The National Attorneys General Training & Research Institute

The National Attorneys General Training & Research Institute The National Attorneys General Training & Research Institute

Center for Consumer Protection Monthly July 2019

Consumer Chief of the Month: Sarah A. E. Frasch, Pennsylvania

Thank you for allowing me to highlight the great work of the Pennsylvania Office of Attorney General, Bureau of Consumer Protection in this month's newsletter.

I was born in Charleston, SC and moved to the suburbs of Philadelphia, PA when I was 10, where I have resided ever since. I attended college (B.S. in Mathematics and minor in Computer Information Technology) and law school at Temple University in Philadelphia and graduated in 2006. While in law school, I interned for the Pennsylvania Office of Attorney General and found the Office to be so important to Pennsylvanians, that I knew I wanted to be a part of the team permanently upon my graduation.

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Article of the Month:

The TRACED Act and What it Means for Robocall Scammers

Jomi Ogunfiditimi, Law Clerk, National Association of Attorneys General

Let's face it, we've all been there before. You're receiving a phone call from a telephone number that you don't recognize and the caller ID displays a state you've never visited. You hesitate to answer while you quickly try to remember to whom you've given your cellphone number recently, or which prospective employer may be calling about your application. You decide to play it safe and answer the call with a curious "hello." You're greeted with a friendly "hello" in return, and for a brief moment you exhale and begin to ask with whom you're speaking. Before you can finish your sentence, you are interrupted by the voice as it begins to tell you about how you can switch to a better health insurance plan and receive a great discount. You hang up and sigh as you realize you've just received your ninth robocall of the week.


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Scam Alert:  

Bogus Web Development Scam Targeting Small Businesses





Federal Consumer Protection News

Consumer Financial Protection Bureau:

  • The CFPB issued an Advance Notice of Proposed Rulemaking (ANPR) seeking information relating to the expiration of the temporary qualified mortgage provision applicable to certain mortgage loans eligible for purchase or guarantee by the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, in the Bureau's Ability to Repay/Qualified Mortgage (ATR/QM) Rule. This provision, also known as the GSE patch, is scheduled to expire no later than Jan. 10, 2021.
  • The CFPB settled its lawsuit against Freedom Debt Relief, LLC, the nation's largest debt-settlement services provider. The company agreed to pay $20 million in restitution to affected consumers and a $5 million civil money penalty.
  • The CFPB issued an updated advisory to financial institutions urging them to report to the appropriate local, state, and federal authorities whenever they suspect that an older adult is the target or victim of financial exploitation. The CFPB also recommended that financial institutions file Suspicious Activity Reports with the federal government when they suspect elder financial exploitation.
  • The CFPB released a report that found that more than one-in-four consumers with a credit report have at least one debt in collection by third-party debt collectors.
  • The CFPB released a report which explores patterns of revolving and repayment of credit card accounts in the United States.

Federal Trade Commission:

  • The FTC imposed a $5 billion penalty and new privacy restrictions on Facebook for user privacy violations. FTC Commissioners Rohit Chopra and Kelly Slaughter issued dissenting statements on the Facebook settlement. The Electronic Privacy Information Center has gone to court in an attempt to intervene in the settlement.
  • The FTC filed an administrative complaint against data analytics company Cambridge Analytica, and filed settlements for public comment with Cambridge Analytica's former chief executive and an app developer who worked with the company, alleging they employed deceptive tactics to harvest personal information from tens of millions of Facebook users for voter profiling and targeting.
  • The FTC is seeking comment on the effectiveness of the amendments the agency made to the Children's Online Privacy Protection Rule (COPPA Rule) in 2013 and whether additional changes are needed.
  • As part of its continued efforts to help make the Do Not Call (DNC) data it collects more transparent and easier for consumers to use, the FTC announced the debut of a new interactive public web page containing a wealth of information about the National DNC Registry and unwanted telemarketing robocalls.
  • The FTC has stopped a student loan debt relief scheme, alleging it bilked more than $23 million from thousands of consumers with false claims that it would service and pay down their student loans. After the FTC filed a complaint seeking to end the deceptive practices, a federal court temporarily halted the scheme and froze its assets.
  • The operator of an online rewards website will be required to implement a comprehensive information security program before collecting personal information as part of a final settlement with the FTC related to allegations that he failed to take reasonable steps to protect personal data.
  • The FTC and its regional partners will hold a public workshop in Atlanta on Thursday, August 15, 2019, on truth-in-advertising basics and data security compliance. Designed for business owners, advertising and marketing executives, and attorneys, Green Lights & Red Flags: FTC Rules of the Road for Business features a roster of experts discussing established consumer protection and antitrust principles, new developments in the law, and their practical application in today's marketplace. FTC Commissioner Rohit Chopra and Georgia Attorney General Christopher M. Carr will deliver remarks.
  • The FTC reported that government imposter scams top the list of reported frauds since 2014.
  • Gerber and the FTC have agreed to settle a dispute arising from a FTC complaint filed in 2014 alleging that Gerber Products Company, also doing business as Nestle Nutrition, deceptively advertised that feeding Good Start Gentle formula to infants with a family history of allergies prevents or reduces the risk that they will develop allergies, and misrepresented that its Good Start Gentle formula qualified for or received approval for a health claim from the U.S. Food and Drug Administration.

