The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly March 2019
Consumer Chief of the Month: Max Weinstein, Massachusetts
Thanks very much to the NAGTRI Center for Consumer Protection for making me the Consumer Protection Chief for the month of March. March features National Consumer Protection Week, March Madness, and the Ides of March – what a month! Except that the weather in Boston is terrible. Speaking of which, I am the Chief of the Consumer Protection Division in the Office of Massachusetts Attorney General Maura Healey. It is quite a privilege to work for Attorney General Healey, who is an inspiring leader and an accomplished advocate for civil rights and consumer protection. She is also very good at basketball.
Article of the Month:
Supporting the Public Health: Eliminating Negative Reimbursements by Pharmacy Benefit Managers
Shawn J. Johnson, Senior Assistant Attorney General
Office of the Arkansas Attorney General
Pharmacists are important front-line healthcare providers. They dispense prescription generic and brand-name drug medications to consumers and commonly serve as small businesses for our communities across the United States. Importantly, like other businesses, they obtain their inventories from wholesalers (e.g., AmerisourceBergen, Cardinal, McKesson, etc.) and sell the inventory to consumers, receiving payment either through insurance claims or through cash transactions. Prescription drugs constitute 92% of total dollar sales in independent, community pharmacies, and because generic drugs are typically cheaper than brand name drugs, generics constitute a substantial portion of these transactions.
New NAGTRI Consumer Protection Website:
The National Attorneys General Training and Research Institute’s Center for Consumer Protection launched its new consumer-focused website, ConsumerResources.org, which is designed to be a national hub of consumer protection information and resources for consumers from state and territory attorneys general.
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB released its annual report to Congress on the administration of the Fair Debt Collection Practices Act.
- The CFPB issued a suspicious activity report on elderly financial exploitation.
- The CFPB released its 18th edition of Supervisory Highlights. The report covers Bureau supervision activities generally completed between June 2018 and November 2018, and includes examination findings in the areas of automobile loan servicing, deposits, mortgage servicing, and remittances.
Federal Trade Commission:
- The FTC is rescheduling a roundtable with the state attorneys general, which originally had been planned for March 25 as part of the agency’s Hearings Initiative, due to logistical issues. A new date and further details for the session will be announced as soon as they become available.
- As part of a state, federal, and international crackdown on tech support scams, the FTC has temporarily shut down a Utah-based scheme that tricked consumers into believing their computers were infected with viruses in order to sell them costly computer repair services.
- FTC Chairman Joe Simons released the agency’s 2018 Annual Highlights, highlighting the FTC’s ongoing efforts to protect the interests of consumers and promote a competitive marketplace.
- Office Depot, Inc. and a California-based tech support software provider have agreed to pay a total of $35 million to settle FTC allegations that the companies tricked customers into buying millions of dollars’ worth of computer repair and technical services by deceptively claiming their software had found malware symptoms on the customers’ computers.
- The FTC issued orders to seven U.S. Internet broadband providers and related entities seeking information the agency will use to examine how broadband companies collect, retain, use, and disclose information about consumers and their devices.
- The FTC announced a crackdown that stopped operations responsible for billions of illegal robocalls.
- The FTC and the CFPB reported on their 2018 activities to combat illegal debt collection practices. The annual report to Congress on the administration of the Fair Debt Collection Practices Act highlights both agencies’ efforts to stop unlawful debt collection practices, including robust law enforcement, education and public outreach, and policy initiatives.
- The FTC released its annual report highlighting its privacy and data security work for 2018.
- Four defendants in a multi-million dollar business coaching scheme known as Digital Altitude, including the scheme’s former CEO, will pay $1.9 million to settle FTC allegations that they deceived consumers by claiming they could earn “six figures in 90 days.”
- For the first time, imposter scams topped the list of consumer complaints submitted in 2018 to the FTC’s nationwide Consumer Sentinel database, driven in part by a jump in reports about government imposter scams.
- A federal district court in Arizona entered three stipulated orders on February 26, 2019, settling the FTC’s case against the operators of a sham grant scheme known as Premium Grants. The defendants targeted individuals, many of whom are elderly or have disabilities, who sought help with paying personal expenses such as medical bills, home repairs, and debt.
