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Center for Consumer Protection Monthly August 2018

Consumer Chief of the Month: Jeff Hill, Tennessee

I grew up as a member of a newspaper family in Oak Ridge, Tennessee. My father was the publisher of the local paper, the Oak Ridger. My mother is the person in teh family with a journalism degree, and, with her considerable skills, she wronte a weekly humor column in teh paper — often featuring me. Let me tell you, having all of your friends read about you in a humor column really shapes a person. Oak Ridge was created as part of the Manhattan Project to enruch uranium. So, if my mom's hilarious stories about my oversized band uniform weren't enough to keep me humble, being the only kid in class whose parents did not have a Ph.D. in science did. It's safe to say, I never won a science fair.

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Article of the Month:

Network Neutrality and the Restoring Freedom Order

Caroline Lannon, NAGTRI Law Clerk (2017-2018), National Association of Attorneys General

The internet has transformed significantly since its prototype of ARPANET in the 1960s, and, with that transformation, the role of the internet itself has changed in our daily lives. The internet has become somewhat of a necessity within the past decade; not only is it a form of communication, but it can also act as a research tool, a diary, even a shopping mall. Like the internet, the role of internet service providers (ISPs) has also changed drastically. New legislation enacted this year now gives ISPs greater control over content and distribution.

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Scam Alert:

Watch out for card skimming at the gas pump.

Federal Consumer Protection News

Bureau of Consumer Financial Protection:

  • The Bureau reported that 1-in-5 consumers had telecommunications related collections on their consumer report in the past five years.
  • The Bureau finalized amendments to implement legislation that allows financial institutions that meet certain requirements to be exempt from sending annual privacy notices to their customers.
  • The Bureau’s Ombudsman’s office released its mid-year update.
  • A federal district court in the Western District of Missouri entered an order effectuating a settlement between the Bureau and Richard Moseley, Sr., Richard Moseley, Jr., and 20 interrelated corporate entities controlled by Moseley, Sr. and Moseley, Jr., in the Bureau’s lawsuit regarding the unlawful origination and servicing of short-term, small-dollar online loans to consumers nationwide.

Commodity Futures Trading Commission:

  • The CFTC wins its trial against a virtual currency fraudster.
  • The CFTC unanimously approved a swap clearing requirement proposed rule that would reduce unnecessary burdens on bank holding companies, savings and loan holding companies, and community development financial institutions.
  • The CFTC announced multiple whistleblower awards totaling more than $45 million.
  • The CFTC issued an order filing and simultaneously settling charges against Christian Robert Mayer of Eden Prairie, Minnesota, for engaging in a fraudulent trading scheme involving unauthorized trades in cattle, crude oil, and wheat futures contracts.

Federal Communications Commission:

  • Chairman Ajit Pai announced the appointment of eighteen new members to the FCC’s Intergovernmental Advisory Committee (IAC) and named Doug Ducey, Governor of Arizona, Chair of the newly expanded IAC.

Federal Trade Commission:

  • The FTC will begin its Hearings Initiative with two full-day sessions, co-sponsored with and held at the Georgetown University Law Center, on September 13 and 14, 2018.
  • The FTC returned more than $14 million to consumers who were deceived by misleading light bulb claims.
  • The FTC has advice for parents on talking to their kids about online safety, protecting their children’s personal information, and back-to-school shopping.
  • The FTC approved changes to a video game industry self-regulatory program aimed at ensuring compliance with the Children’s Online Privacy Protection Act Rule.
  • The FTC is warning consumers about scammers who impersonate celebrities on social media.
  • The FTC and the State of Minnesota have charged Minnesota-based Sellers Playbook with running a large business opportunity scheme. A federal court temporarily halted the operation pending resolution of the case.
  • The FTC will require Spain-based global healthcare company Grifols S.A. to divest blood plasma collection centers in three U.S. cities, among other conditions, as part of a settlement resolving charges that Grifols’ acquisition of Florida-based Biotest US Corporation is anticompetitive and violates federal antitrust law.
  • The FTC has charged a group of four auto dealers operating in Arizona and New Mexico, near the border of the Navajo Nation, with a range of illegal activities, including falsifying consumers’ income and down payment information on vehicle financing applications and misrepresenting important financial terms in vehicle advertisements.

