Below are highlights from some of the Consumer Protection Unit's ("CPU") civil and criminal achievements in 2016:
Unfair and Deceptive Practices
Aames Plumbing and Heating, Inc. d/b/a The Pink Plumber and owner Geoffrey Gillon - The Georgia Department of Law, Consumer Protection Unit (CPU) alleged that The Pink Plumber regularly advertised septic pumping services for $195 or less, when the actual price consumers were charged was consistently higher. The company also routinely represented that certain expensive services and products, namely “hydro jetting” and additive treatments, were necessary and of benefit when, according to various regulatory agencies, those services and products are of questionable benefit, at best, and may even cause damage to septic systems. Additionally, the company represented that certain of its employees could perform services that they were not certified to do. The Pink Plumber and owner Geoffrey Gillon entered into a settlement, in which they agreed not to allow technicians to perform services that they are not certified by the State to perform, to refrain from false or misleading claims as to the price and/or effectiveness of its products and services, to pay over $27,190 in consumer restitution, and to pay $75,000 in penalties and fees to the State of Georgia. Failure to comply with the settlement will cost the company an additional $125,000 in penalties. The Georgia Department of Public Health, Environmental Health Division assisted in this investigation.
Bristol-Myers Squibb – Our office was part of a $19.5 million dollar settlement, along with 42 other state Attorneys General, with Bristol-Myers Squibb Company (BMS) regarding the drug company’s alleged unfair and deceptive marketing of Abilify, an atypical antipsychotic drug. Abilify was originally approved in 2002 by the U.S. Food and Drug Administration (FDA) for the treatment of schizophrenia. Since then, the FDA has approved various formulations of Abilify for several indications.
The complaint alleged that BMS:
- promoted Abilify for use in elderly patients with symptoms consistent with dementia and Alzheimer’s disease despite the lack of FDA approval for these uses and without first establishing the drug’s safety and efficacy for those uses. In 2006, Abilify received a “black box” warning stating that elderly patients with dementia-related psychosis who are treated with antipsychotic drugs have an increased risk of death.
- promoted Abilify for uses in children not approved by the FDA.
- minimized and misrepresented the risks of using Abilify.
- overstated the findings of scientific studies by not revealing limitations that would materially affect the interpretation of the study results.
BMS’ marketing of any formulation containing the active ingredient aripiprazole is restricted by the terms of the settlement. BMS is prohibited from making false or misleading claims about Abilify, about its safety or efficacy in comparison with other drugs, and about the implications of clinical studies relating to the drug. BMS is also subject to limitations on financial incentives to sales representatives and health care providers, dissemination of information that may promote off-label use of Abilify, and other practices affecting off-label promotion.
Festiva Development Group, Inc., a Nevada-based company, has in the past sold timeshares to Georgia consumers for various properties located outside the State. Festiva currently sells vacation club memberships. The company solicited Georgia consumers to attend functions where they could receive free vacations and/or other valuable prizes.
CPU alleged that this practice was actually a marketing ploy designed to make contact with prospective customers. In addition, CPU alleged that Georgia consumers, who had previously purchased memberships or timeshares, were invited to attend events where they could win prizes in exchange for attending, when, in fact, the true purpose of the event was to "strong arm" consumers into purchasing upgrades to their memberships or convert timeshares into other types of memberships. CPU also alleged that the company misrepresented the potential savings consumers could get by purchasing its travel memberships. The company also allegedly misrepresented the availability of its resorts and the amount of vacation days that could be taken based on the number of points in the initial membership agreement.
Festiva entered into a settlement with the State and agreed to pay $75,000 civil penalties and to offer customers a cancellation of their contracts and refunds ranging from 25%-40% of the original purchase price of memberships. The benefit to consumers under this settlement was estimated to be in excess of $300,000.
Advanced Med Direct, LLC, William Barry Hall and James White - Advanced Med Direct, LLC, d/b/a Hartford Scientific and f/d/b/a US Natural Supplements, LLC, is an online seller of anti-aging eye creams and moisturizers. The company, based in Martinez, Georgia, promoted its products on its websites, via emails and through Internet pop-up ads. CPU's investigation revealed that the business was offering products through a “30-day risk-free trial” for the cost of shipping and handling. The company allegedly deceived consumers into enrollment in a negative-option renewal plan and refused to honor customers’ timely requests for cancellations and refunds. CPU further alleged that once consumers agreed to the “free trial,” they were automatically enrolled – without any notification – into a continuing negative-option renewal plan through which they were charged approximately $95 a month for additional products. Despite the company’s claims that consumers would receive their money back if they were not completely satisfied with the products, the company allegedly refused to cancel the plans or refund consumers upon their request. In further violation of Georgia consumer protection laws, the company allegedly made false claims about the benefits of their products and posted phony customer testimonials to its websites.
The company and its principals, Hall and White, entered into a settlement requiring them to pay approximately $16,300 in consumer restitution and $120,000 in civil penalties. If the parties default on either payment or fail to comply with any term of the settlement, they must pay an additional $150,000 penalty.
Jars of Clay Kingdom Worship Center, Inc. and Anita Lane Favors, Individually - Jars of Clay Kingdom Worship Center (JOC) represented that it was a charitable organization that ministers and provides different services to the Atlanta metro area's homeless population, as well as others who may be in need. The services they claimed to offer included
- providing shelters for homeless children and pregnant teens;
- daily food distribution;
- a jobs/resume preparation seminar;
- a free clothing outreach; and
- a program called "Home in 30," which promised to place homeless persons into housing within 30 days.
CPU alleged that JOC represented to consumers that it was affiliated with organizations such as United Way, the Food Bank Locator of the U.S. Department of Agriculture, and the Georgia Department of Human Resources, when that was not the case. Likewise, neither the organization nor any of Ms. Favors' (unregistered) "ministries" were listed as 501(c)(3) charitable organizations, despite Favors' claims to the contrary (including her assurances to potential donors that their contributions would be tax-deductible). JOC and Favors have entered into a settlement in which they have agreed to pay $24,000 in fees and penalties and $24,500 in restitution to consumers who were enrolled in the "Home In 30" program.
Our office was part of a multi-state settlement with MoneyGram Payment Systems, Inc. The investigation focused on complaints by consumers who used MoneyGram’s wire transfer service to send money to third-parties involved in schemes to defraud consumers. In addition to Georgia, 48 states and the District of Columbia participated in this settlement. MoneyGram agreed to maintain and continue to improve a comprehensive and robust anti-fraud program designed to help detect and prevent consumers from suffering financial losses as a result of these types of fraud-induced wire transfers. Additionally, the company agreed to pay a total of $13 million to the participating states to fund a nationwide consumer restitution program and as reimbursement of the states’ costs and fees.
Laptop & Desktop Repair, LLC - The State of Georgia and the Federal Trade Commission (FTC) have charged Laptop & Desktop Repair, LLC, an electronics buyback company, and its owner, Vadim Olegovich Kruchinin, with violating the Georgia Fair Business Practices Act (FBPA) and the Federal Trade Commission Act through a long-running scam in which they promised consumers “top dollar” amounts for used electronic devices and then paid them only a fraction of the quoted amount after consumers sent in their devices. Laptop & Desktop Repair, LCC (LDR) is a Nevada limited liability company, also doing business as cashforiphones.com, cashforlaptops.com, ecyclebest.com, smartphonetraders.com, sell-your-cell.com.
The complaint alleges that, through its numerous websites, LDR induced customers to sell their used smartphones, laptops and tablets with assurances of high payments. According to the complaint, consumers who provided information about the make, model and condition of their devices received online quotes that promised attractive prices. However, despite the company’s assertions that consumers would receive the amount quoted for their devices, consumers claimed that after mailing their devices to the company, they were told they would only receive a small percentage (often as little as 3%-10%) of the promised amount. Consumers, who subsequently tried to reject the significantly lower offer and get their devices back, allegedly found it nearly impossible to do so. Although the company represents that consumers can reject the “Revised Offer” by calling LDR’s Purchasing Department, consumers allege that the company regularly hangs up or puts consumers on extremely long holds. Furthermore, the Rejection Period allowed by LDR is very limited (usually three or five days), sometimes made even shorter since Saturdays and Sundays are counted in that period despite that fact that the Purchasing Department is closed on weekends. The complaint notes that very few consumers who actually succeeded in reaching LDR by phone found the company willing to honor its original quotes or to return their devices. The complaint alleges that the company has made millions through this bait-and-switch scheme. It has deceived consumers into turning over their devices for far less than the amount quoted and then resold them at a profit on Internet sites such as eBay.com and Newegg.com, among others.
The United States District Court for the Northern District of Georgia - Atlanta Division issued an order temporarily stopping the defendants’ practices and freezing their assets. The case is ongoing.
Direct Market Concepts LLC d/b/a DMC Services and Satish B. Singh, Individually –Our agency investigation revealed that the company, Direct Market Concepts, systematically misrepresented the nature of its business by disseminating postcards and utilizing telephone scripts that represented that the company was a package delivery service. However, the true purpose of the company was soliciting consumers on behalf of a local Georgia business selling water purification systems.
The company and its owner,Satish B. Singh, entered into a settlement requiring them to comply with Georgia consumer protection laws, cease and desist from marketing to Georgia consumers for 3 years, pay a civil penalty of $20,000, and abide by strict disclosure conditions should they resume marketing to Georgia consumers after the three-year period.
United Enterprise Consulting, LLC and Juliana Melo, Individually – Until May 2013, United Enterprise Consulting (UEC) offered mortgage relief services to consumers who were facing foreclosure. It offered loan modification assistance, foreclosure prevention services and other mortgage-related services for an upfront fee. Collection of such a fee in advance of performing services is prohibited by the Mortgage Assistance Relief Services (MARS) Rule. In addition to failing to provide all of the disclosures required by MARS, Juliana Melo, the sole owner and operator of UEC, represented that an unaffiliated law firm was UEC’s attorney and guaranteed prospective clients that UEC would be able to negotiate some type of mortgage relief, knowing her statements were untrue.
UEC and Melo agreed to pay restitution to consumers in the amount of $38,792, cease involvement in mortgage assistance relief services in Georgia for 5 years, and cease activities relating to assisting others in connection with seeking mortgage loans or mortgage assistance relief services in Georgia indefinitely. Failure to comply with the terms of the settlement will result in an additional $250,000 penalty.
Southern Tots, LLC is a Georgia-based online retailer of children’s clothing. CPU’s investigation revealed that the company failed to ship goods that consumers ordered or failed to ship them within the timeframe advertised, and then failed to issue refunds for the goods that were not provided. The company agreed to provide refunds to 7,599 consumers in the amount of $177,855, comply with Georgia consumer protection laws, and pay a $20,000 civil penalty.
Capital Tax Service, LLC, Teshia Trahan, and Taron Trahan - The company and its licensees primarily provided tax preparation services, but the company, its licensees, and the Trahans also offered or were involved in a variety of business ventures including credit repair, debt adjustment, financial planning services, used car sales, insurance, immigration consulting, and travel services. CPU's investigation found that Capital Tax Service, LLC, Teshia Trahan, and Taron Trahanhad committed multiple violations of the FBPA.
The parties have entered into a settlement under which they agree to:
- refrain from providing credit repair services unless and until they can show they are authorized to do so;
- refrain from providing debt adjustment services unless and until they can show that the business model and fee structure they or their partners offer is in compliance with the Georgia law;
- not sell or broker any used vehicle without the proper licenses and authority;
- not sell insurance or give insurance advice without obtaining and maintaining a license and complying with all rules and requirements applicable to insurance agents or counselors;
- not engage in or represent others in immigration matters without complying with all applicable rules and requirements under the law; and
- not refer consumers to others for services it does not provide, unless the parties have determined that such referral partners are operating in compliance with any applicable rules and regulations.
The settlement also requires the parties to pay $10,000 in fees and penalties. If Capital Tax or the Trahans violate the terms of the settlement within a specified monitoring period, an additional $90,000 penalty will immediately become due.
Skip Barber Racing School, LLC (SBRS) - CPU alleged that Skip Barber Racing School, LLC (SBRS) engaged in multiple violations of the FBPA related to its offering of racing classes to consumers. SBRS scheduled racing classes, collected money from consumers (often several thousands of dollars) in advance of those classes, and then cancelled classes without offering to refund the money collected in advance to the consumers. SBRS implied that the only recourse for the consumers was to reschedule their classes. These were classes at race tracks across the country which involved travel expenses for the consumers and which were not easily rescheduled. If SBRS did agree to give the consumers a refund of their money, they did not do so within a reasonable time frame. The average time it took consumers to receive their refund (from refund request date, not from the date that SBRS knew the services would not be provided) was 122 days.
SBRS has agreed to change its practices and to pay $5,000 in penalties and approximately $118,000 in restitution to the consumers who did not receive their refunds for a cancelled SBRS class.
Volkswagen - Our office took part in a multi-state settlement along with 36 other states' Attorneys General requiring Volkswagen to pay more than $570 million for violating state laws prohibiting unfair or deceptive trade practices by marketing, selling and leasing diesel vehicles equipped with illegal and undisclosed defeat device software. The settlement provides cash payments to affected consumers and requires Volkswagen to buy back or modify certain VW and Audi 2.0-liter diesel vehicles. The attorneys generals' investigation confirmed that Volkswagen sold more than 570,000 2.0- and 3.0-liter diesel vehicles in the United States equipped with “defeat device” software intended to circumvent applicable emissions standards for certain air pollutants, and actively concealed the existence of the defeat device from regulators and the public.
Volkswagen made false statements to consumers in their marketing and advertising, misrepresenting the cars as environmentally friendly or “green” and that the cars were compliant with federal and state emissions standards, when, in fact, Volkswagen knew the vehicles emitted harmful oxides of nitrogen (NOx) at rates many times higher than the law permitted.
Under the settlements, Volkswagen is required to implement a restitution and recall program for more than 475,000 owners and lessees of 2.0-liter diesel vehicles. 17,157 of these vehicles are located in Georgia. The settlement also requires Volkswagen to pay $2.7 billion into a trust to support environmental programs throughout the country to reduce emissions of NOx. Under the terms of the mitigation trust, Georgia is eligible to receive $58,105,433 to fund mitigation projects. In addition to consumer restitution, Volkswagen will pay to the states more than $1,000 per car for repeated violations of state consumer protection laws, amounting to $570 million nationwide. This amount includes $18,872,700 paid for affected vehicles Volkswagen sold and leased in Georgia. Further, Volkswagen has committed to investing $2 billion over the next 10 years for the development of non-polluting cars, or Zero Emission Vehicles (ZEV), and supporting infrastructure. Volkswagen will also pay $20 million to the states for their costs in investigating this matter and to establish a fund that state attorneys general can utilize for future training and initiatives, including investigations concerning emissions violations, automobile compliance, and consumer protection.
Hyundai Motor Company, Hyundai Motor America, Kia Motors Corporation, Inc., and Kia Motors America, Inc. – The State of Georgia was part of a multi-state settlement between 33 states and the District of Columbia and the Hyundai Motor Company, Hyundai Motor America, Kia Motors Corporation, Inc., and Kia Motors America, Inc. regarding the companies' business practices related to fuel economy estimate adjustments which occurred at a time when gasoline prices in the United States were especially high. State and federal law set limits on emissions from vehicles sold in the United States. Before vehicles may be offered for sale in the country, auto manufacturers must conduct testing under mandatory protocols set by government regulators and use the resulting data from that testing to support applications demonstrating their vehicles' conformity to those standards.
In November 2012, Hyundai and Kia announced they were adjusting and restating the fuel economy ratings for certain model year 2011, 2012 and 2013 vehicles after it was revealed that the companies had overstated the fuel efficiency of certain vehicles. The states alleged that Hyundai and Kia incorporated the inflated and inaccurate data into the estimated mileage ratings displayed on the window stickers of hundreds of thousands of cars in Georgia and across the country. The states also alleged that the companies sought to capitalize on the erroneous mileage estimates by placing them prominently in a variety of advertisements and other promotional campaigns. The states alleged that these actions were likely to mislead consumers and were material to consumers' decisions to purchase particular vehicles during a time of high gasoline prices.
The multi-state settlement requires the companies to refrain from misrepresenting the estimated fuel economy of new motor vehicles and to pay $41.2 million dollars to the participating states.
Southtowne Motors of Newnan, Inc. d/b/a Southtowne Chevrolet Buick GMC, Southtowne Motors, Inc. d/b/a Southtowne Hyundai Riverdale, and Southtowne Motors of Newnan II, Inc. d/b/a Southtowne Hyundai of Newnan – These automobile dealerships entered into settlements with CPU to resolve allegations that they were not properly disclosing to consumers that they were purchasing “Lemon Buybacks.” “Lemon Buybacks” are vehicles which a manufacturer had previously repurchased, or bought back, due to a claim by the previous owner of an unresolved warranty issue or an unrepaired defect. After the vehicle was reacquired by the manufacturer, it was resold to a motor vehicle dealer and offered for sale to the public.
CPU’s investigation revealed that for several years Southtowne failed to give consumers the statutorily required form that informs the purchaser that the vehicle being purchased is a Lemon Buyback and identifies the type of defect that was the original problem. As a result of Southtowne’s alleged failure to properly disclose the status of the vehicles, some consumers claimed they paid more than the vehicles were worth, which they did not discover until they tried to trade in their vehicles at another dealership. CPU’s investigation also revealed that Southtowne had used a handout for approximately one year that significantly misrepresented the reduced value of Lemon Buybacks and minimized the potential seriousness of vehicle defects.
Because Southtowne Hyundai of Newnan sells the vast majority of the Southtowne group’s Lemon Buybacks, the settlement required it to pay the State $80,000 in fees and penalties. The two other dealers, Southtowne Chevrolet Buick GMC and Southtowne Hyundai Riverdale, each paid $7,500.00 to the State. All of the dealers agreed to conduct sales in accordance with Georgia law, and most notably, institute, for a period of two years following the execution of the settlements, a repurchase policy under which certain consumers who purchased a Lemon Buyback may sell that vehicle back to Southtowne for its NADA clean trade-in value without regard to the vehicle’s buyback status. The settlements also require Southtowne to purchase these Lemon Buybacks, at this same trade value, from other dealers, so that consumers who seek to purchase a new vehicle from another dealership and use their Lemon Buyback as a trade-in can still receive the benefit of this repurchase program.
Ivory Chevrolet, LLC - CPU took action against this vehicle dealership after learning that it had distributed a marketing mailer containing numerous misleading or false representations. The mailer, which was sent to thousands of Georgia consumers, represented that all recipients had won a cash prize when, in fact, only one consumer would receive that prize. Additionally, the dealership advertised vehicles for sale, but had misrepresented the price of the vehicles by excluding certain fees (other than tax, tag and title) from the advertised price. The company’s conduct was not only a violation of the FBPA, but also a violation of a previous agreement with the Governor’s Office of Consumer Protection related to similar conduct. The company has agreed to change its practices and to pay a $10,000 penalty.
CPU initiated an investigation into the business practices of Infiniti of Union City, LLC d/b/a Infiniti of South Atlanta after learning that the dealer had failed to disclose the pre-sale damage and repairs to 26 vehicles it sold to consumers. The dealership had purchased new vehicles from an Oklahoma dealer. Prior to this sale, however, the vehicles had been outside during a heavy hailstorm and sustained damage. The Oklahoma dealer repaired the vehicles and disclosed to Infiniti of South Atlanta the existence of the damage and repair. Since the cost of each repair exceeded 5% of the manufacturer's suggested retail price, the dealer was statutorily required to disclose the damage and repairs to consumers before selling or leasing the vehicles. The dealer also violated the FBPA by adding its dealer service fee charge to its advertised prices. The company entered into a settlement agreeing to modify its business practices, and to pay $30,000 in civil penalties and $8,000 in consumer restitution.
Courtesy Ford, Inc. d/b/a Courtesy Mitsubishi – Thousands of Georgians received from Courtesy Mitsubishi (Courtesy) a deceptive direct mail piece.
- The mailer listed specific prices for vehicles, but the advertised prices excluded certain fees (other than tax, tag and title), thereby making the purchase price of the vehicle appear lower than it actually was. Consumers had been required to pay more than the amount advertised in order to purchase the vehicles.
- The mailer also represented that Courtesy offered a guaranteed minimum amount of money to consumer for trade-in vehicles. This practice is deceptive since some vehicles may be worth less than the “guaranteed” minimum and the dealership, in order to compensate for any loss, will negotiate less than it otherwise might have in order to honor the “guaranteed” offer.
- The mailer also represented that all recipients had won a cash prize when only one consumer would receive that prize.
- Georgia law prohibits offering cash prizes in connection with the type of marketing campaign, a “promotion,” which Courtesy was advertising.
- Finally, the dealership failed to comply with certain notice provisions required by the FBPA when conducting promotions.
Courtesy agreed to modify its practices and pay $5,000 in penalties.
Robert Loehr Automotive, LLC d/b/a Robert Loehr Chrysler Dodge Jeep – This automotive dealership violated the FBPA by distributing a marketing mailer in Georgia which represented that the recipient’s vehicle was subject to a safety recall and directed consumers to call the dealership to schedule repairs. The mailer’s envelope suggested that this information came directly from the vehicle’s manufacturer. CPU’s investigation verified that, in fact, the dealership had little, if any, specific knowledge as to whether the recipient’s vehicle was subject to a recall, nor was it in any way authorized to act on behalf of the manufacturer in this context. The company entered into settlement in which it agreed to pay $7,500 in resolution of this matter and amend its practices.
Sutherlin Nissan Mall of Georgia, LLC - CPU's investigation of this car dealership revealed that for a multi-month period Sutherlin heavily marketed its vehicle prices, yet failed to sell the overwhelming majority of its advertised vehicles at, or even near, the advertised price. Consumers who purchased the vehicles were required to pay an additional $689 dealership fee and finance the purchase with Nissan's finance arm. Other consumers were charged hundreds and even thousands of dollars above the advertised price. During this same period, Sutherlin briefly advertised a "Buy One, Get One" offer which promised consumers a 2-year lease "at no additional cost" with the purchase of certain vehicles. The ad failed to disclose, however, that the consumer could not negotiate the purchase price of the first vehicle and had to forfeit all dealer and manufacturer discounts and pay the Manufacturers Suggested Retail Price (MSRP). By purchasing the first vehicle at MSRP the consumer enabled the dealer to save sufficient money on the transaction so as to provide the leased vehicle. Sutherlin modified the advertisement after being notified by CPU that marketing the lease as "no additional cost" was misleading and deceptive. Sutherlin's marketing also violated three previous settlements it entered into with the Governor's Office of Consumer Protection in 2007, 2008 and 2011. As part of this current settlement, Sutherlin agreed to pay $50,000 in fees and penalties and reimburse affected consumers a total of $31,000.05, in addition to correcting its practices.
G.T.R. Enterprises, Inc. d/b/a Thomasville Toyota - CPU alleged that this dealer engaged in multiple violations of the FBPA related to its advertising and sale of Toyota Certified Used Vehicles ("TCUV"). Toyota consistently advertises these TCUVs as higher quality used vehicles due to the rigorous selection, inspection and repair procedures involved in the Toyota certification process. In particular, Toyota and its dealers, like Thomasville Toyota, represent through both advertisements and forms handed to consumers that these vehicles have been specifically inspected to ensure they are free of structural or frame damage. The existence of this type of damage causes both depreciation and safety concerns. Additionally, Toyota's own certification procedures explicitly prohibit the certification of a vehicle which has sustained this type of damage even if the vehicle has been repaired.
CPU's investigation revealed that Thomasville Toyota had certified and sold a number of vehicles which had sustained structural damage while in its own rental or loaner fleet. The dealership agreed to pay $10,000 in fees and penalties and approximately $14,000 in consumer restitution, and change its behavior.
Student Loan Solutions, LLC (SLS), a Texas company, and Academic Debt Alliance, LLC (ADA), a Florida company, both offered to assist student loan borrowers residing in Georgia with federal student loan consolidation, lowering monthly payments, and loan forgiveness. The services offered constituted “debt adjusting” under Georgia law, and the companies failed to comply with the provisions of the statute. Georgia’s Debt Adjustment Act requires companies offering debt adjustment services to file annual insurance and audit records with this office and to cap all fees for its services at no more than 7.5% of the monthly amounts paid by consumers for distribution to their respective creditors.
SLS charged consumers fees in excess of the statutorily defined fee cap and failed to file the requisite documents with our office. SLS signed a settlement agreement, in which it agreed to cease doing business in Georgia and to pay approximately $36,000 in restitution to Georgia consumers and to pay $5,000 to the State.
ADA charged consumers a fee ranging from $699 to $799 for its services. As the company did not collect funds from consumers for distribution to their creditors, these fees exceed those permitted under the debt adjustment statute. It also was required to file a copy of its insurance policy with the Attorney General’s office, however, it failed to do so. ADA executed a settlement, requiring it to bring its business practices into compliance and pay $5,000 in penalties and approximately $27,000 in restitution.
American Credit Resolution, Inc. (“ACR”) and Zachary J. Mancuso, Individually - ACR is a debt collection firm operating in Sandy Springs, Georgia. Zachary Mancuso is the Director, President and General Manager of ACR. CPU alleges Respondents and/or Respondents’ agents engaged in the following unlawful or deceptive acts or practices (among others) in the course of collecting debts:
- Collected or attempted to collect fees from consumers that were not legally owed;
- Stated or implied that nonpayment of the debt would result in the arrest or imprisonment of the consumer or garnishment of the consumer’s wages;
- Falsely represented or implied that consumers had committed a crime, in order to disgrace said consumers;
- Falsely represented to consumers that they are attorneys;
- Falsely represented that they were vouched for, bonded by, or affiliated with the United States or a state;
- Placed telephone calls to consumers without disclosing, in a meaningful way, the caller’s identity;
- Stated or implied to consumers that they were legal couriers and/or associated with a law firm, law enforcement, or other government entities;
- Failed to disclose in the initial written communication with the consumer and, in addition, in the initial oral communication if the initial communication with the consumer was oral, that
- the debt collector was attempting to collect a debt, and
- that any information obtained would be used for that purpose;
- Communicated, in connection with the collection of debt, with persons other than the consumer, his or her attorney, a consumer reporting agency, the creditor, the attorney of the creditor, or the attorney of the debt collector, in violation of federal law; and
- Attempted to collect from Georgia consumers debts which had resulted from payday loans which are illegal and unenforceable under Georgia law.
The company and Mancuso entered into a settlement which required them to comply with the Fair Business Practices Act and the Fair Debt Collection Practices Act, and transfer to this office 10,439 consumer debt accounts totaling $6,769,370. The settlement also required Respondents to pay $25,000 in penalties. Should the company fail to comply with the settlement terms during a three-year monitoring period, it must pay an additional $255,000 penalty.
Family Dermatology, P.C. is a medical practice headquartered in Lilburn, Georgia with multiple locations in Georgia, Pennsylvania and Maryland. The company entered into a settlement with CPU in response to allegations that it attempted to collect debts from consumers without sufficiently confirming that the debts were valid and/or that the billing statements were accurate. A number of consumers claimed they had been billed for services for which they had already paid, while others alleged that the company failed to timely submit claims to consumers’ insurance providers, resulting in the insurance providers denying the claims and consumers then being charged. When consumers tried to contact Family Dermatology to question the bills, most claimed they were unable to get through to customer service.
The settlement required the company to pay restitution to consumers who, due to the company’s billing practices, paid alleged debts they did not owe. The company must also cease collecting on 42,301 customer accounts for services provided prior to April 1, 2013, totaling $8,892,215, so that those accounts will no longer be subject to collection efforts, and to pay $5,000 in fees and penalties. In addition, the company must cease from attempting to collect debts from consumers until it has implemented changes to its billing practices to ensure that consumers will not be billed for amounts they do not owe. Should the company fail to comply with the terms of the settlement, it will be assessed an additional $50,000 fee.
Reliance Exchange Group, LLC; APE Processing, LLC; and Sharif Robinson, Individually - CPU alleged that these debt collection firms and their owner harassed consumers and threatened them with arrest, imprisonment or seizure and garnishment of wages and/or property without intending to take such action; placed telephone calls to consumers without meaningful disclosure of the caller's identity or reason for calling; attempted to collect debts from Georgia consumers that resulted from payday loans, which are illegal and unenforceable; and collected or attempted to collect fees from consumers that were not legally owed.
The companies entered into a settlement requiring them to:
- cease all debt collection activities in Georgia and with regard to consumer-debtors in the State of Georgia for 5 years;
- transfer to CPU 8,965 consumer debt accounts totaling $5,648,993.84, so that those accounts will no longer be subject to collection efforts; and
- pay a $240,000 civil penalty, a portion of which would be waived if the Respondents fully comply with the stated terms of the settlement during the 5-year period.
Robert Dixon, Karen Bradley, and Landerick Mitchell participated in a scheme to apply for and receive credit cards using fraudulent names and Social Security numbers. After receiving credit cards, the Defendants withdrew money at ATMs and processed transactions using fraudulent Square merchant accounts. In addition, Dixon used the credit cards to make payments toward a Jeep and to purchase event tickets. Criminal Investigators from the Attorney General’s Consumer Protection Unit conducted a search warrant at Dixon’s residence and found 298 cards (credit, debit, and gift) in 200 different names, over 1,000 pieces of credit card mail, and ledgers and documents containing 1,045 Social Security numbers. In all, Bradley, Dixon, and Mitchell were responsible for 1,568 credit card applications and $592,551 of fraud loss. The intended fraud loss total was $730,551.
Dixon, Bradley, and Mitchell were indicted in the Northern District of Georgia for wire fraud conspiracy, wire fraud, and misuse of a Social Security number. All three defendants pled guilty.
- Dixon was sentenced to serve 34 months in federal prison, to be followed by 3 years of supervised release. He was also ordered to pay $403,745 restitution.
- Bradley was sentenced to 18 months in federal prison, followed by 6 months home confinement and ordered to pay $244,232 restitution.
- As Mitchell played a lesser role in the scheme, he was sentenced to 6 months confinement, 6 months in adult residential re-entry facility, and 3 years supervised release. He was ordered to pay $23,328 in restitution.
Hendy Tirtawijaya - The Criminal Investigation Division conducted an investigation into an alleged multi-million dollar fencing operation for cell phones, tablets and other electronic goods. The investigation identified at least $6 million in losses to cell phone carriers and countless identity theft victims.
The Suspects obtained new electronics via identity theft, burglaries, robberies, and/or insurance fraud and then sold the products to several “store fronts” in the metropolitan Atlanta area. The owners of the “stores” paid below market value for the items (which resulted in a profit for these stores), and then allegedly shipped these newly acquired devices overseas where the devices were sold for more than in the U.S.
Several of the alleged fences were located, including a location operated jointly by Tirtawijaya and a co-defendant. Tirtawijaya and his partner sold collectively over 5,500 electronic devices to one of the fencing locations, receiving over $2 million, and then opened and operated their own alleged fencing business.
Tirtawijaya pled to one count of conspiracy to commit wire fraud. He was sentenced to 41 months in federal prison, to be followed by 3 years supervised release. He was also ordered to pay over $766,000 in restitution. Our agency was joined in the investigation by the U.S. Secret Service and the Internal Revenue Service.
Maurice Lambert – A Federal Grand Jury indicted Maurice Lambert in September 2016 for his alleged role in an identity fraud scheme involving approximately 850 Capital One, Discover and AMEX cards. The calculated potential loss totals $304,364 with actual losses of $179,289. Our Criminal Investigators recovered notebooks containing hundreds of sets of personal identifiers (name, address, date of birth, Social Security number, etc.) at Lambert’s former residence.
Lambert was arrested on September 16 through the combined efforts of U.S. Postal Inspectors and our Criminal Investigative Division Investigators. Having been told about the outstanding arrest warrant by an associate, Lambert was believed to be fleeing from the area when he was stopped and arrested 20 minutes after leaving a North Atlanta apartment complex with his belongings. He remains in custody and is awaiting trial.
Other criminal investigations have resulted in arrest warrants, indictment and/or extradition for individuals charged with, among other things, Identity Fraud, Theft By Taking, and Manufacturing, Selling, or Distributing False Identification Documents