries Kuu Hubb Oy and Recolor Oy, violated the Children’s Online Privacy Protection Act Rule requiring verifiable parental consent prior to collecting personal information of children under 13. The companies also agreed to a $3 million monetary penalty, which will be suspended upon payment of $100,000 due to their inability to pay the full amount.
The FTC is sending refund checks totaling nearly $2.3 million to people who lost money to credit card debt relief schemes perpetrated by Educare Centre Services, Inc. and Tripletel, Inc. The FTC is mailing 7,786 refund checks averaging about $293 each.
U.S. Department of Justice
The United States Department of Justice (USDOJ) announced the arrest of a homeopathic doctor for selling fake COVID-19 immunizations and falsifying vaccination cards. Juli A. Mazi of Napa, California allegedly sold homeoprophylaxis immunization pellets which Mazi told patients contained the COVID-19 virus and would create an antibody response in their immune system. Mazi also allegedly provided Moderna vaccination cards with instructions for her patients to mark the cards to state that they had received the vaccine on the date they ingested the pellets.
USDOJ announced the conviction of two men for their roles in a $4.5 million telemarketing scheme that defrauded victims in the United States from a call center in Costa Rica. According to court documents, Manuel Chavez of Miami, Florida and Mark Oman of Long Beach, Washington participated in a fraudulent telemarketing scheme in which co-conspirators, who falsely posed as U.S. government officials, contacted victims in the United States to tell them that that they had won a substantial “sweepstakes” prize but needed to make substantial up-front payments to receive the bogus prize.
The U.S. Attorney’s Office for the Northern District of Ohio announced that two Romanian nationals have been charged for their roles in an online auction fraud scheme. The indictment alleges that beginning in July of 2008 through August of 2020, Costel Alecu and Madalin Ghinea devised a scheme to entice victims in the United States and elsewhere to purchase items online, including vehicles and other high-value items, that did not exist and to obtain the personal identifying information of their victims. As a result, victims suffered a combined loss of approximately $9 million.
USDOJ announced that Avanos Medical Inc. will pay $22 million to resolve criminal charges related to the fraudulent misbranding of its surgical gowns. According to court documents, Avanos falsely claimed that its surgical gowns met the highest level of protection against fluid and virus penetration, when in fact the gowns did not meet the standard.
The U.S. Department of State announced its Rewards for Justice program is offering a reward of up to $10 million for information leading to the identification or location of any person who, while acting at the direction or under the control of a foreign government, participates in malicious cyber activities against U.S. critical infrastructure in violation of the Computer Fraud and Abuse Act. More information about this reward offer is located on the Rewards for Justice website: www.rewardsforjustice.net.
Other Federal News
The Consumer Product Safety Commission (CPSC) filed an administrative complaint against Amazon.com to force Amazon to accept responsibility for having potentially hazardous products sold on Amazon.com recalled. The complaint charges that specific products are defective and pose a risk of serious injury or death to consumers and that Amazon is legally responsible for recalling them. Although Amazon has taken certain action with respect to some of the named products, the CPSC charges that those actions are insufficient.
The CPSC urged vacation rental platforms AirBnB, Vrbo, TripAdvisor, and others to require owners to disable home elevators immediately. According to the CPSC, residential elevators pose a hidden and deadly hazard as small children can be crushed to death in a gap that may exist between the doors. The CPSC has previously issued warnings, recalls, and filed a lawsuit concerning residential elevators manufactured by Cambridge, Coastal Carolina, Otis, Porta, ThyssenKrupp, and Waupaca.
The U.S. Department of Education approved claims for federal student loan forgiveness related to three institutions that will result in approximately $55.6 million in relief for 1,800 borrowers. The institutions were found to have engaged in deceptive practices including, respectively, misrepresenting the transferability of credits and likelihood of employment (Westwood College), the type of instruction that would be provided (Marinello Schools of Beauty), and the time to complete the program (Court Reporting Institute).
The Federal Bureau of Investigation released its 2020 Elder Fraud Report. According to the report, approximately 28% of total fraud losses in 2020 were sustained by victims over the age of 60, resulting in approximately $1 billion in losses to seniors. This represents an increase of approximately $300 million in losses reported in 2020 versus what was reported by victims over 60 in 2019.
The U.S. Food and Drug Administration (FDA) issued a warning letter to an e-cigarette company with over 15 million products listed with the FDA to remove unauthorized products from the market. The letter to Visible Vapors LLC advises them that marketing these new tobacco products, which lack premarket authorization, is illegal, and therefore they cannot be sold or distributed in the U.S. The firm did not submit any premarket tobacco product applications by a Sept. 9, 2020, deadline.
The FDA approved the first interchangeable biosimilar insulin product, indicated to improve glycemic control in adults and pediatric patients with Type 1 diabetes mellitus and in adults with Type 2 diabetes mellitus. Semglee (insulin glargine-yfgn) is both biosimilar to, and interchangeable with (can be substituted for), its reference product Lantus (insulin glargine), a long-acting insulin analog. The FDA’s action offers patients additional safe, high-quality, and potentially cost-effective options for treating diabetes.
President Biden issued an Executive Order on promoting competition. In announcing the order, the White House made the case that an increased number of business consolidations in recent years have led to increased costs for consumers, decreased advertised wages, and to a decline in economic growth and innovation. The order seeks to establish a whole-of-government effort to promote competition and includes 72 initiatives by more than a dozen federal agencies.
Other Items of Interest
Michigan Attorney General Dana Nessel obtained an order dissolving 10 fraudulent entities for failing to comply with state nonprofit and charity laws. The entities have names similar to those of legitimate nonprofits, like the American Cancer Society, American Cancer Foundation, United Way, and the American Red Cross, but appear to serve no charitable or commercial purpose.
Arkansas Attorney General Leslie Rutledge sued a couple who allegedly misrepresented their child’s health condition to receive charitable donations. According to the complaint, Kristy and Erik Schneider falsely claimed that their minor child was deathly ill resulting in the Schneiders receiving over $31,000 in charitable contributions and assistance from Arkansas consumers, organizations, and law enforcement agencies.
South Carolina Attorney General Alan Wilson announced that the indictment of the former Executive Director of the Boys and Girls Clubs of Myrtle Beach, for allegedly embezzling more than $100,000 from the organization.
Veterans and Military
The FTC, CFPB, and Department of Defense, announced Military Consumer Month, a month-long education effort that provides targeted resources for military communities on how to avoid scams and fraud. A number of attorneys general also participated in announcing initiatives, including California Attorney General Rob Bonta, Florida Attorney General Ashley Moody, Illinois Attorney General Kwame Raoul, Indiana Attorney General Todd Rokita, and Louisiana Attorney General Jeff Landry.
South Carolina Attorney General Alan Wilson applauded passage of a new law to combat the financial exploitation of the elderly and other vulnerable adults. The new law grants financial institutions, including banks, broker-dealers, and investment advisers, the ability to delay a financial transaction if there is reasonable belief that financial exploitation of a vulnerable adult is taking place. The delay will give the Attorney General’s Office and the Department of Social Services time to investigate the suspected abuse.
Other articles in this edition include:
- Consumer Chief of the Month
- A Review of CPSC and NHTSA Safety Information Transparency and Recall Authority
- Attorney General Consumer Protection News: July 2021