Consumer Protection

LOS ANGELES — Attorney General Kamala D. Harris issued a consumer alert today to warn homeowners about mortgage loan modification scams.  The California Department of Justice has received an increased number of complaints from homeowners and has also been contacted by mortgage servicers that have expressed concern about these scams.

Scammers are calling and mailing homeowners, pretending to be their mortgage servicer or a representative from the Home Affordable Modification Program (HAMP), to offer fake loan modifications and “trial payment plans” to lower mortgage payments.  These scammers may send genuine-looking letters with the logo of the homeowner’s mortgage company, the homeowner’s account number, and deceptive contact information that routes homeowners to the scammers instead of their mortgage servicer.  They may also call from telephone numbers that show up on caller ID as the homeowner’s mortgage company. 

As with legitimate HAMP offers, homeowners are told that their loans may be permanently modified if they make three trial period payments and follow certain other requirements.  Homeowners are usually instructed to send payments via wire transfer or money order to sham addresses that supposedly belong to their mortgage company, only to later discover that they have been sending payments to scammers and have lost thousands of dollars while their real mortgage company has not received any payment during the duration of the scam. Currently, the federal HAMP and HARP programs are set to end on December 31, 2016.[1]

Other common mortgage modification scams include:

• Illegally charging homeowners upfront fees for mortgage modification services and then providing little or no assistance;

• Falsely guaranteeing or implying that modification applications will be approved (often through falsely claiming affiliation with HAMP, other government programs, or mortgage servicers); and

• Tricking homeowners into transferring part or all of their property interests to a scammer, usually in an effort to drain equity from a property.

Important Tips

Homeowners should keep the following tips in mind to protect themselves from mortgage modification scams:

• Be wary of unsolicited telephone calls and mailings that offer a mortgage modification or claim to be a pre-approved modification, especially if the homeowner is asked to provide any payment or personal information.
• Homeowners who have applied for a mortgage modification should confirm any modification offers or approvals directly with their mortgage servicer to ensure that the modification offer or approval is legitimate before paying money or providing personal information.
• Because scammers may provide fake contact information, homeowners should contact their mortgage servicer using the contact information on their regular mortgage statements to make sure that an offer or approval is legitimate.  If the offer or approval is for a HAMP modification, homeowners can also call the federal government’s Making Home Affordable hotline at 1‑888-995-HOPE (1-888-995-4673) to confirm that the offer is legitimate.
• Scammers often request payment by money transfer companies, including Western Union and MoneyGram, or wire transfer, and may also use a fake address for payments.  Before sending a mortgage payment to any address other than what is on the regular mortgage statements, homeowners should verify that the address is legitimate with their mortgage servicer.
• In California it is illegal for any person, including real estate agents, real estate brokers, and lawyers, to charge upfront fees for loan modification assistance or services.[2]  Be wary of any individual or company that guarantees a successful result, since only the mortgage servicer can approve a mortgage modification offer.  Homeowners should also be wary of any individuals who encourage homeowners to stop contacting their mortgage servicer or to stop making mortgage payments. 
• Homeowners should not have to pay a fee in order to apply for a mortgage modification and can get FREE help from a U.S. Department of Housing and Urban Development (HUD)-certified housing counselor to apply for a modification or other relief.  See Additional Resources below.

Additional Resources

• To check the legitimacy of a HAMP offer or approval, report a suspected scam, or to get free mortgage loan assistance, call the Making Home Affordable hotline at 1-888-995-HOPE (1-888-995-4673) or go to www.MakingHomeAffordable.gov.
• If a fake HAMP offer or approval is received, report it to the Office of the Special Inspector General for the Troubled Asset Relief Program at 1-877-SIG-2009 (1-877-744-2009) or go to www.sigtarp.gov.
• If a fake modification offer or approval is received by mail, report it to the United States Postal Inspection Service at 1-877-876-2455 or go to postalinspectors.uspis.gov.
• For a referral to a free housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), call 1-800-569-4287 or go to www.hud.gov.
• For free assistance for low- and moderate-income Californians who want to stay in their homes and maintain an affordable mortgage, call Keep Your Home California at 1-888-954-KEEP (1-888-954-5337) or go to www.keepyourhomecalifornia.org. 

To submit a consumer complaint about a mortgage loan modification scam to the Office of the Attorney General, visit oag.ca.gov/contact/consumer-complaint-against-business-or-company.

[1] https://www.hmpadmin.com/portal/news/docs/2016/hampupdate030316.pdf, http://www.harp.gov/About

[2] See SB 94, passed in 2009, and 16 C.F.R. Part 322 

LOS ANGELES – Attorney General Kamala D. Harris today issued an information bulletin to California law enforcement agencies to reinforce integral eviction procedures under the California Homeowner Bill of Rights. Under current California law, occupants of a foreclosed property who are not named in eviction documents - such as tenants - can present a “Claim of Right to Possession” form to temporarily stop the eviction process up to and including when the Sheriff comes to remove them from the property.

