Consumer Protection

LOS ANGELES -- Attorney General Kamala D. Harris today announced a settlement with Skilled Healthcare Group, Inc. that will require court-enforceable improvements of staffing levels and quality of care at the chain's 20 facilities. The nursing homes are comprised of 2,360 beds throughout California, most of which are in the Los Angeles region.

The agreement empowers Attorney General Harris to appoint an independent monitor who will ensure compliance with California's staffing laws and conduct an ongoing evaluation of quality of care and staffing sufficiency at all of Skilled's 20 facilities.

"This is a case about neglect and abuse of California's elders by a facility that was supposed to protect and care for them," said Attorney General Harris. "This agreement ensures that the elderly occupying Skilled's 2,360 beds will receive better and higher quality care. At a time when California's elderly population is growing twice as fast as the general population, family and friends should have peace of mind that their loved ones are being well cared for when they are in a nursing home setting."

The independent monitor will make regular reports to the Attorney General and conduct surprise inspections of Skilled's nursing homes for two years. The cost of the monitor, estimated to be $350,000 a year, will be paid for by Skilled.

The Attorney General's enforcement action stems from 76 citations and 209 deficiencies issued by the California Department of Public Health to Skilled's nursing facilities from 2008 to 2012. Specifically, the citations and deficiencies were issued because of Skilled's failure to prevent pressure ulcers, dehydration, malnutrition, over-medication and medication errors, deficient catheter care, urinary incontinence, and naso-gastric feeding care practices.

This case was investigated and prosecuted by the Justice Department's Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA).  Attorney General Harris has created specialized BMFEA teams in Sacramento and Los Angeles composed of legal and nursing professionals to combat abuse, neglect and poor quality of care in California's nursing homes.

Earlier this week, Attorney General Harris charged a Sacramento-area residential care provider with manslaughter for negligence that directly led to a patient's death. In January, Attorney General Harris announced a three-year state prison sentence for a nurse who pled no contest to "convenience drugging."

Skilled and its subsidiaries operate nursing homes in Fresno, Los Angeles, Orange, Riverside, and Santa Barbara counties. A complete list of the facilities and the settlement document is attached to the online version of this press release.

SAN FRANCISCO -- Attorney General Kamala D. Harris today filed a lawsuit against one of the nation's major credit rating companies for inflating its ratings of structured finance investments, which caused California's public pension funds and other investors to lose billions of dollars.

The complaint, filed today in San Francisco Superior Court, alleges that the McGraw-Hill Companies, Inc. and Standard and Poor's Financial Services LLC violated the False Claims Act and other state laws by using a ratings process based on what senior executives described as "magic numbers" and "guesses."

"For years, S&P placed its priority on maintaining its market share, instead of the investors who trusted in its supposedly objective ratings," said Attorney General Harris. "When the housing bubble burst, S&P's house of cards collapsed and California paid the price—in billions. S&P must be held accountable for its conduct that contributed to one of our country's worst financial crises."

Investors relied on S&P and its competitors to rate these securities because they had access to only general descriptions of the assets backing their investments, which often included mortgages. California's public pension funds also relied on S&P because they are often required to buy securities that received a coveted "AAA" rating, signaling that the investment was top-tier and bore minimal risk.

The complaint alleges that, from 2004 to 2007, S&P systematically misrepresented to the public, and to CalPERS and CalSTRS, that its ratings of structured finance securities were based on an independent, objective and reliable analysis, and not influenced by S&P's economic interests.

In doing so, S&P lowered its standards for rating securities to gain market share and increase profits, and violated the False Claims Act by making false statements about the nature and risk of investments. The complaint also describes the company's efforts to suppress the development of new and more accurate ratings models.

In mid-2007, the housing bubble burst. After securities that S&P had deemed the least risky began defaulting, S&P downgraded many residential mortgage backed securities investments. The market collapsed, and of those securities issued in 2007, more than 90 percent were downgraded to junk status.

