The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly January 2019
Consumer Chief of the Month: Richard S. Schweiker, Jr., Virginia
It is a great privilege to serve as Chief of the Consumer Protection Section in the Virginia Attorney General’s Office. I work with an excellent team of dedicated public servants. Each day, we are very fortunate to come to work with a primary purpose of helping other people. Thank you for the opportunity to share some information about our Section and my background.
I joined the Antitrust and Consumer Litigation Section (now called the Consumer Protection Section) as an assistant attorney general in April 1996 after several years on the litigation team of a large national law firm. In July 2000, I was promoted to the position of senior assistant attorney general. In January 2016, as part of a major reorganization and expansion of our Section, Attorney General Mark Herring selected me to serve as chief. As the new chief, I was tasked with overseeing and implementing the reorganization and expansion.
Article of the Month:
How to Successfully Embrace the Courtroom without Looking like a Fool
Phil Carlson, Assistant Attorney General
Office of the South Dakota Attorney General
So, your first time in court is coming up. You’re sweating, you’ve got a nervous twitch, your heart is in your throat, and it’s beating so hard and fast you’re sure that there’s a blacksmith in there. You know your case cold. You’ve spent days memorizing the pertinent facts and poring over the applicable law. You’re ready, but now what?
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB announced a settlement with Enova International, Inc., an online lender that extends unsecured payday and installment loans, and lines of credit based in Chicago, Illinois.
- The CFPB reported on credit score myths.
- The CFPB asked Congress for clear authority to supervise compliance with the Military Lending Act.
- The United State Supreme Court refused to hear a challenge to the CFPB’s structure.
- GAO report finds that the CFPB needs a systematic process to prioritize consumer risks.
- The CFPB published a report under section 1022(d) of the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) assessing the effectiveness of the Bureau’s Ability to Repay and Qualified Mortgage Rule and a separate report assessing the effectiveness of the CFPB’s mortgage servicing rule issued under the Real Estate Settlement Procedures Act (RESPA).
- The CFPB announced a settlement with USAA Federal Savings Bank, a federally chartered savings association headquartered in San Antonio, Texas. As described in the consent order, the CFPB found that USAA violated the Electronic Fund Transfer Act and Regulation E by failing to properly honor consumers’ stop payment requests on preauthorized electronic fund transfers, and by failing to initiate and complete reasonable error resolution investigations. USAA also violated the Consumer Financial Protection Act of 2010 by reopening deposit accounts consumers had previously closed without seeking prior authorization or providing adequate notice.
Securities and Exchange Commission:
- The SEC announced that a federal court in Florida ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors.
- The SEC announced that it filed charges against Texas resident and real estate developer Phillip Michael Carter, two other individuals, and several related entities for allegedly conducting a multi-million dollar offering fraud.
- The SEC announced charges against nine defendants for participating in a previously disclosed scheme to hack into the SEC’s EDGAR system and extract nonpublic information to use for illegal trading. The SEC charged a Ukrainian hacker, six individual traders in California, Ukraine, and Russia, and two entities. The hacker and some of the traders were also involved in a similar scheme to hack into newswire services and trade on information that had not yet been released to the public. The SEC charged the hacker and other traders for that conduct in 2015 (see here, here and here).
In other federal news:
- The FTC announced nine FTC developments that could impact businesses in 2019.
- The United States Senate Special Committee on Aging released a report on the top 10 scams targeting seniors.
Attorney General Consumer Protection News and Other Items of Interest
Fifty-plus attorneys general announced a $171 million settlement with Fiat Chrysler and Robert Bosch for equipping, selling or leasing environmentally non-compliant vehicles.
Forty eight attorneys general announced an agreement with for-profit education company Career Education Corporation that will relieve more than $493.7 million in debts owed by 179,529 students nationwide.
Forty-five attorneys general reached a $120 million settlement with Johnson & Johnson and DePuy to resolve allegations that DePuy unlawfully promoted its metal-on-metal hip implant devices, the ASR XL and the Pinnacle Ultamet.
Forty-four attorneys general have reached a settlement agreement with the Neiman Marcus Group LLC (Neiman Marcus) following an investigation into the 2013 breach of customer payment card data at 77 Neiman Marcus stores across the United States.
Arizona Attorney General Mark Brnovich filed a Consumer Fraud Lawsuit against Mercedes-Benz USA, LLC and its parent Daimler AG for allegedly defrauding Arizonans through the sales of certain “clean diesel cars.”
District of Columbia Attorney General Karl A. Racine filed a lawsuit against Town Sports International, LLC, the operators of Washington Sports Clubs, over its alleged deceptive cancellation and billing practices.
Florida Attorney General Ashley Moody’s Office obtained a court enforceable agreement with Dollar Thrifty Automotive Group, Inc., a holding company that owns the Dollar and Thrifty car rental companies. The settlement agreement resolves an investigation regarding Dollar Thrifty’s practices involving add-on fees for cashless tolls in Florida and other related add-on charges.
Georgia Attorney General Chris Carr encouraged consumers to protect themselves from tax-related scams. In other Georgia news, General Carr warned hotels in advance of the Super Bowl that they need to honor existing reservations at the agreed-upon rates.
Indiana Attorney General Curtis Hill warned Hoosiers to exercise caution before entering into financial transactions with solicitors claiming affiliations with local schools. In recent years, the Indiana Office of the Attorney General has received multiple complaints about scams involving fraudulent sales of supposed sponsorships benefiting school programs or sports teams.
Iowa Attorney General Tom Miller announced that consumer complaints to the Iowa Attorney General’s Office increased 18 percent in 2018 over the previous year, led by complaints related to vehicles, home improvement projects, and imposter scams.
