Consumer Protection

LOS ANGELES -- Attorney General Kamala D. Harris today issued a letter urging the Consumer Financial Protection Bureau (CFPB) to adopt regulations that strengthen protections against harmful payday and small-dollar lending practices. The CFPB is proposing to create the first nationwide regulatory floor for the payday lending industry that can work in harmony with California’s laws and regulations to further protect vulnerable consumers from falling into vicious cycles of debt.

“Together with California’s existing lending laws, the Bureau’s proposals would bring needed protections to vulnerable California consumers who take out small-dollar loans, which too often are predatory and create a debt trap for fixed- and low-income borrowers. Californians who need short-term emergency access to cash are getting stuck in a destructive and unaffordable cycle of repeat high-interest loans that they cannot afford to repay,” Attorney General Harris stated in the letter to the CFPB.

In 2014, 1.8 million California consumers took out 12.4 million payday loans, borrowing $3.38 billion.  There are over 2,000 licensed payday loan locations in California (substantially more than the number of McDonald’s restaurants).  Moreover, many locations are in counties with high poverty rates and low education levels, effectively targeting communities most in need of emergency access to cash and most at risk of becoming trapped in crippling cycles of debt.

In the letter, Attorney General Harris strongly supports the CFPB’s proposals to curb the abuse stemming from traditional, high-cost payday loans and collections and urges the CFPB to consider additional measures that would provide a meaningful alternative for Californians who need small-dollar loans.

Attorney General Kamala D. Harris’ Comments on the CFPB’s Proposed Actions

• Require a meaningful “ability to repay” standard: Attorney General Harris strongly supports the CFPB’s proposed “ability to repay” standard. This would require lenders to make good-faith, reasonable determinations that a consumer has the ability to repay the loan, after satisfying financial obligations and living expenses. Requiring an ability to repay analysis for payday and small-dollar loans would help ensure consumers are provided with loans they can afford without needing to re-borrow or default.

• 60-day “cooling off” period: Attorney General Harris supports the proposed 60-day “cooling off” period between short-term loans, which presumes an inability to repay subsequent loans made within 60 days of another loan, and a mandatory 60-day “cooling off” period after consumers take out three short-term loans in a row. This would help protect consumers from falling into debt cycles.

• Implement an “off-ramp” to taper of indebtedness: If the CFPB decides to allow an alternative to an “ability to repay” standard, Attorney General Harris would support increasing screening requirements, structural protections, and potentially phasing out alternative loans that do not require an “ability to pay” standard over time. Attorney General Harris would support the CFPB’s “off-ramp” proposal, which would allow consumers to repay certain short-term loans over additional installments without incurring additional costs, so they may better avoid taking out additional loans. Lenders should also be required to notify consumers of their right to take the off-ramp, and should not discourage borrowers from using the off-ramp.

• Curbing harmful payment collection practices: Attorney General Harris strongly supports proposals requiring notification before lenders attempt to collect payment from consumers’ accounts. Lenders should also be limited to two attempts to collect payment unless they obtain new authorization. This can help protect consumers from excessive account fees following unsuccessful withdrawal attempts.

• Protect consumer privacy: Attorney General Harris encourages the CFPB to require strict limitations on information entered into databases. Use of this data should be restricted to confirming eligibility for new loans, and access should only be granted to the necessary parties. Borrowers should receive notice that their data will be collected and stored in the database.

• Permit states to adopt more restrictive laws and regulations: The CFPB is strongly encouraged to take the necessary steps to clarify that it does not intend to undermine or preempt stricter state and local laws governing payday and small-dollar loans. Following assessment of need, further regulations may be deemed necessary for certain states and localities. The ability to implement additional restrictions should remain available.

India-Based Company to Pay $100,000 Over Unfair Business Practices, Use of Pirated Software, in First Legally Enforceable Judgment by a State Against a Foreign Company

LOS ANGELES - Attorney General Kamala D. Harris today 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 case marks the first time a state has secured a legally enforceable judgment against an international company for these types of violations. 

The settlement, which was filed in Los Angeles Superior Court and has been approved by a judge, requires Pratibha Syntex to pay $100,000 in restitution within 30 days.