- The FTC is seeking comment on proposed amendments to two rules that protect the privacy and security of customer information held by financial institutions.
- In Congressional testimony, the FTC described its work to promote reasonable data security and reiterated its longstanding bipartisan call for enactment of a comprehensive federal data security law.
- The operators of a sweepstakes scam that appeared to target seniors have agreed to forfeit a record $30 million in cash and assets and will be permanently banned from the prize promotion business under a settlement with the FTC.
Securities and Exchange Commission:
- The SEC charged the former controller of a New York-based not-for-profit college with defrauding municipal securities investors by fraudulently concealing the college’s deteriorating finances.
- The SEC announced settled charges against 79 investment advisers who will return more than $125 million to clients, with a substantial majority of the funds going to retail investors. The actions stem from the SEC’s Share Class Selection Disclosure Initiative, which the SEC’s Division of Enforcement announced in February 2018 in an effort to identify and promptly correct ongoing harm in the sale of mutual fund shares by investment advisers.
In other federal news:
- Attorney General William P. Barr and multiple law enforcement partners announced the largest coordinated sweep of elder fraud cases in history, surpassing last year’s nationwide sweep. The cases during this sweep involved more than 260 defendants from around the globe who victimized more than two million Americans, most of them elderly. The Department took action in every federal district across the country, through the filing of criminal or civil cases or through consumer education efforts. In each case, offenders allegedly engaged in financial schemes that targeted or largely affected seniors. In total, the charged elder fraud schemes caused alleged losses of millions more dollars than last year, putting the total alleged losses at this year’s sweep at over $750 million. The Department provided a chart of cases filed by each state.
- The Drug Enforcement Administration (DEA) urged its DEA-registered practitioners and members of the public to be cautious of telephone calls from criminals posing as DEA or other law enforcement personnel threatening arrest and prosecution for supposed violations of federal drug laws or involvement in drug-trafficking activities.
- A GAO study after the Equifax breach reports that the FTC needs more civil penalty authority.
- The Department of Justice announced that a North Carolina man pleaded guilty to conspiracy to access a protected computer, for his role in an international “tech support scam” that defrauded hundreds of victims, including seniors, of more than $3 million.
- The Department of Justice announced that six people and two Florida corporations were charged in an indictment for their roles in a scheme to distribute illegal dietary supplements.
- The CFTC announced that a federal court entered a Consent Order resolving a CFTC action against 1pool Ltd., located in the Marshall Islands, and its chief executive officer and owner, Patrick Brunner, for illegally offering retail commodity transactions that were margined in bitcoin, failing to register as a futures commission merchant, and failing to meet its supervisory duties by not having the required anti-money laundering procedures in place.
Attorney General Consumer Protection News and Other Items of Interest
The National Association of Attorneys General (NAAG), with the support of the NAAG Consumer Protection Committee, has partnered with several federal agencies, including the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), to crackdown on tech support scams. The sweep was announced at a press conference at DOJ. Attorneys general offices participating in the sweep were from Arizona, Connecticut, Florida, Kentucky, Louisiana, Minnesota, Mississippi, Montana, Nebraska, Nevada, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, and Washington D.C.
Alabama Attorney General Steve Marshall announced the top five categories of complaints from Alabama consumers received by his office’s Consumer Interest Division over the last year. In other Alabama news, General Marshall and State Comptroller Kathleen Baxter issued a consumer alert warning that scammers are sending out fraudulent checks that purport to be from the State of Alabama Department of Finance.
Arizona Attorney General Mark Brnovich filed a civil lawsuit against CashCall, Inc., its owner J. Paul Reddam, and a wholly owned subsidiary, WS Funding LLC, for alleged violations of the Arizona Consumer Fraud Act. The state alleges the defendants participated in a coordinated scheme to market, fund, service, and collect payments on high-interest, illegal loans to Arizona consumers utilizing a sham loan program that disguised the fact the loans were void under Arizona law and violated Arizona usury laws.
Arkansas Attorney General Leslie Rutledge announced the top 10 most common consumer complaints the attorney general’s office received in 2018. In other Arkansas news, General Rutledge alerted consumers to tax scammers sending fake letters.