Following the 2012 national mortgage settlement, Attorney General Harris sponsored the landmark California Homeowner Bill of Rights (HBOR), which took effect on January 1, 2013. The legislation package included additional protections for homeowners and tenants facing foreclosure. Although HBOR has been in effect since 2013, advocacy groups have reported cases in which Sheriffs proceed with the eviction process despite being presented with a Claim of Right to Possession form. This bulletin provides guidance for Sheriffs performing evictions following a foreclosure. 

“This bulletin clarifies integral protections and due process available under the Homeowner Bill of Rights,” said Attorney General Harris.  “I sponsored this bill to provide a fair process for vulnerable Californians who are facing the loss of their homes. I thank the advocacy organizations for their tireless work on behalf of those affected by the foreclosure crisis."

Prior to HBOR, occupants who were not named in an Unlawful Detainer Complaint were required to respond to a “Prejudgment Claim of Right to Possession” within 10 days of service. This is no longer the case.  Under HBOR, certain post-foreclosure occupants, such as tenants, can temporarily stop the eviction process by presenting a Claim of Right to Possession, including at the time of the lockout, to the Sheriff at the property. Once a claim is presented, the Sheriff should take no further action until notified by the court.  The bulletin further instructs Sheriffs on how to respond when presented with a Claim of Right to Possession. 

“HBOR provides critical protections for tenants in foreclosed properties.  Western Center on Law & Poverty is grateful to the Attorney General for providing guidance to the sheriffs who play a key role in implementing these protections and ensuring that innocent tenants will not be evicted without notice,” said Madeline S. Howard, Senior Staff Attorney at the Western Center on Law and Poverty. 

“Over 1 million California tenants suffered displacement after their landlords’ foreclosure from 2008-2012.  The tenant protections of HBOR helped address this crisis, and the Claim of Right to Possession gave tenants a new tool to assert their rights. However, many tenants have had difficulty using this procedure because it was new and education was limited.  Tenants Together believes that this Bulletin will significantly improve the use of the Claim of Right to Possession and ensure that Sheriffs across the state are able to properly follow the legal process,” said Leah Simon-Weisberg, Legal Director at Tenants Together. 

Western Center and Tenants Together have received calls asking for assistance with the prejudgment claim process and reports of post-foreclosure eviction abuse from tenants in the Central Valley, Inland Empire, and the San Francisco Bay Area. 

Attorney General Harris has worked to ensure that California’s homeowners are treated fairly and with consideration during the foreclosure process. In 2011, she created the Mortgage Fraud Strike Force, which was tasked with the responsibility to investigate and prosecute misconduct related to aspects of the mortgage process. In February 2012, Attorney General Harris secured more than $20 billion for struggling California homeowners from the nation’s five largest banks.

The Attorney General has also taken steps to improve relations between the public and law enforcement agencies. In 2015, she directed a review of her Division of Law Enforcement's policies on implicit bias and the use of force. Following the 90-day Review, Attorney General Harris created the first POST-certified course on Procedural Justice and Implicit Bias in the United States. In 2016, she sponsored legislation that would create a stand-alone course for peace officers on principled policing, procedural justice and implicit bias. She later formed the 21st Century Policing Working Group, which has convened several times to discuss its current progress and strategies to improve policing policies to fit the needs of today.   In addition, Attorney General Harris sent a bulletin to law enforcement making clear that federal immigration detainers are voluntary and that law enforcement agencies should direct resources in a manner that best serves their community.

LOS ANGELES – On Saturday, April 30, Attorney General Kamala D. Harris, AARP CA, and the District Office of Councilman Curren Price will hold Shred Fest 2016, a Los Angeles event where consumers can learn about how to prevent identity theft by shredding personal documents and other sensitive records for free. 

Saturday’s event is part of an ongoing partnership between AARP and Attorney General Harris’s office to protect consumers from identity theft and fraud and is one of several Shred Fest 2016 events scheduled for communities nationwide.  Shred Fest is also part of Money Smart Week®, supported by AARP’s Fraud Watch Network and the AARP Foundation.

“We must be vigilant in prosecuting those who take advantage of seniors and work to educate all Californians on how to avoid the increasing risks of identity theft, fraud and scams,” said Attorney General Harris. “‘Shred Fest 2016’ will help seniors safely dispose of sensitive documents and learn key strategies to protect themselves against identity theft.”

Information about Los Angeles Shred Fest 2016:

Saturday, April 30, 2016
4301 S. Central Avenue, Los Angeles, CA  90011
Shredding service begins at 10 a.m. and will continue until 2 p.m.

“Financial fraud causes millions of dollars in losses each year,” said Councilman Curren Price. “With the tax-filing season behind us, we’re encouraging taxpayers to do a spring cleaning of their old financial documents and other records.” 

