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Center for Consumer Protection Monthly November 2017

Consumer Chief of the Month: Paul Singer, Texas

I’m truly honored to serve as this month’s Consumer Chief of the Month and join the excellent company of Linda and Parrell. I’ve been part of the Consumer Protection Division of the Texas Office of the Attorney General since the summer of 2000, when I accepted a part-time position as a law clerk after my second year of law school. At the time I intended to be with the division just that summer, but I quickly realized this was the career that I wanted to pursue. Seventeen years and a variety of positions later, I became chief of the division this past summer.

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Article of the Month:

The National Mortgage Settlement: Where Are We Now?
Gail Lowery, Special Assistant Attorney General, Office of the Attorney General, Mississippi

Prior to the year 2012, homeowners in this country were facing a national foreclosure crisis and consumer financial distress was at an all-time high. However, on March 12, 2012, touted as a landmark agreement, the $25 billion National Mortgage Settlement brought together 49 state attorneys general, the Department of Justice, and the Department of Housing and Urban Development (HUD) into one Consent Judgment addressing these grave concerns. This settlement was lauded to forever change the landscape of homeowner rights in our country. Particularly interesting was one aspect of the Consent Judgment that provided for detailed new servicing standards that were designed to provide better protections for homeowners.

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Scam Alert: Pet Fraud

Pet leasing: apparently, it’s a thing. And there are many people who paid money not knowing they were actually renting their new pets instead of owning them.

Federal Consumer Protection News

Antitrust agency heads from the United States, Canada and Mexico met at the Department of Justice in Washington, D.C., to discuss their ongoing work to ensure fair and effective antitrust enforcement and increased cooperation among the nations.

The Commodity Futures Trading Commission announced that Judge David G. Campbell of U.S. District Court for the District of Arizona entered a Consent Order against Defendants Derek Springfield and his company, Draven, LLC both of Mesa, Arizona finding that they fraudulently solicited and received at least $1.8 million from approximately 112 commodity pool participants in connection with pooled investments in commodity futures and foreign currency exchange. The Order, entered on November 13, 2017, also finds that the Defendants engaged in fraudulent sales practices, misappropriated pool participant funds, and provided false account statements to pool participants.

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Freedom Debt Relief, the nation’s largest debt-settlement services provider, and its co-CEO Andrew Housser for deceiving consumers. In other CFPB news, the CFPB took action against Citibank, N.A. for student loan servicing failures that harmed borrowers.

The Federal Communications Commission approved new rules to protect consumers from unwanted robocalls, allowing phone companies to proactively block calls that are likely to be fraudulent because they come from certain types of phone numbers. In other FCC news, consumers and consumer advocates can learn about important safety tips for the holiday season during a webinar on December 4 at 2:00 p.m. EST. The FCC’s Consumer and Government Affairs Bureau and the Federal Trade Commission’s Bureau of Consumer Protection will host this session offering information and resources to assist the public. Also, the Federal Trade Commission released the final agenda for its December 12, 2017 workshop examining questions about the injuries consumers suffer when information about them is misused.

As part of the U.S. Food and Drug Administration’s ongoing efforts to protect consumers from health fraud, the agency issued warning letters to four companies illegally selling products online that claim to prevent, diagnose, treat, or cure cancer without evidence to support these outcomes. In this case, the illegally sold products allegedly contain cannabidiol, a component of the marijuana plant that is not FDA approved in any drug product for any indication.

The Federal Trade Commission has released its draft Strategic Plan for Fiscal Years 2018 to 2022 for public review and comment, as required under the GPRA Modernization Act of 2010, using guidance issued by the Office of Management and Budget. Every four years, government agencies are required to prepare and submit an updated strategic plan covering activities for at least the following five years. The FTC’s last updated strategic plan was prepared in FY 2013. In other FTC news, the operators of a Chicago-area fake debt collection scheme have been banned from the debt collection business and from selling debt portfolios under settlements with the Federal Trade Commission and the Illinois Attorney General. The settlements also require them to surrender assets totaling at least $9 million, which will be returned to consumers.

