Consumer Protection

LOS ANGELES – As students prepare to enroll in college this year and take out loans to pay for higher education, Attorney General Kamala D. Harris issued the following tips, encouraging Californians to know all the facts—and avoid potentially harmful scams—before taking on or paying off substantial student loans.  

In advance of enrolling in a college or university, students should thoroughly research the types of financial aid they may qualify for and determine which loans, scholarships, grants, or work-study programs would be most beneficial to their personal situation.   Student borrowers should be aware of factors that may impact their ability to repay student loans, such as changing the status of student enrollment, future job prospects, the amount of interest accruing on loans, and any loan prepayment penalties.          

Students should also be cautious of private companies that charge for what would normally be free student loan services.  Certain companies may impose fees for assisting with federal student loan consolidation or in submitting the Free Application for Federal Student Aid (FAFSA), without disclosing that such services are actually free.  Student borrowers are strongly encouraged to use free student loan resources to avoid being charged unfair and unnecessary fees.

Consumers who take on student loans should be sure to make their payments on time.  Contact the student loan servicer promptly to discuss options if repayment of loans becomes difficult.  Eligible borrowers may be able to lower monthly payments or may be eligible for loan deferment, forbearance, or cancellation.  Late payments could adversely affect credit scores and harm future ability to make purchases or qualify for additional credit.    

What to look out for

The Attorney General offers student borrowers the following tips in order to educate themselves and take advantage of resources regarding student loans:

• Before taking on a student loan, research the types of financial aid that are available and consider ways to lower the cost of higher education programs.  To the extent possible, carefully consider job prospects, including salary information, in deciding whether and how to take out student loans.

• Do not sign a loan document electronically without first reviewing and understanding the terms of the loan agreement.  Make sure to understand how much money is being loaned, the interest rate of the loan, and when the loan will need to be repaid.  Inquire about the available options if loan payments cannot be made on time (which can come up during periods of unemployment, economic hardship, or enrollment in a graduate program).

• Be aware of the differences between federal and private student loans.  Federal student loans may offer lower, fixed interest rates, while private student loans may have higher, variable interest rates.  Additionally, federal student loans generally do not need to be repaid until the student graduates and loan consolidation and income-based or other more flexible repayment plans may be available.  In contrast, private student loans may need to be repaid while the student is still in school and may not offer deferment or forbearance options.    

• Be wary of private companies that charge a fee for assisting with filling out and submitting the FAFSA.  Such companies are unaffiliated with the government.  The U.S. Department of Education provides free assistance with filling out the FAFSA.

• Beware of companies that charge an application fee and monthly fees for assisting with consolidating federal student loan debt.  Consolidating federal student loans is FREE through the Federal Direct Consolidation Program.  The loan consolidation process combines several federal student loans into just one loan.  Consolidated loans may be eligible for various repayment plans, including income-driven repayment plans. 

• Ask about the student loan’s grace period and be aware that the grace period may change depending on circumstances.  Engaging in active military duty, returning to school, and consolidating loans may alter grace periods.  Make sure to stay in contact with student loan servicers to stay informed regarding the repayment time frame.
• Defaulting on student loans will adversely affect credit and will impede the ability to make purchases down the road.  It is important to stay in touch with student loan servicers, especially if there is a difficulty in making timely payments.

HELPFUL RESOURCES

The U.S. Department of Education provides information on the types of federal aid available to students.  The website includes basic eligibility requirements for federal aid.  Additionally, the FAFSA4caster assists consumers with calculating the amount of federal student aid for which they are eligible.

The U.S. Department of Education offers a comparison of federal student loans and private student loans. 

The Federal Student Aid website also helps student borrowers learn about federal loan consolidation before applying for consolidation.  Students who have questions regarding the loan consolidation process can contact the Loan Consolidation Information Call Center at (800) 557-7392. 

Finally, the Federal Student Aid website has information on scholarship opportunities that may help students fund their educational goals. 

What to do if you are the victim of a STUDENT LOAN scam

The Office of the Inspector General at the U.S. Department of Education investigates education programs and collects complaints regarding fraud or schemes related to the misuse of federal student aid.  If you are the victim of a student financial aid scam, please contact the Office of Inspector General’s hotline.

The California Department of Justice protects the rights of consumers and collects complaints on student loan scams in order to identify patterns of wrongful activity.  To submit a complaint to the California Department of Justice regarding a student loan scam, please use one of the following complaint forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.  

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf

中文: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf

Tiếng Việt: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf

SAN FRANCISCO - Attorney General Kamala D. Harris today filed a lawsuit against investment bank Morgan Stanley for misrepresentations about complex investments such as residential mortgage-backed securities, in which large pools of home loans were packaged together and sold to investors.  These misrepresentations contributed to the global financial crisis and to major losses by investors including California's public pension funds, which are responsible for the retirement security of California peace officers, firefighters, teachers, and other public employees.

The complaint, filed in San Francisco Superior Court, alleges that Morgan Stanley violated the False Claims Act, the California Securities Law and other state laws by concealing or understating the risks of intricate investments involving large numbers of underlying loans or other assets. In addition to residential mortgage-backed securities, the complaint also focuses on "structured investment vehicle" investments, which involved not just packages of residential mortgage loans but also other types of debt of individuals and corporations. 