“Identity thieves routinely search through dumpsters and trash cans, looking to find confidential information.  Our Shred Fest 2016 event will allow consumers to discard this paperwork in a safe and secure manner,” said Nancy McPherson, AARP CA State Director.

To avoid having your sensitive information compromised, security experts recommend shredding of the following types of materials:

• Old documents: Papers that carry your Social Security number, birth date, signature, account numbers, passwords or PIN numbers.
• Banking: Canceled or unused checks.  Shred deposit slips and ATM and credit card receipts, once you receive your monthly statements.
• Credit Cards: Preapproved credit card applications and incentive/gift checks from credit card companies.
• Medical: unneeded medical bills.
• Investments: Investment account statements.
• Obsolete ID cards: Expired driver’s licenses, medical insurance cards and passports.

Last year, Attorney General Harris partnered with AARP to protect seniors from fraud and abuse in a collaboration that includes tele-town halls and webinars to educate seniors, their families and the general public about legal protections designed for people age 50 and over. Together with the AARP Fraud Watch Network, Attorney General Harris’s office has created and disseminated consumer and educational resources to protect seniors against scams and schemes.

More resources to protect against identity theft are available on the Attorney General’s website at: http://oag.ca.gov/idtheft.

SACRAMENTO -- Attorney General Kamala D. Harris today announced her support for the Homeowner Survivor Bill of Rights, California Senate Bill 1150, legislation authored by Senators Mark Leno (D-San Francisco) and Cathleen Galgiani (D-Stockton).  The proposed bill would require companies that collect payments from borrowers—mortgage loan servicers— to communicate with the widowed spouses and survivors of homeowners to ensure that survivors receive accurate information about assuming responsibility for a mortgage and avoiding foreclosure. This legislation builds on Attorney General Harris’ work in 2011, when she secured $20 billion in relief for California homeowners.

“Following the devastating loss of a loved one, too many Californians also face the possibility of being stripped of their home. This proposed legislation requires mortgage servicers to communicate with spouses and children of deceased homeowners and gives them a fighting chance to stay in their homes,” said Attorney General Harris. “I thank Senators Leno and Galgiani for their efforts to extend critical financial and legal services to Californians facing unnecessary foreclosures.”

The proposed legislation would allow survivors or heirs to simultaneously apply for both loan assumption and loan modification and provide a single point of contact with the lender. The California Senate Banking Committee will hold a hearing on the legislation this afternoon.

“Instead of getting basic information on how to proceed with a home loan following the death of a loved one, surviving spouses and children face a labyrinth of paperwork and conflicting directions and requests, which only prolongs their grief,” said Senator Leno. “Many family members unnecessarily lose their homes without ever knowing they had the right to assume the loan or seek foreclosure remedies. Before more families give up, we must step in.”

"As California's senior population increases, so does this problem. Through its common-sense protections, SB 1150 would prevent additional, unnecessary, ‘red-tape foreclosures’ on widows, widowers, and other heirs,” said Kevin Stein, Associate Director at California Reinvestment Coalition.

In 2013, the Consumer Financial Protection Bureau issued guidance stating that “servicer[s] must have policies and procedures reasonably designed to ensure that, upon notification of the death of a borrower, the servicer promptly identifies and facilitates communication with a successor in interest of the deceased borrower with respect to the property that secures the deceased borrower’s mortgage loan.”  Despite this guidance, the California Department of Justice continues to receive reports that mortgage servicers are refusing or failing to communicate with widows and orphans of deceased homeowners.  SB 1150 would require servicers to communicate with successors and prevent families from facing unnecessary foreclosures after the deaths of their loved ones. 

In 2012, Attorney General Harris helped to enact the California Homeowner Bill of Rights (HBOR), a landmark package of laws establishing key mortgage and foreclosure protections to California homeowners and borrowers.  The laws, which took effect on January 1, 2013, restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender, impose civil penalties on fraudulently signed mortgage documents, and require loan servicers to document their right to foreclose.  Dual-track foreclosures refer to a practice whereby a lender forecloses on a home while homeowners are simultaneously seeking a loan modification.

The California Homeowner Bill of Rights also extended the statute of limitations to prosecute mortgage fraud-related crimes to three years and allowed the Attorney General’s office to use statewide grand juries to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.  For more information, see http://oag.ca.gov/hbor.

In May 2011, Attorney General Harris created a Mortgage Fraud Strike Force within the California Department of Justice to investigate and prosecute misconduct at all stages of the mortgage process and in February 2012, Attorney General Harris secured an unprecedented settlement with the nation’s five largest banks, securing $20 billion in relief for California homeowners.

SB 1150 is sponsored by the California Alliance for Retired Americans, Housing and Economic Rights Advocates and California Reinvestment Coalition.

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-...