Securities and Exchange Commission:

  • The SEC announced charges against Facebook Inc. for making misleading disclosures regarding the risk of misuse of Facebook user data.
  • The SEC announced that its Retail Strategy Task Force will host a roundtable on October 3 on combating elder investor fraud. The roundtable will focus on the types of fraudulent and manipulative schemes currently targeting elder investors. The roundtable also will explore views from a broad range of regulators and industry experts on potential steps regulators, broker-dealers, investment advisers, and others can take to identify and combat elder investor fraud.
  • The SEC filed insider trading charges against an accountant and her friend, whom she illegally tipped with confidential information in advance of her company's quarterly performance announcements in exchange for all-expense paid travel and other expensive gifts. The alleged insider trading scheme generated profits of more than $6.2 million and was uncovered by the SEC through analysis and technology that it uses to detect suspicious trading activity.
  • The SEC instituted two related enforcement actions against Nomura Securities International Inc., which has agreed to repay approximately $25 million to customers for its failure to adequately supervise traders in mortgage-backed securities.

In other federal news:

  • U.S. Treasury Secretary Steven Mnuchin expressed concerns about Facebook's proposed digital currency.
  • Global consumer goods conglomerate Reckitt Benckiser Group plc (RB Group) has agreed to pay $1.4 billion to resolve its potential criminal and civil liability related to a federal investigation of the marketing of the opioid addiction treatment drug Suboxone. The resolution, the largest recovery by the United States in a case concerning an opioid drug, includes the forfeiture of proceeds totaling $647 million, civil settlements with the federal government and the states totaling $700 million, and an administrative resolution with the FTC for $50 million.
  • CFTC issued, "There's Nothing to Like about Scammers on Social Media," a Customer Protection Advisory that warns customers to beware of and avoid unregistered brokers and advisers, as well as fake testimonials and so-called trading experts on social media platforms.
  • The Department of Justice announced that a former East Greenwich, Rhode Island, businesswoman Monique N. Brady, 44, whose company, MNB, specialized in preserving the condition of foreclosed homes for resale, admitted to utilizing her business and business contacts, often times family members, friends, and business associates, to operate a $10.3 million dollar Ponzi scheme.
  • The Department of Justice announced that two Mississippi men pleaded guilty for their roles in a long-running odometer tampering scheme.

Attorney General Consumer Protection News and Other Items of Interest

Fifty attorneys general, the CFPB, and the FTC reached a $600 settlement with Equifax as a result of the 2017 Equifax data breach.

Thirty-seven attorneys general sent a letter to the Food and Drug Administration in response to their request for comments regarding "Scientific Data and Information About Products Containing Cannabis or Cannabis-Derived Compounds." The letter urges federal cooperation with states to protect consumers. It also expresses concern some companies may use false advertising and unsubstantiated claims to mislead consumers into buying cannabis products.

Thirty-three attorneys general have reached an agreement in principle to settle allegations that pharmaceutical manufacturer Reckitt Benckiser Group (Reckitt) improperly marketed and promoted the drug Suboxone, resulting in improper expenditures of state Medicaid funds. Suboxone contains a combination of buprenorphine (an opioid) and naloxone (blocks the effects of opioid medication, including pain relief and feelings of well-being that can lead to opioid abuse). The drug was approved to suppress opioid withdrawal symptoms as part of a complete withdrawal treatment plan that would include counseling and psychosocial support.

Thirty attorneys general entered into a $10 million settlement with Premera Blue Cross for failing to secure sensitive consumer data and for misleading consumers before and after a data breach affecting millions across the country.

Twenty-five attorneys general opposed any effort by the CFPB to roll back or limit its Overdraft Rule.

Arizona Attorney General Mark Brnovich filed an Arizona Consumer Fraud Act lawsuit against three former executives of opioid manufacturer Insys Therapeutics Inc., which is based in Chandler. The lawsuit alleges that the three named defendants, including the founder of the company, engaged in a fraudulent marketing scheme designed to increase the sales of Insy's flagship drug, Subsys, a highly addictive opioid prescription drug that contains fentanyl.

Arkansas Attorney General Leslie Rutledge obtained a judgment valued at more than $600,000 against The Resort Place LLC and owners Jay Allen Edmonson and Dora Ann Edmonson. Based on allegations in the complaint, The Resort Place failed to book pre-paid vacation and used consumers' credit card information to pay for other consumers' vacations.

Delaware Attorney General Kathy Jennings announced that the Department of Justice's Consumer Protection Unit has reached a settlement with two California-based companies requiring them to stop advertising and selling mortgage loan modification and debt relief services in Delaware and to provide restitution to Delaware consumers.

District of Columbia Attorney General Karl A. Racine filed a lawsuit against Marriott International, Inc., a multinational hotel company, for allegedly hiding the true price of hotel rooms from consumers and charging hidden resort fees to increase profits.

Florida Attorney General Ashley Moody issued a Consumer Alert with tips to help consumers identify, avoid and report online tech support scams.

Indiana Attorney General Curtis Hill asked Hoosiers to watch for car dealers posing as private sellers on Craigslist and to alert the Office of the Attorney General when they come across such listings.

Iowa Attorney General Tom Miller announced that a Florida man accused of operating a "pure pyramid scheme" and taking more than $51,000 from older Iowans must make refunds to the victims and stop his solicitations under a settlement with the Iowa Attorney General's Office.

Kansas Attorney General Derek Schmidt announced that the attorney general's Consumer Protection Division recovered more than $16 million for Kansas consumers and taxpayers last year.

Massachusetts Attorney General Maura Healey announced that the for-profit education company Salter College and its parent, Premier Education Group, will provide over $1.6 million in debt relief to resolve allegations that the company did not provide its students with critical information on program job placement, loan repayment and graduation rates as required by state law.

Missouri Attorney General Eric Schmitt announced his office filed a lawsuit against Apex Contracting & Roofing, a roofing company in Cass County, Missouri and its owner Jason Stewart. The lawsuit was brought as a result of multiple complaints filed by Missouri consumers. The lawsuit alleges that Apex and Stewart violated the Missouri Merchandising Practices Act by requiring consumers to pay certain amounts of money prior to beginning work, promising substantive completion by certain dates, and failing to provide the promised roofing and construction services in sufficient quality or on time.

Nebraska Attorney General Doug Peterson filed a lawsuit against Hilton, a multinational hotel company, for allegedly hiding the true price of hotel rooms from consumers and charging hidden resort fees to increase profits. The Attorney General alleges that Hilton's deceptive and misleading pricing practices and failure to disclose fees harmed consumers and violated Nebraska's consumer protection laws.

New Jersey Attorney General Gurbir S. Grewal and the New Jersey Bureau of Securities within the Division of Consumer Affairs announced that the State has filed a three-count lawsuit against Pocketinns, Inc., a Princeton-based blockchain-driven online rental marketplace, and its president Sarvajnya G. Mada. The lawsuit alleges that Pocketinns and Mada offered and sold more than $400,000 of unregistered securities from New Jersey in the form of a cryptocurrency called "PINNS Tokens."

New York Attorney General Letitia James announced a settlement resolving a lawsuit against TicketNetwork, Inc., Ticket Galaxy, and their owner Donald Vaccaro for tricking tens of thousands of unsuspecting customers into purchasing tickets to concerts, shows, and other live events that the sellers did not actually own. In other New York news, General James announced a settlement banning Buffalo-based debt collection kingpin Douglas MacKinnon, and his companies Northern Resolution Group, LLC and Enhanced Acquisitions, LLC, as well as Mark Gray and his company Delray Capital, LLC, from the debt collection industry, and requiring defendants to pay more than $66 million in restitution and penalties. MacKinnon, Gray, and their companies routinely inflated debts to try to collect more than consumers were legally obligated to pay. Collection offices working at the behest of MacKinnon and Gray used a variety of illegal tactics to obtain payments, such as threatening consumers with arrest. Additionally, General James and the FTC announced court orders stopping a scheme to distribute and collect on millions of dollars in "phantom debts," fake debts that consumers did not owe.

