2004 Accomplishments - Enforcement

A few highlights of our achievements for consumers in the civil and criminal arena in 2004 are:

Credit Repair and Debt Adjustment

Cambridge Credit Counseling Corporation - Several Georgia consumers filed complaints with the Administrator regarding Cambridge Credit Counseling Corporation, a Massachusetts-based 501(c)(3) company offering credit repair and debt adjustment services to consumers in all 50 states and the District of Columbia. Georgia consumers allege that they either visited the company’s web site or received marketing ads or solicitation letters that promised debt adjustment services. The investigation revealed that the fees charged were in excess of Georgia’s 7.5% fee cap and that the company had never complied with statutorily required registration obligations. OCA issued a Notice of Contemplated Legal Action, then entered into an Assurance of Voluntary Compliance (AVC) with the company that required that it bring all annual insurance and audit records into compliance, cap all fees for its services at no more than 7.5% of the monthly amounts paid by consumers for distribution to their respective creditors, pay full restitution to consumers, and pay $100,000 in administrative costs and penalties. (Filed June 4, 2004)

Cordelin Cole, d/b/a Credit Doctor – Cordelin M. Cole, a former employee of one of the three national credit- reporting agencies, began advertising and offering credit repair services to consumers under the name Credit Doctor. The investigation began when a complaint alleged that a consumer was promised credit repair while visiting Centennial Park, Atlanta. The investigation revealed that consumers would meet Ms. Cole in Centennial Park, where she would explain her credit repair plan and collect payment in amounts ranging from $500 to $900. Georgia statutes prohibit credit repair services when offered by a company that is not exempted by virtue of having 501(c)(3) IRS designation. The business paid a $2,000 civil penalty and approximately $7,900 in restitution to the consumers harmed by the unlawful credit repair services. Immediately following the settlement, the business closed and, to date, Cordelin Cole has not operated another credit repair business in Georgia. (Filed June 4, 2004)

Deceptive Auto Sales and Advertising

Bill Heard Chevrolet and J&L Marketing – On December 22, 2004, four Bill Heard Chevrolet dealerships-Bill Heard Chevrolet-Buford, Bill Heard Chevrolet at Town Center, Tom Jumper Chevrolet, and Bill Heard Chevrolet-Union City-entered into an AVC with OCA. These four dealerships were deceptive in a number of ways, including the following: advertising for “Repossession Sales” when not all of the vehicles in the advertisement were actually repossessed; in connection with direct mail advertisements, failing to comply with the prize promotion requirements of the Georgia Fair Business Practices Act; and representing to consumers that they were pre-approved for credit lines when such statements were not based on actual credit checks. The dealerships agreed in the AVC to cease these prohibited practices, to pay a total of $188,000 in administrative expenses, and to participate with OCA in a framework of intensive future monitoring of advertisements. Additionally, the Administrator assessed J&L Marketing, the Kentucky advertising agency who developed and distributed the ads, a $30,000 administrative fee. (Filed December 16, 2004 and December 22, 2004)

Henna Autoplex - Henna Autoplex is a Texas-based car dealership with a two-year history of running newspaper and radio advertisements containing violations of the Fair Business Practices Act, the false advertising statutes and the Truth in Lending Act (TILA). The ads used deceptive and confusing language referring to quantities and particular models of vehicles the dealership did not actually have, and using TILA “trigger terms” regarding financing without making all the additional disclosures required by the Act. As an informal settlement, the company had previously entered into a Letter of Understanding (LU) with OCA, wherein it had agreed to bring its advertisements into compliance with the laws. The new ads violated the statutes and failed to comply with the LU’s terms. After three attempts to have the dealership respond to violation notices, a Notice of Contemplated Legal Action was issued. Two months later, OCA entered an AVC with the company that contained specific injunctive terms. These included prohibiting it from using any TILA trigger terms without making all required disclosures, and requiring it to comply with all future OCA ad-monitoring activities and to pay $23,000 in administrative costs and penalties. (Filed December 16, 2004)

Unfair and Deceptive Practices

Werco, Inc. - This company was a Persian rug dealer who operated a going-out-of-business sale in Atlanta for a period in excess of 90 days, in violation of the Fair Business Practices Act. OCA and Werco entered into an Assurance of Voluntary Compliance on July 19, 2004. The company agreed in the AVC not only to cease the sale, but also to refrain from operating a retail Persian rug business at the store location in question. The company paid $5,000 in administrative expenses. (Filed August 3, 2004)

Peter Stephens, d/b/a AAA All State Door Company, Overhead Garage Door Services, Inc., America's Choice Overhead Door Co. Inc., and America's Alliance Overhead Door Corp - The Administrator initiated this investigation upon receipt of a consumer complaint involving a company originally identified as America’s Choice Discount Garage Door Service. The consumer stated that he dialed a local telephone number after seeing a telephone directory ad. The consumer was quoted $147 as a total charge for labor, parts and extended warranty for garage door repairs. However, when the technician completed the repair job, he was given a bill totaling $617. The directory ads

Misrepresented the identity of the business the consumer would contact in response to the ad;

Misrepresented that the business had received a high rating from at least two consumer product rating groups, including Good Housekeeping;

Misrepresented that the business is incorporated in Georgia;

Misrepresented an affiliation with merchant companies, including Sears;

Misrepresented that the business advertised is a local business;

Failed to disclose the non-local address for the forwarded telephone numbers;

Failed to honor the advertised price guarantees;

Deceptively induced consumers with low misrepresented charges;

Confused the consumer as to the business name by advertising in one name and billing in another name; and

Willfully violated the terms of a 2001 AVC.