“Morgan Stanley’s conduct in this case evidenced a culture of greed and deception that helped create a devastating economic crisis and crippled California’s budget,” said Attorney General Harris. “This lawsuit is necessary in order to hold Morgan Stanley accountable for the destruction it caused to California, our people, and our pension funds.”

Specifically, the complaint alleges that, from 2004 to 2007, Morgan Stanley assembled and sold billions of dollars in mortgage-backed securities, many of which contained risky loans made by Morgan Stanley subsidiary Saxon, or by New Century, a mortgage lender which received crucial funding from Morgan Stanley.  Morgan Stanley purchased and bundled high-risk loans from subprime lenders like New Century into seemingly safe investments, even though it knew the lenders were “not [using] a lot of common sense” when approving the loans, the complaint alleges. Additionally, the complaint alleges that Morgan Stanley did not disclose the risks because it did not want its concerns about loan quality to become a “relationship killer” that would cause it to lose its lucrative business with companies making the risky loans. 

Among other things, Morgan Stanley's offering documents, which were required to fully and accurately inform investors about the risks, actually misrepresented the quality of the loans contained in the investment packages, by failing to disclose that many of them were underwater (the mortgage was more than the property was worth) and by failing to disclose the number of delinquent loans.  They also used exaggerated appraisals which overstated the value of the properties securing the loans, and knowingly presented incorrect data concerning owner occupancy and loan purpose, which tended to understate the riskiness of the loans.   

The complaint goes on to allege that Morgan Stanley sometimes even took loans that it had already decided not to include in its investment packages because they were too risky, and then included them in later investment packages, despite knowing the problems with the loans, and doing nothing to fix them. The complaint alleges that the lack of disclosure prompted a Morgan Stanley employee to observe to his co-workers that someone “could probably retire by shorting these upcoming . . . deals,” “someone needs to benefit from this mess.”

The complaint also alleges that Morgan Stanley played a central role in crafting the Cheyne structured investment vehicle, which sold supposedly safe short-term investments based on mortgage-backed securities and other complex investments.  Investors were particularly reliant on accurate disclosure of the risks because of the complicated nature of these investments.  The complaint alleges, however, that while Morgan Stanley knew of significant risks, it nevertheless worked to portray the investments as extremely safe.  In fact, Morgan Stanley managed to procure extremely high credit ratings, in some cases the same ratings as the very safest investments such as U.S. government bonds, for investments in Cheyne notes. Morgan Stanley bragged that it “shaped rating agency technology” to “get . . . the rating we wanted in the end,” prompting a SIV manager to observe, “it is an amazing set of feats to move the rating agencies so far.”  Unfortunately, the result of Morgan Stanley's success was huge losses to investors when the SIV failed.     

The California Public Employees Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) – two of the nation's largest institutional investors – lost hundred of millions of dollars on these Morgan Stanley investments.  CalPERS provides retirement security and health plans to more than 1.6 million California firefighters, peace officers, and other public employees.  CalSTRS provides retirement, disability, and survivor benefits for over 850,000 of California’s pre-kindergarten through community college educators and their families. 

The lawsuit arises from a multiyear investigation into the issuance and rating of mortgage-backed securities by Attorney General Harris's California Mortgage Fraud Strike Force.

The Attorney General’s Mortgage Fraud Strike Force was created in May 2011 to comprehensively investigate misconduct in the mortgage industry. As a result of that investigation, Attorney General Harris has to date recovered over $900 million for California’s public pension funds in settlements with three banks and a credit rating agency over misrepresentations in connection with structured finance investments sold to CalPERS and CalSTRS. 

The Attorney General's additional efforts to investigate the mortgage crisis include securing an estimated $18 billion for California in the National Mortgage Settlement and sponsoring the California Homeowner Bill of Rights, a package of laws instituting permanent mortgage-related reforms.

SAN FRANCISCO - Attorney General Kamala D. Harris today announced a preliminary approval of settlements resolving allegations that LG, Hitachi, Panasonic, Toshiba, and Samsung, companies all based in Japan or Korea, fixed prices on critical components of televisions and computer monitors from 1995 to 2007.  Those critical components, known as Cathode Ray Tubes or CRTs, were used to display images on computer monitors and televisions screens before they were replaced by flat screens. The court has approved the settlement pending valid objections submitted within 60 days.    

The companies’ price fixing scheme caused damage to California consumers and government entities that overpaid for their televisions and computers. The announced settlement has led to legally enforceable judgments against these foreign companies.

“LG, Hitachi, Panasonic, Toshiba, and Samsung deliberately targeted the U.S. market to raise prices for televisions and computers worldwide,” said Attorney General Harris. “These settlements bring justice and relief to California consumers and end the malicious practice of price-fixing by these companies.”

