Attorney general posts

"Hi. This is Rachel from Cardholder Services." It's safe to say that millions of Americans have received a call from Rachel or one of her robo-calling cohorts at some point. In fact, there have been so many complaints about calls from robo-dialers with pre-recorded announcements that the government has almost entirely banned them.

As of September 1, the Federal Trade Commission barred all prerecorded telemarketing calls unless a consumer gives their written permission to receive them furst. Robo-soliciting over cell phones was already prohibited by the Federal Communications Commission several years ago.

Just don't tell that to Rachel. She doesn't appear to be slowing down -- and, at least for the time being, no one can stop her because it's not clear where she comes from.

Internet telephone provider Vonage agreed to pay $3 million and change how it deals with its customers after reaching a settlement with 32 states.

Among the allegations against Vonage was consumers continuing to be charged after canceling, not clearly disclosing the terms of its "free trial," and not honoring a supposed "money back guarantee." One problem consumers ran into -- something that particularly affected senior citizens -- was the failure to disclose in Vonage's numerous advertisements that having high-speed internet was a requirement to use the service.

Extended warranties of all sorts have always been a dicey proposition, but when it comes to extended auto warranties many don't even appear to be warranties at all.

Missouri Attorney General Chris Koster took aim at the industry this week by suing six companies that market the so-called warranties and warning the public that what is being pitched isn't what you end up with. He said the industry is "rife with fraud."

Koster said what consumers are actually buying into are limited "service contracts" or "automotive additives" deals rather than a traditional warranty. That was done to avoid consumer protections otherwise afforded by law, he said in a news release.

The contracts are filled with catches. Among them:

• A 30 to 90 day (or 1,000 miles) timeframe when you can't make a claim.
• Promotion of a 7-year, 100,000 miles warranty extension that doesn't note coverage is limited to the declining value of the car. (In other words, Koster said, "The coverage may soon be less than the price paid by the consumer for the contact).
• Sending an additive to be put into your car immediately to activate coverage without noting that its use negates the ability to cancel.

In a move that would make Chuck Norris proud, Texas Attorney General Greg Abbott announced today that the state of Texas had reached an agreement with Tagged, Inc., a social networking site that was accused of tricking users into providing access to their address books. As part of the agreement, Tagged has to pay $250,000, which includes the cost of the state's investigation.

After Tagged had access to a user's address book, the social networking site sent messages that appeared to come directly from the user, offering to share photos with the recipient. When a recipient tried to view the pictures, which often didn't even exist, they were prompted to sign up, giving Tagged access to their address book and continuing the deceptive practice.

New York Attorney General Andrew Cuomo this morning announced an antitrust lawsuit against dominant computer chip maker Intel, alleging the company bribed, threatened and cheated to maintain its dominance in the marketplace.

Intel, Cuomo said, bullied its business partners and pushed aside competition --hurting consumers who could have benefited from the cost savings that comes with a competitive environment. Intel's chips are the guts of the vast majority of PCs.

"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said in a statement. "Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace."

In the lawsuit, Cuomo alleges: "Intel has distorted competition and harmed consumers, depriving them of the lower prices and increased rates of innovation which competition would have yielded. Absent Intel's illegal acts, prices would likely have been lower, product innovation more dynamic, and consumer gains greater."

Eight months after computer giant Dell Inc. reached a settlement with 34 states over allegations that included the company duping consumers over financing offers, New York state's attorney general settled claims against the company for more than all the other states combined.

The 34-state settlement cost Dell $3.35 million. The New York settlement: $4 million.

Dell was sued by New York in 2007 for fraud, false advertising, deceptive business practices as well as abusing consumers in its debt collection. The company and New York Attorney General Andrew Cuomo battled out the claims in court, where a judge in 2008 ruled in favor of the state and upheld the the allegations. How compensation would be worked out had been up in the air since.

Dell did not respond to a request to its media relations office for a comment on the settlement.

So, you want to be a writer? You think you have some talent, maybe an idea that people need to know about, or perhaps you have the next great novel swirling in your brain, and you're not quite sure about how to get noticed.

You have a lot of company, and that's what makes you a target to get ripped off. Following a lengthy investigation (involving 175 complaints) by the Florida Attorney General's office into Robert M. Fletcher, his girlfriend and two accomplices, along with a large collection of purported companies soliciting writers who wanted to get published -- the state filed a lawsuit that details an elaborate alleged scam that ran for at least four years, with victims from throughout the U.S. and as far away as China.

"Through a constantly changing spider web of defunct corporations in Florida, Nevada and Wyoming, as well as websites, and unregistered businesses, Fletcher has created a business which generates hundreds of thousands of dollars annually from prospective authors relying on the unfair and deceptive advertising," according to the lawsuit.

A woman answering the phone listed on one of the sites run by Fletcher said no one there would be able to respond due to the pending legal issue, but offered an email address to direct any questions. An email to that address received a reply that Fletcher was interested in responding and the request had been forwarded to him.

Dish Network has reached an agreement with 46 states' attorneys general to pay nearly $6 million plus restitution to settle allegations of deceptive consumer marketing and a lack of disclosure about costs and service limitations.The states came after Dish after thousands of consumer complaints were lodged.

Consumers with complaints against Dish are eligible for restitution from the settlement if they have filed a complaint with their state's attorney general or Dish Network between Jan. 1, 2004 and July 9, 2009. Complaints eligible for compensation from the settlement will continue to be accepted through Dec. 14 as long as it involves problems that happened over the past two years.

A collection of 25 federal and state agencies have lodged a total of 189 actions against individuals and companies who allegedly deceived consumers into paying for bogus foreclosure rescue and mortgage modification programs, the Federal Trade Commission announced.