The California Public Employees Retirement System (PERS) and the California State Teachers Retirement System (STRS) – two of the nation's largest institutional investors – lost approximately $1 billion.

Attorney General Harris today joined the U.S. Department of Justice and 12 other states and the District of Columbia in announcing lawsuits in Washington, D.C. The other lawsuits allege violations of the federal Financial Institutions Reform, Recovery and Enforcement Act and state unfair competition laws.

However, California's suit is unique because it is being filed not only under California's unfair competition laws but also under the state's False Claims Act. This suit includes a claim for triple damages – because when the state makes a purchase based on a false statement, the defendant is responsible for the amount lost times three.

The lawsuit arises from a 20-month investigation into the issuance and rating of mortgage-backed securities by Attorney General Harris's California Mortgage Fraud Strike Force, which she formed in May 2011 to comprehensively investigate misconduct in the mortgage industry. 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.

The complaint is attached to the online version of this press release at http://oag.ca.gov/.

SANTA ROSA -- Attorney General Kamala D. Harris today announced the arrest of three suspects who have been charged in a mortgage fraud scheme targeting struggling Northern California homeowners. Six websites allegedly used by the suspects to advertise their scheme have been intercepted and redirected to a resource page on the California Attorney General’s website.

The felony complaint alleges that Ronald Vernon Cupp, 58, of Santa Rosa, deceived homeowners by falsely advertising a way to “kill” their mortgage debt on six websites including www.wekillyourmortgage.com. Cupp was assisted by Randall Gilbert Heyden, 69, of San Rafael, and Angelle Wertz, 38, of Santa Rosa, a public notary who allegedly certified phony legal documents. Cupp allegedly recorded fraudulent documents, which would only delay a foreclosure, not actually satisfy the preexisting mortgage debt.

“Vulnerable California homeowners thought they were working to save their homes but were actually the victims of a fraudulent scheme,” Attorney General Harris said. "Today, it's not enough to dismantle the brick-and-mortar aspect of a criminal operation; we need to shut down criminal operations in cyberspace as well." 

Cupp, Heyden and Wertz are charged in a 57-count complaint alleging theft, forgery, notary fraud and recording of false documents. They were booked at the Sonoma County Jail on Wednesday, January 23. Cupp and Heyden are being held with bail set at $500,000 and $75,000 respectively. Wertz was released but ordered to appear for arraignment on Friday, January 25.

Through Cupp’s business, North Bay Trust Services, homeowners would often allegedly pay upfront fees of between $1,000 and $10,000 and sign a promissory note or new mortgage for a phony offer to eliminate their mortgage debt. Requiring up-front fees is illegal in California. The suspects would then allegedly record fraudulent documentation purporting to be the attorney for the homeowner’s actual lender and then relinquish the mortgage and record a new deed of trust in favor of North Bay Trust Services. The debt to the original lender was never actually satisfied.

The following six websites have had their service suspended pursuant to a court order at the request of the Attorney General Harris’s eCrime Unit:

http://www.northbaytrustservices.com/

http://wekillyourmortgage.com/

http://santarosatrustandtitle.com/

http://sonomafidelitytitle.com/

http://cortemaderafidelityandtitle.com/

http://marintrustandtitle.com/

These pages have been redirected to the California Attorney General’s website (http://oag.ca.gov/ecrime/doj-investigation) where individuals are able to file an online complaint form if they believe they may have been the victim of the scheme.

The arrests were a result of a joint investigation by the California Department of Justice Mortgage Fraud Strike Force, Northern California Computer Crimes Task Force, Marin County District Attorney’s office, Sonoma County District Attorney’s Office and Santa Rosa Police Department.

Below are tips for homeowners on how to avoid mortgage fraud schemes:

• Never pay an up-front fee for mortgage-related services. It is against California law and should be reported to the California Department of Justice.
• Be skeptical of third party phone or online solicitations.
• Do not give your personal financial information, such as your bank account number, social security number or the name of your loan servicer, to a solicitor. Your bank or loan servicer already has this information.

