Ponzi scheme centennial
A scam known by the name of its Boston-area perpetrator, Charles Ponzi, who made his millions just over 100 years ago, in 1920, is one we still have to be wary of today. Just last week, U.S. Attorney Alina Habba announced that Cesar Humberto Pina, a New Jersey real estate investor and online influencer, was charged with committing a multimillion-dollar Ponzi-like investment fraud scheme along with other crimes. According to the U.S. Attorney's office, Pina partnered with a celebrity disc jockey and radio personality to conduct real estate seminars around the country. Through these seminars and other marketing strategies, Pina developed a significant social media following. And, starting in at least 2017, the U.S. Attorney's office explains, Pina began accepting investments from individual investors for the supposed purchase, remodel and sale of specific real estate properties in New Jersey and other states. To induce investors, Pina often promised 30% or higher returns on investments within four to five months. Instead of using investors’ funds as promised, however, Pina allegedly commingled and misappropriated investors’ money, including by using new investor funds to pay off prior investors in a Ponzi-like scheme, and by spending investor funds on unauthorized business and personal expenditures. The investigation so far, says the U.S. Attorney's office, has revealed that Pina defrauded dozens of investors of millions of dollars. Pina's actions allegedly also involved bribery, money laundering, and conspiring to launder funds from illicit drug sales. The U.S. Securities and Exchange Commission offers a handy resource for recognizing the warning signs of the evergreen Ponzi scheme.
False illusion
Newsweek reported earlier this month that a jury in San Jose, California, awarded more than $314.6 million to class action plaintiffs in a case accusing Google of misusing Android smartphone users' mobile data allowances. A separate, parallel class action lawsuit set for hearing next year could potentially award billions of dollars to consumers in the rest of the country. According to court papers, the consumers in the case allege that, even while their Android devices were in their purses and pockets, or seemingly idle on nightstands as they slept, Google’s Android technology was surreptitiously using up their cellular data plan allowances. Google allegedly used the consumers' cellular data to send and receive information that furthered Google's own corporate interests, including their targeted advertising business. The consumers' lawsuit demanded that Google compensate them for misappropriating their data allowance—and the jury sided with them. In the Newsweek article, the plaintiffs' attorneys are cited as saying that for years Google created a "false illusion" that users had the ability to control whether their mobile data was used, when, in fact, they did not. Newsweek also cites Google as saying that the verdict "misunderstands services that are critical to the security, performance, and reliability of Android devices." Whether the jury verdict will stick remains to be seen, as Google said it will appeal. We'll keep an eye on the results of the appeal process, and on what, if any, awards may be coming to consumers across the country in the parallel suit.
Win some, lose some
Just won't click. Let's start with the "lose some" part: The Federal Trade Commission’s (FTC) "click-to-cancel" rule that was going to make canceling a subscription as easy as it is to sign up for one—with just a few clicks—and which was set to take effect yesterday, July 14, has been blocked. A CNN article explained that the rule was meant to address common consumer frustrations, such as getting billed for a subscription after a free-trial period ends or getting stuck in a subscription for a product or service that was misrepresented. In its own reporting, Reuters explained that a U.S. appeals court found that the FTC did not follow protocol, including by failing to "conduct a preliminary analysis of the costs and benefits of the rule." CNN cited a statement by Nidhi Hegde, executive director of American Economic Liberties Project, saying that “By slow-walking a simple, massively popular protection, (the FTC) ensured that hardworking people will keep getting stuck with subscriptions they don’t want or can’t afford from cable companies, gyms, and online services.” Hegde has called on the FTC to reissue the rule, and we'd sure second that.
Word on the wire. A couple of years ago, the FTC sued Walmart, alleging that the retailer (including when acting as an agent of MoneyGram, Western Union and Ria) allowed its money transfer services to be used by fraudsters who fleeced consumers out of hundreds of millions of dollars. The FTC alleged that Walmart failed to implement effective anti-fraud policies and procedures, did not properly train its employees, and failed to warn customers about potential money transfer fraud. In a resolution of the case announced last month, Walmart has agreed to a $10 million judgment. An FTC statement about the settlement lists several prohibitions that were part of the court order and will protect consumers. These include that Walmart cannot: provide money transfer services without taking timely action to detect and prevent fraud-induced money transfers; send or pay out any money transfer that is fraud-induced; assist any seller or telemarketer that is accepting a cash-to-cash money transfer as payment for goods, services or charitable contributions; or assist any telemarketer that has asked a consumer to pay in advance for a loan or credit extension. This is definitely a win for consumers, and for the FTC.
