Wilmington – Attorney General Beau Biden announced today that his office, along with the Attorneys General of the other 49 States and the District of Columbia, the Federal Trade Commission, and the Federal Communications Commission, have reached settlements with AT&T Mobility LLC that resolves allegations the company placed charges for third-party services on consumers’ mobile telephone bills that had not been authorized by the consumer, a practice known as “mobile cramming.” The $105 million nationwide settlement includes $80 million in refunds to consumers who were “crammed” and a $25 million payment to the Attorneys General and the Federal Communications Commission. The Attorney General’s Consumer Protection Fund will receive $692,570 as a result of its participation in the investigation and the settlement.

“I’m disturbed that consumers were charged for cell phone services they neither sought nor agreed to pay,” Biden said. “That’s why we took action to end mobile cramming and why we’re holding AT&T accountable for its practices by securing refunds for victims. I urge AT&T’s Delaware customers who were victims of cramming to initiate a refund by visiting www.ftc.gov/att or to call our Consumer Hotline at 1-800-220-5424 if they have questions.”

Consumers who have been “crammed” often complain about charges, typically $9.99 per month, for “premium” text message subscription services that appear on their cell phone bills. These services, also known as “PSMS” subscriptions, commonly included features including horoscopes, trivia, and sports scores. The Attorneys General and federal regulators allege that cramming occurred when AT&T Mobility placed monthly charges on consumers’ mobile telephone bills for these services without the consumer’s knowledge or their consent. AT&T Mobility is the first mobile telephone provider to enter into national settlement to resolve allegations regarding cramming, and AT&T Mobility was among the four major mobile carriers – in addition to Verizon, Sprint and T-Mobile – that announced last fall it would cease billing their customers for commercial PSMS charges.

Under the terms of the settlements, AT&T Mobility is required to provide $80 million to a fund that will be administered by the Federal Trade Commission be used to pay refunds to consumers who were victims of cramming. AT&T customers who were crammed can submit refund claims by visiting www.ftc.gov/att, or contact the contact the Claims Administrator with questions about the refund program at 1-877-819-9692.

Today’s settlement also requires AT&T Mobility to alter its business practices by staying out of the commercial PSMS business – the platform to which law enforcement agencies attribute the lion’s share of the mobile cramming problem. In addition, AT&T Mobility is required to take a number of specific steps to ensure that it only bills consumers for third-party charges that have been authorized, including:
• obtain consumers’ express consent before billing consumers for third-party charges, and ensure that consumers are only charged for services if the consumer has been informed of all material terms and conditions of their payment;
• provide a full refund or credit to consumers who are billed for unauthorized third-party charges at any time after this settlement;
• inform its customers when the consumers sign up for services that their mobile phone can be used to pay for third-party charges, and must inform consumers of how those third-party charges can be blocked if the consumer doesn’t want to use their phone as a payment method for third-party products; and
• present third-party charges in a dedicated section of consumers’ mobile phone bills, must clearly distinguish them from AT&T Mobility’s charges, and must include in that same section information about the consumers’ ability to block third-party charges.

Deputy Attorney General Jillian Remming handled this matter for the Delaware Department of Justice.

# # #

Wilmington – Delaware Attorney General Beau Biden today alerted consumers to be on the lookout for two unrelated telephone scams that have targeted large numbers of consumers in Delaware and beyond. The scammers appear to be randomly targeting victims, claiming that victims owe back taxes to the government, or owe processing fees to collect a sweepstakes prize.

“Scammers prey on unsuspecting victims to make a quick buck,” Biden said. “Unfortunately, increasing numbers of phone scams are initiated beyond our national borders, where con artists are difficult to track and it’s relatively easy for them to hide from law enforcement. That’s why it’s more important than ever to be aware of these criminal tactics, recognize the signs, and avoid becoming a victim.”

