In August 2004, California Attorney General Bill Lockyer sued the deceptively-named “California Alternative High School” (CAHS) and a number of individuals connected with it. The Los Angeles County-based defendants pitched their school to adult Latino immigrants, claiming that CAHS was fulfilling a divine mission to help them escape poverty by earning a high school diploma. Charging up to $1,450 for a 10-week, 30-hour course, the defendants represented that consumers completing the program would receive a high school diploma, when, in fact, the state and federal government did not recognize CAHS as an institution authorized to confer high school diplomas. CAHS also claimed graduates could get into accredited colleges; the CAHS program, however, does not meet those schools’ requirements, including the University of California. In addition, the defendants falsely claimed that a CAHS diploma would help students get state and federal financial aid for college. At the end of the course, consumers were left with a useless certificate and less money to spend on legitimate high school or vocational programs.
On September 20, the court issued a preliminary injunction. The receiver has closed the schools throughout the country. The complaint seeks a permanent injunction to stop the defendants’ illegal activities, restitution for consumers who paid defendants’ fees, and civil penalties of at least $4 million.
(More information about the case can be found at www.ag.ca.gov then search for news and alert.)
Deputy Attorney General Michele Van Gelderen
Illinois Attorney General’s Office
Credit Card/Check Processing Services
The Illinois Attorney General’s Office sued America Merchant for automatically debiting businesses’ checking accounts without authorization for amounts substantially in excess of regular service fees. The defendants sold credit card/check processing services to small, predominantly Hispanic businesses. At least 16 businesses had accounts debited by the defendants in amounts ranging from $1,125 to $66,337. The company has failed to refund approximately $158,000 in total unauthorized debits. An Order for Default was entered September 17, the case scheduled for another hearing on November 30. People v. United America Merchant, 03 CH 9466.
Immigration Consulting Fraud
The Illinois Attorney General’s Office sued Lucy Rios for falsely representing to consumers that she worked for the INS and by providing legal advice concerning the type of immigration petition or form consumers should file with the U.S. Bureau of Citizenship and Immigration Services to obtain a particular immigration benefit. The defendant violated the Immigration Services Rules by: 1) failing to register as an immigration service provider; 2) falsely promising a consumer that she would receive her U.S. employment authorization or “work permit” within three months; and 3) failing to post signs in her business stating that she is not an attorney and is not authorized to provide legal advice, as required under the Consumer Fraud Act. A Final Judgment was entered on May 20, permanently enjoining the defendant from engaging in Immigration Assistant Services in Illinois. People v. Lucy Rios, 03 CH 1812.
New York State Attorney General’s Office
Legal Cash Advance Firm Settlement
In June 2004, the New York State Attorney General’s Office entered into an assurance of discontinuance with Cambridge Management Group, LLC, a New Jersey finance company that provides cash advances ranging from $1,000 to $7,000 to consumers with pending personal injury lawsuits, in exchange for the right to receive a part of the proceeds of any judgment or settlement obtained by the consumer. These cash advances are not considered “loans” under New York State law because the consumer is not obligated to repay the advance.
Cambridge’s contract provided that if a consumer received no recovery on his claim, he did not owe any money to the company making the cash advance. Many consumers did not understand the terms of the financial agreement, because the contracts were not clearly written, and did not fully disclose all the terms. In addition, the contracts were only written in English, even when the consumer was not fluent in English and the underlying transaction was conducted in another language. Cambridge had entered into over 500 transactions with New York consumers, and often received proceeds significantly in excess of its advances.
Cambridge agreed to several reforms, including clear and conspicuous disclosure of the cash advance amount and contracts in Spanish if the negotiations were conducted in Spanish, or a translation of the “principal terms” into the consumer’s native language for consumers whose primary language is neither Spanish nor English. Cambridge also agreed to reform its contracts to comply with NY’s “Plain Language Law” and to discontinue requiring mandatory arbitrations for all disputes. Cambridge paid $20,000 in costs.
Immigration Services Fraud
In July 2004, the New York State Attorney General’s Office sued an unaccredited immigration consultant who falsely claimed in a weekly radio show and advertisements in a Spanish newspaper that he was an attorney, and that for a $1,500 fee could obtain residency for immigrants under a new law passed in November, 2003 - the Development, Relief & Education for Alien Minors Act of 2003 (Dream Act), which although reintroduced in Congress last year, has not yet passed.
New York State Attorney General Eliot Spitzer issued recommendations for consumers seeking immigration assistance:
Immigration Consultant Scams
Montgomery County, Maryland Division of Consumer Affairs
Consumer Protection Symposium/Coupon
Montgomery County’s Division of Consumer Affairs and AARP are conducting a consumer protection symposium on October 28 to help identify and prevent consumer scams in the Hispanic community. Elected officials, community leaders, agency staff, and media representatives will focus on law enforcement initiatives, identity theft and credit counseling, challenges in consumer education, and the role of the Spanish speaking media.
The Hispanic community survey/coupon reflects one of the Montgomery County’s Division of Consumer Affairs and AARP’s “outreach” efforts to determine the types of consumer protection problems currently being experienced by Spanish speaking consumers. They are requesting that members of the Hispanic community tell them what kinds of consumer problems the consumers have experienced so that state officials will be able to appropriately focus their services and education programs. The agencies plan to report on the results of this survey at or shortly after the symposium. The agencies also have offered the potential for a small award to encourage consumers to respond.
(More information about the symposium and outreach efforts can be obtained at www.montgomerycountymd.gov/dhca)
New York State Consumer Protection Board
Outreach and Education/Seminar
Outreach and education efforts by the New York State Consumer Protection Board (CPB) were bolstered by the CPB’s participation in the FTC’s May 12-13 Hispanic Outreach Forum and Law Enforcement Workshop. CPB Chairperson and Executive Director Teresa A. Santiago was a panelist. The CPB will be hosting a seminar on October 20 at Hostos Community College in Manhattan. The seminar will be co-hosted by the Hispanic Federation of New York and Governor George E. Pataki's Office of Citizenship Services.
“Immigration fraud will be the primary topic of the evening,” said Chairperson Santiago. “It will be our first opportunity to explain a new law, recently signed by Governor Pataki, to combat fraud involving ‘so-called immigration consultants’.”
(More information about the new fraud law and the October 20 seminar can be obtained at www.nysconsumer.gov)