In 2013, Attorney General Harris sued Pratibha Syntex on the basis that it did not pay licensing fees for software it relied on for its business, including products manufactured by Adobe, Microsoft, and others, giving the company a significant cost advantage in the low-margin business of apparel manufacturing, shipment and sales.

“Pratibha Syntex engaged in illegal business practices that placed California garment companies at a disadvantage, while hurting American software companies’ ability to develop new and innovative products, ” Attorney General Harris said. “Businesses around the globe should be on notice that the state of California will hold them accountable for stealing intellectual property to unfairly undercut their competition.”

Other terms of the landmark settlement prohibit Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and further require the company to perform four complete audits of the software on their computers and fix any violations within 45 days.  In addition, Pratibha Syntex must draft an information technology policy statement regarding the use of licensed software and distribute this policy to all employees.

The complaint alleges that Pratibha Syntex obtained an unfair advantage because they were able to redirect money saved by using pirated software to hire employees and invest in research and development efforts.  The use of pirated software not only provides companies with an unfair business advantage, but also deters American software companies, particularly those developing software used in the garment industry, from investing in new technology and products.

“Our software is a key differentiator in the business operations of the fashion industry. Companies using software without paying for it should not be rewarded with lower costs, especially when this comes at the expense of hardworking American companies,” said Shahin Kohan, president of AIMS360, which designs and develops powerful and state-of-the-art software solutions for apparel manufacturers, wholesalers, and importers. “This landmark settlement will allow us to continue innovating and help our customers grow their businesses and create new jobs.”

California’s apparel industry, which is largely based in Los Angeles County, employed nearly 100,000 people in 2012-2013.  A 2011 study by the Orange County Business Council found that California had lost nearly 400,000 manufacturing and technology jobs over the past decade to countries where piracy rates are as high as 80 percent. This activity resulted in a loss of $1.6 billion in economic activity and $700 million in tax revenue for California.

Copies of the complaint and stipulated judgment are attached to the online version of this release at www.oag.ca.gov/news.

SAN FRANCISCO – Attorney General Kamala D. Harris today issued a consumer alert urging  older Californians to be on the lookout for the “Grandparent Scam” and other scams targeting seniors and others that have been reported to the California Department of Justice.  During the holidays, older Californians are especially vulnerable to scams perpetrated by individuals who prey on their good will.

Earlier this month, Attorney General Harris and AARP California hosted a telephone town hall with thousands of older Californians to discuss the ‘Grandparent Scam’ and other common scams.  According to estimates from the AARP, fraud costs American seniors billions of dollars a year.

“The perpetrators of these cruel scams and fraudulent schemes prey on the bond between grandparents and their grandchildren,” said Attorney General Harris.  “My office will continue to work with AARP and our law enforcement partners to educate Californians about the threat of these scams and to prosecute those who victimize our families, friends and neighbors.”

“AARP is committed to helping older Californians protect their financial well-being by arming them with knowledge,” said AARP California State Director Nancy McPherson. “That’s why we’re proud to join Attorney General Harris and the Department of Justice in spreading the word about these nefarious schemes.”  

 Be on the Look out for These Scams

• The “grandparent scam” is a common scam targeting older Californians.  In this scheme, scam artists pretend to call on behalf of a relative – often a grandchild – who purportedly needs money.  Scammers will create stories of this relative being in jail or stranded in a far away city. Conveniently, the scam artists will insist that you do not have time to call anyone or that your relative does not want you to alert anyone about their circumstance.  Remember, scammers often depend on creating a false sense of urgency.  Do not send money or offer any help without first calling other family members to make sure that the emergency is real.  If the caller says your relative is being held in jail, call the jail or police station yourself to make sure your relative is there and ask for the amount of money needed for bail.

• Some scammers pretend to be from the IRS.  These scammers will call you and say that you owe the IRS money and that you will go to jail if you do not pay immediately.  Again, notice that the caller is creating a false sense of urgency.  The IRS will first send you a letter before attempting to contact you.  The IRS will never call and ask for money and threaten to send you to jail.  Moreover, the IRS will never ask you for personal information through email.  If you receive such an email, delete it – it is from a scammer.  You can report potential fraud to the IRS and Treasury Department at 1-800-366-4484 or https://www.treasury.gov/tigta/contact_report_scam.shtml.

