A\A V 5: 3120bb D271 STSb S cott Harshbarger COLLECTION August 1995 1, w-/|n 3 1936 I- [sachusetts Consumers, 1 * dart, of itessactar Throughout my administration as your Attorney General, have consistently pursued new and effective ways to ensure that I |ts as a consumer are protected from unfair or unscrupulous retailers, manufacturers and telemarketers. My Consumer Protection and Antitrust Division is charged specifically with protecting your rights. The division represents |n more than 200 cases peryear, advocates for protective laws and regulations, and scrutinizes large business mergers ly have a negative impact on consumers. Each yearwe respond to more than 100,000 consumer inquiries. The complaint the division works to negotiate fair settlements forconsumers who have been unlawfully wronged. It also scrutinizes |its fortrends and take action against businesses which appear to have a pattern of deceiving customers. Whether it is safeguarding consumer rights or fighting for restitution for a consumer, my office is on the front line working IAs part of my continued effort to serve you better, in June the Consumer Complaint section was moved to a new location. pice on Portland Street in Boston can accommodate more h and is equipped with upgraded computerand phone liesigned to take-in and process complaints more efficiently, INSIDE THIS ISSUE... Increasing our capacity to protect and defend you, the lr. AG's Comments on FTC The creation of this Consumer AGenda isjust one more way Bay State Benefits Case 6 you ofyour rights as a buyer, alert you to current scams, Car Rental Co. Pays 100 Consumers 5 you posted on what this office is doing to stop illegal actions Consumers. Twice a year, new issues of the newsletterwill Chase Manhattan Bank Settlement 5 iportant consumercases, provide tips to alert you to Consumer Cases 9 scams, and educate you about your rights underthe law. Credit Card Tips 12 ilso let you know where you can go forassistance when you In wronged. (See page II fora list ofconsumer programs near Donating Do's & Don'ts 6 (ill the office's consumer hotline at 727-8400.) Fair Lending Update 7 Home Buyer Alert 7 I hope you will find the Consumer AGenda both interesting [rmative. welcome your suggestions for upcoming issues and Home Improvement Scams 8 I will share this information with otherconsumers in Local Consumer Program Directory II fea. Merger Watch 2 1? New Consumer Guides 5 Proposed Telemarketing Trade Rule 4 Student Consumer Education Project 2 r Scott Harshbarger Top Ten Consumer Myths 3 Office of the Attorney General One Ashburton Place Boston, MA 02108-1697 r w\ AGUS/S'- llbA,'! / > Update from Attorney General Scott Harshbarger COLLECTION August 1995 1, Dear Massachusetts Consumers, Throughout my administration as your Attorney General, have consistently pursued new and effective ways to ensure that I your rights as a consumerare protected from unfairor unscrupulous retailers, manufacturers and telemarketers. My Consumer Protection and Antitrust Division is charged specifically with protecting your rights. The division represents citizens in more than 200 cases peryear, advocates for protective laws and regulations, and scrutinizes large business mergers which may have a negative impact on consumers. Each yearwe respond to more than 100,000 consumer inquiries. The complaint section ofthe division works to negotiate fair settlements for consumers who have been unlawfully wronged. It also scrutinizes complaints fortrends and take action against businesses which appearto have a pattern of deceiving customers. Whether it is safeguarding consumer rights or fighting for restitution fora consumer, my office is on the front line working foryou. As part of my continued effort to serve you better, in June the Consumer Complaint section was moved to a new location. The new office on Portland Street in Boston can accommodate more mediators and is equipped with upgraded computerand phone systems designed to take-in and process complaints more efficiently, INSIDE THIS ISSUE... thereby increasing ourcapacity to protect and defend you, the consumer. AG's Comments on FTC The creation ofthis Consumer AGenda isjust one more way Bay State Benefits Case 6 to inform you ofyour rights as a buyer, alert you to current scams, Car Rental Co. Pays 100 Consumers 5 and keepyou posted on what this office is doing to stop illegal actions against consumers. Twice a year, new issues of the newsletterwill Chase Manhattan Bank Settlement 5 review important consumercases, provide tips to alert you to Consumer Cases 9 potential scams, and educate you about your rights underthe law. Credit Card Tips 12 We will also let you knowwhere you can