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July 2015

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Citigroup Will Refund $700 Million for Deceptive Marketing

Citigroup's extra fees for add-on services is now costing the company $770 million.

In an agreement with the Consumer Financial Protection Bureau (CFPB), Citigroup will pay $70 million in fines and refund $700 million to consumers for illegal and deceptive credit card practices.

Here is what you need to know:

Illegal and Deceptive Practices

The Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Act after the 2008 financial crisis, is responsible for regulating the credit industry and investigating illegal and deceptive practices. In 2013, the CFPB fined JP Morgan Chase for unfair billing practices for credit card add-on products. In 2014, Bank of America was fined for a similar violation. Citigroup is the CFPB's latest victim.

In its investigation into the company, the CFPB found that, as far back as 2000, Citi charged customers for add-on products such as credit score monitoring or rush processing of payments. The company allegedly signed consumers up for add-on services when it was unclear whether the consumer actually said they wanted it or not. In another case, Citi charged customers for credit monitoring services but did not perform any of the services. Also, the company charged customers a $14.95 expedited payment fee for over-the-phone payments without informing them about free payment options.

These add-on services are illegal because they provide no actual benefit to the consumer.

The Refunds

As part of the settlement, Citi has agreed to issue refunds to 8.8 million affected customers. Most customers will receive a statement credit. Customers who no longer have a Citi account will receive a check in the mail.

Watch out for Deceptive Charges

Citi has reported that it stopped these deceptive practices since 2013. Also, the CFPB's enforcement activities have largely ended the practices among other banks and credit card companies as well.

However, consumer financial advocates warn that payday lenders and so called loan sharks still engage in these deceptive practices. If you believe that your lender or credit card company is engaging in illegal practices, you can make a complaint with the CFPB or consult with an experienced consumer protection attorney for help.

Related Resources:

Military Consumer Protection Day: Scams Targeting Servicemembers

July is the month when service members recognize Military Consumer Protection Day.

While servicemembers protect the country every day, they are often more susceptible to financial exploitation and scams. So, in honor of Military Consumer Protection Day, here are some scams and unfair practices to watch out for:

Affinity Scams

There is a certain shared connection among all servicemembers. So, you're more likely to trust someone who is also a servicemembers. In an affinity scam, fraudsters use that connection to dupe victims.

In one case, a Texas man used his status as an Army Veteran to trick current and former military personnel to invest money with him. In another case, an Army Staff Sergeant ran a Ponzi scheme stealing $500,000 from nearly 100 fellow soldiers

Card Popping Scam

College students and young active duty military personnel are being targeted in card popping scams.

In these scams, the scammers, impersonating USAA officials, create false social media profiles or Instagram or Facebook, offering quick cash, scholarships, or promotions. The scam promises that victims will get a cut of a check that they must deposit into their checking account after they provide the scammers with debit card numbers, pin numbers, and login information. Scammers will then deposit fake checks, and use the victims' debit cards to withdraw large sums of money before the bank discovers the fraudulent checks.

In many cases, the victim ends up being on the hook for the fake check.

Unfair Debt Collection

In another case of unfair exploitation of service members, Freedom Stores Inc. used illegal and abusive debt-collection practices to get money from servicemembers.

Freedom Stores, Inc. is a chain of stores that services military bases throughout the United States. According to a lawsuit filed by the Consumer Financial Protection bureau, the company filed illegal lawsuits to get default judgments against consumers who did not even know they were being sued. The company also made unauthorized withdrawals from the accounts of servicemembers' friends or families to satisfy debts.

In a win for servicemembers, the company will now have to pay $2.5 million in refunds and penalties to victims.

If you have been victimized by a scam or unfair debt collection practices, consult with an experienced consumer protection attorney for help.

Related Resources:

Two Chicken Recalls for Wheat and Salmonella

This week two companies are recalling their chicken products, one for unlisted wheat and the other for possible salmonella contamination.

Here is what you need to know:

Recall # 1: Big Easy Foods - Unlisted Wheat

Big Easy Foods, a Louisiana food company, is recalling its stuffed chicken products because wheat, a possible allergen, was not listed among the ingredients on product labels.

Wheat is a common food allergen. In fact, nearly 90 percent of all food related allergic reactions are caused by wheat, milk, eggs, peanuts, tree nuts, fish, soy, and shellfish. Because of this common condition, the Food Allergen Labeling and Consumer Protection Act requires that foods that contain any major food allergen ingredient must clearly declare presence of the allergen on the products' labels.

According to Big Easy, wheat is a minor ingredient, less than .01 percent of total ingredients, in its chicken base used in the stuffing. While wheat was included in the recipe more than two years ago, the ingredient was not listed on product labels.