• Similar to the IRS scheme is the debt collector scam.  Here, con artists pretend to be debt collectors and say that if you do not pay immediately, you will go to jail.  Again, note the sense of urgency the scammers try to create.   Under state and federal law, it is illegal for debt collectors to threaten to send you to jail if you do not pay a debt.  You will not go to jail if you do not pay them money.  If you receive such a call, you should immediately report it to the California Attorney General’s Office at http://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

• Finally, if you receive a telephone call or email giving you news that is too good to be true, like winning the lottery or making easy money from home, it is likely just that – too good to be true!  Do not share your personal information with these scammers.

How to Avoid Being a Victim

Attorney General Kamala D. Harris offers the following tips for older Californians to avoid becoming a victim of these scams:

• The most important thing to remember is that scammers rely on pressuring people to act quickly.  By instilling a false sense of urgency, scammers take advantage of the good will of senior citizens who want to help their family and friends.  Remember that you can take your time and do your research before sending money or personal information to another individual. 

• Remain vigilant and be wary of calls or emails from people who you do not know asking for money or for personal information.  Just because someone knows things about you or your family does not mean that you should trust them.  The Internet, including websites like Facebook and other social networks, can give scam artists all of the information they need to pretend to be a trusted family friend. 

Additional Consumer Resources

Consumers can file a complaint with the Department of Justice by using the following form: http://oag.ca.gov/contact/consumer-complaint-against-business-or-company

Consumers can find additional information regarding fraud targeting seniors through AARP Foundation ElderWatch:
http://www.aarp.org/aarp-foundation/our-work/income/elderwatch/

SAN FRANCISCO - Attorney General Kamala D. Harris and Alameda County District Attorney Nancy E. O’Malley today announced a settlement with Comcast Cable Communications LLC (“Comcast”) to resolve allegations that Comcast both unlawfully disposed of hazardous waste and discarded records without first omitting or redacting private customer information. As part of the settlement, Comcast will pay a total of $25.95 million. 

“Comcast’s careless and unlawful hazardous waste disposal practices jeopardized the health and environmental well-being of California communities and exposed their customers to the threat of identity theft,” said Attorney General Harris. “This agreement holds Comcast accountable for breaking the law and puts strict measures in place to prevent them from putting Californians and our environment at risk in the future.”

“Today’s settlement represents a victory in California’s ongoing efforts to ensure that hazardous waste is disposed of in a safe, legal and environmentally sustainable manner,” states Alameda County DA Nancy E. O’Malley. “Not only will my office pursue all necessary legal action against entities that pollute our environment, but we will also use all legal means to ensure California’s consumers’ private information is protected.  My office will continue to work together with state and local agencies to investigate and prosecute violations against our environment.”

The civil enforcement action and proposed settlement against Comcast were filed today in Alameda County Superior Court by Attorney General Harris and District Attorney O’Malley. The settlement requires court approval before it becomes final.

Today’s announcement stems from a robust investigation by the offices of Attorney General Harris and District Attorney O’Malley, assisted by the Department of Toxic Substances Control and the California Highway Patrol. According to the investigation, since 2005, Comcast warehouse and dispatch facilities and customer service centers throughout the state unlawfully handled and disposed of various hazardous waste products, routinely and systematically sending these materials to local landfills that were not permitted to receive these items. The majority of the hazardous waste was electronic equipment such as remote controls, splitters, routers, modems, amplifiers, and power adapters. The investigation also uncovered that Comcast discarded documents containing sensitive customer information, including names, addresses and phone numbers, into the trash without shredding them or making them unreadable, potentially exposing the information to identity thieves.

If approved by the court, under the final judgment, Comcast must pay $19.85 million in civil penalties and costs. An additional $3 million will fund projects furthering environmental and consumer protection and enforcement in California. Comcast will also be providing CalRecycle with $2.25 million in airtime over a four-year period and $150,000 to develop and produce public service announcements that educate the public on the proper handling and disposal of hazardous waste they might generate, including electronics. Finally, Comcast will spend a minimum of $700,000 to enhance its environmental compliance and will be prohibited from violating these laws in the future, under the terms of a permanent injunction.