The Securities and Exchange Commission is warning investors to beware online “paid-to-click” scams that promise an easy payday by merely purchasing a membership or an advertising product up front and then clicking on a certain number of online ads each day.

A federal court entered an order against three Los Angeles area telemarketing companies and two executives, the Department of Justice announced. That order, entered by Judge Michael W. Fitzgerald in the Central District of California, permanently bans the companies and one executive from future telemarketing activity and restricts the telemarketing activities of another executive. The order also imposes a civil monetary penalty.

The United States Department of Justice filed a civil antitrust lawsuit to block AT&T/DirecTV’s proposed acquisition of Time Warner Inc. The $108 billion acquisition would substantially lessen competition, resulting in higher prices and less innovation for millions of Americans.

Attorney General Consumer Protection News and Other Items of Interest

Arkansas Attorney General Leslie Rutledge warns consumers about debt relief scams and provides a list of red flags that could signal unscrupulous activity.

Colorado Attorney General Cynthia H. Coffman announced the launch of the first annual Colorado Consumer Protection Month. This new initiative will focus on raising awareness and providing education about consumer fraud issues including common scams, financial abuses, and fraud affecting Coloradans across the state. The Colorado Attorney General’s Office is partnering with law enforcement, regulatory entities, and non-profit programs statewide to help Coloradans learn how to identify, prevent, and report fraudulent activity.

Connecticut officials are warning residents to look out for scammers using federal open enrollment periods to lure consumers into buying fake health plans or otherwise obtain personal or financial information, Connecticut Attorney General George Jepsen, state Department of Insurance Commissioner Katharine Wade and Jim Wadleigh, CEO of Access Health CT, said.

A Kansas auto dealer has been sued for violating state consumer protection laws and is temporarily banned by court order from doing business in Kansas while the lawsuit proceeds, announced Kansas Attorney General Derek Schmidt.

Kentucky Attorney General Andy Beshear announced that Kentuckians who have been victims of fraud induced wire transfers involving Western Union need to begin filing claims as part of a global settlement reached January with the company.

Maryland Attorney General Brian E. Frosh announced that his Consumer Protection Division has filed charges against Swift Van Lines, LLC (formerly known as Revolution Moving and Storage, LLC), a household goods moving company based in Hyattsville, and its owner, Juan Carlos Martinez, for charging consumers several times the amount the company estimated it would cost to move consumers’ goods, and then driving off with consumers’ goods if they did not pay the increased demand.

Missouri Attorney General Josh Hawley announced that his Office has issued an investigative subpoena to Internet giant Google, Inc., in connection with an investigation into the company’s business practices. Specifically, the investigation will seek to determine if Google has violated the Missouri Merchandising Practices Act—Missouri’s principal consumer-protection statute—and Missouri’s antitrust laws.

North Dakota Attorney General Wayne Stenehjem issued a Cease & Desist order against Jason Rhoden of Santa Ana, California, doing business as Vehicle Protection Department, LLC, for violations of the consumer fraud and telephone solicitation laws. The Attorney General’s Consumer Protection division initiated an investigation after a consumer complained that she received a telephone solicitation even though her number is registered on the Do Not Call list.

New York Attorney General Eric T. Schneiderman announced that his office won a lawsuit for consumers against Brian Robinson, a Rochester-based home improvement contractor and snowplow operator who bilked New Yorkers out of over $42,000. Robinson, who owned and operated Apex Construction and Robinson and Son, Inc., must now pay $42,085 in restitution to consumers and $50,000 in penalties and costs.

Ohio Attorney General Mike DeWine announced a consumer protection lawsuit against an Akron-area man accused of failing to provide promised home improvement services to consumers.

Texas Attorney General Ken Paxton announced that his office served an investigative subpoena – also known as a Civil Investigative Demand – on Equifax, one of the nation’s three major credit reporting agencies. Equifax reported a massive data breach affecting 145.5 million Americans, including 12.2 million Texans.