In the first scam, which has targeted consumers in many states across the country, consumers receive unsolicited phone calls from an individual who claims to represent the Internal Revenue Service (IRS), the Treasury Department, a law enforcement agency, or even a law firm. The caller informs the victim that they owe money to the IRS or to a law enforcement agency and demand prompt payment through a pre-paid debit card or a wire transfer. If the intended victim refuses to immediately comply, the scammer threatens arrests, indictment, deportation, or suspension of a business or driver’s license. In many cases consumers report that the caller becomes hostile and insulting. In several recent solicitations the caller has identified himself as Steve Martin. Several consumers have reported to Biden’s office that the following phone numbers have appeared on caller ID when calls were received: (909) 666-8077, (559) 358-4650, (202) 241-0181, (949) 873-7420. Biden warned consumers to beware that telephone scammers commonly employ a tactic known as “caller ID spoofing” that falsifies the telephone number and name that appears on the consumer’s caller ID in order to appear legitimate or hide their true identity and location.

The Attorney General’s Consumer Protection Unit has received 30 reports of these phone scams in recent weeks. The New Castle County Police Department reported earlier this week that it had received 50 reports of the same IRS phone scam.

Biden reminded consumers that government agencies will not ask for credit card numbers over the phone and will never demand that a payment be made using a pre-paid debit card or wire transfer. If you receive a harassing call from an individual claiming to be a government official demanding payment, hang up and do not call back the number on your caller ID. Instead, contact the actual government agency directly to inquire whether you owe payment to them – for example, consumers may contact the IRS at 1-800-829-1040 – or contact the Delaware Attorney General’s Consumer Protection Unit at 1-800-220-5424.

In a second scam, consumers report receiving unsolicited phone calls from an individual claiming they have won a significant prize in the form of money, a trip, or a vehicle. The caller reports the prize will be delivered to the consumer after the consumer pays a processing fee that can range from several hundred to several thousand dollars, and the scammer directs the victim to make payment by purchasing a pre-paid debit card or making a wire transfer. After the payment is made, however, delivery of the “prize” never occurs.

Biden warned Delawareans to be wary of unsolicited calls, letters, or e-mails claiming the recipient has won a lottery or sweepstakes, reminding consumers that if they didn’t buy a lottery ticket or enter a sweepstakes, they can’t win a prize. He recommended the following tips to avoid becoming a victim of lottery and sweepstakes scams:
• Never pay up-front fees to collect a prize.
• Never wire money to someone you do not know. Don’t ever wire funds from a check you’ve received to pay “taxes or fees” for a promised lottery or sweepstakes prize. Reject any kind of scheme that sends you a check and asks you to wire money back to the sender.
• Do not give out your social security number, credit card and bank account numbers to anyone.
• Beware of solicitors requesting money be sent via a wire service or overnight delivery.

If you receive unsolicited calls, letters, or e-mails claiming you have won a lottery or sweepstakes you did not enter, hang up the phone or ignore the message. If you believe you have been the victim of a lottery or sweepstakes scam, contact your local police or the Attorney General’s Consumer Protection Unit at 1-800-220-5424.

# # #

Files lawsuit in coordinated federal/state effort to crack down on foreclosure relief schemes that target distressed homeowners

Wilmington – Today, Attorney General Beau Biden a filed a lawsuit against a California-based company alleging it operates a mortgage rescue and loan assistance scam that illegally collects large upfront fees from Delaware consumers facing financial distress with the promise to secure loan modification or other relief from their mortgage lenders.

“Mortgage rescue scammers target vulnerable homeowners, taking thousands of dollars from struggling families who ultimately receive no meaningful services, lose valuable time, and are instead left at greater risk of foreclosure,” Biden said. “We are protecting Delaware homeowners from these deceptive and harmful schemes.  Our Office of Foreclosure Prevention, Delaware’s certified housing counselors, and other agencies provide free foreclosure and mortgage modification help to homeowners – Delawareans should never pay a dime to anyone for assistance in seeking a loan modification or other services.”

Biden’s Consumer Protection Unit filed today’s lawsuit against Irvine, California-based Consumer Relief Program, Inc, which conducted business under the name Consumer Advocacy Assistance, and its owner Marinus Pieter Van Sweeden.  It alleges the company violated Delaware’s Mortgage Loan Modification Services Act, Consumer Fraud Act, and Deceptive Trade Practices Act by targeting struggling homeowners with a promise to save their homes by negotiating lower mortgage payments with the homeowners’ lenders for an upfront fee.  After five Delaware homeowners collectively paid the company more than $8,000, none of the homeowners received the promised services.