Upon notice of the investigation, Comcast agreed to cooperate and, at the request of the Attorney General and the Alameda County DA, took interim steps to improve its hazardous and universal waste management compliance programs. As part of the settlement, Comcast has committed to fund multiple measures over the next five years to enhance its environmental compliance. Comcast will also be required to hire an independent auditor to conduct three audits of its environmental and customer privacy compliance over the next five years. There are ten Comcast facilities in Alameda County and all ten facilities are subject to the terms of the settlement.

Last year, Attorney General Harris and District Attorney O’Malley reached a $23.8 million settlement with AT&T over similar hazardous waste disposal violations.

Copies of the civil enforcement action and proposed settlement are attached to the online version of this release at oag.ca.gov/news.

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En Español 

SAN FRANCISCO – With the holiday season and the end of the tax year approaching, Attorney General Kamala D. Harris today issued consumer tips on how Californians can make the most of their charitable giving and avoid scams.

In 2014, Americans gave more than $350 billion to charities and nonprofit organizations. This year, many Californians will look to help the less fortunate or support a favorite cause by donating to a charity. Unfortunately, with so much money in play, scammers will continue to look for ways to prey on people’s generosity. Attorney General Kamala D. Harris offers the following tips for Californians to make sure their charitable giving will benefit worthy causes and not scammers.

TIPS FOR DONATING WISELY

Research the Charity

The number one tip for consumers this holiday season is to research the charity you are considering donating to and make sure it is legitimate and trustworthy. Don’t assume that charity recommendations on Facebook, blogs, or other social media are legitimate.

Private watchdog organizations have created spending standards for charities and issued reports based on those standards. These are great resources for consumers to use in researching your intended charities. Three such organizations are: Wise Giving Alliance (www.give.org), Council of Better Business Bureaus’ Foundation (www.bbb.org), and American Institute of Philanthropy (www.charitywatch.org).

To check the status of a charity, visit http://rct.doj.ca.gov/Verification/. Other sites that can provide helpful information in checking the status of your charity are: www.charitynavigator.org, or www.give.org. For more detailed information and tips, check the Attorney General’s Guide to Charitable Giving for Donors at: http://oag.ca.gov/charities/publications.

If a solicitor contacts you on behalf of a charity, ask if he or she works for a commercial fundraiser, and verify whether that the commercial fundraiser is registered with the Attorney General’s Registry of Charitable Trusts, as it is unlawful for unregistered commercial fundraisers to solicit donors in California. You can also check to see how much a commercial fundraiser raised for the charity in the past by reviewing the Attorney General’s Commercial Fundraising Reports, which summarize by year the results of the charitable solicitation campaigns conducted in California by for-profit fundraisers. Historical figures show that a solicitation campaign conducted by a commercial fundraiser returns to the charity, on average, about 50 percent or less of the contributions received. A commercial fundraiser retains the remainder in the form of fees and expense reimbursements. To check these publications visit: http://oag.ca.gov/charities/publications. 

Other Helpful Tips for Donors

• A great way for donors to select worthwhile charities is to first volunteer with a local charity. This helps provide first-hand knowledge about programs that benefit your community or cause.
• You may want your donation used for a specific program or purpose within a charity. If a website has a “donate” button, check to see if you can designate a specific purpose for your donation. If you can’t, contact the charity to be sure your donation will be spent for the purpose you intend.
• If a solicitor contacts you on behalf of a charity, ask if he or she works for a commercial fundraiser, whether they are registered with the California Registry of Charitable Trusts, and ask what percentage of donations go directly to the charity for its charitable program and how much is spent on fundraising and administrative expenses. You may prefer to contact the charity directly to make a secure donation. If a solicitor tells you the donation is for your local police, firefighter, or other public safety agency, check directly with the law enforcement agency to avoid a potential scam. 
• If you receive an e-mail or text message asking for a donation to a charity, contact the charity directly and confirm that the request is legitimate.
• Make charitable contributions directly on a charity’s website when possible. If donating by check, use the full name of the charity rather than initials or an abbreviation. Do not give your credit card number to a telephone solicitor or in response to any unsolicited phone call you receive.
• Charitable gifts-in-kind, such as food or clothing given directly to a charity, may help scammers mask exorbitant executive compensation or administrative costs if they falsely inflate the value of the goods in IRS filings. Research the charity recipient of gifts-in-kind, just as you would for cash gifts.
• Be wary of car donation solicitations. Car donations often result in minimal returns to charities because of the high cost of advertising and other expenses associated with marketing the vehicles for re-sale. If you do decide to donate to a car donation fundraiser or charity, ask that they inform you of, and provide records on, every donation designated to you. Call the charity that was supposed to benefit from your car donation to ensure that they received your donation.

ADDITIONAL CONSUMER RESOURCES

The California Attorney General’s Guide to Charitable Giving: http://oag.ca.gov/sites/all/files/agweb/pdfs/charities/publications/CharitiesSolicitation.pdf

Consumers who believe they are a victim of a charitable giving scam can file a complaint with the Department of Justice by using the following form: http://oag.ca.gov/sites/all/files/agweb/pdfs/charities/charitable/ct9.pdf

En Español 

SAN FRANCISCO – With Black Friday and Cyber Monday fast approaching, Attorney General Kamala D. Harris today issued consumer tips for safe shopping this holiday season.

The holidays are a festive time of the year that unfortunately leave consumers vulnerable to monetary scams and online hackers. This season’s online holiday sales are predicted to reach a record $83 billion, with consumers spending a combined $6 billion online on Black Friday and Cyber Monday. Attorney General Harris offers the following tips for consumers to protect themselves during the holiday season.

Tips for Safe Shopping

• Review your bank and credit card statements frequently for unusual transactions.  Call your bank or credit card company to immediately report any suspicious activity.
• In the event of a security breach involving your debit or credit card, monitor your account and contact your bank promptly if you see any suspicious transactions. If you have been breached, you are also entitled to place a free initial fraud alert with one of the three national credit reporting companies (Experian, TransUnion, and Equifax); the reporting company must then notify the other credit reporting companies of the potential fraud.
• If the security breach involves your debit card, the best way to protect yourself is to immediately cancel the card and get a replacement card with a different number.
• If you receive a call from your credit card company that requests you to verify your account information for security reasons, ask to call the credit card company back and then call the telephone number listed on your credit card. 
• Shipping e-mail scams are becoming increasingly common. Be wary of e-mails that appear to be from shipping companies that contain an attached file; this is a good indication that you have received a fraudulent e-mail that contains a virus. Also, during the holiday season, theft of packages becomes more common. If you do not have a secure area for delivery companies to leave a package, consider requiring a signature for packages or having packages held for pickup at a nearby shipping center.
• Parents and grandparents should be wary of scam artists who pretend to be a child or friend of a child who has encountered a medical or legal emergency and needs money immediately. Scammers are able to get personal information from social media to make the calls sound legitimate. A good way to avoid this situation is to have a secret word the child would use in an emergency situation.
• Scammers can use handheld scanners and counterfeit credit cards to use gift cards that they do not actually have. Only buy gift cards that are kept behind the store’s customer service counter or activated upon checkout. Before buying the card ask for it to be scanned to show that it is fully valued.

Online Safety Basics for the Holidays

• Shop only on secure websites. One indicator of a secure website is the presence of a yellow padlock icon in the browser bar. Another indicator is “https” (as compared to “http” with no “s” at the end) in the web address.
• Avoid making online purchases in public Wi-Fi hotspots, such as a coffee shop, which can put your credit card numbers and other information at risk.
• Never send sensitive personal or financial information, such as a Social Security or bank account number, through e-mail. Legitimate companies will not ask you to do so because this is not a secure way to transfer sensitive information.
• The internet has many legitimate websites that offer vacation homes. However, scammers also put listings on vacation websites. If the price is too good to be true, it usually is.
• Scammers can use phone apps and games to steal your personal information. Do not download apps unless they are from a known source and have third-party reviews that verify their legitimacy.
• If you are receiving text messages on your cell phone saying you have won a prize or gift card, do not click on the link in the message – it is most likely a scam and may install a virus on your phone.
• Consider implementing a two-step protection process for your email account, which pairs “something you know,” like a password or PIN, with “something you have,” like your cellphone or a physical token. This adds an extra layer of security to prevent access to your personal information.  For example, after inputting your password, you will then receive a text on your cellphone, giving you a one-time-use code to log into your email account.  Information on how to set up this two-step protection strategy for each of the following email providers can be found here:

Outlook – http://windows.microsoft.com/en-us/windows/two-step-verification-faq

Gmail – http://www.google.com/landing/2step/

Yahoo –  https://help.yahoo.com/kb/account/two-step-verification-extra-account-security-sln5013.html

Additional Consumer Resources

The California Attorney General’s consumer tips on identity theft and other privacy issues can be found here: https://oag.ca.gov/privacy/info-sheets

Consumers can file a complaint with the Department of Justice by using the following form: http://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

If you have additional questions or comments, please call: 800-952-5225

SAN FRANCISCO - Attorney General Kamala D. Harris will join a telephone press call today with incoming Secretary of Education John King and Under Secretary of Education Ted Mitchell to release new factual findings by the U.S. Department of Education, which are the result of a joint investigation by the Department and the California Attorney General.  The Department of Education analyzed job placement rates at Everest and Wyotech Colleges, as well as additional evidence provided by Attorney General Harris, and concluded that placement rates were widely misrepresented to both enrolled and prospective students. 

These findings will lead to enhanced and streamlined debt relief opportunities for thousands of former students at Everest College and Wyotech College campuses in California as well as students nationwide who attended Everest University online.  Corinthian Colleges, Inc. owned Everest and Wyotech Colleges, along with Heald College.

“Corinthian preyed on vulnerable students who are now buried under mountains of student debt,” said Attorney General Harris.  “Today’s joint investigation findings will expand the pool of Corinthian students eligible for streamlined student loan relief options, helping them rebuild their lives and pursue a brighter future. I thank the Department of Education for joining my office to keep Corinthian accountable for their actions and providing debt relief to students who were misled."

“I commend Attorney General Kamala Harris and her team for their collaboration in the effort to help defrauded Corinthian students receive the relief they are entitled to,” said Secretary of Education Arne Duncan. “The results of our joint investigation will allow us to get relief to more students more efficiently.  Helping wronged students is much easier when everyone—Congress, State Attorneys General, accreditors, authorizers and the Department—does their part to protect students and works together.  Our team welcomes help from anyone who wants to follow her lead.”

The factual findings will help students establish a case for “defense to repayment” loan relief (the process by which students may be relieved of loan obligations if their schools violated state law) on a program-wide basis to former Corinthian students who enrolled in programs for which Corinthian published false placement rates.  This assistance is vital to students who might otherwise face the difficult task of proving that they are entitled to relief on an individual, case-by-case basis.

The findings from this investigation apply to Everest and Wyotech locations in California, as well as Everest University online programs based in Florida, and add to the existing findings concerning programs at Heald College – which were also a part of the joint investigation with Attorney General Harris’s office.  The Department of Education expects these findings will allow it to simplify and expedite the relief process for tens of thousands of former students at Wyotech and Everest.  Investigations into Corinthian schools by the Department of Education will continue.

Following the April 2015 announcement by Corinthian Colleges, Inc. that it “substantially [ceased] all operations and discontinued instruction” at all Corinthian Colleges, Attorney General Harris announced an online “Interactive Tool for Corinthian Students” to help former Corinthian students learn more about what forms of relief may be available to them, based on their specific circumstances. 

The tool, available at http://oag.ca.gov/corinthiantool, was updated after the June 2015 announcement expanding streamlined relief to certain Heald College students and has now been updated to reflect new options now available for certain former Everest and Wyotech College students.  It prompts students to answer a short series of questions, which will result in a personalized resource sheet with information about types of relief they may be eligible for, information on free local legal aid organizations that may provide advice and assistance in applying for relief, and information on cost-effective educational opportunities in their geographic area. The Department of Education also has information on debt relief for former Corinthian students at www.studentaid.gov/Corinthian.

In 2013, Attorney General Harris filed a lawsuit against Corinthian Colleges, Inc. 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.

Last year, after Corinthian’s failure to comply with federal regulations, the Department of Education heightened its oversight of the company.  In February 2015, the Department of Education and the Consumer Financial Protection Bureau (CFPB) secured more than $480 million in forgiveness for borrowers who took out Corinthian College’s high-cost private student loans.