So, Big Easy is recalling 93,000 pounds of its stuffed chicken products with expiration dates before June 9, 2017. While the company believes that much of the recalled products have already been eaten, Big Easy reports that no claims of allergic reactions from eating the chicken have been made.

Recall #2: Barber Foods - Salmonella

In a much scarier recall, Barber Foods, from Maine, is recalling 1.7 million pounds of chicken for possible salmonella contamination. The recalled products covers frozen, raw stuffed chicken varieties produced by the company from February 17, 2015 to May 20, 2015.

The products are believed to be contaminated with salmonella enteritidis after several patients in Wisconsin and Minnesota were treated for salmonella consumption. When consumed, salmonella, a bacteria, causes diarrhea, abdominal cramps, fever, and even death in the elderly or very young children with weakened immune systems.

Salmonella can only be killed by fully cooking chicken. However, if you have any of the recalled products, the company recommends that you do not try to eat the chicken. Just return the product to where you bought it for a refund.

If you are sickened or have an allergic reaction after eating these recalled products, you may want to consult with an experienced personal injury attorney to discuss your claim for compensation.

Related Resources:

GM Recalls Hummers, Chevrolet Spark, and Chevrolet Sonic

If you still drive a Hummer (although, I don't know how you afford the gas) watch out for car fires. General Motors has just announced recalls of two Hummer models, Chevrolet Spark, and Chevrolet Sonic -- nearly 500,000 cars.

Here is what you need to know:

Recall #1: Hummer Fires

In this first recall, General Motors is recalling almost 200K  Hummer H3 (2006-2010) and  Hummer H3T (2009-2010).

These Hummer models have a faulty connector module in the car's climate control system. The module can overheat when operated for a long time, causing nearby plastic to melt and the car to catch fire. So far, the defect has caused 42 car fires and three injuries, but no fatalities.

If your car is recalled, GM will notify you of the recall by mail. You can then bring your car to a dealership, and GM will replace the faulty module and wiring harness for free.

Recall #2: Radio Software Malfunctions

This second recall applies to about 51K  Chevrolet Sparks (2014-2015) and 2015 Chevrolet Sonics.

GM reported that radio software on these cars can get stuck in the OnStar navigation mode. This will cause the radio screen to go blank and disable all audio functions and notifications. Drivers will not be able to hear any warning for keys left in the ignition or seat belts not being fastened. The malfunction can also drain the battery.

According to GM, no accidents or injuries have been caused by this malfunction.

Owners of recalled cars will be notified in the mail, and the company will reboot and update the cars' radio software to remove the glitch, free of charge.

Injured by a Defect

If you are ever injured by a defect in your car, you may have a products liability claim against the car's manufacturer and the dealer that sold you the car. You may be able to sue on the grounds of breach of warranty or negligence. If the product had an unreasonably dangerous defect that caused you injury while used in its intended purpose, you may also sue for strict liability.

To file a products liability lawsuit, consult an experienced personal injury attorney for help.

Related Resources:

Counterfeiters of Fake 5-hour ENERGY Indicted

Is that 5-hour ENERGY drink just not working for you? You may be drinking a counterfeit.

In a first of its kind case, the U.S. District Attorney's recently charged 11 people with conspiracy to traffic in counterfeit goods, conspiracy to commit criminal copyright infringement, and conspiracy to introduce misbranded food into interstate commerce.

Here is what you need to know:

Fake 5-hour ENERGY

The counterfeiting scheme began in 2009 as a legitimate business arrangement between Joseph and Adriana Shayota and 5-hour ENERGY's parent company, Living Essentials.

The Shayotas were supposed to distribute 5-Hour Energy's product in Mexico with Spanish-language labeling. Instead, the Shayotas and others sold the products in the United States at a discount instead. Then, they advanced to making their own versions of 5-hour ENERGY drinks. The drinks were made with unregulated ingredients in unsanitary plastic vats.

Between May and December 2012, the Shayotas and gang distributed over four million bottles of counterfeit 5-hour ENERGY. The products were sold at 7-Eleven, CVS, Circle K, and Chevron stores.

The Investigation

Soon after the counterfeit products hit the market, consumers were complaining of not getting any energy from 5-hour ENERGY products. While the FDA did investigate the drink after consumers made nearly 100 reports of adverse reactions to the drinks, including 13 deaths and 33 hospitalizations, Living Essentials was unsure if the reactions were caused by the counterfeit products.

In 2012, 5-hour ENERGY discovered the counterfeit products and was able to track down where they were made. The company sued in civil court to shut down the counterfeiters' factory and seize the fake products.