Tips
Summertime lemon-aid. Folks looking to save money on new wheels for mid-summer road trips may want to take advantage of used car deals—if they can find them. But, before you step on a car dealer’s lot (where, as everyone knows, swindles can lurk), check out Consumer Reports' (CR) latest expert tips to help you steer clear of lemony cars. For starters, CR's Jon Linkov recommends that used car buyers select models with good reliability records before starting their shopping. The article includes links to CR's auto reliability information resources, many of which you can also find through your local library if you're not a CR member. Linkov's article includes lots of practical inspection and vehicle history research tips. These will help you avoid buying a car with hidden or undisclosed damage, sloppy repairs, and even odometer fraud. If you do buy a lemon, you'll surely find the section about your federal and state consumer rights and steps for resolving a sour deal helpful.
Blowing their cover[age]. With the cost of health insurance going up year after year and Medicaid cuts becoming a reality for many, consumers looking to explore options may be vulnerable to questionable offers purporting to provide cheap health "coverage." In a recent consumer alert, "Is it health insurance or a medical discount plan?," the FTC warned that some dishonest marketers are making people believe that they are selling health insurance, when, in reality, what they're really selling is a product known as a "medical discount plan" (also called a "discount health care program"). The FTC explains that scammers also make people believe that medical discount plans offer the same coverage as health insurance, and that they are as widely accepted by medical providers as insurance. The alert offers tips to better understand what you're buying and to ensure you're dealing with a legitimate company; plus, it links to an FTC publication with even more tips. The FTC's sure got you covered on this topic.
Prime Days of summer. As this year's four-day Amazon shopping event we know as Prime Day has moved into the rearview mirror, we certainly hope you did not encounter the impersonation scammers that probably look forward to the event even more than many of you do—for entirely different reasons than shopping, of course. On its page dedicated to educating customers about scam trends, Amazon recently reminded us that the most common scam tactics bad actors use when impersonating Amazon include fake order confirmations asking for a payment, and emails attempting to steal financial information under the pretense of resolving problems with an account or a purchase. Even after a busy shopping period, Amazon warns, it’s important to stay vigilant. Amazon also recommends that shoppers reach out to them through an official channel if they receive a message that seems urgent or too good to be true. Amazon impersonation scams can be reported using the company's reporting tool. As you get ready to jump back into Amazon shopping (it's been at least a few days since Prime Day, right?), make sure to visit this page with more Amazon tips for staying safe.
Don't click "unsubscribe" (and certainly not to messages from us, by the way). USA Today recently featured an article by Mary Walrath-Holdridge reminding us to think twice before hitting the "unsubscribe" link. Walrath-Holdridge cited a Wall Street Journal article that explained that at least one in every 644 "click here to unsubscribe" links led to potentially malicious websites, according to findings by cybersecurity software seller DNSFilter. Instead of being added to a "do not send" register, users who click an unsubscribe link might instead be sent to a mock landing page or inadvertently "give scammers the exact confirmation they were looking for, allowing them to pick out better potential victims," the USA Today article explained, citing the same source. Check out the USA Today piece for tips on unsubscribing safely using “list-unsubscribe headers" from your e-mail provider, and tips for dealing with senders you never want to hear from again. Good to know for dealing with recalcitrant spammers!
Scams education in NYC. As part of Consumer Action's decades-long work educating consumers to better recognize and avoid fraud, we are bringing to New York City next week our "Say No to Scams: Protecting consumers and communities from fraud" train-the-trainer event. The training will provide community educators, counselors, and other community-based nonprofit advocates an opportunity to gather knowledge and resources to help them protect their communities against ever-evolving scams and fraud. Those of you who live on the other side of the country, watch your in-box for invitations later this year for events in Southern California and Arizona. If we don't make it to your area this year, you need not wait to download our newly updated "Say No to Scams" consumer guide, tip sheet, and PowerPoint slide deck to use in your community education work. Chinese and Spanish versions of the consumer guide and tip sheet will be available for download soon, too.
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