The settlements, which were filed in San Francisco Superior Court, require all five companies to pay a total of $4.95 million to settle claims of overcharges paid by California government entities, general damages suffered by the State’s economy, and civil penalties. The settlements require that the companies pay back the illegally obtained profits to those affected by their actions. In addition, the settlements include injunctive relief, which requires that each company engage in company-wide antitrust compliance training and reporting that involves products in addition to CRTs and extends to foreign companies and subsidiaries. Finally, the settlements include requirements, enforceable by the court via fines and imprisonment, to prevent future violations of antitrust law. 

In 2011, after the Office of Attorney General Harris conducted a confidential investigation into price-fixing involving CRTs, Attorney General Harris filed complaints against these companies for having entered into a price-fixing conspiracy of critical components of television and computer screens. That conspiracy involved top-level meetings of key executive decision-makers in Asia and Europe to set prices and outputs of CRTs.  It also involved worldwide meetings among lower-level executives to exchange confidential information.  Californian subsidiaries of these companies were involved in this conspiracy and took on the role of monitoring the prices of televisions and computers in California stores.

This case, filed by Attorney General Harris, requested the court award damages to California consumers. A parallel case filed by private counsel in federal court, known as the Indirect Purchaser Plaintiffs, also requested damages on behalf of Californians, and Attorney General Harris and the Indirect Purchaser Plaintiffs coordinated their discovery and settlement efforts.

Due to these coordinated efforts, California consumers or sole proprietorships that purchased at least one television or computer between 1995 and 2007 can make a claim, with a guaranteed minimum check of $25.

All eligible California consumers and sole proprietorships can file claims for reimbursement at https://www.crtclaims.com/. The new deadline for filing those claims is June 30, 2016.

In December 2015, Attorney General Harris announced a settlement resolving allegations that Pratibha Syntex Ltd., a company based in India, gained an unfair competitive advantage over American-based companies by using pirated software in the production of clothing imported and sold in California. The settlement, which was filed in Los Angeles Superior Court, required Pratibha Syntex to pay $100,000 in restitution, prohibited Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and required the company to perform four complete audits of the software on their computers and fix any violations within 45 days. That case marked the first time a state has secured a legally enforceable judgment against an international company for these types of violations. 

Copies of the complaint, memorandum in support of preliminary approval, and the order granting preliminary approval, are all attached to the online version of this release at www.oag.ca.gov/news.  Further details can also be found at http://oag.ca.gov/consumers/crt_notice.

SAN FRANCISCO — With Tax Day fast approaching on April 18, 2016, Attorney General Kamala D. Harris today issued a consumer alert, advising taxpayers to be wary of schemes targeting hardworking Californians during this tax season.  Each year, millions of California taxpayers file their taxes and many look forward to receiving tax refunds.  Unfortunately, tax season also draws scam artists who prey on individuals who may need help with filing their taxes.  This alert explains some of the most common tax season scams and provides resources to help Californians find reputable tax help.  In addition to this written alert, Attorney General Harris has also released the second in a “Consumer Spotlight” audio series highlighting consumer issues across the state.  This radio story focuses on Tax Season Scams and includes one Californian’s story about a tax impersonation scam, discussion of other common tax season concerns, and resources to find tax help.  Listen (Radio Story) 5:41

COMMON TAX SEASON SCAMS

IRS Impersonation Scams One of the most common scams begins with an unsolicited call or email from a person claiming to represent the IRS.  Sometimes the caller will claim to have information about an unexpected tax refund.  Other “representatives” may demand immediate payment of a phony tax bill, threatening that the consumer will be sued or even arrested if she does not comply.  Consumers should hang up the phone or delete the email because the IRS does not initiate contact with taxpayers by telephone or email, nor does it demand immediate payment without first offering the taxpayer the opportunity to appeal.  Seniors and immigrants in particular may be targeted by these scams, and should exercise caution. Tax Preparation Scams Consumers should also be on the lookout for dishonest tax preparers.  Some deceptive preparers may falsify returns in order to claim an inflated refund, only to keep portions of the inflated refund for themselves.  Others may steal the taxpayer’s identity and use it to file a completely fraudulent return.  Finally, as the implementation of the Affordable Care Act continues, consumers should look out for a new scam in which tax preparers incorrectly tell consumers they owe a health coverage penalty that they must pay to the preparer.  Unnecessary High Cost Products Consumers should also steer clear of high-cost products that allow them to pay the cost of tax preparation out of their refund.  These Refund Transfers or Refund Anticipation Checks do not get consumers a faster refund and generally have triple-digit annual interest rates.  

TAX SEASON TIPS

While the overwhelming majority of tax professionals are honest, the tips below can help consumers avoid the deceitful ones.  Free tax preparation assistance is also available for seniors, the disabled, individuals whose first language is not English, and people with incomes under $54,000.  Individuals who qualify for free assistance should start by visiting the IRS website to find free tax prep help near you.  Those who do not qualify for free assistance should follow these tips when searching for a legitimate tax preparer.