The investigation revealed that the telephone lines were programmed to forward all incoming calls to BellSouth switching centers, where the lines are forwarded to undisclosed locations (all out of state). The business was required to develop and implement new employee training procedures, as well as new marketing guidelines and procedures. An AVC was entered incorporating the modified business practices and assessing a $20,000 civil penalty with consumer restitution. (Filed July 2, 2004)

Verizon Wireless, Cingular Wireless, and Sprint PCS - Culminating a three-year national investigation, the State of Georgia was part of a group of 32 states that reached an agreement with three of the largest cellular service providers in the country to ensure the rights of consumers.

At issue were the carriers’ advertisements and promotions offering statewide or nationwide service coverage and free items such as long-distance coverage. The companies were cited for their failure to disclose clearly the terms and conditions of coverage and the actual cost to consumers of long-distance minutes used; and their failure to acknowledge the need to remedy circumstances causing gaps in geographic service coverage.

The three companies signed an Assurance of Voluntary Compliance, mandatory for a minimum period of three years, requiring that they:
- Pay a combined sum of $5 million, to be dedicated largely to consumer education.
- Provide coverage maps to consumers that are as accurate as possible under current technology so that one should be able to tell, before purchasing a service agreement, whether the desired usage areas are covered.
- Allow a customer to return a newly-purchased phone for any reason within three days after activation, without having to pay the activation or early termination fees. Payment would be required only for charges or fees associated with the actual usage during this time.
- Allow a trial period of at least 14 days for the consumer to test a new phone and make sure the plan’s coverage area meets his or her needs. If not, the service contract may be canceled without an early termination fee.
- Make certain disclosures in advertisements, as well as through retail, Internet and telemarketing sales channels, to give consumers comprehensive information about the costs and limits of their wireless service.
- Publicize their contact information for public inquiries and complaints and respond to consumers in a timely manner and in good faith. (Filed July 2004)

Warner-Lambert Company (a wholly-owned subsidiary of Pfizer Inc.) – Georgia participated in an unprecedented multi-state settlement with the pharmaceutical manufacturer following a consumer protection investigation that netted the 50 states a combined total of $38 million for the illegal ”off-label” marketing of the drug Neurontin. This includes $28 million to fund a program designed to correct problems in pharmaceutical manufacturers’ direct marketing to doctors and others and to provide them with more accurate product information.

While the FDA has approved Neurontin only for certain treatment of epilepsy and shingles, approximately 90% of the time the aggressively-marketed drug was prescribed for other purposes not supported by scientific evidence, putting the health and safety of consumers at potential risk.

The settlement prohibits Warner-Lambert and Pfizer Inc. from:

Making false, misleading or deceptive oral or written claims about Neurontin;

Promoting off-label uses in violation of the federal Food, Drug and Cosmetic Act;

Misrepresenting the nature of scientific evidence concerning Neurontin;

Disseminating written materials that have not appeared in peer-reviewed scientific journals;

Failing to disclose the funding sources of Neurontin-related research and educational events;

Failing to require speakers at such educational events who have financial relationships with Warner-Lambert or Pfizer to disclose their relationship and whether they were paid for speaking;

Failing to comply with the previously-voluntary Pharmaceutical Research and Manufacturers of America Code regarding payments, gifts and remuneration to health-care providers;

Failing to comply with the previously-voluntary Accreditation Council for Continuing Medical Education Guidelines;

Misrepresenting the credentials of sales, medical and technical personnel;

Providing information that is misleading or lacking in fair balance to drug reference compendia; and

Violating federal anti-kickback laws.

(Filed May 13, 2004)

Improper Disposal of Business Records

H. Hemingway and Associates, Inc. - The Administrator reached a settlement with H. Hemingway and Associates, Inc., resolving allegations that the student loan collection firm improperly disposed of records containing sensitive personal information. It was alleged that the business discarded in dumpsters, without first shredding, documents containing such personal information as Social Security numbers, driver's license numbers and bank account information. The settlement prohibits such improper disposal in the future and requires that the business fully implement policies and procedures to ensure proper disposal. In addition, the defendant must pay $5,000 in administrative expenses and $5,000 in civil penalties. (Filed January 16, 2004)

Criminal Prosecutions

The Governor’s Office of Consumer Affairs investigated and sought the prosecution of Janice Rose Oxford for multiple counts of identity theft and computer theft. Oxford, who was employed by the Psychic Network, received telephone calls from consumers seeking advice and counseling. During these conversations, she also obtained names, addresses, Social Security numbers, dates of birth, telephone numbers and other identifying information from the callers and then used that information for Internet credit applications and purchases. In December 2004, Oxford was concurrently sentenced to a 15-year sentence, which she was allowed to serve on probation, and restriction from use of or access to the Internet for one year unless under supervision, as well as being fined $5,926.50.

Charles Earls, who used someone else’s Social Security number without permission to obtain a car loan, was sentenced to three years, to be served on probation, and ordered to pay fines and fees of $1,800 and to perform 140 hours of community service.

Angela D. Pope and Ernest A. Johnson were prosecuted in DeKalb County after having carried out an identity fraud scheme, using the personal information of a Georgia consumer to buy $2,500 worth of wood flooring, along with a handful of gift cards. Johnson also submitted a credit application, using the victim’s name and Social Security number, to a local membership club. Both Johnson and Pope received sentences of five years, to be served on probation, and 300 hours of community service time; and each was ordered to pay restitution in the amount of $2,500. Pope received first-offender status.

A number of other arrest warrants were issued and executed and at year-end were awaiting prosecution.

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