In early April of this year, Attorney General Harris urged the U.S. Department of Education to relieve the student loan debt of thousands of students who attended Corinthian Colleges, Inc. campuses.  Later that month, the Department of Education took action against Corinthian Colleges, Inc, issuing a $30 million fine for misrepresentation of its job placement rates at Heald Colleges.  Other steps taken by the Department of Education included placing Corinthian on heightened cash management, requiring the company to sell or close all of its programs, and establishing an independent monitor to protect students, reduce tuition, and eliminate poor-performing programs. 

Former Corinthian students can learn more about debt relief by visiting http://oag.ca.gov/corinthian and www.studentaid.gov/Corinthian.

LOS ANGELES – As we honor our military service members on Veterans Day, Attorney General Kamala D. Harris today issued a consumer alert to Californians regarding scams targeting seniors who served in the military and their survivors. These scams have been reported to the California Department of Justice’s Public Inquiry Unit.

“California’s veterans have made extraordinary sacrifices to keep our nation safe and uphold our most sacred values and freedoms,” said Attorney General Harris. “Sadly, many of our senior veterans are being targeted by scam artists seeking to take advantage of them for a quick profit. My office will continue to protect our veterans and ensure that predators who seek to profit from their service are held accountable.”

These reported “pension poaching” scams prey on veterans and target the financial assistance offered through the Veterans Administration Aid and Attendance Program, which provides pension benefits to financially disadvantaged wartime veterans and their survivors over 65 years of age.

Specifically, pension poaching scams involve unscrupulous insurance agents and their representatives posing as unpaid volunteers or accredited VA representatives who offer to help seniors apply for VA pension benefits. These insurance agents and their representatives lure seniors into buying an annuity or setting up an irrevocable trust to create a false appearance of financial hardship by attempting to conceal the senior’s assets.

Insurance agents and their representatives charge high fees for these services, including undisclosed sales commissions that are paid to the purported volunteer. Targeted seniors may not be fully aware of the consequences of moving their assets into an annuity or irrevocable trust, such as strict withdrawal limitations leaving them without access to funds they may actually need for their care.

Although a VA pension benefits application based on false financial need may be successful, those who receive this benefit may face significant financial and legal consequences if the concealed funds are discovered, including repayment of benefit amounts received. Seniors who receive other VA or government-sponsored benefits that require disclosure of funds held in annuities and irrevocable trusts are especially vulnerable to reversal of their VA pension benefit.

WHAT TO LOOK OUT FOR

The Attorney General offers California consumers the following tips to protect themselves from VA pension benefits poaching scams:

• Anyone who asks you to pay money or move assets in connection with applying for a VA pension benefit is likely not a VA-accredited representative.  He or she may be an insurance agent or representative who receives a sales commission for selling you an annuity or irrevocable trust.  

• Moving assets into an annuity or irrevocable trust could restrict your access to these funds and may have significant unintended tax or legal consequences that outweigh any financial benefit gained from receiving VA pension benefits.

• If you receive VA pension benefits based on false financial need, you could be required to repay any benefits received back to the government.

WHAT TO DO IF SOMEONE OFFERS TO HELP YOU APPLY FOR VA PENSION BENEFITS 

If you are approached by someone offering to help you apply for VA pension benefits, contact your local VA Benefits Office, or your County Veterans Service Office, to determine whether this assistance is reputable.  Be wary of sharing personal information over the phone.  VA and County Veterans Service Office representatives will tell you what you need to know and their advice is free.  

A directory of VA benefits offices is available at www.va.gov/directory/.  A list of County Veteran Service Offices is available at https://www.calvet.ca.gov/VetServices/Pages/CVSO-Locations.aspx.

HELPFUL RESOURCES

If you believe that you are a victim of a pension poaching scam and do meet the age, military service, and financial need requirements for a VA pension benefit, VA-accredited representatives including Veterans Service Organizations, agents, and attorneys are available to help you file a claim, free of charge. 

You can also file a complaint with the California Department of Justice by visiting http://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

A searchable list of VA-accredited representatives is available at www.va.gov/ogc/apps/accreditation/index.asp or call 1-800-827-1000.

For more information about VA Aid and Attendance pension benefits, visit www.benefits.va.gov/pension.