Massachusetts Attorney General Maura Healey announced that tax preparation company Jackson Hewitt Tax Service Inc. will pay more than $187,000 to resolve allegations that it violated Massachusetts consumer protection laws by posting misleading and deceptive advertisements.
Michigan Attorney General Dana Nessel issued a notice of intended action and a cease and desist order to Executive Car Rental for several alleged violations of the state’s Consumer Protection Act after receiving numerous complaints against the company from around the country.
Missouri Attorney General Eric Schmitt released the top ten consumer complaints his office received in 2018.
Nevada Attorney General Aaron D. Ford warned consumers to be alert when purchasing tickets from a reseller or for events advertised online. Recently, event-related scams have been on the rise, and Nevada’s popularity as a tourist destination makes it a prime target for selling fake events and counterfeit tickets.
New York Attorney General Letitia James and Department of Financial Services Superintendent Maria T. Vullo announced a $9 million settlement with the federal student loan servicer, ACS Education Services (currently known as Conduent Education Services). This settlement is the first in the country to address claims that a federal student loan servicer steered distressed borrowers away from available income-based repayment plans towards other, more expensive options, thus costing them money and increasing their risk of default. In other New York news, General James and the Consumer Financial Protection Bureau announced an $11 million settlement with Sterling Jewelers Inc. (Sterling) (doing business as Kay Jewelers, Jared The Galleria of Jewelry, and several other brands). The settlement resolves an investigation that revealed that Sterling signed consumers up for store credit cards without the consumers’ knowledge or consent. Sterling also enrolled consumers in a credit insurance product without consumers’ knowledge or consent and misrepresented the terms of the store cards. Pursuant to the settlement, Sterling will pay $11 million in penalties.
North Carolina Attorney General Josh Stein announced the top 10 consumer complaints that his office received in 2018.
North Dakota Attorney General Wayne Stenehjem issued Cease and Desist Orders banning three North Dakota unlicensed contractors from conducting any further business in the state. Timothy Jacobson of Fairmount, Tyler Giles of Fargo, and Patrick Peltier of Bottineau, violated the state’s consumer fraud and contractor licensing laws. All three unlicensed contractors took thousands of dollars in advance payments from homeowners, but failed to do any work.
Oklahoma Attorney General Mike Hunter warned Oklahomans to be aware of phone calls from scam artists claiming to be with the Social Security Administration and attempting to steal social security numbers and money.
Pennsylvania Attorney General Josh Shapiro announced that his Bureau of Consumer Protection filed a lawsuit against Syed Qumrazzaman a/k/a Syed Zaman for allegedly scamming Pennsylvanians by falsely identifying himself as an attorney and collecting at least $20,000 for immigration assistance services that he was not licensed to provide – and never did. In other Pennsylvania news, General Shapiro announced a lawsuit against an Alabama driveway paving company owner on claims that he sold defective driveway paving services to unsuspecting consumers in Northwestern Pennsylvania from at least 2015 through October 2017.
Texas Attorney General Ken Paxton warned Texans to beware of calls from scam artists pretending to be with the Social Security Administration and attempting to fool unsuspecting people into giving them their Social Security number and money.
Virginia Attorney General Mark R. Herring warned Virginians who have been furloughed because of the government shutdown, or those who wish to help federal workers, to be vigilant and look out for scams related to the shutdown.
Washington Attorney General Bob Ferguson announced a lawsuit against multi-level marketing business LuLaRoe and several of its “home office” executives, alleging that the company’s former bonus structure constituted a pyramid scheme. The lawsuit also asserts that LuLaRoe’s claims regarding sustainability, profitability and inventory refunds are unfair and deceptive.
West Virginia Attorney General Patrick Morrisey reminded students with plans to attend college to safeguard their personal information as they apply for financial aid. In other West Virginia news, General Morrisey urged consumers to safeguard their tax information.
Google acknowledged its second data breach on its social media site Google Plus, this one affecting 52.2 million users, resulting in the company’s decision to expedite the shutdown of Google Plus to April 2019. Google said it will provide users with additional information to enable them to download and migrate their data to transition off of Google Plus.
The National Consumers League offered tips to consumers to protect themselves from fraud in 2019.
Password manager Blur posted a notice about a data breach impacting more than 2.4 million users.
Massachusetts Governor Charlie Baker signed a law requiring free credit monitoring and freezes following a data breach. The law would also require a consumer's consent for third parties to request credit information for non-credit purposes, "to give consumers more control over their data and how it is used," Baker said in a statement.
Veterans and Military News
The CFPB announced a settlement with Mark Corbett, a broker of contracts offering high-interest credit to veterans. In other veterans news, the CFPB’s Office of Servicemember Affairs released its sixth annual report that highlights issues and emerging trends facing servicemembers, veterans, and military families.
Pennsylvania Attorney General Josh Shapiro announced his Bureau of Consumer Protection and Office of Military and Veterans Affairs have settled a case against a Pennsylvania woman for scamming veterans by making misrepresentations in advertising services pertaining to long term health care, including Department of Veterans Affairs Claims Benefit consultation and assistance. This was in violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.
Consumer Protection Trivia
- Which state attorney general's office created the nation's first consumer protection division?
C. New York
- In which ancient set of laws did more than two dozen of the 282 sections deal with various aspects of lending practices?
A. Laws of Eshnunna
B. Code of Hammurabi
C. Napoleonic Code
D. English common law
*Trivia answers can be found below.
- A. Michigan
- B. Code of Hammurabi
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.