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2006 Accomplishments - Enforcement

A few highlights of our achievements for consumers in 2006 in the civil arena are:

Price Gouging During a Declared State of Emergency

The Governor’s Office of Consumer Affairs (OCA) resolved twenty (20) cases in 2006 involving allegations of price gouging during a state of emergency. Three (3) of the resolved cases involved hotels that charged consumers fleeing Hurricane Katrina increased room rates, in violation of Georgia law.  Seventeen (17) cases involved hikes in gasoline prices in disregard of the August 31, 2005, Executive Order Governor Perdue issued to control spiraling motor fuel costs in the wake of Hurricane Katrina.  Each matter was resolved on a case-by-case basis, and the resolutions included consumer restitution and/or civil penalties in excess of $16,000, depending upon the severity of the violation.

Deceptive Auto Sales and Advertising

• North Atlanta Auto Group, LLC d/b/a Town Center Kia – The principal accusation against this car dealership was that it violated Georgia law by advertising a “2 for 1” sale, in which the price of the first vehicle was artificially inflated to cover the price of the second vehicle. In addition, they failed to include various fees in the prices advertised and charged customers more than the total price reflected in the Buyer’s Order.  The company is required to pay $37,500 in administrative, legal and investigative fees and $37,500 as a civil penalty, as well as $80,126 in restitution to consumers.
  
  
• Triple Z, Inc. (d/b/a Pars Car Sales) and Pars Financial Corporation (d/b/a United Auto Acceptance) – Allegations against this automobile dealership and financing company included illegally threatening customers with criminal arrest warrants if they defaulted on their loans; advertising automobiles for sale that were no longer available; publishing testimonials that could not be verified; persuading customers to sign contracts and submit down payments without giving customers the opportunity to inspect the vehicle first, and then refusing to refund the down payment when the vehicle turned out to be in poor working order; and failure to include the disclosures required by the federal Truth-in-Lending Act. In settlement of this matter the companies agreed to cease and refrain from false or misleading advertising; and implement advertising guidelines, sales guidelines and collection guidelines that will ensure adherence to the federal Truth-In-Lending Act, the  Fair Business Practices Act and the Fair Debt Collection Practices Act. They also were required to pay $5,300 in customer restitution and $50,000 as reimbursement of administrative, legal and investigative expenses.
  
  
• An additional twenty-five (25) automotive-related cases were resolved, the settlements of which totaled over $8,900 in customer restitution and $135,500 in civil penalties. The companies include:
  
  
  • Griffin Ford Sales, Inc.
    
  • Landmark Dodge Chrysler Jeep, LLC
    
  • Performance Automotive Group, LLC d/b/a Eddie Wiggins Pontiac Buick GMC
    
  • Stone Mountain Chrysler Jeep, Inc.
    
  • GPI Atlanta-F, Inc. d/b/a World Ford Stone Mountain
    
  • Hennessy Cadillac, Inc.
    
  • Bellamy Automotive Group, Inc. d/b/a Bellamy-Strickland Chevrolet
    
  • Capital Automobile Company d/b/a Cadillac Capital
    
  • Carl Black Pontiac Buick GMC Hummer, LLC f/k/a Carl Black Pontiac, Buick GMC Isuzu, LLC and Carl Black Pontiac GMC Truck, Inc.
    
  • TKO Motor Sales, Inc. d/b/a Brunswick Toyota and Extremely High Results LLC d/b/a American Automotive Liquidators
    
  • Kia Mall of Georgia
    
  • Lou Sobh Pontiac Buick GMC, Inc., Lou Sobh Automotive, Inc. and Lou Sobh Buick Pontiac GMC, Inc.
    
  • Roberson Chevrolet Buick, LLC
    
  • Gwinnett Place Ford
    
  • Marietta Dodge
    
  • Gwinnett Auto Mall No. 2, LLC d/b/a Conyers Toyota Scion Mitsubishi
    
  • Sterlynton Auto, Inc. d/b/a Cottman Transmission and Linda Aguebor-Helm d/b/a Cottman Transmission
    
  • Chatham Motor Sales, Inc. d/b/a Chatham Parkway Toyota
    
  • Justin Dodge Chrysler Jeep LLC and JC Motors, LLC
    
  • Royal Oldsmobile Co., Inc. d/b/a Royal Buick Pontiac GMC
    
  • Auto Credit Sales and Rentals, LLC
    
  • Kia Autosport of Albany, Inc.
    