go forassistance when you have been wronged. (See page II fora list ofconsumer programs near Donating Do's & Don'ts 6 you orcall the office's consumer hotline at 727-8400.) Fair Lending Update 7 Home Buyer Alert 7 I hope you will find the ConsumerAGenda both interesting and informative. welcome your suggestions for upcoming issues and Home Improvement Scams 8 I hope you will share this information with otherconsumers in Local Consumer Program Directory II yourarea. Merger Watch 2 New Consumer Guides 5 Proposed Telemarketing Trade Rule 4 Student Consumer Education Project 2 Harshbarger Top Ten Consumer Myths 3 1 Office of the Attorney General One Ashburton Place Boston, MA 02108-1697 August, 1995 MERGER WATCH Attorney General Harshbarger Student Consumer evaluates proposed mergers to answer concerns over Education Project prices,jobs, and the availability ofhealth care. Starting this fall, the Attorney General's What does the proposed Stop & Shop / examined in the same way as the office will begin a pilot program for Purity Supreme merger have in common Harvard / Pilgrim merger. Each is being consumereducation at the high school with the Harvard Community Health / reviewed by the office's Consumer level. The program is the result ofa Pilgrim HMO merger, or Fleet Bank's Protection and Antitrust Division forthe $10,000 grant from the National acquisition of Shawmut Bank, oreven the impact it will have on consumers and Association of Attorneys General proposed acquisition of MetroWest the affected communities. Consumer Education Partnership Fund. Medical Center by Columbia/HCA Healthcare Corp., Inc.? In the case of MetroWest Medical Center, The curriculum forthe program, which a non-profit hospital which if purchased will focus on topics such as retail The answer Their merger, like any large by HCA/Columbia will become a for- advertising, consumercredit, used-car mergeroracquisition within the state, is profit medical facility, the AG's office will purchase and repair law, landlord/ subject to scrutiny by the attorney hold hearings and review issues of fair tenant law and consumercorrespon- general in orderto protect the business pricing, community impact, justifiable dence with business entities, will be community and consumers from profit margins, and also resolve the implemented on a demonstration basis potential market dominanceby a single question of how the medical center's in a class at Madison Park High School entity. charitable interests will be protected. in Roxbury. The class will be designed to maximize student participation, and Earlierthisyear, the Attorney General Stop & Shoo's proposed acquisition of will utilize, among other media, reviewed the merger between Harvard Purity Supreme supermarkets is also videotapes and role-playing exercises. Community Health and Pilgrim and, as a being scrutinized by the AG's office. The final two classes will be devoted to a result, allowed their merger under several Concerns raised are overa potential mock trial of a consumer dispute. conditions, including the provision of$4 market dominance. Similar issues are million in new benefits forconsumers and cause fora similar study of Fleet's In addition to the classroom component communities. The agreement resolves buyout of Shawmut Bank. Both mergers ofthe program, some ofthe grant antitrust concerns overcontractswith are currently still under review. money will go toward funding an after- hospitals and physicians in addition to school consumer counseling program providing money forviolence prevention Finally, in anotheranti-trust matter, available to the students to address programs, health care services for Blue Cross and Blue Shield yielded a theirown consumer issues and prob- members who have lost theirjobs, settlement in which the Blues will pay lems. Upon the pilot program's services forthe homeless, and AIDS $200,000 in response to concerns over successful completion, the AG's office education programs. It also places a the insurer's negotiationswith the will seek additional grants forexpansion freeze on non-group and small group Berkshire Medical Center. $175,000 of of the program into other urban high rates fora year. the settlement monieswill go to the schools. Local Consumer Aid Fund. Currently, the Stop & Shop / Purity Supreme merger, the Fleet Bank / Watch this newsletter forfurther Shawmut Bank merger, and the acquisi- updates on these mergers. tion of MetroWest Medical Center by Columbia/HCA Healthcare Corp. are being AGenda: Consumer Page 2 - August, 1995 The Attorney General's Top Ten List of Consumer Myths The top myths Although it is tempting to think you percentage ofthe money will 1 - and corresponding facts could be a winner, proceed very actually go to the charity. are designed to help cautiously. Frequently, these offers end up costing you money. Be on 6. Giving out your credit Massachusetts consumers the alert ifyou are asked to card number is okay for better understand their purchase, provide a donation or purposes of identification rights^ under the consumer send an advance payment oftaxes, as long as you do not protection laws. handling fees orothercharges. authorize a charge on your account. 