California Attorney General Xavier Becerra announced tips to encourage safe tax filing and preparation, and prevent tax-related identity theft.
Colorado Attorney General Phil Weiser unveiled a list of the top 10 consumer complaints his office received in 2018. In other Colorado news, General Weiser announced that a Denver District Court judge ordered the owners of Denver Custom Food Trucks to pay $4.5 million dollars to resolve a case in which they took thousands of dollars from clients to build custom food trucks that were either never delivered or equipped with unsafe, fraudulent parts.
Connecticut Attorney General William Tong warned consumers to avoid business with Texas-based Sports Media Advertising, which appears to be actively engaged in scams targeting Connecticut businesses and schools. In other Connecticut news, General Tong and Consumer Protection Commissioner Michelle Seagull cautioned taxpayers to remain vigilant on multiple fronts about identity theft, unscrupulous preparers, and scams related to the filing of their tax returns.
Delaware Attorney General Kathleen Jennings warned Delawareans to be wary of threatening collection calls purporting to be from Delmarva Power. In other Delaware news, the Consumer Protection Unit of the Delaware Department of Justice warned Delawareans to be wary of scams when looking for a vacation rental this summer.
Florida Attorney General Ashley Moody’s Consumer Protection Division filed a complaint against a Jacksonville construction company for allegedly scamming Floridians in need of roofing repairs. In other Florida news, General Moody issued a consumer alert to inform Florida students of now defunct Argosy University that they may be eligible for student loan discharges. Additionally, General Moody filed a court action in Hillsborough County to shut down a Florida diploma mill. The action stems from complaints against Ellenwood Academy, LLC for deceptive marketing of illegitimate high school diplomas to consumers in Florida and nationwide.
Georgia Attorney General Chris Carr is again warning the public about scam artists posing as law enforcement and elected officials in an attempt to swindle consumers out of their money.
Illinois Attorney General Kwame Raoul announced his office’s list of top 10 consumer complaints for 2018.
Michigan Attorney General Dana Nessel released her office’s Top 10 Consumer Complaints for 2018. In other Michigan news, General Nessel warned Michiganders about phone scammers posing as public health officials. Additionally, General Nessel urged Michiganders affected by the data breach sustained by Detroit-based Wolverine Solutions Group to take extra precautions to help safeguard their information that may have been compromised.
Mississippi Attorney General Jim Hood announced that he reached an agreement with Questar Assessment, Inc., a testing vendor, to strengthen its cybersecurity measures following an investigation into a data breach involving student information in North Mississippi. In other Mississippi news, General Hood announced that a central Mississippi man has been arrested for home repair fraud for allegedly collecting money for work on a home that was never started.
Missouri Attorney General Eric Schmitt announced that James R. Butts, 31, pleaded guilty to unlawful merchandising practices in Pulaski County. In his plea, Butts admitted that he falsely promised a homeowner that, in exchange for $9,762 dollars, he and his company Marshfield Landscaping and Fence, LLC would order privacy fence materials and install a residential privacy fence for the homeowner. Despite being paid, Mr. Butts failed to provide any work or materials to the homeowner. In other Missouri news, General Schmitt released a list of tips and warnings to protect Missourians who have been affected by the flooding from scams and frauds in the coming weeks and months.
The Montana Attorney General's Office of Consumer Protection and AARP Montana collaboratively trained volunteers who will educate community groups in various Montana cities about scams, fraud, and identity theft. This effort, which is believed to be the first of its kind in the nation between AARP and an attorney general’s consumer protection team, will reach more older Montanans than either organization formerly has been able to using its own staff.
Nebraska Attorney General Doug Peterson reminded Nebraskans to donate with care and avoid charity scams in response to recent weather damage and flooding. In other Nebraska news, General Peterson provided information to help Nebraskans protect themselves from unscrupulous contractors.
Nevada Attorney General Aaron Ford advised Nevadans to be wary of scams that prey upon users of the popular online game “Fortnite.” In other Nevada news, General Ford advised consumers to beware of tech support scams.
New Jersey Attorney General Gurbir S. Grewal announced that the state has filed a lawsuit against two South Jersey “Buy Here-Pay Here” auto dealerships and their owner for alleging targeting financially vulnerable consumers in predatory sales and loan tactics.