Under Delaware law, mortgage modification businesses are required to register with Biden’s Consumer Protection Unit and are prohibited from soliciting, collecting or attempting to collect any fees or other compensation from consumers before an offer for a modification of the loan terms is actually received from the lender/servicer.  Over the past year, Biden’s office has investigated multiple complaints about this company, which was not registered as a loan modification services provider as required.

Biden urged Delaware homeowners who are behind on their mortgage, are worried about making their mortgage payments, or who suspect a mortgage rescue fraud to contact the Delaware Homeowner Relief Hotline at 1-800-220-5424 or visit www.delawarehomeownerrelief.com.

Click here to read Biden’s Consumer Advisory on Mortgage Loan Modification Services.

Delaware’s lawsuit seeks restitution for the homeowners, the payment of civil penalties, and a Court order requiring the company to cease and desist its illegal activities.  It was filed in a coordinated nationwide effort among the federal Consumer Financial Protection Bureau, the Federal Trade Commission, and 17 states that together filed more than 30 lawsuits today targeting dozens of scam operations that prey on delinquent homeowners or those facing foreclosure.

# # #

SunTrust to provide borrowers with loan modifications; foreclosed loans may be eligible for payments for past abuse

Wilmington – Attorney General Beau Biden today secured nearly $2 million for Delaware homeowners as part of a state-federal settlement with mortgage lender and servicer SunTrust to address mortgage origination, servicing, and foreclosure abuses.  Under the national $1 billion settlement, $550 million is earmarked for borrowers to provide relief to those who either lost their home to foreclosure or who are currently in distress under a SunTrust mortgage; SunTrust will also pay $418 million to the federal government to resolve its potential liability under the federal False Claims Act.

“We’re holding another financial institution accountable for unacceptable mortgage practices which contributed to the nationwide economic crisis that brought our economy to its knees,” Biden said.  “This action provides financial benefits to Delaware borrowers who were harmed by this bank’s foreclosure abuses and establishes tough new mortgage servicing standards it must follow to better protect borrowers.”

The agreement requires SunTrust to provide approximately $1.8 million to certain Delaware borrowers in the form of loan modifications or other relief.  The modifications may include principal reductions and refinancing for underwater mortgages.  More information about these loan modifications will be released at a later date, although current borrowers with loans serviced by SunTrust can contact the company directly with questions.

In addition, approximately 50 eligible Delaware borrowers whose loans were serviced by SunTrust and who lost their home to foreclosure from January 1, 2008 through December 31, 2013 and encountered servicing abuse may be eligible for cash payments from a separate $40 million national fund that is being established through today’s agreement.  Eligible borrowers will be contacted about how to qualify for payments. The amount each borrower receives will depend on how many borrowers file claims.

Today’s settlement with Biden, 48 other states and the District of Columbia, the U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the federal Consumer Financial Protection Bureau also establishes tough new mortgage servicing standards for the bank and subjects it to oversight by an independent monitor to ensure its compliance with the settlement.  Its servicing standards largely mirror the February 2012 National Mortgage Settlement between the states, federal government, and the nation’s five largest national mortgage servicers which provided consumers with more than $50 billion in direct relief, created tough new servicing standards, and implemented independent oversight.

Under the terms of today’s settlement SunTrust must substantially change how it services mortgage loans, handles foreclosures, and ensures the accuracy of information provided in federal bankruptcy court.  Each are aimed at ending past foreclosure abuses, such as robo-signing, improper documentation and lost paperwork.  Among the dozens of new consumer protections and standards are:

• Expanded protections for military servicemembers under the federal Servicemembers Civil Relief Act (SCRA) first championed by Biden in the February 2012 national mortgage settlement.  They include extending SCRA protections to all active servicemembers serving in a hostile fire zone and expanding mortgage assistance for servicemembers whose reassignments to new posts require them to relocate on short notice.
• Making foreclosure a last resort by first requiring SunTrust to evaluate homeowners for other loss mitigation options;
• Restricting foreclosure while the homeowner is being considered for a loan modification;
• New procedures and timelines for reviewing loan modification applications;
• Giving homeowners the right to appeal denials;
• Requiring a single point of contact for borrowers seeking information about their loans and maintaining adequate staff to handle calls.