1. You have a three-day right 4. There is a lemon law that FACT: Using credit cards for identifi- to cancel any purchase. protects you on all big- cation purposes can turn out to be a FACT: The three day right to cancel ticket items you purchase, costly mistake. Con-artists with exists only fora limited number of including used cars not access to your card numberand transactions. Forthemostpart,it under warranty. expiration date may make unautho- applies to credit orcash transac- FACT: Almost all states have lemon rized charges against yourcard. tions of$25 or more initiated laws that cover new car purchases. However, it is acceptable and even through face-to-face contact (like Our state also has a used car lemon recommended to use your credit door-to-door sales) away from the law that applies to used cars card for catalogue purchases, travel seller's regular place of business. In purchased for $700 or more from a reservations, or othertypes of Massachusetts, there exists a dealer, aswell as a lemon aid law purchases from familiar, established separate three-day right to cancel that applies to all used car sales. businesses. Using a credit card can time-share purchases, health club However, there is no universal lemon help to protect you in the event you memberships and mortgage law that applies to all big ticket have difficulty receiving the product refinancings. items. Investigate the history ofany or service. used product before purchasing it. 2. A store has to give you a 7. You have a better chance refund if you request one. 5. When solicited by a of winning a publisher FACT: In Massachusetts, a sellercan charity, almost all the sweepstakes when you have any type of return policy it money you contribute purchase magazines. wants. A seller's refund, return or must go to the intended FACT: It is illegal for sweepstakes cancellation policy must be disclosed charitable purpose. promotions to require any type of to the buyerclearly and conspicu- FACT: Charitable organizations are purchase or payment. All entrants, ously before the transaction is not obligated to spend a certain whether purchasing or not, must completed. percentage on their stated chari- have the same chance ofwinning. table purpose. Charities that hire 3. When you receive an professionals fund-raiserswill have "awards notification" you higheroverhead costs to meet, so are a guaranteed winner they may spend less on the actual Continued, pg 4 of fabulous prizes. cause. Consumers should ask if the FACT: One ofthe most common types caller is a paid solicitor ora of fraud involves phony prize offers. volunteer for the charity and what AGenda: Consumer Page 3 August, 1995 AG Harshbarger Comments on the FTC's effective approach taken in the first draft of the Rule and abandon the see-no-evil Proposed Telemarketing Sales Rule approach certain representatives ofthe telemarketing industry appearto have cultivated within the FTC." In aJune letterto the Federal Trade Com- The second draft is also missing essential mission, the Attorney General made the requirements found in the first which following comments regarding his concern would have created significant restric- Continuedfrom page 3 over a weakened second draft ofthe FTC's tions on unfair sales tactics, including 8. People cannot take money proposed telemarketing sales rule. requirements to distribute prizes within directly from your bank 18 months of a prize promotion, to accounts without your "I believe that a uniform, national set of disclose the value of a prize and the odds written authorization. restrictions on the telemarketing industry ofwinning the prize, and for the callerto FACT: Merely giving someone your would be helpful to efforts to safeguard identify him/herself as being a sellerand checking account number may elderly persons in Massachusetts, but only state the sales purpose of the call result in their making withdrawals if that set of restrictionswere comprehen- immediately. from your account. People can sive, well-informed and detailed. ... I sometimes issue a "demand draft" to joined with other Attorneys General in Furthermore, the second draft creates your bank, claimingyou authorized submitting a Comment to the FTC