Securities and Exchange Commission:

  • The SEC charged a professional football player and a former investment banker with insider trading in advance of corporate acquisitions facilitated through coded text messages and FaceTime conversations.
  • The SEC announced that Moody’s Investors Service Inc., one of the nation’s largest credit ratings agencies, has agreed to pay a total of $16.25 million in penalties to settle charges involving internal control failures and failing to clearly define and consistently apply credit rating symbols. This marks the first time the SEC has filed an enforcement action involving rating symbol deficiencies.
  • The SEC Chairman Jay Clayton announced that an additional investor roundtable to discuss the Commission’s recently proposed rules regarding the obligations of financial professionals to investors will be held in Baltimore on the evening of September 20, 2018.
  • The SEC charged five individuals and four companies for unlawfully selling securities of Woodbridge Group of Companies LLC, to retail investors. Woodbridge collapsed into bankruptcy in December 2017 and the SEC previously charged the company, its owner, and others with operating a massive $1.2 billion Ponzi scheme.
  • The SEC announced that Citigroup has agreed to pay $10.5 million in penalties to settle two enforcement actions involving its books and records, internal accounting controls, and trader supervision.
  • The SEC announced that Ameriprise Financial Services Inc. will pay $4.5 million to settle charges that it failed to safeguard retail investor assets from theft by its representatives.
  • The SEC charged a cloud communications company and two executives with providing misleading quarterly revenue estimates. The company and executives agreed to pay over $1.9 million in penalties to settle the SEC’s charges.
  • The SEC obtained permanent officer-and-director and penny stock bars against the founder of a company who perpetrated a fraudulent initial coin offering to fund oil exploration and drilling in California.

In other federal news:

  • The Department of Justice announced that six indictments and one criminal complaint were unsealed in federal court in Brooklyn, New York, charging a total of 22 defendants with illegally bringing into the United States millions of dollars of counterfeit luxury goods from China.
  • The Department of Justice announced that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented.
  • IC3 released a public service announcement titled “Cyber Actors Use Internet of Things Devices as Proxies for Anonymity and Pursuit of Malicious Cyber Activities.”
  • IC3 released a public service announcement titled “Extortionist Increasingly Using Recipients’ Personal Information to Intimidate Victims.”
  • The Justice Department announced a $4.9 billion settlement with The Royal Bank of Scotland Group plc (RBS) resolving federal civil claims that RBS misled investors in the underwriting and issuing of residential mortgage-backed securities between 2005 and 2008.

Attorney General Consumer Protection News and Other Items of Interest

Twenty nine attorneys general filed comments with the Federal Trade Commission (FTC) highlighting the significant role state attorneys general play in consumer protection and asking the FTC to include states in the discussion as the agency holds public hearings on “Competition and Consumer Protection in the 21st Century.”

T-Mobile informed its customers that it experienced a data breach.

Alabama Attorney General Steve Marshall announced that a Calhoun County Circuit Court granted his emergency request for a temporary restraining order to prevent continued harm from a deceptive and dangerous plumbing operation in several northeast Alabama counties. Calhoun County Circuit Judge Brian Howell also ordered that the defendants’ assets be frozen and appointed a receiver to handle financial matters and accept claims from victims.

Arizona Attorney General Mark Brnovich announced the filing of a consumer fraud lawsuit against Texas-based travel company EB Worldwide, LLC, and its CEO, George Barragan. The lawsuit alleges EB Worldwide charged a group of Cienega High School students more than $34,000 for a senior class trip to Disneyland and then failed to provide the trip or refund the students’ money. In other Arizona news, General Brnovich warned consumers that they should beware of false and misleading advertising relating to the “2018 Women EmpoweredUp Conference,” which supposedly will take place in late September at an unspecified location in Phoenix.

Arkansas Attorney General Leslie Rutledge filed a consumer protection lawsuit against Alert America for alleged violations of the Arkansas Deceptive Trade Practices Act. In other Arkansas news, General Rutledge announced that Pulaski County Circuit Judge Chris Piazza has found northwest Arkansas auto dealer John Vancuren and his wife Michelle Vancuren and, their companies, Infinity Auto Sales, Inc., Infinity Towing and Recovery, Inc. and Vancurens Auto Sales, Inc., liable for 59 violations of the Arkansas Deceptive Trade Practices Act.

California Attorney General Xavier Becerra filed criminal charges against Marin County operators Pamela Kelley and Scott Parke for alleged rental property price gouging during last year’s Tubbs Fire.

Florida Attorney General Pam Bondi filed a legal action against a closed Florida travel agency that still owes consumers nationwide more than $3 million.