The crackdown, called "Operation Loan Lies," was announced by Federal Trade Commission Chairman Jon Leibowitz and California Attorney General Edmund G. Brown Jr. The scams were run nationwide, federal officials said, and originated in Southern California.

"These con artists see the high foreclosure rates as an opportunity to prey on people in distress," Leibowitz said in a prepared statement. "They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline."

The FTC announced four new lawsuits for a total of 14 against mortgage foreclosure rescue and loan modification scams since April. In all, 23 state attorneys general and other agencies are participating in the operation.

In these types of scams, homeowners are typically charged a fee -- often equal to a month's mortgage payment -- with the promise of mortgage renegotiation. Rarely is there any follow-up or refund under supposed guarantees.

To help educate consumers about these types of scams, the FTC released the video "Real People, Real Stories."

Here is the FTC's description of some of the cases filed:

• The FTC and the states of California and Missouri charged that US Foreclosure Relief falsely claimed years of experience and a high success rate and promised quick results. Instead, homeowners paid the defendants thousands of dollars for services they never received.
• Lucas Law Center allegedly used an attorney to circumvent state prohibitions against receiving a fee before providing any services; the defendants charged up to $3,995 in advance. In addition to falsely representing that they would obtain mortgage loan modifications, the defendants told some homeowners to stop paying their mortgage in order to pay the defendants' fee.
• Loss Mitigation Services marketed primarily through direct mail solicitation. The defendants allegedly targeted consumers whose mortgage payments have increased, who have made late payments, and whose homes were in foreclosure. They charged up to $5,500 in advance and promised that a loan modification was assured or virtually assured if consumers hired them.
• The FTC alleged that Internet company Apply2Save charged consumers up-front fees of up to $995, claiming they could obtain a loan modification in 30 to 90 days. In fact, they did not obtain loan modifications for most consumers and were unable to stop foreclosures.

Copies of the actual litigation as well as tips about these types of scams are available on the FTC site. A list of the state actions can be found here.

In an attempt to crack down on the organized posting of phony positive Web-based reviews, New York's attorney general announced a settlement with Lifestyle Lift -- a firm that had littered cyberspace with glowing testimony from pretend satisfied customers.

Attorney General Andrew M. Cuomo said the case is believed to be the first in the nation to attack so-called astroturfing, the practice of creating the illusion of spontaneous support for a product or cause. His office said company officials ordered Lifestyle Lift employees to write the reviews and to go after real customers who complained by attacking their legitimate message board posts or trying to get them removed.

"This company's attempt to generate business by duping consumers was cynical, manipulative, and illegal," Cuomo said in a prepared statement.

Lifestyle Lift, which markets cosmetic surgery at more than 40 U.S. locations, agreed to pay $300,000 in penalties and the cost of the investigation as well as to stop publishing the phony reviews. The company posted a "Code of Internet Conduct & Assurance" on its site promising to deliver only truthful information and to use only actual customers as examples.

A standalone site full of fake reviews, MyFaceLiftStory.com, is now clearly labeled as being published by the company and contains information about the procedures in place of the phony commentary. You can see some of the phony sites and reviews here.

Morgan Stanley Capital Group agreed to pay $2.3 million to settle accusations that a gasoline supplier it owns gouged consumers last fall during Hurricane Ike, Florida officials announced. The settlement is the largest in Florida history and might be the largest ever, they said.

Typically, small retailers are the ones caught in gouging investigations, which are common in Florida following natural disasters, particularly hurricanes. Florida has tough anti-gouging rules that prevent prices for staples such as fuel or supplies from being increased during a declared emergency.

But in the midst of Hurricane Ike in September, Florida officials said gas prices shot up by $1.60 a gallon within 24 hours. Thousands of consumers complained and in a highly unusual move applauded by retailers, offciials went after Morgan Stanley and its subsidiary, TransMontaigne Product Services, a wholesaler and distributor of Morgan Stanley owned gasoline.

"Price gouging victimizes people already dealing with a disaster, and big business needs to be held accountable for any involvement in this behavior," Florida Attorney General Bill McCollum said in a statement. "I appreciate Morgan Stanley's efforts to resolve this matter and set a high standard for the rest of the fuel suppliers in the state."

Ticketmaster is facing a $50,000 fine and a change in how it does business after an Illinois Attorney General investigation found that the company had not clearly told customers they were paying marked up ticket prices.

As part of the agreement, TicketsNow, owned by Ticketmaster, will also close 100 websites that tricked customers into believing that they were purchasing directly from the concert venue.

Though the $50,000 fine is relatively small (perhaps convenience fees will triple it), the biggest win is for consumers. Illinois Attorney General Lisa Madigan stated, "This agreement will substantially impact how the TicketsNow online brokers market popular event tickets so that consumers clearly understand that they are making purchases from a ticket reseller at marked-up rates."

California filed a $222 million lawsuit against the owner of 22 Midas Muffler shops after uncover agents discovered a "massive" scheme in which consumers were charged for unneeded repairs, California Attorney General Edmund G. Brown Jr. announced.

"These Midas shops were running a massive bait-and-switch scam, in which customers were lured in with the promise of cheap brake specials and then charged hundreds more for unnecessary repairs," Brown said in a statement. "This investigation revealed a shady and deceptive operation that violated the trust of its customers."

Texas officials filed charges against two Californians operating a business under the name Compliance Services that solicits money from small business owners in the name of getting them to comply with the law.

Texas Attorney General Greg Abbott won a temporary restraining order preventing Compliance Services and principals Selwyn Monarch and Gayle N. Standford from sending the mailings to Texas businesses. Other states, including Massachusetts, Ohio and Florida have warned against this and other similar attempts to solicit money from business owners. Here's an example of one of the mailings.