For free, trustworthy advice, on mortgage related matters call a HUD approved counselor – (888) 995-4673.

The arrest warrant is attached to the online version of this press release at http://oag.ca.gov/.

SAN FRANCISCO -- Attorney General Kamala D. Harris today issued recommendations for mobile application (app) developers and the mobile industry to safeguard consumer privacy. Today’s report provides guidance on developing strong privacy practices, translating these practices into mobile-friendly policies, and coordinating with mobile industry actors to promote comprehensive transparency.

“Californians want to know what personal information their apps collect, how it is used and with whom it is shared,” said Attorney General Harris. “To meet this need and keep pace with rapidly changing technology, these recommendations strike a responsible balance between protecting consumers’ personal information and fostering the continued growth of the innovative app economy.”

Today’s report, Privacy on the Go: Recommendations for the Mobile Ecosystem, is the result of an outreach effort that compiled input from stakeholders throughout the mobile industry. Its purpose is to serve as a template for the mobile industry to develop mobile-friendly privacy policies and practices that will improve consumer privacy without stifling innovation.  To accommodate the smaller screens of mobile devices, the report recommends the use of special notifications such as icons, or pop-up notifications to inform consumers about how personally identifiable information is being collected and shared.

The issue of mobile privacy is increasingly pressing as more than half of American adult cell phone owners access the Internet from their phones, and more than 1,600 mobile apps are released every day.

To protect consumers’ online privacy, Attorney General Harris forged an agreement among the seven leading mobile and social app platforms in 2012. The agreement – with Amazon, Apple, Facebook, Google, Hewlett-Packard, Microsoft and Research in Motion – involved displaying app privacy policies that users could find in a consistent location in the platform store and review before downloading an app. 

In October 2012, the Attorney General sent letters to approximately 100 mobile app developers and companies that were not in compliance with the California Online Privacy Protection Act and gave 30 days to post a conspicuous privacy policy. In December, the Attorney General filed the first legal action against Delta Airlines, Inc. for violating California’s online privacy law, which requires apps that collect personally identifiable information to conspicuously post a privacy policy.

Last year, Attorney General Harris also established the Privacy Enforcement and Protection Unit to enforce federal and state privacy laws regulating the collection, retention, disclosure, and destruction of private or sensitive information by individuals, organizations, and the government. This includes California’s Online Privacy Protection Act, as well as laws relating to cyber privacy, health and financial privacy, identity theft, government records and data breaches.

A copy of the report is available here: http://oag.ca.gov/sites/all/files/agweb/pdfs/privacy/privacy_on_the_go.pdf

To learn more about the Attorney General’s privacy work, visit http://oag.ca.gov/cybersafety.

SACRAMENTO -- Attorney General Kamala D. Harris today announced that the California Homeowner Bill of Rights, a landmark package of legislation that extends key mortgage and foreclosure protections to California homeowners and borrowers, will take effect on January 1, 2013.

The new laws restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender and impose civil penalties on fraudulently signed mortgage documents. In addition, homeowners may require loan servicers to document their right to foreclose.

“For too long, struggling homeowners in California have been denied fairness and transparency when dealing with their lending institutions,” said Attorney General Harris. “These laws give homeowners new rights as they work through the foreclosure process and will give Californians a fair opportunity to stay in their homes.”

Governor Jerry Brown signed the California Homeowner Bill of Rights into law to bring fairness, accountability and transparency to the state’s foreclosure process. As a result:

• There is a restriction on dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home.
• Struggling homeowners are guaranteed lenders will provide them a single point of contact with knowledge of their loan and direct access to the banks’ decision makers.
• The statute of limitations to prosecute mortgage-related crimes is extended from one to three years, allowing the Attorney General’s office to investigate and prosecute complex mortgage fraud crimes.
• The Attorney General’s office can use statewide grand juries to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.  
• Purchasers of foreclosed homes are required to give tenants at least 90 days before starting eviction proceedings. If the tenant has a fixed-term lease of one year or less, the new owner must honor the lease unless the owner can prove that exceptions intended to prevent fraudulent leases apply. 
• Local governments have additional tools to fight blight caused by multiple vacant homes in their neighborhoods.

The California Homeowner Bill of Rights marks a significant step in Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. The Mortgage Fraud Strike Force was created in May 2011 to investigate and prosecute misconduct at all stages of the mortgage process. In February 2012, Attorney General Harris secured a commitment from the nation’s five largest banks of up to $18 billion for California borrowers.

For more information, see http://oag.ca.gov/hbor.

SAN FRANCISCO -- Attorney General Kamala D. Harris today issued a consumer alert with tips for the holiday season on how Californians can make the most of their charitable giving through smart donations and protect themselves from identity theft when shopping online.

Tips for safe shopping:

• Shop on secure websites. One clue about which websites are safe and which are not is to look for a yellow padlock in the browser bar or ‘https’ in the web address (the ‘s’ stands for ‘secure’).

• Don’t make purchases over a free Wi-Fi hotspot like at a coffee shop, which can be scanned by those looking to capture your passwords and other information.

• Never send personal or financial information through e-mail. Legitimate companies will not ask you to do so because it is not a secure way to transfer sensitive information.

• 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.

• To get the full value of a gift card, use it right away. Gift cards that are lost or stolen are not always replaceable. Retailer or restaurant gift cards do not have expiration dates, but bank cards, like Visa or MasterCard gift cards, or cards issued by a mall that can be used at different stores, may sometimes have expiration dates.

• Know the return policies of the retailers you shop with before you leave the store or conclude an online transaction. Many retailers will give you a refund if you have a receipt and your return is prompt, but some may only give store credit. Ask a clerk if the policy is not posted at the register.

Tips for donating wisely:

• Make sure your charitable donations are well spent and serving the activities you support by working with a local charity as a volunteer or by contacting the charity directly to make a donation.

• If you are contacted by a solicitor on behalf of a charity, ask if he/she works for a commercial fundraiser and what percentage of donations being raised is going directly to the charity. You may prefer to contact the charity directly to make a donation.

• If a solicitor tells you the donation is for your local police, firefighter or other public safety agency, check directly with the agency to avoid a potential scam.

• Make charitable contributions by writing a check or by credit card directly on a charity's website. 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.

Additional consumer tips, information, and lists of resources are available at:

www.ftc.gov, or toll free nationwide at (877) 382-4357

www.idtheftcenter.org, for information on your credit history

www.give.org, for additional information about a specific charity

SAN FRANCISCO – Attorney General Kamala D. Harris announced today the first legal action under California’s online privacy law against Delta Airlines, Inc. for failing to comply with the state’s Online Privacy Protection Act.

Delta, headquartered in Atlanta, GA, was among the companies given 30 days to conspicuously post a privacy policy within their mobile app that informs users of what personally identifiable information is being collected and what will be done with it.

“Losing your personal privacy should not be the cost of using mobile apps, but all too often it is,” said Attorney General Harris. “California law is clear that mobile apps collecting personal information need privacy policies, and that the users of those apps deserve to know what is being done with their personal information.”

The California Online Privacy Protection Act requires commercial operators of websites and online services, including mobile and social apps, which collect personally identifiable information from Californians to conspicuously post a privacy policy. Privacy policies are an important safeguard for consumers. Privacy policies promote transparency in how companies collect, use, and share personal information.  If developers do not comply with their stated privacy policies, they can be prosecuted under California’s Unfair Competition Law and/or False Advertising Law.

The complaint alleges that since at least 2010, Delta has operated a mobile app called “Fly Delta” for use on smartphones and other electronic devices.   The Fly Delta app may be used to check-in online for an airplane flight, view reservations for air travel, rebook cancelled or missed flights, pay for checked baggage, track checked baggage, access a user’s frequent flyer account, take photographs, and even save a user’s geo-location. Despite collecting substantial personally identifiable information such as a user’s full name, telephone number, email address, frequent flyer account number and pin code, photographs, and geo-location, the Fly Delta application does not have a privacy policy.

The suit seeks to enjoin Delta from distributing its app without a privacy policy and penalties of up to $2,500 for each violation.  The suit was filed in San Francisco Superior Court and a copy of the complaint is attached to the online version of this press release.

This action by Attorney General Harris follows an agreement she forged among the seven leading mobile and social app platforms to improve privacy protections for millions of users around the globe who use apps on their smart phones, tablets, and other electronic devices. Those platforms – Amazon, Apple, Facebook, Google, Hewlett-Packard, Microsoft, and Research in Motion – agreed to privacy principles designed to bring the industry in line with California law requiring mobile apps that collect personal information to have a privacy policy. The agreement allows consumers the opportunity to review an app’s privacy policy before they download the app rather than after, and offers consumers a consistent location for an app’s privacy policy on the application-download screen in the platform store. 

The California Online Privacy Protection Act is one of the privacy laws that the DOJ’s Privacy Enforcement and Protection Unit is charged with enforcing. Created by Attorney General Harris in 2012, the Privacy Unit’s mission is to enforce federal and state privacy laws regulating the collection, retention, disclosure, and destruction of private or sensitive information by individuals, organizations, and the government. This includes laws relating to cyber privacy, health privacy, financial privacy, identity theft, government records and data breaches.

The October 2012 press release announcing the notification to mobile app developers can be found here: https://www.oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-notifies-mobile-app-developers-non-compliance. The February 2012 press release announcing the apps agreement can be found here: https://www.oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-secures-global-agreement-strengthen-privacy. The June 2012 press release announcing that Facebook joined the apps agreement can be found here: https://www.oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-announces-expansion-california%E2%80%99s-consumer.

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced a $10.4 million grant program for organizations that provide housing counseling and legal services to homeowners.  The grant funds were secured through the National Mortgage Settlement with the goal of providing assistance to homeowners impacted by California's foreclosure crisis.

The California Department of Justice will award Consumer Assistance Grants for housing counseling and legal service providers ranging from $150,000 to $750,000 per organization.  A Homeowner Bill of Rights Implementation Grant of approximately $1 million will also be awarded to assist in the implementation of California’s new homeowner protection legislation sponsored by the Attorney General this year.

Grant applications must be received electronically no later than January 14, 2013.  Details regarding the application process can be found at http://oag.ca.gov/grants.

The California State Bar, under the leadership of Executive Director Joe Dunn, will work with the Attorney General’s office to administer the grants.

The California Homeowner Bill of Rights, signed into law earlier this year, restricts dual-track foreclosures, where a lender forecloses on a borrower despite being in discussions over a loan modification to save the home.  It also guarantees struggling homeowners a single point of contact at their lender with knowledge of their loan and direct access to decision makers, and imposes civil penalties on fraudulently signed mortgage documents.

The California Homeowner Bill of Rights expanded Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012, Attorney General Harris negotiated a commitment from the nation’s five largest banks to dedicate an estimated $18 billion to mitigate harm to California homeowners caused by bank conduct in the foreclosure process.

SAN FRANCISCO -- Attorney General Kamala D. Harris today filed a lawsuit against eBay for entering into a “handshake” hiring agreement with Intuit that prohibited the company from recruiting and hiring one another's employees.

The complaint alleges that from 2006 to 2009, senior executives at eBay and Intuit agreed not to recruit employees who worked for the other company, and eBay agreed not to hire any Intuit employees. As a result, employees of both companies were prevented from seeking potentially better-paying positions. The companies passed on talented employees because of their anticompetitive agreement.

“The pact harmed employees and it harmed competition,” said Attorney General Harris. “If California is going to continue to be the high-tech capital of the world, we can’t allow anticompetitive conduct that prevents talent from going where it’s put to its highest use.”

