uCFPB Sues Debt Relief Firm, Alleging It Bilked Customers For $67Mr

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  (frankieleon)
  

  Being in debt can be paralyzing, leaving some people with the feeling like they’ll never climb their way out of the hole. So when a company promises it can help ease that burden, it might some like a good idea to spend even more money in the hope that you’ll ultimately be pointed in the right financial direction. Federal regulators say one debt relief operation took in $67 million from customers in need of help, but most of that money just went to the firm’s fees while the customers’ debts continued to pile up.

  According to a complaint [PDF] filed last month in a U.S. District Court in Florida by the Consumer Financial Protection Bureau, the folks at Orion Processing — also known as World Law Processing, World Credit Repair, and World Law Debt — “operate a debt relief business that takes exorbitant, illegal upfront fees from vulnerable consumers suffering financial difficulties.”

  The company tells these debtors that its team of lawyers will negotiate with the customer’s creditors to come to affordable repayment plans. But in order to get this process started, the customer is directed to stop paying their creditors and make payments directly to the debt relief firm.

  Even though the defendants’ various operations have brought in millions of dollars the CFPB alleges that they “often fail to settle” any of their customers’ debts, and “fail to provide consumers with the legal representation they promise.”

  In 2010, the Federal Trade Commission amended the Telemarketing Sales Rule to bar debt relief companies that use telemarketing from requesting or receiving advance fees before they renegotiate a client’s debt.

  Around this same time, the CFPB alleges that the defendants devised a scheme to get around this prohibition by changing the appearance of the service they offered from debt relief to “legal representation” and “processing services.”

  The defendants claimed to employ lawyers in every state, according to the complaint. “They also touted that consumers would receive the skill and expertise of a licensed lawyer to negotiate with creditors regarding their unsecured debts.”

  But the CFPB claims that clients rarely communicated with any lawyers and the “vast majority” of the work performed was debt relief services provided by non-attorneys.

  Thus, argues the suit, the defendants were not operating a legal representation firm, but a debt relief business. And in spite of the prohibition against collecting advance fees from debt relief clients, the CFPB says the defendants collected upfront fees from 99% of its customers.

  And those fees were not cheap.

  The lawsuit breaks down the three types of upfront fees charged by the defendant:

  • $199 in “Initial Fees” collected during the first three months of being a client.

  • “Bundled Legal Service Fees” of anywhere from 10-15% of the client’s total outstanding debts. Rather than collect these after the debt was renegotiated, the CFPB says it is often collected over the course of the first 13 months of being in the program.

  • $84.95 in “Attorney Monthly Service Fees,” even though the CFPB says that most customers never dealt with or were represented by a lawyer. As the name implies, this fee is collected monthly so long as the client remains in the program.

  And if clients try to quit, the lawsuit alleges that World Law “typically makes canceling very difficult or refuses to provide the requested refund.”

  Today, the court granted a preliminary injunction [PDF] against World Law and the other defendants, freezing their assets, halting their online operations (but preventing them from deleting their websites), and granting a temporary restraining order that prohibits the defendants from marketing any debt relief services.

  “We took action today against World Law Group for an alleged debt relief scheme that lured consumers with false promises of help from lawyers and collected millions in illegal upfront fees,” said CFPB Director Richard Cordray. “We are seeking to put an end to this scheme and prevent more consumers from being harmed.”

  
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by Chris Morran via Consumerist

uRJ Reynolds Ordered To Stop Selling 4 Cigarette Brandsr

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  (MarteaDesignCo)

  The nation’s top cigarette manufacturer must stop selling four products after federal regulators determined RJ Reynolds failed to show the brands did not pose increased health risks compared to items already on the market.

  The Food & Drug Administration ordered RJ Reynolds to cease the sale, distribution and marketing of Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13 after finding the company’s submissions for the products did not meet requirements under the Federal Food, Drug, and Cosmetic Act (FD&C Act).

  The order to cease the sale of the products was handed down after investigators for the FDA found that the four products were not substantially equivalent (NSE) to comparable products marketed as of Feb. 17, 2007.

  Under the Family Smoking Prevention and Tobacco Control Act of 2009, the FDA has the ability to reject cigarettes and other tobacco products that its scientists believe pose greater public health risks than comparable products.

  In the case of RJ Reynolds’ Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13 products, the company was allowed to begin selling the cigarettes on the basis that they were comparable to products already on the market.

  To be considered substantially equivalent, tobacco products must be proven to have the same characteristics of previous products, or to different ones that don’t raise new questions for public health.

  However, the FDA determined that the products were not the same as their predecessor brands. Specifically, the agency found that the products in question had higher amounts of harmful ingredients, higher levels of menthol, and the addition of new ingredients raised new questions for public health.

  In the case of Camel Crush Bold, RJR also failed to show the addition of a menthol capsule in the filter did not affect consumer perception and use.

  “These decisions were based on a rigorous, science-based review designed to protect the public from the harms caused by tobacco use,” Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products, said in a statement. “The agency will continue to review product submissions and exercise its legal authority and consumer protection duty to remove products from the market when they fail to meet the public health bar set forth under law.”

  Under the NSE orders, RJ Reynolds must stop selling the products immediately and to dispose of them within 30 days or face financial penalties or criminal prosecution.

  
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by Ashlee Kieler via Consumerist

uWoman Settles Dunkin’ Donuts Hot Coffee Lawsuit For $522Kr

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  (m01229)
  

  As long as chains and restaurants sell hot beverages sold, we’ll probably continue to hear about lawsuits tied to accidents with hot coffee, or hot cider, or any hot liquid. To wit: in a recent hot coffee lawsuit development, a woman who claimed she fell in the parking lot of a New Jersey Dunkin’ Donuts, spilling hot coffee on her face and neck, has settled with the chain for $522,000.

  The woman’s case was scheduled to go to trial this month, her attorney told MyCentralJersey.com.

  Unlike other cases involving liquid burns, the woman didn’t have a problem with how the coffee was served or packaged, but instead claimed that the Dunkin’ Donuts location didn’t maintain its property adequately: according to the lawsuit, she said she tripped over an exposed spike from a dislodged curb stop in the parking lot, while carrying multiple coffees she’d just purchased.

  She suffered burns to her face and neck, the lawsuit said, and she also had cuts to her hand and knee from the fall. Her attorney says she sustained back and shoulder injuries that required surgery.

  “Basic standards for parking lot maintenance are for the protection and safety of the general public,” her attorney told CNBC. “Allowing a metal spike to protrude out of the asphalt clearly violates these standards. Although it is never a replacement for health, [the plaintiff] is hopeful that the settlement will serve to remind business owners that their customer’s safety should always be a priority.”

  Somerset woman settles Dunkin’ Donuts suit for $522,000 [MyCentralJersey.com]
  New Jersey Dunkin’ Donuts settles personal injury lawsuit for $522,000 [CNBC]

  
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by Mary Beth Quirk via Consumerist

uCustomer Says Car Wash Worker Wrote “B*tch Is Crazy” On Her Receiptr

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• I don’t work in human resources, but if I did I’d be sure that all applicants had to respond to the following hypothetical: “You’re annoyed at a customer (the reason doesn’t matter) and you have the opportunity to express that annoyance to said customer by scrawling an offensive note on a receipt that he or she will almost certainly see. Do you do it?”

  Asking that question might have saved the owner of a Georgia car wash some public embarrassment after one of his employees allegedly voiced his opinion about a customer — specifically that “B*tch is crazy” — via a handwritten note on a receipt that was then placed on her windshield.

  The customer tells WXIA-TV that she’d been disappointed by the $40 detailing job she’d paid for at the car wash, so she took it back to ask for a second effort.

  “There was dog hair everywhere, still on the seats… The inside hadn’t been cleaned at all,” she explains. “The tires themselves hadn’t been cleaned.”

  The manager agreed to redo the detailing, but when the customer went to get her daughter’s medicine out of her car while it was being wiped off, she spotted the offensive note.

  “I started shaking. I started crying,” she tells WXIA. “I was like, what is this. How do people operate like this? How do you treat customers this way?”

  The response from the manager was not what she’d hoped for.

  “He said, ‘I don’t know who did it. I didn’t do it. I was in the back. Your car is ready,”‘ according to the customer.

  When confronted by WXIA, that manager said he’d already apologized to the customer and the the employee involved will be fired. The customer says no apology was given.

  
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by Chris Morran via Consumerist

uCitibank Apparently Hasn’t Heard About ATM Skimmers In Mexican Tourist Destinationr

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  (Krebs on Security)

  Reader J. had what we’re sure was a wonderful vacation in Puerto Vallarta, Mexico last November, and used his Citibank ATM card to withdraw cash as needed. When he returned home, he noticed multiple withdrawals on some days, and the “extra” transactions were for amounts much larger than what he remembered taking out. J. says that Citibank wouldn’t reverse the transactions, since the card never left his possession.