New York Attorney General Letitia James announced that Spectrum (formerly Time Warner Cable) has started to issue credits to New York consumers as required by Charter Communications, Inc.’s December 17, 2018 settlement agreement. The settlement agreement resulted from an action brought by the Office of the Attorney General alleging that the company failed to deliver customers the reliable and fast internet service it had promised. Under the terms of the settlement, Charter is required to issue monetary relief to qualified subscribers and offer video streaming services at no charge. In other New York news, General James filed a lawsuit against the manufacturers, Sackler Family, and distributors of opioids for their alleged role in the opioid epidemic.
North Carolina Attorney General Josh Stein announced a $274,000 settlement with Georgia Tree Company LLC to resolve a price gouging lawsuit for excessively-priced tree removal work done after Hurricane Florence. In other North Carolina news, General Stein warned consumers to beware of sports ticket sale scams.
Ohio Attorney General Dave Yost announced a consumer protection lawsuit against a used car dealership and its owner accused of failing to deliver vehicle titles to consumers in northwest Ohio.
Oregon Attorney General Ellen Rosenblum released the Oregon Department of Justice annual list of top ten consumer complaints. In other Oregon news, General Rosenblum announced a $975,000 settlement with pharmaceutical company, Pfizer, for distributing marketing misleading materials and coupons to Oregon consumers.
Pennsylvania Attorney General Josh Shapiro alerted Pennsylvania consumers to a new twist on an old scam involving their Social Security numbers. In other Pennsylvania news, General Shapiro warned Pennsylvanians to be aware of deceptive advertising by businesses posting “We Buy Homes” signs on street corners.
Texas Attorney General Ken Paxton issued a consumer alert regarding persons alleging to be priests or pastors texting members of the church and asking them to buy gift cards for a false charitable cause. In other Texas news, General Paxton filed a final judgment and permanent injunction against Guided Tourist, LLC, an Austin-based third-party online booking company that advertises and sells tickets to tour national parks and monuments, including the Statue of Liberty and Alcatraz Island. The state’s lawsuit shows that Guided Tourist, LLC failed to disclose to consumers that it is not an official ticket vendor and inadequately discloses its booking fees, legal name, contact information, hours of operation, and refund policy.
Vermont Attorney General T.J. Donovan alerted Vermonters about a tech support scam as part of a nationwide crackdown on fraudsters who try to trick consumers into buying fake tech support and repair services. In other Vermont news, General Donovan filed a lawsuit against two distributors of opiates, Cardinal Health Inc. and McKesson Corporation. The lawsuit alleges that Defendants committed unfair and deceptive acts in violation of the Vermont Consumer Protection Act and alleges claims of negligence and public nuisance.
Virginia Attorney General Mark R. Herring encouraged Virginians to familiarize themselves with the risks associated with small-dollar loans including online, payday, car title, and open-end loans, and to understand their rights when taking out one of these potentially risky loans.
West Virginia Attorney General Patrick Morrisey filed a consumer protection lawsuit alleging the Wheeling-Charleston Diocese and former Bishop Michael J. Bransfield knowingly employed pedophiles and failed to conduct adequate background checks for those working at the Diocese’s schools and camps, all without disclosing the inherent danger to parents who purchased its services for their children. General Morrisey brought the action against the Diocese and Bransfield for violations of the state’s consumer protection laws, in addition to seeking a permanent court order blocking the Diocese from the continuation of any such conduct. In other West Virginia news, General Morrisey’s office has finalized a $3.2 million settlement with drug maker Bristol-Myers Squibb Company and marketer Sanofi-Aventis in relation to their marketing of the prescription blood thinner Plavix.
The BBB issued its 2018 Scam Tracker Risk Report.
Bing search engine doubled takedowns of bad accounts in 2018. Third-party tech support scams, cryptocurrency, and weapons advertising content topped the areas of attention.
Microsoft issued a 2018 global report on tech support fraud.
The National Consumers League warned of pyramid schemes posing as direct sales opportunities.
Alabama Attorney General Steve Marshall encouraged generosity and urged vigilance when donating to groups to aid recent storm victims.