on the two exemptions which will create gaping the withdrawal, and the bank may first draft of the proposed Telemarketing loopholes in the application of the Rule. pay it even though it lacks your Sales Rule and ...was by and large The first exempts transactions that signature. supportive ofthe first draft... it held the merely begin with a call but are not promise of becoming a genuinely useful completed until a consumer attends a 9. Your credit report is government regulation. high pressure sales presentation, and the private unless you autho- second exempts calls that are made by rize someone to review it. "I was dismayed upon receipt of the second the consumer in response to a solicitation FACT: Potential employers, landlords, draft ofthe proposed rule, because it received in the mail. insurers, and others may also look reflected a sharp turning back from the at yourcredit report and many clearwisdom ofthe first draft... The first The second draft of the Rule would also actually do. draft was on target because it recognized partially preempt state law, limiting the inherently deceptive telemarketing ability of states to fight telemarketing 10. Advertisements you see or practices forwhat they were; the second abuses resulting in injury to vulnerable hear in radio, TV, newspa- draft reflects a lack ofconfidence in that consumers. pers and magazines are judgment." accurate or they would "Please be assured," the Attorney General not be in the reputable Missing from the second draft are much concluded, "I believe it is a laudable aim media. needed prohibitions against the failure to to promulgate a Rule to complement and FACT: There is no government disclose important details of sales offers augment the powers of state Attorneys requirement that advertisements be such as costs or restrictions of a sales offer General to protect their citizens from submitted to a governmental agency orthe terms ofa seller's refund, cancella- dishonest telemarketers. However, the for advance review. Also, the media tion orexchange policy and misrepresenta- current draft ofthe proposed generally do not investigate the tion about how the sellerwill use informa- Telemarketing Sales Rule is too general, truth of advertisements and are gen- tion about a consumer's checking, savings too weak, and too full of loopholes to erally not legally required to do so. orcredit card account orthe risk /value accomplish that goal. urge (the FTC) to I ofany "investment opportunity." return to the clear-sighted, determinedly AGenda: Consumer Page 4 August, 1995 New Consumer Car Rental Leasing Agent to Pay / Restitution to I00 consumers and $100,000 Guides Penalty for Alleged Deceptive Rental, Available to the Public Leasing and Sales Practices f Choosing a Health A Worcester car rental agent and the car rental companies he operated have agreed Plan? The 10 Most Impor- to a settlement with the AG's Consumer Protection and Antitrust Division for tant Questions You allegedly deceptive practices in the rental, leasing and sale of motorvehicles. Should Ask The settlement orders William Broadbent, the Auto Group, Ltd., Sunshine Daily Aguide to help you identify your Rentals, Inc., Auto Rent-Auto Lease of New England and Statewide Leasing, Inc. to health care needs as they relate to pay $50,000 in restitution to 100 consumers who rented or leased cars from these choosing a health plan. locations, in amounts ranging from $41.96 to $3,225 per person. A civil penalty of f $100,000 must also be paid to the Commonwealth. Protect Yourself: Essential Information The suit filed by the AG's office alleged that Broadbent and the companies misrepre- for Seniors sented the daily rental rate ofvehicles, imposed undisclosed extra charges forvehicle rental, charged consumers for non-existent damage, made inappropriate charges to Describes scams targeted at those consumers' credit cards and misrepresented the condition ofvehicles for sale and who have recently lost a loved one. lease. Areas discussed include investment decisions, mortgage refinancing, In addition to restitution and civil penalties, the defendants are permanently barred home improvements, telemarketing, from engaging in bait and switch pricing, imposing hidden fees or undisclosed costs, and personal safety. making unauthorized charges to consumers' credit cards and charging consumers for non-existent damages. //* The Attorney General's Guide to the AG Reaches $110,000 Settlement with Permit Process for Busi- nesses in Massachusetts Chase Manhattan Bank Are you, or do you plan to be, a The Attorney General's Consumer State regulations limit, among other small business owner? This new Protection and Antitrust Division things, the