annual report on the activities of the consumer protection and antitrust division

88 Pages·2014·4.7 MB·English

& OFFICE OF THE
ATTORNEY GENERAL

ANNUAL REPORT ON THE ACTIVITIES
OF THE CONSUMER PROTECTION
AND ANTITRUST DIVISION
DECEMBER 1, 2014

PATRICK MORRISEY

ATTORNEY GENERAL
2014 ANNUAL REPORT

REPORT ON THE ACTIVITIES OF
THE WEST VIRGINIA ATTORNEY GENERAL'S
CONSUMER PROTECTION AND ANTITRUST DIVISION

FOREWORD

In accordance with West Virgina Coce § 464-/-102:4), it is my pleasure «
submit ths “opart fo tne Gavernar 2d Legislature ot Wes: Virginia, This report ou'lnes
lhe aclivties of the Consumer Protection end Anbtust Divsion from Novemaer 2
2013. through November 12, 2014, and high igus the type of consumer prctertor

sssues thal are beg harilled by our office,

Respectuly Suomitted,

frmndge Hanh

PAIRICK MORRISEY
ATTORNEY GENERA
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TABLE OF CONTENTS

FOREWORD.
“ABLE OF CONTENTS.
OVE RVITW OF DIVISION
KEY SSUES AND EMERGING PROBLEMS.
SUMMARY OF AGTIVITY, INVFS"IGATIONS, AND ENFORCEMENT.
A. CONSUMER GOMPLAINIS
B, CONSUMER PROTECTION LITIGATION
1 CASF SLMARIES
2, ASSURANCES OF LISCON INUANCE AND SETTLEMENT
AGREEMENTS.
6. ANTITRUST LITIGATION,
D. PRENEED FUNERAL UNIT.
UTS NF COUNSFI POLICY
CONCLUSION

14
UL
OVERVIEW OF CONSUMER PROTECTION AND ANTITRUST DIVISION

As the vargest civison in Altomey General Patrisk Mortisey's Offize, the

tc

nsuiner Protect an and Antitrust A visian (Divisian’) is central a the “ifiae’s mission

fees, The

to protect the public from unfair. deceptive ans fraudulen: acts or pi
Division's ‘nission § ase to foster fair and honest competition ang ensure that
monopoling do not override the trax maraet

In furtherance rod ane

© these mssions, the Office has vigorously er

advocated the States caneumer laws cfreugh an expanded base of attorneys,

investigalors. and staff, We have aguressive y comballed scans agaist consumers

and devotion ct resoarcas fo -ronitor and identity

through: praastive puble awaron
enening Feuccle"l serwnres, In addtien, we Fave continued che implementation uf

the officiensy and

usdated tachnology and a naw exee managam:

I systor to orha

svutk product the Draision
‘Overall, the Consumer Proticcion and Antiast Divisian continues to pe an

rlegral comerslane of Atoney Gengial Morrisey s e"lerls to protect arid educate the

noasume’s of nis State

A. Legal Authority

The Sivision is respons bie for enforcing te WW

Virg nia Gorsumer Oredit ard

Protectan Ac:, W. Va, Code § 4BA-1-191 ef sort; the West ¥ rg nla Aatirust Act. YY. Va.
Soce § 47-18-41 ef seg.; and the Preneed Funeral Contracts Act W.Va, Code § 47-14"

at s0q.
B. Statting

Overseen by a Deputy Aitorney General, the Division is comprised of over tty
(30) employees who play @ significant role in the furtherance of the mission, ‘These
employee postions include nine (3) attomeys, two (24 paralegals, four (4) mediators,
thres (2) investigators. and riore than ten (10} support staf In aciton, the Division
also utiizes eight (8) consumer compliance specialists to assist in the consumer
awareness and outreach, These specialists arc located in various iocations inthe State
and are responsible for a dosignated region of counties. The specialists also serve as a
conduit of information from the counties to the Attomey General Ores relating to

emerging prob.cms or scams thal are being experienced by consumers,

C. Processing of Consumer Complalnts

The backbone of the Division's efforts - and its successes is its consumer
complain: procass. The complamt pruvess affords both consumers and businesses the
opportunity to seek an informal resolurion of a dispute without formal Migation, The
process Is intended to have the Division serve as a de facto meciator who aides in the
resolution, The intent isto bring about a pos tive result for the consumer. and ensure
basinoss awareness and compliance with the Consumer Protection laws. The
mediation process is voluntary, but the intent is to reach a setlerrent satisfactory to
both parties

The complaint process is centralized around a wrillen complaint form. If a
consumer has a dispute with 4 business, helshe car call the Division's tal-fras hotline

sat 1-800-3€8.8808. If the consumer has questions or difflcully, an errplayee of the
Div sion will assist the consumer over :Fe phone oF invite she pe’san to the Jivision

ulfige Iu assist in person, When reycested by = pint forn ane

Instrustiors are sent :0 the cansamer’s heme. The cerip'ainl form ¢ akse avaifable: an

the Division's website at ynaw.avago.gav.

Daring this reparing pesind, :3e Division also implementec tecknolegy thal

allows consw'ners :@ fioul aed euberit a complaint arlire, This is the first ma the
Division has allowed online stbmugsios. and Fas bear umpleitertee su meel the needs
of consumers who desire electronic fling

\ehen the complaint fons reluined, I is assignee ‘ca designated “mediator
uathin the office. The nedialors ar employees ot che division tha: ara spesitina ly
cratged with overseeing the complaint process ane guiding Hts resolution. Uson
receiving a Complaint, the mediator ca-tacts the business. on bexalf of tho carsumter
requesing a response le he sunnolain, The business then responds ellher aureeirg to

he comslant ar disnuti

the camplain:. Typioaly, tne “espanse neludes an oar to

reso ve the matter fer 8 desayneled amour? of money as reimbursement, Depencing on

the nature of

apcration of the patties, the averaga med ation

complain: and the

process axle about 3¢ to 44 days.

Ww.
Key Issues and Problems Affecting Consumers

During this reporting period. the Consumer Protection and Antitrust Division has

seen a fase inthe prevalence of scars por consumers as well ay

breaches 0

1roeally stored parscinal identifiable informatisn in the possession of

besinesses, The office contivues tp acdress the scourge of substance akuse in the
State, and rancle comola nts relating to centrac:ors and collection aganaias cempuiance
wath the Gansumer Gredit and Protection Act

Tre reporinig periad also inclusee several un.que events trat prompted Dwvision
wide involvement in she handling andl “eseldvo” of euenotainis. In oarlicubar, he waler
Crisis i the Kanawha Valley prompted complants ot price gouging, aume-aus calls

the office. and establisnment of a designated grcup of empleyees with n the Divisier to

handle Uese mrtte's. Further. the cancelation of a nssiona marl cur ie Gharlaston

resulted in an avenehelming numbe’ ef compla nts tc our offes, Within 24-hours othe
announced cancellation, the Division received mare than 250 fled comslants. More
continues Io he led in we days ar aneeks that fol owe

Ihese unique evonts, coupled with mara genera comalent matlers, rasiited in
niult-facesed issues arid proslems the: needed ta be audressed during this “epert na
porod

Role ig a oriat surmary ul s

rl problems ar issues oneaueree and bo ne

addressed by ou” Divis on,

‘A. Scam Protection and Awareness subdivision
During this reporting petod, one of the largest isses affecting corsumers >

Winst Viginia ig the massive uplick m1 scams being perpetrated wa te eprons, mail

email, anc even perso solicitation, Ihe ireraasee usa at technology and areetian at
false websites and telepyone ruribers thal sniror “eal enlities Fave further enhenced

the deception of consumers,
Recogrigieg thet the ony ney tc cambat these scammers is by puble

Beareness, and when possible, prosecution, the Divisicn nas undertaker an aggressive

pulls awareness and investigation plan. Working with stale and fecera lew
arfercament. che Divison 2as heen icvestigating seams and forwarling secassary
nnforrration to kaw er forcement 0 aide iy *he prosec.aton of these scammers.

In addit’on, the Div sio~ is proactive'y making the pub ic

re of scams as they
fre Uisucvered, hus assists > simiting he reach of 2 particu scary, nd aetiiana ly
aids in the proscoution of that matter, In furtherance af this aggressive anprcach, in
fay of 2014, che Wesl Virginia Aétarney General Garsumer Protection Diy sion start

A Seam Prulestice- and Axvarerwees subvliy sion,

I His sube vision wae s:2t00 s0 consumers who call 1 can rapcrt possib e searns

vey have received This subidivis unt keeps lrick cf all calls (hal some nly the eff

cobeeting the name of the consumer and tho araz of the state they aro caling from, tne

type of gram telephane ermal and any stone numbers oF skldtesses that the
consumer may have obtained. The Atimey Generals Ofice currently has ane tut time
empoyee to iraes all of hase alls and speak wit consurners, The emplayee s also
able to ef the sonsuner <anw whether ar ratit's a knoAWn, repairs saan, The Nps. of
coamns tual have been reported ure varied. To date, seme of the more prevalent soars
inclue those ‘alse purporing 1c be Publishes Clearing House, Mega Milions IRS.
Credit Cerd Serviows, Mirage! or Wilains, and varous medical device compares
The repeitng prices negihs ‘with a consumer cailag tn repor a seam. 1 is
centered nto the ‘scam’ database anc the corsumer can also fil out a format eamzlaint

torn. Ifa certain seam begins to tresd, tha office wil send out a press ra gase to the
area where the consumers are receiving these calls or statewide, Our office necives
Cover 400 calls # month solely retated to scams.

Given the signiicant impact upon our state, cur office will continue to make the
publ amare of these scams es they happen and cooperste with law enforcement

brng these scarnmers to justice,

68, Data Breaches of Personal Identifiable Information

‘Over the past year, the Consumer Protection Division saw an unprecedented
inerease in sophisticated computer hacking andor data breac’ incidents affecting farge
corporations, financial institutions and health organizations, Some of the businesses
~whose systems were breached were eBay (antina rataller); Community Health Systems,
Ine. (a Tennesseebased health corporation that ovis 207 hospitals ir 29 states,
including 4 in West Viginia); Home Depot (which has six stores in West Virginia) aad
JP. Morgan Chase Bank {vith banks throughout West Virginia). Even the federal
government was not immune when hackers recently stole personel identification
information of 800.000 US. Postal Service employees.

Sophisticated international comouter hacking organizations have been identified
by law enforcement ae being responsible for infirating the computer ayetems af these
enfilies ard stealing the personal lenteation infarmation of rilions of customers anc
patiants. In most cases, the businesses are unuware that their systems have been
breached unt an outside source, usually @ security firn, notiies them of unusual

acchity 11 thelr systems.
What is clas’ for thase data breac*es is the eromeus cost te earsumers ard

businesses le the breach, to netfy #s customers of the breach snd to take

mnesures kr corre the breach and preverit i flor happening the in uluie Ie a react

ews arti

‘Target is stl in litigator ever & massive dala broach that occurred 2 year
2¢9, It most cases, the cosls to the businesses have been in the millions, thus the
phrase ‘eyser teverism! has boon coined by the data breach n¢ustry to describe this

type of vo'rputer hacking:

Virginia ek can attoctad by these data broachas by having
thelr personal Iforrration stolen, lnding unauthonzee chases ar alternpts te charge on
their erect accaurts and having .nautrarized charge accounts ancned in trait names
The Altorney Gererai has dedicated an stlomey nthe Cons.mer Protectan
Divisiow -0 be the soiw of contac: fer data hreaches affecing West Virgirians. The
aitomey is a-nember of he NAAG Privacy Working Group. is auxiva n muliclsle effarts
agains: hssinesses whisk have “alled 1 propery sacure pevsnnal_iepmtitcatina
information ued is mwolved ir efforts to mace West Virgnis ok zens and businesses

aware of steps they can take ta protect themse ves acainst data breaches and identty

brett

©. Substance Abuse Task Force

One of Ise centeal initiatives by Attemey Gereial Morisey continued 4 be
scdressing the scourge of prescription drug abuse in the Stale, The souse of
prescriptions orgs, soeeiticaly onlak’s, has nereasec dramatioaly in recent years

bug abuse in Wost Virginio and thraugheut the vation has reached & menumental