The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly April 2018
Consumer Chief of the Month: Micklas, A. Akers, California
I joined the California Department of Justice in 2006 and transferred to the Consumer Law Section in 2012 to serve as the Supervising Deputy Attorney General (SDAG) for our San Francisco office, where I led the section’s work on for-profit education, including the Corinthian Colleges case. I was appointed as the Senior Assistant Attorney General in charge of the Consumer Law Section in 2014.
Article of the Month:
Dangerous Dating: Hidden Perils of Online Dating Services
Eli Rymland-Kelly, NAGTRI Visiting Fellow (Fall 2017), National Association of Attorneys General
During the last decade, the online dating industry has grown substantially in both size and competitiveness. As online dating services (ODS) attempt to capture market share, their practices have caught the attention of state and federal law enforcement. Similarly, as more people use ODS, the services face a growingly complicated legal environment in which their actions and their users may cause them to face liability.
FTC asking for access to your computer? It’s a scam.
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB announced a settlement with Wells Fargo Bank, N.A. in a coordinated action with the Office of the Comptroller of the Currency.
- The CFPB released its semi-annual report highlighting the Bureau’s work.
- The CFPB finalized an amendment to its “Know Before You Owe” mortgage disclosure rule that addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a Closing Disclosure. The update is intended to provide greater clarity and certainty to the mortgage industry.
- The CFPB issued a Request for Information on consumer financial education.
- The CFPB issued a Request for Information on its handling of consumer complaints and inquiries.
Commodity Futures Trading Commission:
- The CFTC released The Truth Behind Binary Options Fraud, new videos that give viewers a first-hand look at the tactics shrewd fraudsters use to con investors out of hundreds or even thousands of dollars.
- The CFTC issued an order filing and settling charges against Anuj C. Singhal, a Dallas, Texas, resident and registered floor broker, for engaging in the disruptive trading practice of “spoofing” (bidding or offering with the intent to cancel bids or offers before execution) through manual trading in the Chicago Mercantile Exchange wheat futures market between at least March and June 2016.
Federal Communications Commission:
- The FCC reached a settlement concluding its investigation into whether T-Mobile USA, Inc. violated the Communications Act when it failed to correct ongoing problems with delivery of calls to rural consumers and whether it violated the FCC rule that prohibits providers from inserting false ring tones with respect to hundreds of millions of calls. T-Mobile agreed to pay $40 million to the U.S. Treasury and entered into a compliance plan to prevent future violations.
- The FCC adopted new measures to tackle the problem of failed or poor-quality long-distance calls to rural parts of the United States.
Federal Trade Commission:
- FTC Acting Chairman Maureen K. Ohlhausen released the agency’s 2017 Annual Highlights detailing its continued efforts to protect American consumers and promote competition without unnecessarily burdening legitimate businesses.
- The FTC is mailing 2,116 refund checks totaling more than $355,000 to people who bought CogniPrin, a deceptively marketed “memory improvement” supplement.
- The FTC staff has sent warning letters to six major companies that market and sell automobiles, cellular devices, and video gaming systems in the United States. The letters warn that FTC staff has concerns about the companies’ statements that consumers must use specified parts or service providers to keep their warranties intact.
- Three marketers who allegedly sold phony debt relief services, including fake loans, have agreed to be banned from selling debt relief, credit repair, and financial products and services, to be banned from telemarketing, and to turn over assets worth approximately $35 million dollars, under settlements with the FTC and the State of Florida.
- Uber Technologies, Inc. has agreed to expand the proposed settlement it reached with the FTC last year over charges that the ride-sharing company deceived consumers about its privacy and data security practices.
Securities and Exchange Commission:
- The SEC charged two individuals, the pastor of one of the largest Protestant churches in the country and a self-described financial planner in a scheme to defraud elderly investors by selling them interests in defunct, pre-revolutionary Chinese bonds.
- The SEC has charged Michael Liberty, the founder of the fintech startup now known as Mozido Inc., with a scheme to trick hundreds of investors into investing in his shell companies instead of Mozido.
- The SEC issued an Investor Alert warning investors of fraudsters claiming to be SEC employees in an attempt to trick investors into sending money or revealing sensitive account information.
- The SEC announced that the entity formerly known as Yahoo! Inc. has agreed to pay a $35 million penalty to settle charges that it misled investors by failing to disclose one of the world’s largest data breaches in which hackers stole personal data relating to hundreds of millions of user accounts.
In other federal news:
- The Department of Justice announced that a federal court permanently enjoined a Walton, New York, creamery and its owner from manufacturing and distributing adulterated food.
- The Department of Justice announced that a Chinese citizen plead guilty in Dallas, Texas, to mail fraud and smuggling charges in connection with a scheme to sell mislabeled dietary supplements.
- The Department of Justice’s Antitrust Division issued the 2018 edition of its annual Spring Newsletter on its website.
Attorney General Consumer Protection News and Other Items of Interest
Arizona Attorney General Mark Brnovich announced Arizona consumers will receive up to $130,000 in restitution as part of a settlement with ABC Nissan, an auto dealer in Phoenix.
Arkansas Attorney General Leslie Rutledge filed a lawsuit against Utah-based Alder Holdings, LLC, Alarm Protection Technology Arkansas LLC, and Alarm Protection Arkansas LLC for alleged violations of the Arkansas Deceptive Trade Practices Act, the Home Solicitation Sales Act, and the Automatic Renewal of Professional Home Security Contracts Prohibition.
The Consumer Protection Unit of the Delaware Department of Justice warns Delawareans to be careful when looking for a vacation rental. In other Delaware news, General Denn announced a new online data security breach reporting resource.
Florida Attorney General Pam Bondi filed a complaint against Carlson Enterprises, LLC, a Jacksonville construction company, for allegedly taking money from Florida consumers for roofing repair work and then failing to fix the roofs.
Georgia Attorney General Chris Carr announced an $8.5 million settlement with National Check Resolution, Inc., resolving charges that the debt collection company committed multiple violations of the federal Fair Debt Collection Practices Act and the Georgia Fair Business Practices Act.
Kansas Attorney General Derek Schmidt announced that a Wichita roofer has been temporarily banned from doing business in Kansas by two court orders while lawsuits alleging violations of consumer protection laws are pending.
Kentucky Attorney General Andy Beshear filed a lawsuit alleging Johnson & Johnson, and its Janssen Pharmaceuticals Inc. and Ortho-McNeil subsidiaries, devised a deceptive marketing scheme in order to generate higher profits from their opioid drugs Duragesic, Nucynta, and Nucynta ER.
Illinois Attorney General Lisa Madigan filed a lawsuit against Major Energy Electric Services, an alternative retail electric supplier, for allegedly misleading thousands of Illinois customers about the company’s costly electricity contracts using high-pressure sales tactics to push people to enroll without explaining the service or the costs.
Iowa Attorney General Tom Miller has reached settlements with marketers of deceptive online advertisements and fake news stories featuring Stephen Hawking, Ashton Kutcher, Bill Gates, and other celebrities supposedly promoting “smart pills.”
Massachusetts Attorney General Maura Healey announced that her office has secured $898,000 from a Florida-based credit union that made loans to more than 200 Massachusetts students to finance expensive and ineffective online study materials and educational services.
Missouri Attorney General Josh Hawley announced that his office has issued an investigative subpoena to social media giant Facebook Inc. in connection with a new investigation into the company’s business practices related to the sharing and tracking of consumers’ user data.
Minnesota Attorney General Lori Swanson filed a lawsuit against AutoAssure, LLC, a Texas company, for allegedly deceptively selling costly and often unnecessary car warranties to nearly 1,000 Minnesotan residents.
New Hampshire Attorney General Gordon J. MacDonald warns New Hampshire residents that IRS scam calls are on the increase throughout New Hampshire. In the last few days, the Attorney General's Office has received over 90 complaints related to IRS scams.
New Jersey Attorney General Gurbir S. Grewal announced that Virtua Medical Group, P.A., a network of physicians exclusively affiliated with more than 50 south Jersey medical and surgical practices, has agreed to pay $417,816 and improve data security practices to settle allegations it failed to properly protect the privacy of more than 1,650 patients whose medical records were made viewable on the internet as a result of a server misconfiguration by a private vendor. In other New Jersey news, General Grewal announced a $296,000 settlement with two Monmouth County residents and their companies to resolve allegations they defrauded senior citizens by selling emergency response systems through highly aggressive and misleading telemarketing sales tactics.
New Mexico Attorney General Hector Balderas announced that he reached a settlement with Visa and MasterCard, the United States’ two largest payment card networks, over a lawsuit brought by the New Mexico Office of the Attorney General alleging excessive fees charged during credit and debit card transactions.
New York Attorney General Eric T. Schneiderman launched the Virtual Markets Integrity Initiative, a fact-finding inquiry into the policies and practices of platforms used by consumers to trade virtual or “crypto” currencies like bitcoin and ether. In other New York news, General Schneiderman announced a $550,000 settlement with Liberty Power Holdings, LLC, as part of an ongoing investigation into energy service companies. The investigation uncovered that the company’s contractors and subcontractors lured consumers with false promises of savings and then charged them costly early termination fees when they tried to get out of their contracts.
Ohio Attorney General Mike DeWine filed a consumer protection lawsuit against the man who operated Ohio Restoration Group, a roofing company accused of taking thousands of dollars for work never provided.
Pennsylvania Attorney General Josh Shapiro alerted consumers to mortgage modification scams taking place across Pennsylvania and announced restitution for consumer victims of Michael Rabel, an attorney who scammed consumers in Western Pennsylvania.
Washington Attorney General Bob Ferguson’s lawsuit against iYogi, which accused the company of using deception and scare tactics to pressure consumers into buying unnecessary tech support services, has resulted in the company essentially shutting down.
West Virginia Attorney General Patrick Morrisey filed suit against Equifax alleging it ignored warnings to secure its system, failed to safeguard consumer information, and stalled in notifying the public of a data breach that affected 148 million consumers nationwide.
North Dakota Attorney General Wayne Stenehjem confirmed that his office is investigating Minot resident Terpsichore “Tore” Maras-Lindeman, doing business as “A Magic City Christmas,” for alleged violations of the consumer fraud laws and charitable solicitation laws. The investigation was initiated in early December 2017 after the consumer protection division received a media inquiry about claims made by Maras-Lindeman in fundraising solicitations for a holiday concert supposedly to benefit charities.
Oklahoma Attorney General Mike Hunter is urging Oklahomans to use caution and to carefully research charities before making a donation to benefit individuals impacted by the recent wildfires.
The United States filed a civil complaint seeking to permanently bar Michael L. Meyer, of Southwest Ranches, Florida, from providing federal tax advice for compensation because Meyer allegedly promotes, organizes, and executes a national charitable giving tax scheme that has cost the United States Treasury more than $35 million. The complaint alleges that Meyer executes his scheme through three bogus charities that he controls. The United States also seeks to disgorge the fees that Meyer received from the scheme.
The ABA House of Delegates approved a draft uniform law on the regulation of virtual currency businesses drafted by the National Conference on Uniform State Laws. According to the act’s prefatory note, it is intended to create a statutory structure for regulating virtual currency business activity. To date, the draft legislation has been introduced in Hawaii and Nebraska.
Alabama Governor Kay Ivey signed into law SB 318, the Alabama Data Breach Law. It requires entities doing business in the state to disclose to consumers if their personal information has been compromised by a data breach.
Arizona Attorney General Mark Brnovich announced newly signed legislation that strengthens Arizona’s data breach consumer protection statute.
A bipartisan group of 19 attorneys general sent a letter urging Congress to oppose legislation that would strip protections against debt collection attorneys who take unfair advantage of state courts to intimidate, harass, and deceive customers.
Veterans and Military News
In connection with a scheme involving a truck driving school, California Attorney General Xavier Becerra has filed a criminal complaint alleging that 38 individuals defrauded the United States Veterans Administration (VA) out of $4.3 million.
The Department of Justice announced that the owner of Atius Technology Institute, a privately owned, non-accredited school specializing in information technology courses, pled guilty to bribing a public official at the U.S. Department of Veterans Affairs in exchange for the public official’s facilitation of over $2 million in payments that were supposed to be dedicated to providing vocational training for military veterans with service-connected disabilities.
Maryland Attorney General Brian E. Frosh announced that the Attorney General’s Consumer Protection Division and the Maryland Department of Labor’s Office of the Commissioner of Financial Regulation have each filed charges against Scott Alan Kohn, Glorilyn Cusi, and a web of companies owned and operated by Kohn for allegedly making unlicensed and usurious loans, referred to as “pension advances,” to retirees and other veterans in Maryland.
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 firstname.lastname@example.org or call (202) 326-6263.