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Center for Consumer Protection Monthly September 2018

Consumer Chief of the Month: Jessica Whitney, Iowa

Thank you for the opportunity to be Consumer Protection's Chief of the Month. Following the August CP Chief Jeff Hill is a difficult task, but then so is coming after all of the great CP Chiefs that have proceeded me. I am truly honored to be among them.

Before starting one of the best jobs in law, I grew up in Indianola, Iowa, a town south of Des Moines and separated by 12 miles of cornfields. For a decade my parents, brother, and I lived with my maternal grandparents, so that my mother could care for her mother who had broken her neck. I witnessed the vulnerabilities of the elderly first hand – scam calls, door-to-door sales, sweepstakes, medical expenses – and it inspired my dedication to public service.

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Article of the Month:

Servicemembers Civil Relief Act: A Primer

Stephen John Sovinsky, Assistant Attorney General
Office of the Attorney General of Virginia, Consumer Protection Section

Servicemembers face a number of unique challenges as consumers. Not only are members of the military and their families, who are often young and financially inexperienced but who have a steady income, frequently the target of deceptive practices and scams, they also may be deployed and move around frequently on short notice, which creates additional hurdles when it comes to monitoring and safeguarding their finances.

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Scam Alert:

How to Watch Out for Utility Scams

Federal Consumer Protection News

Bureau of Consumer Financial Protection:

  • A federal judge cites the Bureau’s structure in tossing a suit accusing firm of misleading 9/11 responders.
  • The Bureau highlights a new research report on the geography of credit invisibility.
  • The Bureau has filed a complaint against several entities alleging that they violated the Consumer Financial Protection Act of 2010 by representing to consumers that their pension-advance products were not loans, were not subject to interest rates, and were comparable in cost to, or cheaper than, credit card debt when, in actuality, the pension-advance products were loans, and were subject to interest rates that were substantially higher than credit card interest rates.
  • The Bureau issued an interim final rule updating two model disclosures to reflect changes made to the Fair Credit Reporting Act by recent legislation.
  • The Bureau released its 17th edition of Supervisory Highlights. The report covers Bureau supervision activities generally completed between December 2017 and May 2018, and shares observations in the areas of auto loan servicing, credit card account management, debt collection, mortgage servicing, payday lending, and small business lending.

Commodity Futures Trading Commission:

  • The CFTC issued an order filing and settling charges against Mizuho Bank, Ltd.for engaging in multiple acts of spoofing in a variety of futures contracts on the Chicago Mercantile Exchange and the Chicago Board of Trade, including futures contracts based on United States Treasury notes and Eurodollars.
  • The CFTC issued an order filing and settling charges against Bank of America, N.A. (Bank of America) for attempted manipulation of the ISDAFIX benchmark and requiring Bank of America to pay a $30 million civil monetary penalty.
  • The CFTC filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Defendants Royal Metals Group, LLC, and its member, manager, and part owner, Chelsea Glessof Iowa. The CFTC’s Complaint charges the defendants with defrauding retail clients in connection with precious metals transactions and fraudulently obtaining more than $600,000 from those clients.
  • Five federal financial regulatory agencies extended until October 17, 2018, the comment period for a proposed rule to simplify and tailor compliance requirements for the “Volcker rule.” The Volcker rule generally restricts banking entities from engaging in proprietary trading and from owning or controlling hedge funds or private equity funds.

Federal Trade Commission:

  • The FTC, working jointly with the United States Department of Justice, is mailing 1,179,803 refund checks totaling more than $505 million to people who were deceived by a massive payday lending scheme operated by AMG Services, Inc. and Scott A. Tucker.
  • The FTC, for the first time, charged a marketer and seller of intravenously injected therapy products (iV Cocktails) with making a range of deceptive and unsupported health claims about their ability to treat serious diseases such as cancer, multiple sclerosis, and congestive heart failure.
  • The FTC is mailing more than 430,000 checks totaling more than $10 million to people who could not access money deposited to their NetSpend reloadable prepaid debit cards. According to an FTC complaint, many NetSpend customers were unable to access their funds, either because NetSpend denied or delayed activation of their card or because NetSpend blocked them from using it.
  • In two FTC cases, companies selling hockey pucks and companies selling recreational and outdoor equipment agreed to stop making false “Made in USA” claims. Four related Farmingdale, New York-based companies doing business as Patriot Puck, and their officer, have agreed to stop making false claims that the hockey pucks they sell are all, or virtually all, made in the United States. Also, two commonly controlled California companies that sell recreational and outdoor equipment have agreed to stop making false, misleading, and unsupported “Made in USA” claims about their products.
  • The FTC has given final approval to a settlement with mobile phone manufacturer BLU Products, Inc. and its co-owner over allegations that they deceived consumers about the disclosure of their personal information and BLU’s data security practices.
  • One of the defendants involved in a multimillion-dollar business-coaching scheme has agreed to settle Federal Trade Commission charges that he helped deceive consumers with false claims that they could earn “six figures” within 90 days.
  • The FTC has approved two applications from Alimentation Couche-Tard Inc., or ACT, to divest eight retail fuel stations in Minnesota and Wisconsin. The Commission approved ACT’s application to divest seven stations to Molo Oil Company, which Molo Oil will immediately assign to Twin City Petroleum.
  • The operators of a Georgia-based debt collection business that allegedly used false claims and threats to get people to pay debts – including debts they did not owe or that the defendants had no authority to collect – are banned from the debt collection business and from buying or selling debt, under settlements with the FTC.

Securities and Exchange Commission:

  • The SEC charged Elon Musk, CEO and Chairman of Silicon Valley-based Tesla Inc., with securities fraud for a series of false and misleading tweets about a potential transaction to take Tesla private.
  • The SEC announced that SG Americas Securities LLC will pay more than $800,000 to settle charges of improper handling of “pre-released” American Depositary Receipts, predominantly by its predecessor entity.
  • The SEC announced it has obtained a court order halting an ongoing Ponzi-like scheme that raised more than $345 million from over 230 investors across the U.S. The SEC also obtained an emergency asset freeze and the appointment of a receiver.
  • The SEC announced that SeaWorld Entertainment Inc. and its former CEO have agreed to pay more than $5 million to settle fraud charges for misleading investors about the impact the documentary film Blackfishhad on the company’s reputation and business.
  • The SEC announced that Convergex Execution Solutions LLC, now known as Cowen Execution Services LLC, will pay $2.75 million to settle charges that the broker-dealer firm provided the SEC with incomplete and deficient securities trading information known as “blue sheet data.”
  • The SEC charged a group of 10 individuals and 10 associated entities for their participation in long-running fraudulent schemes that generated over $27 million from unlawful stock sales and caused significant harm to retail investors who were left holding virtually worthless stock.
  • The SEC announced it has obtained monetary relief that will fully reimburse retail investors for losses on a leveraged oil-linked exchange-traded note that registered representatives of Syracuse, New York-based broker-dealer and investment adviser Cadaret, Grant & Co. Inc. recommended without a reasonable basis.
  • The SEC charged two brokers for recommending excessive levels of trading that were costly for retail customers but lucrative for the brokers.
  • The SEC charged a Texas-based investment fund and its founder with defrauding investors with false promises of massive returns in cannabis-related businesses. The SEC also issued an alert to warn retail investors about marijuana-related securities offerings.
  • The SEC is awarding $39 million to one whistleblower and $15 million to another whose critical information and continued assistance helped the agency bring an important enforcement action. The $39 million award is the second-largest award in the history of the SEC’s whistleblower program.

In other federal news:

  • United States Attorney General Sessions and other Department of Justice leaders had a productive dialogue with 14 state attorneys general’s offices. The discussion centered on ways the Department and state governments can most effectively safeguard consumers using online digital platforms.
  • The Federal Communications Commission proposed a more than $37.5 million fine against Affordable Enterprises of Arizona for apparently making millions of illegally-spoofed telemarketing calls that appeared to originate from consumers and other numbers not assigned to the company.
  • The United States Department of Justice announced that a seafood processor plead guilty to selling foreign crab meat falsely labeled as “made in the USA.”
  • The United States Department of Justice announced that a federal grand jury indicted two New York corporations and their owners for their alleged scheme to falsely label squid as octopus that was later sold across the country.
  • The Federal Reserve Board, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency agencies issued a joint statement explaining the role of supervisory guidance for regulated institutions.