According to 5-hour ENERGY, the counterfeit products came in three flavors, regular strength Berry, extra strength Berry, and regular strength Orange. While most of the counterfeit products were rounded up in 2012, if you still have any counterfeit 5-hour ENERGY you can call the company at 1-866-324-7949.

As for the counterfeiters, the U.S. Attorney's office is pursuing the first ever criminal case against food counterfeiters. If convicted, they could each face 15 years in prison.

Related Resources:

Is It Legal to Travel With Large Sums of Cash?

If you have $75,000 in cash, can you stuff it into a suitcase and board a plane with it?

One passenger actually did this. The Transportation Security Administration (TSA) at Richmond International Airport discovered $75,000 in cash in a passenger's luggage during a security check. The question remains: is it legal to travel with that much cash?

Traveling with Cash

Although it may seem sketchy, it is perfectly legal to travel with any amount of cash -- even very large amounts. You could cram a million dollars into your purse if you wanted. There is no law against that as far as domestic flights are concerned.

If you're flying internationally with more than $10,000, you'll have to declare the amount to customs. Other than that, assuming customs approves your luggage, you can carry as much cash as you want.

Can the Government Take My Money?

While carrying large amounts of cash isn't necessarily illegal, you may run into trouble if the authorities believe the cash may be tied to illegal activity.

Since the TSA routinely finds evidence of criminal activity such as illegal drug trafficking or money laundering, don't be surprised when the TSA pays a little extra attention to your cash stash. TSA officers may question you about where you got the money, where you're taking it to, and why. You are not required to answer these questions, but not answering can result in delays.

If the TSA suspects that the cash may be linked to illegal activity, it will call in a law enforcement agency to investigate further.

In the case mentioned above, a law enforcement agency was called in to investigate the $75,000 found. The cash was seized, as allowed by laws governing civil asset forfeiture, and the traveler was allowed to continue on his flight.

Tips for Traveling

If you do decide to stash stacks of Benjamins in your luggage, here are some tips:

  • Ask TSA officials to screen you in a private location. You don't want everyone in line to know you're carrying a lot of cash.
  • Always keep cash and other valuables with you in a carry-on bag. Never leave such items in checked baggage.
  • Don't forget to declare the cash to customs if you're traveling internationally.

Related Resources:

Niagara Bottling Recalls Bottled Water: E.Coli

How a company can mess up bottling water is beyond my comprehension, but be careful when you open your next water bottle.

Niagara Bottling is recalling 14 brands of bottled water for possible E.coli contamination.

Here is what you need to know:

Niagara Bottling's Bottled Water

Niagara Bottling is recalling Acadia, Acme, Big Y, Best Yet, 7-11, Niagara, Nature's Place, Pricerite, Superchill, Morning Fresh, Shaws, Shoprite, Western Beef Blue, and Wegman's bottled water. The bottles were produced at two plants in Pennsylvania between June 10 and June 18.

Niagara Bottling announced the recall after one of the plant's operator failed to notify the company of an E.coli outbreak.

E.coli in Bottled Water?

E.coli, or Escherichia coli, is a bacteria that lives in the digestive tract of mammals. Most strains of E.coli are harmless. However, one particular strain, E.coli O157:H7, is one of the leading causes of food poisoning.

The bacteria spreads through livestock's fecal matter and can contaminate food and water sources. Once consumed, E.coli can cause severe bloody diarrhea, abdominal cramps, and even kidney failure, strokes, and comas. While most healthy people will not experience severe symptoms, the bacteria can be deadly among infants and the elderly.

Niagara Bottling reports that the recall is motivated by an abundance of caution as no E.coli contamination has been detected in any of the water bottles recalled yet. Also, no complaints of injury or illnesses have been reported.

If you do have any recalled water bottles, the company recommends boiling the water to kill any bacteria first before use. Better yet, just use non-recalled bottled water.

If You Do Get E.coli

If you do get E.coli from Niagara's bottled water or from another source, you may have legal recourse. Producers who sell an infected product may be sued for strict liability, violation of express or implied warranty, or negligence. However, these cases can be complex and hard to prove, so contact an experienced personal injury attorney for help.

Related Resources:

Military Consumer Protection Act Would Protect Servicemembers

The armed forces take care of us, so it's only right that we take care of servicemembers. A group of senators are proposing new legislation that would protect U.S. servicemembers from abusive financial practices.

Nine Democrats have introduced legislation to allow the Consumer Financial Protection Bureau (CFPB) to oversee and enforce provisions of the Servicemember Civil Relief Act (SCRA). That's a lot of acronyms, so let's take a look at how the new law would work.