• Look for a tax preparer with a longstanding presence and trustworthy reputation in the community.
• Always verify that the tax preparer is either registered with the state or exempt from registration because he or she is an attorney, a certified public accountant, or an IRS-enrolled agent.  Visit the California Tax Education Council’s website to check a preparer’s status and for more information about registration and exemption requirements.
• Make certain the preparer has a valid IRS Preparer Tax Identification Number (PTIN).  Use the IRS Directory of Federal Tax Return Preparers to research tax professionals.
• Beware of suggestions that a tax preparer will exploit hidden loopholes or uncover little-known deductions to obtain a bigger refund than the competition.  As a taxpayer you are responsible for the return that you file, so do not allow scammers to coax you into falsifying information.  If a promise seems too good to be true, it probably is.
• Always review a tax return before signing it and watch out for suspicious signs like too many dependents claimed or tax credits that do not seem applicable or have not been clearly explained.  And never, ever sign a blank return.
• Keep a copy of the return.  Honest preparers should provide copies of the return that may be needed for future reference or to answer questions from the IRS.
• Review the IRS Tips on “How to Select an Income Tax Return Preparer.”  

ADDITIONAL RESOURCES FOR CALIFORNIA TAXPAYERS

• Free tax assistance is widely available through the IRS Volunteer Income Tax Assistance (VITA) program for taxpayers with disabilities or limited English proficiency, as well as those with incomes under $54,000.  Visit the VITA website for more information. 
• The Tax Counseling for the Elderly (TCE) program also offers free services focusing on issues affecting seniors.  Visit the TCE program website for more information. 
• Visit the IRS website for more information on finding free tax help. 
• Both the IRS and the Treasury Inspector General for Tax Administration  maintain informative websites with detailed information on the latest scams.
• Consumers can report suspected tax scams to the Office of the Attorney General.  To submit a complaint, please use one of the following forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company. En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf? 中文: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf? Tiếng Việt: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf?

SAN FRANCISCO - Attorney General Kamala D. Harris today issued a consumer alert warning California businesses to be aware of phishing scams that target the workplace and can lead to data breaches and loss of funds. The scam is commonly called “brand spoofing” or “phishing” because the spam mail sent uses familiar or legitimate-sounding names of companies to trick consumers into disclosing confidential personal information. In the last few weeks, the California Department of Justice has received notifications of data breaches from California companies that have fallen victim to this type of scam. 

Complaints and reports describe cybercriminals sending fake emails to businesses in an attempt to trick employees into handing over critical data and in some instances money.  Based on recent attacks, these phishing emails will falsely appear to be coming from an executive within the business and will be sent to employees that have access to sensitive data and finances.  For example, an email that looks like it is being sent from an executive may direct an employee in the finance department to transfer money to an account outside the country or an email sent to an HR manager may ask for all employee W2 forms to be sent to a fake CEO email address.

When employees respond to such emails, they may be facilitating a data breach that puts their co-workers or others at risk of identity theft and subjects their company to significant monetary and reputational costs.

The FBI has issued a public service announcement warning about business email compromise, and the Identity Theft Resources Center and security experts have also warned about this type of scam.

There are measures businesses can take to reduce the risk of falling victim to such scams.  In the latest California Data Breach Report, issued last month, the Attorney General‘s office discussed minimum reasonable security controls that businesses should implement, including some that address phishing.

Tips on Combatting Phishing in the Workplace

• Educate employees on phishing, focusing on the types of data likely to be targeted in individual job roles.
• Control access to sensitive data and systems with a “need-to-know” and “least privilege” policy.
• Implement multi-layered network boundary defenses that can detect anomalies in inbound and outbound traffic.
• Use two-factor authentication to confirm requests to transfer funds (such as phone verification of an email request – to a pre-established number, not one provided in the email).
• Implement malware defenses, to protect against malicious software delivered by phishing emails (and other vectors).
• “Whitelist” software that is authorized to run on your network, and prevent execution of all others.

For More Information

California Attorney General’s California Data Breach Report (February 2016)

FBI on Business Email Compromise (August 2015)

Identity Theft Resources Center on CEO Phishing (March 2016)

Krebs on Security, Phishers Spoof CEO, Request W2 Forms (Feb. 2016). 

LOS ANGELES – Attorney General Kamala D. Harris today issued a consumer alert to warn Californians of retailer fraud and scams that are targeting immigrant and limited English proficient (“LEP”) consumers. Numerous complaints filed with the California Department of Justice describe predatory actions of some retailers on consumers who lack credit and/or fluency in English.  In light of this reported consumer threat, the Attorney General reminds immigrant and LEP consumers to be careful in accepting retail contracts or credit card agreements, and encourages individuals to ask for help from appropriate consumer protection agencies when retailers engage in unfair or deceptive practices.

LOOK OUT FOR THIS COMMON SCAM

Common scams that affect communities with limited English proficiency include “store credit” and false warranties scams.  Californians eager to build their credit may be targeted by retailers who offer to sell them products with a small down payment and with the rest of the amount financed through “store credit.”  This type of agreement often traps consumers into contracts with high interest rates and other unfavorable terms.  Dishonest retailers may also sell defective products that they later refuse to exchange or repair, even if the customer has purchased a retailer warranty.  These types of scams can result in customers being forced to continue making payments on defective items or risk ruining their credit and being sued by the retailer.     

HOW TO PROTECT YOURSELF

Immigrant and LEP consumers should be aware that the California Translation Law[1] protects their rights. This law requires retailers who negotiate in Spanish, Tagalog, Chinese, Vietnamese, or Korean, either orally or in writing, to provide a contract translated in the language used for negotiation to customers.  The translation must be accurate and must include every term and condition in the contract or agreement.  If a retailer negotiates in these languages and does not provide a translated copy of a contract before it is signed, a customer may rescind the contract.  This law was passed to protect the rights of millions of California consumers who do not speak or read English as a first language and who are entitled to be fully informed regarding the terms of their contracts.  This consumer alert offers tips for safeguarding immigrant and LEP consumers who may be targeted by unscrupulous retailers.    

What to look out for

The Attorney General offers California consumers the following tips in order to protect themselves from retailers who may be engaging in improper practices:

• Before making a purchase, research a retailer’s reputation by searching online for reviews and any potential consumer complaints regarding prior fraud or scams. 
• Do not allow a salesperson to pressure you into purchasing an expensive item, an add-on item, or any warranty that you do not want.  Be wary of offers in which retailers agree to sell you an item at a discounted price only if you also purchase an expensive warranty or insurance.         
• Request and read a paper copy of your contract before you sign any documents, even if the retailer intends for you to sign the contract electronically.  Do not allow a salesperson to pressure you into signing anything before you see and understand the terms of your contract.
• If there is something you do not understand about your contract, ask the sales representative for clarification.  Be sure that you are aware of all the goods and services listed on your contract, the total amount due, the number and dollar amount of your monthly payments, and the interest rate you will be charged. 
• If you negotiate with a sales representative in Spanish, Tagalog, Chinese, Vietnamese, or Korean, the retailer must provide you with a copy of your contract in the language in which you communicated before you sign the agreement. 
• Before purchasing a retailer’s warranty for an electronic device or an appliance, ask to see the full warranty terms in writing.  Consider whether you need a retailer’s warranty, and confirm the coverage and length of the manufacturer’s warranty on the product (the manufacturer’s warranty is usually included in an item’s price).  Ask about the coverage provided by the retailer’s warranty, any fees associated with use of the warranty, exclusions, and how repairs are handled.    
• Ask about the return and exchange policy prior to making your purchase.  Make sure to read a written version of the return and exchange policy, which specifies how long you have to return or exchange an item.
• Retain copies of all documents associated with your purchase, including the contract, receipt, warranty information, return policy, manuals, monthly statements, and any other documentation you receive from the retailer.
• Promptly examine the merchandise you purchased to make sure it is new (unless you intentionally bought a used item), functional, and in good condition.  Notify the retailer immediately if problems arise with an item.  Document your interactions with the retailer in writing so that a record exists regarding your attempts to resolve the problem.
• Customers who are trying to build their credit should request a copy of their credit report from https://www.annualcreditreport.com to make certain that their payments are being properly reported to the credit bureaus.      

HELPFUL RESOURCES

The California Department of Consumer Affairs provides helpful information on how to build and maintain good credit at http://www.dca.ca.gov/publications/knowyourscore.shtml.  It also offers guidelines on how to avoid scams and fraud at http://www.dca.ca.gov/publications/guide/ref_guide.pdf, and provides resources to consumers who have complaints at http://www.dca.ca.gov/publications/consumer-selfhelp.shtml.

The Los Angeles County Department of Consumer and Business Affairs also offers information to consumers at http://dcba.lacounty.gov/wps/portal/dca, and provides the opportunity to ask questions regarding consumer purchases at https://iddweb.isd.lacounty.gov/dca_ecomplaint/Question/.

The Bureau of Electronic and Appliance Repair, Home Furnishings and Thermal Insulation regulates industry standards, and provides information and resources for consumers at http://www.bhfti.ca.gov/consumer/index.shtml.

What to do if you are the victim of a RETAILER scam

The Better Business Bureau (BBB) offers resources for those who have been the victim of a retailer scam.  If you have been the victim of a retailer scam, immediately file a complaint with the BBB at https://www.bbb.org/consumer-complaints/file-a-complaint/get-started.  

The Los Angeles County Department of Consumer and Business Affairs provides support for those who have been the target of a retailer scam.  If you have been a victim, you may file a complaint with LADCBA at https://iddweb.isd.lacounty.gov/dca_ecomplaint/.

The California Department of Justice protects the rights of consumers and collects complaints on retailer fraud and scams in order to identify patterns of wrongful activity.  To submit a complaint to the California Department of Justice regarding a retailer’s wrongful behavior, please use one of the following complaint forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.  

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf

中文: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf? 

Tiếng Việt: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf?

Translated releases:

Chinese: https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/limited-english-...  

Korean: https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/limited-english-...

Spanish: https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/limited-english-...

Tagalog:  https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/limited-english-...

Vietnamese: https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/limited-english-...

LOS ANGELES – Attorney General Kamala D. Harris today, along with seven states, sent a letter to the U.S. Department of Veterans Affairs (“VA”), urging the Secretary to use his authority to restore educational and vocational rehabilitation benefits to thousands of veterans victimized by predatory practices carried out by for-profit schools such as Corinthian Colleges, Inc. (“Corinthian”).  The letter also asks VA Secretary Robert McDonald to take steps to ensure that veterans are given full and accurate information about the risks associated with using their benefits at certain schools.

“We honor the service and sacrifice of our veterans by ensuring that when they return home, they have access to benefits that will help them transition to civilian employment and build lives for themselves and their families,” stated Attorney General Harris in the letter.

“Rather than being honored, the veterans who enrolled in Corinthian schools were cheated out of these benefits.  ED has acted to remedy the harms suffered by student borrowers who were defrauded by Corinthian and other unscrupulous institutions—we respectfully urge you to act in harmony with your sister agencies and offer similar relief to student veterans who were harmed by precisely the same misconduct,” the Attorney General added. 

The letter specifically calls on the Department of Veterans Affairs to do three things:

1. Restore Benefits to Veterans Who Attended Institutions that Utilized Erroneous, Deceptive, or Misleading Advertising, Sales, or Enrollment Practices

The letter urges the VA to implement processes to restore G.I. Bill and Vocational Rehabilitation and Employment (“VR&E”) benefits to student veterans who used those benefits at schools found to have engaged in misleading and deceptive behavior.  This relief should be provided when a regulatory or enforcement action is taken by the U.S. Department of Education, a State Approving Agency, or a State Attorney General after a showing of misconduct, or when a court enters a judgment against a school, or upon application by a veteran or group of veterans alleging that an educational program or college has been deceptive or misleading.

2. Ensure that Veterans Have Full and Accurate Information

The letter urges the VA to fully educate veterans about their options and risks when choosing a school.  The VA should inform student veterans about the potential consequences of utilizing educational benefits at schools that have been subject to investigations or lawsuits. Early warnings and information will help veterans make informed choices.

3. Support the Efforts of State Approving Agencies and Attorneys General

Lastly, the signatories urge the VA to support states’ efforts to protect veterans from misconduct by for-profit institutions. Ensuring that the VA works collaboratively with and supports the efforts of the State Approving Agencies and Attorneys General in this context will help protect student veterans from future misconduct.

This letter is a continuation of Attorney General Harris’ efforts to protect and provide relief to students of for-profit schools. In 2013, Attorney General Harris filed a lawsuit against Corinthian for false advertising and deceptive marketing targeting vulnerable, low-income students and misrepresenting job placement rates to potential and current students, investors and accrediting agencies. Corinthian closed all of its California campuses on April 26, 2015.  Attorney General Harris has since called for the U.S. Department of Education to relieve the student loan debt of thousands of students who attended Corinthian.

Attorney General Harris is committed to protecting veterans and the benefits they earned through their dedicated service to our country. Last year, an alarming number of “pension poaching” scams targeting senior veterans and their survivors were reported to the California Department of Justice’s Public Inquiry Unit. Attorney General Harris consequently issued a consumer alert urging veterans to be wary of such schemes.

In November 2015, Attorney General Harris announced a stipulated judgment which resolved allegations that JPMorgan Chase (Chase) committed credit card debt-collection abuses against tens of thousands of Californians.  The Attorney General’s investigation and litigation further revealed that Chase violated the Servicemembers Civil Relief Act and the California Military and Veterans Code when it filed false declarations regarding military service and improperly obtained default judgments against servicemembers on active duty. 

The letter can be viewed here: https://oag.ca.gov/sites/all/files/agweb/pdfs/va-multi-state-letter.pdf. 

SAN FRANCISCO - Attorney General Kamala D. Harris today issued the following statement calling on the United States Department of Education (ED) to do more to protect students defrauded by Corinthian Colleges and other for-profit colleges.  Last week, ED held the second of three negotiated rulemaking sessions to determine how student borrowers can get relief from federal student loans when these loans were used at a school that abused and deceived the students.  Attorney General Harris’s office participated in the session as one of two representatives for state attorneys general and called repeatedly for greater protections for students.

“Too many students defrauded by for-profit colleges remain buried under mountains of student debt,” said Attorney General Harris.  “I call on the Department of Education to revise their proposed regulations to ensure meaningful debt relief is available to any student misled by a predatory college."

In the wake of the recent, public collapse of Corinthian Colleges, a joint investigation by ED and Attorney General Harris’s office found that job placement rates were widely misrepresented to enrolled and prospective Corinthian students.  Thousands of the school’s students have asked ED to discharge their federal loans because they were deceived by Corinthian’s inflated job placement rates. 

This issue is not limited to Corinthian Colleges. Other for-profit institutions have used similar dishonest tactics against their students, and it is expected that many more students will need to utilize this defense. 

Federal law, including ED’s regulations, gives students the right to have their loans discharged when their colleges have engaged in certain kinds of unlawful conduct—this right is referred to as a “defense to repayment.”  Yet current federal regulations provide little guidance on who may be eligible, how they should apply, or how ED will evaluate those applications.  Recently, Attorney General Harris’s office and other agencies have uncovered an extensive pattern of misconduct among many for-profit colleges, particularly regarding deceptive recruitment tactics.  As a result of the sharp increase in the number of student borrowers asserting their rights, ED initiated a “negotiated rulemaking” process for interested parties to provide input on new regulations governing defenses to repayment when a school has abused and deceived them.  As part of the process, ED convened a committee made up of stakeholders—including state attorneys general, students, student advocacy groups, public schools, for-profit schools, and accreditors, among others—to voice their positions on what the new rules should say.  Congress imposes this negotiated-rulemaking requirement whenever ED seeks to issue new regulations about student assistance for higher education.