Georgia Attorney General Chris Carr announced that PHH Mortgage Corporation has entered into a settlement with his office to resolve allegations that it violated Georgia’s Fair Business Practices Act by charging unauthorized fees to Georgia consumers. In other Georgia news, General Carr warned Georgians of fake phone calls and letters from scammers posing as government officials.

Idaho Attorney General Lawrence Wasden has released the latest annual report from his office’s Consumer Protection Division. The summary represents a detailed look at the division’s work between July 1, 2017, and June 30, 2018. In other Idaho news, General Wasden announced a settlement agreement with Gary and Sharon Mueller, owners of Idaho Life, LLC. The Idaho Falls-based company, which published lifestyle magazines, sold advertising space to small businesses in 2016 and 2017. The settlement requires the Muellers to pay more than $8,400 in refunds to small businesses that did not receive the ads they purchased.

Indiana Attorney General Curtis Hill warned Indiana residents of credit card scams.

Iowa Attorney General Tom Miller announced that a Louisiana company has paid $14,850 to refund fees paid by owners of Iowa trucking companies, many of whom thought they were responding to a government agency threatening fines.

Kansas Attorney General Derek Schmidt announced that a group of Nebraska roofing contractors have been banned from doing business in Kansas and ordered to repay two consumers after being found in violation of Kansas consumer protection laws.

Kentucky Attorney General Andy Beshear warned Kentucky residents of rental scams.

Michigan Attorney General Bill Schuette released a new consumer alert to warn Michigan business owners of a potential sales tax application scam. In other Michigan news, General Schuette is reminding residents about consumer education programs offered by the Michigan Attorney General’s Office.

Missouri Attorney General Josh Hawley filed a lawsuit against Joseph Ross, Ashley Dillard, and their companies Rough Country Rustic Furniture, LLC (Rough Country) and Rustic Concealment Solutions, LLC. Rough Country is an online furniture company located in Wright County, Missouri. The Attorney General’s lawsuit alleges that the company and its owners used deceptive and unfair business practices in connection with the sale of furniture and home decor.

Nevada Attorney General Adam Paul Laxalt announced an 11 felony count indictment for mortgage lending fraud and theft. According to the indictment, defendant misled victims into believing their homes could be saved from mortgage foreclosure.

New Hampshire Attorney General Gordon J. MacDonald announced that a court has found Thomas Lavigne, owner and operator of CrossFit Affirmation, a health club, to be in violation of the Consumer Protection Act. The court found Mr. Lavigne liable for 4 separate violations of the Consumer Protection Act for (1) his failure to register his health club with the Attorney General, (2) his solicitation of health club memberships for a term of more than 1 year, contrary to the Health Club statute, (3) his failure to disclose his membership liability for purposes of bonding to protect prepaid membership dues, and (4) his failure to provide consumers with contracts containing statutorily required consumer protection disclosures and buyer’s rights.

New Jersey Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that 29 unlicensed movers have been issued Notices of Violation as a result of “Operation Mother’s Attic,” a state-led undercover sting operation targeting public movers suspected of operating without licenses.

New Mexico Attorney General Hector Balderas announced that the Office of the Attorney General’s Consumer and Environmental Protection Division filed a lawsuit against Wells Fargo Bank, N.A., for alleged illegal business practices in opening unauthorized accounts in the name of thousands of New Mexicans. In other New Mexico news, General Balderas issued a scam alert, warning consumers that “storm chasers,” or mobile car repairers are showing up on street corners or at New Mexicans’ front doors, trying to get consumers to pay for hail damage repair and scamming them out of their money.

New York Attorney General Barbara D. Underwood and Governor Andrew M. Cuomo announced a lawsuit against Purdue Pharma L.P., Purdue Pharma Inc., and Purdue Frederick Company, Inc. (Purdue). The lawsuit alleges a decades-long and continuing pattern of persistent deceptive and illegal conduct, whereby Purdue misled prescribers and patients about the risks of its opioids, including OxyContin, intentionally understating the risks and overstating the benefits of these powerful and dangerous drugs.

North Carolina Attorney General Josh Stein filed a suit to hold drug manufacturer Insys Therapeutics, Inc., responsible for its alleged deceptive marketing and sale practices by intervening in two lawsuits accusing Insys of violating the False Claims Act.

North Dakota Attorney General Wayne Stenehjem’s Consumer Protection Division sued a North Dakota building contractor for alleged violations of North Dakota consumer fraud and contractor licensing laws.

Ohio Attorney General Mike DeWine announced that a Wilmington man has been sentenced to prison and ordered to pay restitution for running a fence scam affecting southwest Ohio consumers. In other Ohio news, General DeWine announced a consumer protection lawsuit against a home appliance repairman accused of failing to deliver promised services to Cincinnati-area consumers.

Pennsylvania Attorney General Josh Shapiro encouraged Pennsylvania consumers to sign up for a new text alert system through his Bureau of Consumer Protection to raise their awareness about how to avoid becoming a victim of scams. In other Pennsylvania news, General Shapiro announced the results of a statewide consumer protection initiative to secure restitution payments to Pennsylvania consumers.

Washington Attorney General Bob Ferguson announced that a Washington state court issued a preliminary injunction ordering an estate-planning company to immediately halt its deceptive conduct. The lawsuit asserts the Texas-based company operated a “trust mill” scheme targeting hundreds of Washington seniors.

West Virginia Attorney General Patrick Morrisey issued a warning about a scam in which consumers receive fake checks in the mail and are later required to repay the bank once the check bounces. In other West Virginia news, General Morrisey announced a settlement valued at nearly $900,000 to resolve allegations that a leasing company unlawfully repossessed motor vehicles and made misrepresentations regarding credit repair.

Wisconsin Attorney General Brad Schimel announced the Wisconsin Department of Justice has won a judgment against Atomic Glass and its owner, David Kelly, relating to sales of synthetic cannabinoids, also known as “fake weed,” from the Atomic Glass store in Milwaukee.


The Department of Justice is reminding the public to be aware of fraud when natural disasters strike and report it to the National Center for Disaster Fraud.

The FTC offers tips to consumers on how to donate wisely after a natural disaster.

Massachusetts Attorney General Maura Healey announced that Hopkinton-based Greyhound Friends Inc., has agreed to institute governance reforms and file reports with the Attorney General’s Non-Profit Organizations/Public Charities Division following allegations of financial mismanagement.

New York Attorney General Barbara D. Underwood announced a settlement with The Arc of Erie County, a Buffalo-based nonprofit that provides services to people with developmental disabilities and their families, after finding that the company exposed clients’ sensitive personal information on the internet for years.

Oklahoma Attorney General Mike Hunter charged a former board president of the Down Syndrome Association of Tulsa for allegedly embezzling money from the organization.

Washington Attorney General Bob Ferguson filed a lawsuit to shut down six fake nonprofit entities posing as well-known, international organizations created by Ian Richard Hosang, a former stockbroker who has ties to the mafia. The lawsuit alleges that Hosang could be using the nonprofits to cover up illegal activity. In other Washington news, General Ferguson joined Washington Secretary of Health John Wiesman to announce that more than half a million dollars from the recovered assets of a bankrupt sham charity will fund breast cancer screenings for underinsured women, as donors originally intended.


The Economic Growth, Regulatory Relief, and Consumer Protection Act provides that consumers will be able to contact each of the three major credit reporting agencies and direct them to place a free freeze on the consumer’s credit file under federal law. The law takes effect September 21, 2018.

Massachusetts Attorney General Maura Healey applauded the signing of a Massachusetts bill, H. 4866, Prevention and Access to Appropriate Care and Treatment of Addiction into law that expands tools, treatment, and education to combat the opioid crisis in Massachusetts, and includes a provision proposed by the attorney general’s office that prohibits opioid manufacturers from using coupons to market brand-name opioids to Massachusetts patients.

Veterans and Military News

The federal government implemented new security clearance guidelines that make it more important than ever for servicemembers to stay on top of their bills and monitor their credit histories.

Arizona Attorney General Mark Brnovich announced a State Grand Jury indicted Laura Lynn Bell, a former Psychiatric Mental Health Nurse Practitioner, for her alleged involvement in treating Veterans Affairs patients while unlicensed and defrauding multiple insurance companies.

Consumer Protection Trivia

      1. In what year did Congress grant the Federal Trade Commission authority to protect consumers from "unfair and deceptive trade practices?"
        A. 1953
        B. 1968
        C. 1977
        D. 1938

        1. Which President signed the Federal Trade Commission Act into law?
          A. Woodrow Wilson
          B. Franklin D. Roosevelt
          C. Warren G. Harding
          D. Gerald Ford

          *Trivia answers can be found below.

Consumer Protection Trivia

      1. D. 1938
      2. A. Woodrow Wilson

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 or call (202) 326-6263.

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