California Attorney General Xavier Becerra announced an initiative to educate California charitable organizations. The initiative, Operation Donate with Honor, comes after Attorney General Becerra distributed more than 550 delinquency notices, and approximately 200 cease and desist letters targeted to veteran charities between July 2018 and the present.
Illinois Attorney General Kwame Raoul filed a lawsuit against the Lombard-based charity Veterans Christian Network, Inc. and its founders, Todd and Priscilla Olshefski, alleging that the Olshefskis misappropriated more than $10,000 from the charity.
Iowa Attorney General Tom Miller filed a lawsuit to shut down an alleged puppy-laundering ring, including dissolving two “pet rescue” non-profits accused of exporting designer dogs from Iowa to pet shops in other states.
South Dakota Attorney General Jason Ravnsborg reminded South Dakotans to use care and caution in donating to relief efforts and to avoid charity scams.
Fifty-four attorneys general wrote a letter to the chairman and ranking member of the U.S. Senate Committee on Commerce, Science, and Transportation to express support for the introduced bipartisan Senate bill for the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act.
District of Columbia Attorney General Karl A. Racine announced the introduction of the Security Breach Protection Amendment Act of 2019, which is designed to modernize the District’s data breach law and strengthen protections for residents’ personal information. General Racine has introduced this bill in response to major data breaches that have put tens of millions of consumers, and hundreds of thousands of District residents, at risk of identity theft and other types of fraud.
The Senate Commerce Committee held a hearing on legislation that would strengthen the Federal Trade Commission's data-privacy enforcement powers. A key question was whether a federal bill would preempt and thereby weaken data-privacy laws in states such as California.
The Senate Committee on Homeland Security and Government Affairs released a staff report finding that Equifax’s 2017 data breach was a result of prolonged failure to prioritize cybersecurity and a culture of complacency. The report said Congress should enact legislation requiring private companies that store personally identifiable information to take reasonable and appropriate steps to prevent cyberattacks and data breaches.
Equifax and Marriott were the subjects of bipartisan rebuke in a Senate hearing as lawmakers criticized them for failing to protect personal data and to notify the public of major data breaches in a timely manner. A Senate committee report said Equifax's own audit revealed a backlog in 2015 of more than 8,500 unpatched vulnerabilities, though the company's CEO said Equifax had invested more heavily in security over the past two years.
Veterans and Military News
The operators of two purported sham charities have agreed to settle charges by the FTC and the attorneys general of Missouri and Florida that they deceived donors with false claims that their organizations helped disabled police officers and military veterans. The operators of both schemes are permanently banned from charitable solicitations or otherwise working for charities.
CFPB released a report focusing on mortgages made to first-time homebuyers who are serving in the armed forces or are veterans. The CFPB’s report is the first time researchers have been able to provide a description and analysis of servicemembers’ mortgage choices and mortgage performance, both during and after the housing crisis of the last decade. Additionally, the CFPB released a report of servicemember complaints.
The United States Department of Justice announced that California Auto Finance, a subprime auto lending company based in Orange County, California, has agreed to enter into a court-enforceable consent order to resolve allegations that it illegally repossessed two servicemembers’ cars without court orders while they were on active duty. The Justice Department filed a lawsuit against California Auto Finance and a related entity called 3rd Generation, Inc., on March 28, 2018, alleging that their repossession practices violated the Servicemembers Civil Relief Act.
The United States Department of Justice and the U.S. Attorney’s Office of Eastern Virginia announced a settlement with Lawn Doctor of Stafford-Culpepper (doing business as Beck I LLC). The settlement resolves claims that the business and its owners violated the Uniformed Services Employment and Reemployment Rights Act by suspending and terminating a U.S. Army Reserve soldier following his return from active duty military service.
Consumer Protection Trivia
- Which state's current Attorney General has been in office the longest?
D. New York
- Which Supreme Court justice said "fairness is what justice really is"?
A. Justice Thurgood Marshall
B. Justice Potter Stewart
C. Justice Ruth Bader Ginsburg
D. Justice Anthony Kennedy
*Trivia answers can be found below.
- B. Iowa
- B. Justice Potter Stewart
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.