The complaint filed by Attorney General Harris alleges that senior executives at eBay entered into a “no-poach” agreement to restrict their ability to recruit and hire employees of the other company. Intuit is being named a co-conspirator. The agreement prohibited either company from soliciting one another’s employees for employment opportunities and for over a year, prevented eBay from hiring any employees at all from Intuit.

The agreement was enforced at the highest levels of the company. The complaint alleges that emails exchanged between eBay’s chief executive officer and Intuit’s founder and chairman detail their intention not to recruit or hire one another’s employees.

Harris' complaint alleges that the agreement between the companies violated California’s Unfair Competition Law, the Sherman Anti-Trust Act and the Cartwright Act.

The California Justice Department worked closely with the U.S. Department of Justice on this matter. The U.S. Department of Justice also has filed a case against eBay for their “no poach” agreement. The U.S. DOJ already has an injunction in place against Intuit relating to a similar agreement Intuit reached with other companies. Harris' separate lawsuit, however, is significant because it seeks to enforce California laws which contain stronger protections against anti-competitive conduct than federal law.

California seeks to recover damages for each act of unfair competition, as well as injunctive relief to prevent any such agreement from occurring again.  

SAN FRANCISCO -- Attorney General Kamala D. Harris today urged parents, coaches and officials for youth sports to develop protective policies related to minors’ personal information, particularly for information posted online.

Attorney General Harris also announced that after an inquiry from her office, GameChanger, a popular sports statistics website, has updated its privacy policy and practices to better protect minors. The action comes as more and more information about minors is being posted online, often without adult consent.

“Most parents probably do not realize that the simple act of signing a child up for soccer or Little League could put enough information online to put the minor in harm’s way,” said Attorney General Harris. “While the Internet makes tracking games and statistics easier, it is important that parents, coaches, school officials and volunteers all are informed and think carefully about any information that is put online, especially when it pertains to children.”

GameChanger updated its privacy policy and put new protections for minors in place after an inquiry from Attorney General Harris’s Privacy Enforcement & Protection Unit.

The changes include: not allowing anyone under the age of 13 to sign up or post on the site; removing last names of team members under the age of 13; and providing privacy information pertaining to minors to users when teams are added to the website.

The inquiry into GameChanger’s policies came after the Attorney General’s office was contacted by a parent who was concerned about the amount of information being posted on the site. Information included on the site for some teams included the teams’ travel schedule, child’s statistics, full name and nicknames.

“I was disturbed when I realized so much information about my son’s team was being posted without my permission,” said Amanda Biers-Melcher of Burbank. “I appreciate Attorney General’s Harris’s assistance with the company and dedication to helping protect the privacy of our children.”

The Attorney General’s Privacy Unit will work with parents and sports leagues to develop best practices for handling children’s personal information in youth sports programs.

Here are tips for anyone who is involved in youth sports:

Playing It Safe with Children’s Information: Tips for Parents

Youth sports teams provide great opportunities for our children to engage in exercise, while learning valuable lessons about team work, healthy competition and fair play. When signing your children up for such activities, be mindful of the need to protect their personal information.

Ask if the team or league will post any of the child’s personal identifying information – such as name, address, school or photo on a website. Tell them if you do not want your child’s information posted online.

• Ask questions about any request for your child’s Social Security number, health insurance number or birth certificate. Propose alternatives, such as the following: 
  • Instead of turning over a copy of a birth certificate, offer to show a copy of the child’s birth certificate and ask that the birth date be entered in the records and noted as verified.
  • Resist providing the Social Security number. In most cases, the child’s Social Security number should not be necessary.
  • Insist that a health insurance number, if required, be protected with strong security measures, such as locking it in an office file cabinet or encrypting it if in a digital format.   
• Ask if the team or league has a written privacy policy, and ask for a copy. If they don’t have one, encourage them to develop an official policy statement that describes the kinds of personal information they collect, how they use it and how it is shared. (Note: If they collect personal information through a website, they may be required to post a privacy policy on the site.)