The Internet Crime Complaint Center (IC3):

  • Posted on its website a PSA titled "Education Technologies: Data Collection and Unsecured Systems Could Pose Risks to Students."
  • Posted on its website a PSA titled “Cyber Actors Increasingly Exploit the Remote Desktop Protocol to Conduct Malicious Activity.”
  • Posted on its website a PSA titled “Cybercriminals Utilize Social Engineering Techniques to Obtain Employee Credentials to Conduct Payroll Diversion.”

Attorney General Consumer Protection News and Other Items of Interest:

All 50 states and the District of Columbia have reached an agreement with ride-sharing company Uber Technologies, Inc. to address the company’s one-year delay in reporting a data breach to its affected drivers. Uber will pay a total of $148 million to the states over its 2016 data breach.

Alabama Attorney General Steve Marshall announced that an Alabama state court granted a preliminary injunction against a plumbing operation that had conducted dangerous and deceptive practices in several northeast Alabama counties.

Arizona Attorney General Mark Brnovich took legal action against Purdue Pharma (Purdue), the manufacturer of the prescription opioid painkiller OxyContin. The filing in Arizona state court alleges that Purdue engaged in deceptive and misleading marketing to push opioids, in violation of a prior court order. In other Arizona news, General Brnovich filed a civil lawsuit against Pearl Bridal and its owners, Erica and Tyson Miltenberger. The complaint alleges that Pearl Bridal and the Miltenbergers used false advertising and deceptive practices to collect hundreds of thousands of dollars in prepayments for wedding dresses, and then abruptly shut down the business and disappeared, leaving over $275,000 in orders unfilled.

Arkansas Attorney General Leslie Rutledge warned consumers of alarm systems scams. In other Arkansas news, General Rutledge advised that consumers should be on alert for persons calling and claiming to be government officials.

The BBB issued a study showing how fake check scams bait consumers.

Colorado Attorney General Cynthia H. Coffman filed a lawsuit against Purdue Pharma L.P. and Purdue Pharma, Inc., alleging that the companies’ fraudulent and deceptive marketing of prescription opioids played a significant role in causing the opioid epidemic ravaging Colorado and the rest of the nation. In other Colorado news, General Coffman and the AARP Foundation ElderWatch program alerted Colorado consumers about callers claiming to be with the Social Security Administration.

Delaware Attorney General Matt Denn announced that the Consumer Protection Unit of the Delaware Department of Justice is pursuing criminal charges against a Sussex County-based contractor accused of defrauding multiple Delaware homeowners.

Florida Attorney General Pam Bondi offered consumers tips on how to prepare for hurricane season.

Illinois Attorney General Lisa Madigan urged Illinois public utility companies to inform customers of the expensive price of alternative energy suppliers.

Indiana Attorney General Curtis Hill announced that his office has filed a lawsuit aimed at stopping the illegal activities of several individuals who conspired through illicit used-car dealerships to defraud several hundred customers.

Kansas Attorney General Derek Schmidt announced that a Kansas roofer has been temporarily banned by court order from doing business in Kansas while a lawsuit alleging violations of Kansas consumer protection laws is pending.

Maryland Attorney General Brian E. Frosh announced that his Consumer Protection Division has charged Insys Therapeutics, Inc (Insys) with multiple violations of the Consumer Protection Act and is requesting relief for consumers victimized by Insys’ unfair and deceptive trade practices. In other Maryland news General Frosh announced that his Consumer Protection Division has filed charges against Maryland Speed LLC, an online retailer specializing in the sale of auto parts, for allegedly accepting payment for parts that it failed to provide to its customers, and for refusing to issue refunds to purchasers. Additionally, General Frosh announced that the Consumer Protection Division’s Home Builder Registration Unit revoked the home builder registration of Mid Atlantic Modular, LLC, of Baltimore County, and filed charges against the company and owners Kyle G. Jackson and Scott D. Chilton, for failing to comply with Maryland’s Home Builder Registration Act, Consumer Protection Act, and the Custom Home Protection Act.