New Powers

As it stands now, the CFPB does not have any direct enforcement authority for the SCRA, which has led to incomplete enforcement and many referrals of cases to the Department of Justice. Instead, the Military Consumer Protection Act (MCPA) would not only give the CFPRB enforcement power over SCRA provisions, it would make SCRA enforcement a long-term priority for the CFPB.

Under the MCPA, CFRB oversight and enforcement would be extended to ten provisions, including:

  • Future financial transactions, excluding insurance
  • Default judgments, excluding child custody proceedings
  • Interest rates on pre-service debts
  • Evictions
  • Purchase or lease installment contracts
  • Mortgages and trusts
  • Motor vehicle leases
  • Telephone service contracts
  • Waiver of rights pursuant to a written agreement, excluding bailments

Teaming Up

The Consumer Financial Protection Bureau was created after the financial crisis of 2008 in an effort to protect consumers in financial markets, primarily covering mortgages, credit cards, and payday lenders. The CFPB can enforce federal consumer financial protection laws and restrict deceptive or unfair financial practices.

The Servicemembers Civil Relief Act was enacted to protect military service personnel from civil lawsuits while on active duty and for up to a year afterward. Together, the two acts would protect members of the military and their families from being taken advantage of in financial practices and products.

Related Resources:

Sawed-off Shotguns Legal in Indiana Starting July 1

Earlier this year, Indiana repealed a statewide ban on shotguns with less than an 18 inch barrel, also known as a sawed-off shotgun.

For all the gun enthusiasts out there, here is what you need to know.

What You Can Do

The law will go into effect on July 1st. Starting on that date, it will be legal to manufacture, sell. or own a sawed-off shotgun with barrels 18 inches or less in length. This will bring the law in line with current federal regulations that already allow sawed-off shotguns.

Before you get excited, residents who want a sawed-off shotgun must first undergo a background check and get a permit from the Federal Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). A permit costs about $200 and can take up to six months to be approved.

What You Can't Do

Don't let the name fool you. Just because you may be eligible to own a sawed-off shotgun, doesn't mean that you can go into your garage on July 1st and saw the barrel of your shotgun to any length you like. That is still illegal. You could get up to 10 years in federal prison for illegally modifying a shotgun yourself.

If you do want a sawed-off shotgun, you must purchase one from a licensed manufacturer.

Other Provisions of the Law

In addition to allowing possession of a sawed-off shotgun, the new law also includes an enhancement provisions. An extra 10 years in prison will be added to a sentence if the defendant was in possession of a sawed-off shotgun in violation of federal law while committing certain crimes.

Similar Laws in Other States

Arizona may soon be following in Indiana's footsteps. Currently, Arizona's laws ban the possession of sawed-off shotguns. However, earlier this year, the state's Senate gave preliminary approval to a bill that would allow residents to own sawed-off shotguns, silencers, and nunchakus.

The bill must first be voted on and approved by the senate first before it is sent to the House of Representatives for voting.

If you live in Indiana and absolutely must have a sawed-off shotgun, make sure you get a permit first and buy one from a licensed manufacturer!

Related Resources:

Lender Facing Suit From CFPB for Unfair Debt Collection

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Security National Automotive Acceptance Company (SNAAC) today for unfair debt collection practices.

Here is what you need to know:

SNAAC Tactics

Security National Automotive Acceptance Company is an auto loan company that specializes in providing service members with loans to buy used cars.

When customers defaulted on loans, SNAAC allegedly used unfair, deceptive, and abusive practices to induce payments for the loans. In its lawsuit, CFPB alleges that SNAAC often exaggerated the consequences of being delinquent on a loan. SNAAC would lie and tell servicemembers that they could face demotion, loss of promotion, discharge, or reassignment. In fact, the likelihood of such consequences were non-existent.

SNAAC also repeatedly contact servicemembers' commanding officers to demand payments of delinquent loans. In such communications, SNAAC allegedly lied and suggested that borrowers were in violation of the Uniform Code of Military Justice and could be subject to discipline.

CFPB to the Rescue

Under the Consumer Financial Protection Act (CFPA), the protection bureau has the authority to "take any action authorized ... to prevent a service provider from committing or engaging in an unfair, deceptive, or abusive act or practice."

An act or practice may be unfair if it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers," and abusive if it "takes unreasonable advantage of a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service."

The CFPB contends that SNAAC violated the CFPA when they lied about possible repercussions and contacted servicemembers' commanding officers. The lawsuit wants compensation for harmed borrowers, a civil penalty, and an injunction on the company's practices.

If you've been harmed by a debtor's abusive practices, consult with an experienced consumer protection attorney for help.

Related Resources:



Common Law Vanguard Panel

The following firms have assisted the FindLaw editorial team in identifying emerging trends in consumer protection law and topics of importance to readers of this blog: