Consumer Alerts

SACRAMENTO - California Attorney General Xavier Becerra today announced the recovery of over $1 million for California as part of a multistate settlement against health insurer Premera Blue Cross (Premera). The settlement resolves allegations that the health insurer violated state and federal privacy laws arising from a 2014 data breach. The settlement was the result of a multistate investigation and includes $10 million in civil penalties, of which California will receive $1,002,814. It also includes significant injunctive terms requiring Premera to implement reasonable security to protect consumers’ personal and medical information and to maintain a compliance program.

“Consumers who entrust their health information to companies deserve security in return. Companies have a responsibility to protect consumers’ private information, especially sensitive health information,” said Attorney General Becerra. “Premera’s failure to protect the private information of millions of patients is unacceptable. This settlement should send a strong message to companies with loose data privacy practices: it doesn’t pay to cut security corners.”

The settlement stems from a data breach that was publicly announced in March 2015, where the personal information of 10.5 million consumers, including 400,000 Californians, was breached. The data included the consumers’ names, Social Security numbers, bank account information, medical information, and health claims-related data. Attackers gained access to patient data by sending fake, targeted emails to Premera employees. These emails contained malware that allowed the attackers to spend months compromising Premera’s inadequately-secured network.

The multistate investigation found that the company lacked basic data security, failed to monitor its network for malicious activity, and disregarded experts’ warnings of security flaws. In addition, it failed to limit access to sensitive information, allowing employees without business need to access the information.

The settlement resolves allegations that Premera violated each state’s consumer protection and medical information laws, as well as the federal Health Insurance Portability & Accountability Act (HIPAA), which established national standards and safeguards to protect personal health information.

A copy of the complaint can be found here and the proposed judgment can be found here.

SACRAMENTO – California Attorney General Xavier Becerra today issued a consumer alert following the Governor’s declaration of a state of emergency in Kern County due to a 6.4 magnitude earthquake on July 4, 2019, near the City of Ridgecrest, California. The proclamation declared on July 4 applies to Kern County. Attorney General Becerra reminds all Californians that price gouging during a state of emergency is illegal under Penal Code Section 396.

“Families throughout Kern County are grappling with the significant damage caused by this earthquake and ongoing aftershocks. They should not have to worry about unscrupulous businesses trying to illegally cheat them out of fair prices,” said Attorney General Becerra. “California’s price gouging law protects people impacted by an emergency from illegal price gouging on housing, gas, food, and other essential supplies. I encourage anyone who has been the victim of price gouging, or who has information regarding potential price gouging, to immediately file a complaint through my Office’s website or call (800) 952-5225, or to contact their local police department or sheriff’s office.”

California law generally prohibits charging a price that exceeds, by more than 10 percent, the price of an item before a state or local declaration of emergency. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline. The law also applies to repair or reconstruction services, emergency cleanup services, transportation, freight and storage services, hotel accommodations, and rental housing. Exceptions to this prohibition exist if, for example, the price of labor, goods, or materials has increased for the business.

Violators of the price gouging statute are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $2,500 per violation, injunctive relief, and mandatory restitution. The Attorney General and local district attorneys can enforce the statute.

SACRAMENTO – California Attorney General Xavier Becerra today announced a lawsuit against Texas-based ClubCorp Inc., owner-operator of more than 200 private golf and country clubs nationwide, for failing to repay more than $10 million owed to its more than 9,000 California members. Under the contract entered into by club members, the money, paid as deposits by members, had to be returned after 30 years. Instead, ClubCorp only returned the money if asked and otherwise continued using the money for its own purposes. Given that the club targeted members in mid-life, many of the members to whom the club owed dues are senior citizens.

“We are taking action against ClubCorp on behalf of thousands of Californians,” said Attorney General Becerra. “Instead of repaying money owed to its members, ClubCorp allegedly pocketed its members’ money unless reminded of its obligation. Through this lawsuit, we are reminding ClubCorp that it’s time for the company to return the millions it owes to Californians.” 

The complaint further alleges ClubCorp violated the California False Claims Act by filing reports with the State Controller’s Office that falsely omitted the amounts it owed to its members. If ClubCorp could not return that money to its members, it was required to provide it to the Controller to be held for the rightful owner. ClubCorp is not allowed to simply keep the money, and in doing so is alleged to have violated the law. 

A copy of the complaint can be found here.

SACRAMENTO – California Attorney General Xavier Becerra announced today judgments totaling $1,498,574 in a lawsuit against telemarketers who scammed investors. The company, Consumer Rights Legal Services (CRLS), and four individuals, including CRLS’s president and owner, James Davitt, cheated more than 150 victims by offering bogus “investment recovery services” that they claimed would recover money victims had lost from previous investments. Many of the victims were elderly and had already lost hundreds of thousands of dollars from previous schemes.

“The California Department of Justice is committed to protecting consumers from unscrupulous operators who prey on the most vulnerable,” said Attorney General Becerra. “In this case, these con artists not only targeted the elderly, they doubled down to cheat Californians who had already been the victims of financial fraud. Today’s announcement sends a strong message that California will not stand for those who choose to disregard our laws, and we stand ready to prosecute anyone who violates them.” 

The telemarketers, operating out of Long Beach, cheated victims by making a false and deceptive sales pitch that CRLS could recover their investments for an up-front fee of several thousand dollars. In truth, the company offered only false hope and recovered nothing for the victims. In some instances, victims even paid CRLS to recover fees they had paid to a prior “investment recovery” scam called Consumer Advocate Services Enterprises, where Davitt and other CRLS personnel had previously worked. In addition to judgments totaling $930,800 in penalties and $567,774 in restitution, Attorney General Becerra recovered almost $25,000 in victim restitution pursuant to a bond issued to CRLS under California’s Telephonic Sellers Law.  

Since taking office, Attorney General Becerra has made protecting consumers a top priority. Among other actions, Attorney General Becerra recovered $148.7 million for California from Wells Fargo in settlements over the bank’s systematic misconduct to exploit its own customers; recovered $102 million from BP Energy in a settlement for overcharging Californians for natural gas; and reached a settlement to provide over $51 million in debt relief for students deceived by the now-defunct for-profit Corinthian Colleges.

Consumers are encouraged to report scams to the Office’s Public Inquiry Unit by calling (800) 952-5225 or by submitting a complaint.

A copy of the judgments can be found attached to the electronic version of this press release here.