Massachusetts Attorney General Maura Healey announced that Partners HealthCare System Inc. and Massachusetts Eye and Ear Infirmary will pay $175,000 to settle allegations that they violated Massachusetts’ consumer protection law by failing to adequately disclose to patients billing information for certain health care services. In other Massachusetts news, General Healey announced that UMass Memorial Medical Group Inc. and UMass Memorial Medical Center Inc. will pay a total of $230,000 to resolve claims that two separate data breaches exposed the personal and health information of more than 15,000 Massachusetts residents.

Mississippi Attorney General Jim Hood addressed the use of e-cigarettes among teens.

Missouri Attorney General Josh Hawley filed a petition in the Missouri state court urging the court to enjoin Branson Duck Vehicles, LLC and Ripley Entertainment, Inc. from operating duck boats in Missouri. The attorney general’s office alleges violations of the Missouri Merchandising Practices Act and Missouri’s principal consumer-protection statute.

New Mexico Attorney General Hector Balderas sued a group of tech companies for illegally tracking children online. The suit, filed against Google, Twitter, Tiny Lab Producions, MoPub, AerServ, InMobi PTE, AppLovin, and IronSource alleges the apps designed by Tiny Lab Productions and marketed by Google in its Play Store are targeted at children and contain illegal tracking software.

New York Attorney General Barbara D. Underwood filed a lawsuit against nine student loan debt relief companies for an alleged student loan scam. In other New York news, General Underwood filed a lawsuit against TicketNetwork, Inc., Eventvest, Inc. d/b/a Ticket Galaxy, and the companies’ owner, Donald Vaccaro, for allegedly conducting a massive scheme to trick tens of thousands of unsuspecting fans into buying tickets to concerts, shows, and other live events that the sellers did not actually have. Additionally, General Underwood announced a lawsuit against AAUCONNECT.COM, LLC, a high school and post-graduate basketball recruiting business and its principals, Chris Bevin and Hazel Ward, for allegedly misleading consumers by misrepresenting their program and its services.

Oregon Attorney General Ellen Rosenblum sued Purdue Pharma, the maker of the painkiller Oxycontin, for allegedly falsely and deceptively marketing its opioid drug in Oregon.

Pennsylvania Attorney General Josh Shapiro warns Pennsylvania college and graduate students of common financial scams.

South Dakota Attorney General Marty Jackley confirmed that his Consumer Protection Division has received a number of complaints regarding extortion attempts targeting consumers and businesses via email.

Vermont Attorney General T.J. Donovan announced that his office filed a lawsuit against the pharmaceutical company Purdue Pharma. The lawsuit alleges violations of the Vermont Consumer Protection Act and public nuisance law concerning Purdue’s marketing and promotion of opioids. Purdue is the manufacturer of Oxycontin.

Washington Attorney General Bob Ferguson announced that Samsung, a multinational electronics company, will pay $29 million as part of the Attorney General’s price-fixing lawsuit against seven manufacturers of cathode ray tubes, or CRTs, a technology once ubiquitous in television screens and computer monitors. In other Washington news, General Ferguson filed a lawsuit against several Wenatchee-based collection agencies and their owner for buying millions of dollars of old debt and suing to collect on the debt without being licensed as collection agencies with the state.

West Virginia Attorney General Patrick Morrisey announced that his office will partner with two community and technical colleges to offer free cybersecurity training to senior citizens. In other West Virginia news, General Morrisey asked a West Virginia state court judge to shut down a used vehicle dealership until its owner complies with an investigative subpoena. Additionally, General Morrisey filed suit alleging a West Virginia home improvement contractor accepted payments without a license to perform the requested work and in several instances never began the consumer’s project or performed the work in a poor manner.

Wisconsin Attorney General Brad Schimel is warning citizens about spoof phone calls from people claiming to be police, including the Wisconsin Department of Justice Division of Criminal Investigation.


A federal appeals court has ruled that a public interest law firm and a charitable group co-founded by the Koch brothers have to comply with the California Attorney General’s demand for information regarding top charitable donors. Relatedly, the Supreme Court denied a petition to grant an emergency stay on a ruling that tossed out federal election regulation allowing nonprofit groups to keep donors secret.

The 2018 hurricane season has arrived. The FTC has information to help consumers prepare for, deal with, and recover from the long-term impacts of a hurricane, as well as information on giving wisely to help those in need.