  • Team Suzuki
    
  • Nash Chevrolet Company
    
  • United Auto Credit Corp.
    

Unfair and Deceptive Marketing Practices

• Extreme-Scooters.com, Inc. –   Allegations that this web-based company of mini-scooters did not deliver the brands that it advertised, claimed that certain merchandise was in stock when it was not, and failed to deliver certain merchandise or provide refunds were investigated.   The company agreed to refrain from unfair and deceptive acts and practices and to make restitution to its customers in excess of $11,700.
  
  
• Gregg Appliances, Inc. d/b/a hhgregg – Gregg Appliances sells household appliances and electronic products. After investigating its practices, the OCA alleged that the company had committed multiple violations of the Fair Business Practices Act by advertising merchandise for sale that was discontinued and not available for purchase; refusing to honor the prices as advertised; stating that advertised appliances performed poorly in an effort to sell higher-priced merchandise; and advertising low-priced merchandise which was not available in its stores or warehouses.  Under the settlement terms, the company consented to modify its advertising and sales practices so as to eliminate any misleading or deceptive tactics and to pay $55,000 administrative and legal fees.
  
  
• Newport Creative Communications, Inc. – The Office of Consumer Affairs investigated Newport Creative Communications, Inc. regarding sweepstakes promotions used by certain of its charitable organization clients that involved a pre-selected winner.  The OCA found that the sweepstakes direct mailers contained a number of confusing and misleading aspects which falsely implied that the recipient had already won the sweepstakes and just needed to claim his prize.   The company was required to comply with the Georgia Charitable Solicitation Act and Fair Business Practices Act and to pay administrative and investigative fees in the amount of $10,000.
  
  
• Spagoda, LLC – An Internet “broker” of spa services, Spagoda is alleged to have falsely represented themselves by claiming to have a network of more than 2000 locations nationwide, when such is not the case. They also failed to honor their 2-year expiration period and to refund requests as advertised. They allegedly gave misleading information about their affiliations, the local presence of their spas, and waited until consumers had purchased spa appointments before fabricating excuses as to why consumers could not be given appointments as advertised. In settlement of this matter, Spagoda, LLC agreed to comply with Georgia’s Fair Business Practices Act and Deceptive Advertising statutes by clearly and accurately portraying its spa services, locations, affiliations, appointments and policies. The company was also required to pay $2,000 for administrative and legal fees, a civil penalty of $7,000 and $5,452 restitution to consumers.
  
  
• PCDIRECTBIZ.COM, INC. and James Howard Cook – PCDIRECTBIZ.COM is an online lease-to-own computer business that markets to consumers nationwide through its website. An investigation into the practices of the company revealed that they had accepted down payments from customers but refused to provide computers or refund the down payments to those customers. The company also implied that the annual percentage interest rate on their computers was 21.99%, when the actual interest rate was 82.2%. Furthermore, the company failed to include disclosures required by the federal Truth-In-Lending Act and falsely claimed it was a member of the Better Business Bureau. In settlement of this matter, the company agreed to provide restitution to its customers in the amount of $18,667 and pay $50,000 for administrative, legal and investigative fees. They also agreed to remove any false or misleading statements from their web site and adopt company-wide advertising and sales policies and guidelines to ensure compliance with the applicable laws.

Debt Adjustment and Credit Repair

• American Debt Negotiators, Inc.­ – An investigation conducted into the practices of this debt adjustment company revealed that American Debt Negotiators, Inc. accepted fees in exchange for debt adjustment services but failed to provide said services or refunds; accepted fees from customers above the legally allowable rate of 7.5% of the monthly amount paid for distribution to the consumer’s creditors; failed to disburse funds to creditors within 30 days of receipt of such funds; failed to obtain an annual audit of its accounts; failed to maintain the required insurance coverage; failed to file copies of annual audits and insurance policies with the State; and made misleading statement on its website. In settlement of this matter, American Debt Negotiators agreed to continue to provide adjustment services for certain Georgia customers at no charge, and to otherwise cease to engage in the business of debt adjustment in Georgia until they have created a business model consistent with the statutorily defined debt adjustment model. The company further agreed to pay customer restitution in the amount of $1,771 and $5,000 as reimbursement of investigative fees and future monitoring of compliance.
  