At the committee’s first meeting in January, Attorney General Harris’s office, along with other state attorneys general and student advocacy groups, stressed the need for meaningful, robust, and streamlined loan-discharge procedures for students who have been victimized by their school.  At a subsequent meeting earlier this month, however, ED unveiled proposed language that contradicts the intent of previous discussions by narrowing, limiting, and delaying student relief in the following ways: 

1. ED’s proposal unreasonably limits the categories of school misconduct that would give rise to a defense to repayment.  The proposal limits students’ rights to circumstances where the colleges either breached a contract or engaged in “substantial misrepresentations,” ignoring other categories of rampant school misconduct that violate state law. 
2. ED’s proposal includes a two-year statute of limitations for borrowers to assert a defense to repayment.  This is patently unfair given that there is no corresponding statute of limitations for debt collectors in going after students for federal student loans. 
3. ED’s proposal does not provide any procedure to grant broad, automatic relief to borrowers, even when it is clear that a predatory school has systematically abused and deceived large numbers of students through widespread practices.  In these clear-cut cases, there is no practical reason to deny relief or to put an additional burden on students to again prove their case. 
4. In cases where the school has not already closed down, ED proposes that the decision to grant a discharge be made by pitting the student against the school in an adversary process, effectively requiring the student to hire a lawyer and allowing the school to interfere with the student's right to obtain relief on a government loan.  Any fair process should be sufficiently simple and straightforward so that a student can navigate it successfully without legal representation.

Attorney General Harris continues to call for changes to the new regulations.  Fair and effective defense-to-repayment procedures (1) must look to state law as a basis to assert a defense; (2) must not be limited by any time period; (3) must provide procedures for automatic, global relief to students where it is clear that they are the victims of rampant school misconduct; and (4) must not permit the school to make the process burdensome and expensive.

 

Agreement to provide certain California borrowers with loan modifications; foreclosed HSBC loans may be eligible for payments for past abuse 

SAN FRANCISCO – Today Attorney General Kamala D. Harris announced that California will join the U.S. Department of Justice, Department of Housing and Urban Development, and 48 other states in entering into a consent judgment with mortgage lender and servicer HSBC over its faulty mortgage servicing practices. This ruling will address mortgage origination, servicing, and foreclosure abuses perpetuated by HSBC.

“California homeowners worked hard and played by the rules to stay in their homes during the housing crisis, but for too many, their struggle and sacrifice was met by abusive mortgage servicing practices,” said Attorney General Harris. “This settlement holds HSBC accountable for its abusive practices that manipulated people fighting to stay in their homes. I encourage eligible borrowers who receive a claim form and feel they were a victim of HSBC’s practices to file a claim immediately.”      

Under the terms of the agreement, HSBC will pay $100 million in cash, of which $59.3 million will be used to distribute payments to borrowers whose homes were foreclosed upon between 2008 and 2013, and $40.5 million will be paid to the federal government. The agreement also requires HSBC to provide $370 million in other consumer relief, such as loan modifications, principal reductions, and loan refinancing.

Based on foreclosure numbers, it is estimated that California borrowers are eligible for about 10% of the $59.3 million fund for payments to foreclosed borrowers.

This agreement is very similar to the National Mortgage Settlement of 2012, in which Attorney General Harris secured a historic $20 billion for California homeowners affected by the mortgage crisis. In 2014, Attorney General Harris announced several multimillion dollar settlements regarding mortgage fraud crime, including a national settlement with SunTrust Mortgage that provided $40 million in payments and $500 million in consumer relief nationwide; a national settlement with Bank of America in which California recovered $300 million in damages and $500 million in consumer relief credits; and a national settlement with Citigroup in which California recovered $102.7 million in damages and $90 million in consumer relief. 

Additional information concerning today’s announcement is listed below.

Loan Modifications

The HSBC agreement requires the company to provide certain California borrowers with loan modifications or other relief. The modifications, which HSBC chooses through an extensive list of options, include principal reductions and refinancing for underwater mortgages. HSBC decides how many loans and which loans to modify, but must meet certain minimum targets. Because HSBC receives only partial settlement credit for many types of loan modifications, the settlement will provide relief to borrowers that will exceed the overall minimum amount.

Payments to Borrowers

Approximately 7,526 eligible California borrowers whose loans were serviced by HSBC and who lost their home to foreclosure from January 1, 2008 through December 31, 2012 and encountered servicing abuse will be eligible for a payment from the national $59.3 million fund for payments to borrowers. The borrower payment amount will depend on how many borrowers file claims. 

Eligible borrowers will be contacted about how to qualify for payments.

Mortgage Servicing Standards

The settlement requires HSBC to substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.