Washington Attorney General Bob Ferguson and the Washington State Auto Dealers Association urgeconsumers not to be fooled by the perfect exterior condition of the car and the new car smell. A flood-damaged car may look normal, but almost always will have serious problems including mildew and corroded wires which can result in an electrical failure. In other Washington news, Attorney General Ferguson filed a multi-million dollar consumer protection lawsuit against ride sharing company Uber, alleging thousands of violations of the state’s data breach notification law. Uber discovered a data breach potentially affecting 57 million passengers and drivers around the world, including the names and driver’s license numbers of at least 10,888 Uber drivers in Washington.


New York Attorney General Eric T. Schneiderman introduced new legislation to comprehensively protect New Yorkers’ personal information from a growing number of data breaches. In the wake of the Equifax breach, the Stop Hacks and Improve Electronic Data Security Act (SHIELD Act) - introduced in the legislature this week - would close major gaps in New York’s data security laws, without putting an undue burden on businesses.

Ohio Attorney General Mike DeWine publicly endorsed Senate Bill 220, the Data Protection Act, at a news conference with bill sponsor State Senator Bob Hackett (R-London). The legislation was introduced as part of Attorney General DeWine’s CyberOhio Initiative to help Ohio businesses with cybersecurity issues.

With the recent data breach at Equifax and the increased need for consumers to have greater control in protecting their identity from hackers, Rhode Island Attorney General Peter F. Kilmartin announced his intention to file legislation that would prohibit credit bureaus from charging all Rhode Island consumers fees to place, temporarily lift, or remove security freezes on their accounts.


Michigan Attorney General Bill Schuette announced a lawsuit against Texas-based clothing donation bin operator ATRS, Inc. ATRS owns and operates 251 clothing donation bins in Michigan. The bins state that the Michigan Humane Society “receives 100% of the market value of every donation received at this location.” However, by contract, ATRS pays the Michigan Humane Society just $.02 per pound. For 2016, donations to the bins generated $835k in revenue for ATRS, an average of $.34 per pound; ATRS paid the Michigan Humane Society $49k ($.02 per pound) for these items, which equals just 6% of revenue generated from the bins.

New York Attorney General Eric T. Schneiderman today released his annual “Pennies for Charity: Where Your Money Goes; Fundraising by Professional Fundraisers” report, which found that more than one-third of charitable donations ended up in the pockets of the professional fundraisers.

Veterans and Military News

AARP study finds that veterans are more likely to be victims of fraud than nonveterans.

Federal Trade Commission staff submitted a comment to the Department of Veterans Affairs (VA) in support of its proposed rule that would clarify that VA health care practitioners may provide telehealth services to beneficiaries notwithstanding any contrary state licensing laws, rules, or requirements.

Kansas Attorney General Derek Schmidt announced a charity claiming to raise funds to support veterans has been shut down following an investigation by Kansas and other states into its solicitation practices.

Michigan Attorney General Bill Schuette announced his Charitable Trust Section has reached a settlement with Healing American Heroes, Inc. of Round Rock, Texas and its professional fundraiser Jeremy Squire & Associates for violations of the Charitable Organizations and Solicitations Act. As part of the settlement Helping American Heroes will be dissolved and both the charity and professional fundraiser will pay restitution.

The U.S. Department of Justice filed a lawsuit in U.S. District Court for the Western District of Washington, alleging that Northwest Trustee Services, Inc. (Northwest) violated the Servicemembers Civil Relief Act (SCRA). The complaint alleges that since 2010, Northwest completed foreclosures on at least 28 homes owned by servicemembers without obtaining the required court orders. In other USDOJ news, the Justice Department announced that it has obtained an additional $5.4 million for servicemembers whose vehicles were unlawfully repossessed by Wells Fargo Bank, N.A. in violation of the Servicemembers Civil Relief Act.

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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