Today’s settlement is the latest enforcement action taken by Biden in response to the mortgage foreclosure crisis.  Recent actions by Biden and his office include:

• In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with the nation’s five largest mortgage-servicing banks (including JPMorgan). That settlement brought $11.7 million to the State and has, so far, meant $75 million in financial benefits to 3,000 Delawareans. It also included important new protections for America’s military personnel that Biden fought to include in the settlement.
• In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.
• In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc. (LPS) led to the Florida-based company paying $250,000 to the State of Delaware.
• In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of structured finance securities were independent and objective when actually S&P’s analysis was influenced by its own financial interests. That suit is still pending.
• In November 2013, Biden announced that JPMorgan Chase will compensate Delaware nearly $20 million for selling mortgage-backed securities that were central to economic crisis.  The payment resolves allegations concerning the bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised. The resulting losses were catastrophic for the economy.
• In December 2013, Biden secured nearly $7 million for Delaware from Ocwen Financial Corporation and its subsidiary, Ocwen Loan Servicing in a settlement following the states’  ongoing investigation into mortgage servicing and foreclosure abuse.  The agreement requires Ocwen to pay more than $6 million in direct financial relief for Delaware borrowers who have been harmed by the mortgage crisis

Today’s agreement, which will be filed as a consent judgment in the U.S. District Court for the District of Columbia, does not prevent state or federal authorities from pursuing criminal enforcement actions related to this or other conduct by SunTrust and does not prevent any action by individual borrowers who wish to bring their own lawsuits.

This matter was handled for Delaware by Deputy Attorney General Gillian Andrews in Biden’s Fraud and Consumer Protection Division.

# # #

Attorneys General charge that GlaxoSmithKline illegally promoted medications;

Biden secures more than $1 million for Delaware

DOVER – Delaware Attorney General Beau Biden and 44 of his colleagues announced a $105 million settlement today with GlaxoSmithKline to resolve claims that the pharmaceutical giant unlawfully marketed asthma and anti-depressant medications.

The Attorneys General allege that GlaxoSmithKline unlawfully promoted its asthma drug, Advair, and antidepressant drugs, Paxil and Wellbutrin by misrepresenting the uses and qualities of these drugs. In Delaware, such conduct falls under the Consumer Fraud Act, which is enforced by Biden’s Consumer Protection Unit. Delaware’s share of the settlement will be $1.015 million.

On top of the $105 million, the settlement also requires the company to make significant changes in its marketing efforts that will ultimately benefit consumer. Specifically, GlaxoSmithKline shall not:

• Make, or cause to be made, any written or oral claim that is false, misleading, or deceptive about any of the company’s product;
• Make promotional claims, not approved or permitted by the FDA that a company product is better, more effective, safer, or has less serious side effects or contraindications than has been demonstrated by substantial evidence or substantial clinical experience;
• Present favorable information or conclusions from a study that is inadequate in design, scope, or conduct to furnish significant support for such information or conclusions, when presenting information about a clinical study regarding GSK products in any promotional materials;
• Provide samples of company products to those health care professionals who are not expected to prescribe the sampled company products for an approved use, but who would be expected to prescribe the sampled product for an off-label use; or
• Disseminate information describing any off-label use of a company product, unless such information and materials are consistent with applicable FDA regulations and FDA Guidances for Industry.

The settlement also requires GlaxoSmithKline to continue its Patient First Program at least through March 2019. The Patient First Program reduces financial incentives for sales representatives to engage in deceptive marketing.  In addition, the company will be required to  scientifically trained personnel to be ultimately responsible for developing and approving responses to health care provider questions and for these responses to be unbiased and non-promotional.

The Attorneys General in Oregon and Illinois led the investigation. In addition to Delaware, other participating states were: Alabama, Arizona , Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.

###