North Carolina Attorney General Josh Stein was granted a default judgment against Utah-based event production companies Lantern Fest Productions and Sack Lunch Productions in a lawsuit he filed last year alleging unfair and deceptive business practices.

Ohio Attorney General Dave Yost announced the launch of a new online tool to help Ohioans gauge the reputations of businesses and steer clear of those with problematic pasts. In other Ohio news, General Yost announced a consumer protection lawsuit against a central Ohio concrete contractor accused of performing shoddy work and failing to complete home improvement projects. Additionally, General Yost and the FTC worked together to shut down a telemarketing scheme.

Pennsylvania Attorney General Josh Shapiro announced a settlement with Think Finance, a national online payday lender, and an associated private equity firm for allegedly engineering a $133 million illegal online payday loan scheme that targeted as many as 80,000 Pennsylvania consumers.

West Virginia Attorney General Patrick Morrisey won a $76,000 judgment that also orders a home improvement contractor cease any work as a contractor. The court determined Thomas Plumbing Heating & Air Conditioning; its operator, Oscar Thomas; and his wife and fellow participant, April Thomas; each repeatedly and willfully violated the state's consumer protection laws.

A data breach of Capital One may have affected the personal information of 106 million Capital One credit card holders or credit card applicants in the U.S. and Canada. Attorneys General of Connecticut, Illinois, and New York announced investigations into the Capital One data breach.

AT&T, Sprint, T-Mobile, and Verizon are working to curtail robocalls on their platforms.

Newly released federal data showed 76 billion opioids were distributed between 2006 and 2012.

Former Connecticut Attorney General George Jepson contends that the opioid "negotiation class action" under consideration in a Cleveland, Ohio court should be rejected, while others claim the proposed negotiating class would be beneficial to communities nationwide.


California Attorney General Xavier Becerra provided a list of guidelines to Californians who choose to donate to charities through online charitable fundraising platforms.


New York Governor Andrew Cuomo signed into law the Stop Hacks and Improve Electronic Data Security Act. This consumer privacy policy updates New York's laws governing notification requirements, consumer data protection obligations, and broadens the Attorney General's oversight regarding data breaches impacting New Yorkers.

The U.S. House of Representatives passed the Stopping Bad Robocalls Act targeted at protecting consumers from illegal robocalls.

Truth in Advertising posted a breakdown of false advertising laws by state.

Veterans and Military News

California Attorney General Xavier Becerra and San Diego District Attorney Summer Stephan announced the arrest of Paul Flanagan, Ranjit Kalsi, and Gregory Lee Martin for operating a tax fraud and identity theft scheme targeting military service members in San Diego County. The defendants allegedly unlawfully deceived service members into signing up and paying for unwanted life insurance policies and annuity contracts. The scheme cost service members approximately $4.8 million.

Connecticut Attorney General William Tong, Connecticut Department of Veterans Affairs Commissioner Thomas Saadi, and Connecticut Department of Consumer Protection Commissioner Michelle H. Seagull marked Military Consumer Protection Month by drawing attention to key laws helping to reduce financial pressures on servicemembers while deployed.

Florida Attorney General Ashley Moody released her new Military Consumer Protection Guide which is full of information about common scams targeting military members, veterans, and their families.

Nevada Attorney General Aaron D. Ford urged members of the military and their families to take steps to protect their financial assets. Members of Nevada's military, veterans, and their families are encouraged to take advantage of the free legal assistance and services provided by the Attorney General's Office of Military Legal Assistance.

The BBB released a report on marketplace challenges affecting the military community.

The CFPB discussed five myths in the military community about personal finance.

The FCC seeks comment on proposed $100 million connected care pilot program. The three-year pilot program will bring telehealth services to low-income patients, veterans, and areas lacking adequate health care.

The New York Times reported on military romance scams.

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.

The TRACED Act and What it Means for Robocall Scammers

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