  Here’s the problem: your debit card doesn’t need to be physically stolen for theft or ATM fraud to occur. It was just a few months ago that we shared images of an actual skimmer in place on an ATM in Puerto Vallarta, a popular destination for tourists from up north and our magnetic-stripe, easy-to-clone ATM cards. It’s possible that this is the very ATM that J. used to withdraw pesos on vacation.

  J. is a Consumerist reader, but originally wrote to us before our post about the ATM in Puerto Vallarta. He was able to find information about the increase in skimmer fraud in Mexico through some idle Googling. Wasn’t this information also available to Citi’s fraud department?

  We referred J. to a member of Citibank’s social media team, who was able to help and refunded one of the disputed transactions: the other happened at an ATM that J. had used for his own non-fraudulent transactions. “Having already spent way too much time dealing with this, I’m probably going to write this off and put it past me,” he wrote to Consumerist in an update.

  
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by Laura Northrup via Consumerist

uFlorida McDonald’s Franchisees Testing Ground Chicken Burgersr

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  Tampa Bay-area McDonald’s restaurants debuted a new chicken burger on Monday. (via @mcdtampabay)

  Who needs a regular old hamburger — or a turkey burger, or a chicken filet — when you can get a burger made from ground chicken instead? At least that’s the thought process for the operators of 202 McDonald’s restaurants in Florida’s Tampa Bay area.

  The new regional-specific item debuted Monday after local McDonald’s operators worked with the company’s chicken supplier Keystone Foods for 18 months to craft a more heath-conscious alternative to traditional burgers, the Tampa Bay Business Journal reports.

  The chicken burger concept, which is a 50/50 blend of white and dark ground chicken, was born from the desire of 37 Tampa Bay area McDonald’s operators looking to appeal to new customers.

  “It’s a product that may cause people to think about McDonald’s in a different way,” Blake Casper, CEO of Caspers Co., which operates 53 McDonald’s franchises in the area, tells the Business Journal. “Ultimately, anyone that likes a good burger is our target for this product.”

  The new burgers – which have 390 to 400 calories – come in two varieties: the Classic with red onions, lettuce, tomatoes and ranch sauce and the Signature which includes grilled onions with lettuce, tomatoes and a tangy and sweet “signature” sauce.

  Casper tells the Tampa Bay Times that the operators decided to use chicken in the new burgers as it’s a more approachable and easily customizable than other alternatives like turkey.

  “The whole chicken burger market is growing; you’re seeing it more in restaurants,” Casper told the Times. “This isn’t a chicken sandwich, but a chicken burger — there’s a real difference in its bite.”

  While the chicken burgers are only available in the Tampa Bay region for now, Casper and other local operators believe it could expand to other areas of the U.S. eventually.

  “We are definitely approaching this product with the same spirit that the owner/operators who created the Filet-O-Fish, Egg McMuffin and Big Mac did,” Casper says of other McDonald’s staples that started regionally. “But our focus is on our customers here in Tampa Bay.”

  The next Filet-O-Fish? Tampa Bay McDonald’s operators create their own chicken burger (EXCLUSIVE) [Tampa Bay Business Journal]
  Tampa Bay McDonald’s restaurants debut ground chicken burger [Tampa Bay Times]

  
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by Ashlee Kieler via Consumerist

uFBI: Delta Flight Attendant’s Story About Suspicious Package That Forced Emergency Landing Was A Hoaxr

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  (Quinn Dombrowski)

  A flight attendant who reported a suspicious package on a Delta Air Lines flight, prompting the plane to make an emergency landing last week in North Dakota, made the whole thing up, the FBI says, and has been charged with interfering with the operation of an aircraft and communicating false information.

  According to an FBI affidavit, the attendant admitted that he’d stuffed a bag with towels, and then later reported it as a suspicious package, saying it made beeping noises, reports the Associated Press.

  The SkyWest Airlines-operated flight traveling was traveling from Minnesota when it was forced to make an emergency landing, and Dickinson Airport was temporarily shut down for its arrival.

  SkyWest says the flight attendant has been placed on administrative leave pending a police investigation. He’s scheduled to appear in court today.

  This isn’t the first time he’s apparently played a game of “Let’s Pretend” while on duty: an FBI agent says in court documents that he also admitted to making up a bomb threat on a July 7 flight from Charlottesville, VA to Chicago. That flight returned to Charlottesville.

  FBI: Flight attendant created hoax forcing emergency landing [Associated Press]
  Flight attendant accused of hoax in North Dakota allegedly behind similar incident in Virginia [Associated Press]

  
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by Mary Beth Quirk via Consumerist