The terms will prevent past foreclosure abuses, such as robo-signing, improper documentation, and lost paperwork. 

The settlement’s consumer protections and standards include:

• Making foreclosure a last resort by first requiring HSBC to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• Procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials; and

Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Independent Monitor

The National Mortgage Settlement’s independent monitor, Joseph A. Smith Jr., will oversee HSBC agreement compliance for one year. Smith served as the North Carolina Commissioner of Banks from 2002 until 2012, and is also the former Chairman of the Conference of State Banks Supervisors (CSBS). Smith will oversee implementation of the servicing standards required by the agreement and issue public reports that identify whether HSBC complied or fell short of the standards imposed by the settlement. If HSBC is alleged to have violated terms of the agreement, the states and federal agencies can seek relief through the court.

Additional Terms

The agreement resolves potential violations of civil law based on HSBC’s deficient mortgage loan origination and servicing activities. The agreement does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by HSBC, or from punishing wrongful securitization conduct that is the focus of the Residential Mortgage-Backed Securities Working Group. Additionally, the agreement does not prevent any action by individual borrowers who wish to bring their own lawsuits.

The agreement will be filed as a consent judgment in the U.S. District Court for the District of Columbia. 

For more information on how to file a claim against a business/company, visit: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company

LOS ANGELES – Attorney General Kamala D. Harris today announced that she has lodged a lawsuit against Southern California Gas Company for violations of California law in connection with a massive methane leak from its Aliso Canyon natural gas storage facility.  In addition to filing suit in her independent capacity as Attorney General, Harris’s lawsuit also includes her client, the California Air Resources Board. The natural gas leak has caused a public health and statewide environmental emergency, which has sickened residents of Porter Ranch and compelled them to relocate.   

The lawsuit alleges that Southern California Gas Company violated state health and safety laws by failing to promptly control the release of the natural gas and report the leak to authorities. In addition, the lawsuit cites the environmental threat the uncontrolled release of more than 80,000 metric tons of methane into the atmosphere poses to California’s efforts to reduce greenhouse gas (“GHG”) emissions and mitigate the pace and effects of climate change.   

“The impact of this unprecedented gas leak is devastating to families in our state, our environment, and our efforts to combat global warming. Southern California Gas Company must be held accountable,” said Attorney General Harris. “This gas leak has caused significant damage to the Porter Ranch community as well as our statewide efforts to reduce greenhouse gas emissions and slow the impacts of climate change. My office will continue to lead this cross-jurisdictional enforcement action to ensure justice and relief for Californians and our environment.” 

Specifically, the lawsuit alleges claims of public nuisance under California Civil Code section 3479 and violations of California’s Unfair Competition Law (Bus. & Prof. Code, § 17200, et seq.), joining the City and County of Los Angeles’ pending claims. Attorney General Harris’s lawsuit also alleges violations of Health and Safety Code sections 41700 (discharge of air contaminants) and 25510 (hazardous materials release reporting); and Government Code section 12607 (impairment of the State’s natural resources). 

The Attorney General seeks relief in the form of injunction, civil penalties, and restitution.

The leak, which was discovered on October 23, 2015, has yet to be abated.  The primary component of the leak is methane, which is the second largest component of GHG emissions in California behind carbon dioxide.  As of January 8, 2016 – eleven weeks after the leak was discovered – it was estimated that cumulative methane emissions amount to more than two million metric tons of carbon dioxide equivalent (approximately two percent of estimated statewide GHG emissions over the same period), and this cumulative total will grow as the leak continues.  

"Attorney General Harris' action today is a significant step in the ongoing effort to hold Southern California Gas accountable, end this public health emergency and assure it never happens again," said Los Angeles City Attorney Mike Feuer, who filed suit against Southern California Gas Company on December 7. 

"This action recognizes the impacts of this ongoing leak on our climate and ensures there’s accountability,” said California Air Resources Board Chair Mary D. Nichols.

Given the critical nature and magnitude of the release, its negative impact on California’s statewide GHG emissions reduction efforts, and the Attorney General’s broad authority to remedy the harms at issue, the Attorney General’s participation in the enforcement action is necessary to ensure that the interests of the people of the State of California are fully represented.

The Attorney General and the California Air Resources Board are in an ideal position to ensure that effective GHG emission mitigation is achieved.  Additionally, the Office of the Attorney General is uniquely situated to coordinate multiple agency claims and represent the interests of those agencies, conserving state resources.  The Attorney General is already serving a crucial coordinating role, facilitating the exchange of information among the numerous state, federal, and local agencies with jurisdiction over the gas leak.

The Attorney General’s filing complements ongoing actions of the numerous government agencies that are coordinating efforts related to the gas leak.  In addition to the Air Resources Board, these agencies include the California Energy Commission, the California Public Utilities Commission, the Department of Fish and Wildlife, the Division of Oil, Gas and Geothermal Resources, the Governor’s Office of Emergency Services, the Los Angeles Regional Water Quality Control Board, the Office of Environmental Health Hazard Assessment and the South Coast Air Quality Management District. Also included are the U.S. Environmental Protection Agency, Region 9 and Los Angeles County.