Arkansas Attorney General Leslie Rutledge advised Arkansas residents to research charities when giving to Hurricane Florence victims.

In the wake of widespread damage caused by Hurricane Florence, Maryland Attorney General Brian E. Frosh and Maryland Securities Commissioner Melanie Senter Lubin cautioned investors to watch out for opportunistic investment or charitable scams.

Michigan Attorney General Bill Schuette announced a Notice of Intended Action and Cease and Desist Order against National Emergency Medicine Association of Edgewood, Maryland for over 600,000 violations of the Charitable Organizations and Solicitations Act. In other Michigan news, General Schuette warned Michigan residents to use caution in making charitable donations to Hurricane Florence recovery charities and when considering purchasing used cars in the days and weeks immediately following the storm hitting the eastern seaboard.

North Carolina Attorney General Josh Stein alerted North Carolinians about charity scammers who misuse donations meant to help victims of Hurricane Florence.

Ohio Attorney General Mike DeWine offered recommendations to help Ohioans make wise charitable contributions and avoid scams related to the flooding and damage caused by Hurricane Florence.

Virginia Attorney General Mark R. Herring encouraged Virginians to know their rights as consumers and to be on the lookout for common frauds and schemes that take advantage of people affected by natural disasters.

West Virginia Attorney General Patrick Morrisey reminds consumers to use caution as they open their wallets to help those impacted by Hurricane Florence.


The California legislature passed SB 1121, which would amend the recently enacted Consumer Privacy Act by extending the date by which the California Attorney General is required to adopt regulations to implement the Act from June 2019 to June 2020. It would also delay enforcement until June 2020 or six months after the regulations are final, whichever comes first, and would remove the requirement that a consumer bring an action notify the California Attorney General.

Digital Guardian has published a guide to each U.S. state data breach laws.

Maryland Attorney General Brian E. Frosh is encouraging Maryland residents to take advantage of a new federal law effective September 21, 2018, that gives consumers the right to place a freeze on their credit reports and temporarily or permanently remove the freeze without charge.

Ohio Governor John Kasich signed SB 220 into law, which provides a legal safe harbor for organizations that implement a recognized written cybersecurity program.

Veterans and Military News

Arkansas Attorney General Leslie Rutledge announced that she will join forces with the U.S. Library of Congress to encourage Arkansans’ participation in the Veterans History Project. The nationwide project is an effort to create an audio and video archive with recordings of firsthand accounts from American wartime veterans.

California Attorney General Xavier Becerra applauded Governor Brown’s signing of Assembly Bill 3212, a measure that will strengthen California’s existing consumer protections for service members and military families, including California National Guard soldiers and airmen.

FTC takes action against operators of copycat military websites.

The United States Department of Justice announced that Twin Creek Apartments, LLC, owner of an apartment complex in Bellevue, Nebraska, adjacent to the Offutt Air Force Base, has agreed to a settlement to resolve allegations that it violated the Servicemembers Civil Relief Act by imposing lease termination charges against 65 servicemembers who had exercised their federal right to terminate their residential leases.

The United States Department of Justice announced a settlement with Northwest Trustee Services Inc. of Bellevue, Washington, to resolve a lawsuit alleging that the foreclosure services company violated the Servicemembers Civil Relief Act.

The United States Department of Justice announced that United Communities, LLC, a private company that manages military housing at Joint Base McGuire-Dix-Lakehurst, has agreed to pay $62,501.78 to resolve allegations that it violated the Servicemembers Civil Relief Act by imposing early termination charges on 13 servicemembers who had exercised their right to terminate their residential leases upon receipt of qualifying military orders.

Washington Attorney General Bob Ferguson filed a lawsuit against a Tacoma-based towing company for illegally auctioning off a military service member’s vehicle while he was deployed at sea.

Consumer Protection Trivia

      1. What month is designated as "military consumer protection month?"
        A. April
        B. September
        C. July
        D. March

        1. What type of scam involves people calling consumers claiming to be associated with well-known companies saying that a consumer's computer is experiencing problems?
          A. Imposter Scam
          B. Tech support scam
          C. Grandparents scam
          D. Romance scam

          *Trivia answers can be found below.

Trivia Answers

      1. C. July
      2. B. Tech support scam

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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