  
• Rescue Debt, Inc. – It was alleged that Rescue Debt charged its customers fees in excess of the maximum allowable rate of 7.5% of the monthly amount paid to customer’s creditors; that the conduct of the business was not in keeping with the Debt Adjustment Act, and that they failed to file annual audits and insurance policies as required by law. Rescue Debt was required to comply with the Fair Business Practices Act and the Debt Adjustment Act; to cap their customer fee at 7.5% of the monthly amount the debtor pays to Rescue Debt; and to pay a civil penalty in the amount of $2,000.

Multi-State Settlements

• PayPal, Inc. – The State of Georgia was one of 28 states that entered into a settlement with PayPal, Inc. resolving concerns about the company’s business practices.  PayPal represents a web-based alternative payment system that provides online services which their members can use to transfer money to other people or businesses.  The most common reasons for sending the money include auction or on-line business purchases.

Consumers alleged that:

• PayPal would freeze money held in a consumer’s PayPal account, without notice to the consumer, during a dispute regarding an online or auction purchase;
  
• PayPal would default the consumer's account to their checking/savings account when consumers expected to fund the payment through use of their credit cards; and
  
• the PayPal contract failed to adequately disclose contract terms and modifications of the initial contract.

Under the terms of the agreement, PayPal will pay 1.7 million dollars to the states and modify its business practices.  The settlement requires that PayPal spell out important terms and conditions before a consumer becomes a PayPal member and when members initiate transactions. 

In addition, whenever a PayPal member gets ready to make a purchase he or she will be presented with a clear choice regarding what form of payment to use.   The agreement also requires that PayPal provide clear access to web pages containing important differences between its in-house PayPal dispute resolution programs and chargeback rights granted by federal law to consumers who use electronic banking, debit cards and credit cards to make payments and purchases. 

• Friedman's Inc. d/b/a Friedman's Jewelers - Georgia, along with 17 other states, announced a settlement with Friedman’s Inc., d/b/a Friedman’s Jewelers. The investigation of the nation’s third largest jewelry chain alleged that the company engaged in unfair or deceptive trade practices by failing to adequately inform consumers regarding insurance fees charged by Friedman’s. The states alleged that Friedman’s, when selling jewelry and financing the purchase, would charge premiums for credit life, credit disability and property. Under the terms of the settlement, Friedman’s, who has denied any wrongdoing, has agreed to extensive injunctive relief requiring clear and conspicuous point-of-sale disclosures when offering credit insurance to consumers in the future. Additionally, Friedman’s will be required to comply with licensing laws and Federal Truth-In-Lending laws before offering credit insurance.  Friedman’s is paying $2,150,000 to the participating states under the resolution agreement.
  
  
• Yellow Pages, Inc. d/b/a www.YellowPagesInc.com, Electronic Directories Company, LLC and John Wurth – Yellow Pages, Inc. sent solicitation forms to Georgia consumers consisting of a check made out to the individual, which, when cashed, obligated the consumer to pay for advertising services. Allegations by the OCA include that the disclosures regarding the services offered were inconspicuous, thereby making the check misleading; that the company misrepresented that it was affiliated with nationally-recognized The Real Yellow Pages; that it sent solicitations that could have reasonably been construed as bills or statements of account due; that it refused to cancel orders when requested to do so; and that it failed to conspicuously disclose its alleged intention to automatically renew the companies’ advertising after twelve months. As part of the settlement of this matter, Yellow Pages, Inc. agreed to cease and desist from sending solicitations in the form of checks, as described above. The company further agreed not to engage in any collection efforts against any prior customers arising out of the deposit of the YPI/EDC check solicitation. In addition, they were required to pay the OCA $10,000 for administrative and legal fees and to make restitution to customers.

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