numberof calls that can be guide will walk you through the reached a settlement with Chase made to a debtor at home during any steps ofthe permit process, helping Manhattan Bank regarding its debt seven-day period. you to identify the types of permits collection practices. Underthe agree- you may need as well as how to ment, Chase agreed to comply with the In addition to the $1 10,000 payment to obtain them. state's debt collection regulations and is the Local Consumer Aid Fund, Chase will required to monitor complaints made by set up a new complaint resolution Toobtaina copyofanyoftheabove state residents regarding the collection mechanism to help resolve complaints by publications,pleasecallDeniseSnyder, practices of some of the companies Chase consumers. (617) 727-2200, ext2674. Chase retains to collect on accounts. AGenda: Consumer Page5 August, 1995 Baystate Benefits Barred From Using Deceptive Soliciting Tactics This publication is The Attorney General's office obtained a preliminary injunction against the Cam- bridge fund-raiser Baystate Benefits for allegedly deceiving donors by telling them available in alterna- the money being raised was going to a local charity when in fact it was fora Florida- tive formats for people based group. with disabilities. If you would prefer a Baystate Benefits had been soliciting donations for America's Missing Children, Inc., a Florida-based organization. Additionally, Baystate's solicitors also allegedly failed to copy of this publica- disclose their status as professional fund-raisers, as required by law, leading tion in either format potential donors to believe they were employees ofthe charity. The complaint also listed below; please alleges that Baystate's solicitors falsely suggested that registration with the Attorney check off where indi- General's office constituted approval by the state. cated and return to: The order prohibits Baystate from engaging in deceptive activities in its fund-raising. Denise Snyder Donating Do's and Don'ts , Publications Whenyougive, usethefollowingtipstogive wisely. Coordinator DO knowyour charity. Nevergivetoacharityyou knownothingabout Ask forprinted materials One Ashburton Place which statethe name,addressandtelephone numberofthecharity,andadescription ofhowthecharitable 20th Floor fundswill be used. Askwhetheryourdonation istaxdeductible. MA Boston, 02108 DO find out where your money goes. Askhowmuch ofthe moneygoestothe charity. Bewareofstatementssuch as"all proceedsgotocharity; "the proceedsmightnot be much afterexpenses or call: arededucted. Askforfinancial statements. (617)727-2200 ext.2674 DO verify the information given. Call theAG's Division ofPublicCharities at6I7-727-2200, the local policedepartment,orthe beneficiariesofthecharitable fundsforverification. DO keep records,especially receiptsand cancelledchecks,in caseyou have acomplaintlater. Large Print PONT be fooled by a name. Some phony charity names resemble thoseoflegitimate charities. Audiotape PONT succumb to pressure. Take timetodecide. Name:_ PONT pay by cash. Paybycheck,and makeitouttothecharity,notthefund-raiser. Seek identification fromanyfund-raiserwhocomestoyourdoor. Considermailingyourcheck directlytothe Jddress: charity. PONT be lured by "goodies." Household productsand ticketstoeventscan be legitimate fund-raising tools, but they do add extra costs. AGenda: Consumer Page 6 August, 1995 Harshbarger and Mass Home Buyer Alert: Bank Association Issue New Mortgage Points Law May Mean Progress Report on More Expense for Buyers Fair Lending Initiative A new mortgage points law which took Consumers are advised to take the effect in March can have a significant following steps to protect themselves In May, the Attorney General and the impact on the amount of money and their homes when applying fora Massachusetts Bank Association (MBA) consumers pay fora mortgage. As of mortgage: reported on progress made in the first year March 27, lenders can legally charge following the signing of a model fair lending • any numberof points and similar fees Shop fora mortgage loan just agreement. for mortgage loans as long as the as you would any large ticket item; Since the signing of the agreement, the MBA charges are previously disclosed in compare prices, quality, and has established seven task forces which writing. Prior state law limited lenders' efficiency of service; get recommen- have identified consumer needs, developed charges to no more than two points, or dations from people you trust. action plans, and taken significant steps to one point plus the cost for selling the • begin to remedy fair lending and access loan on the secondary market. A point Find out specifically as possible barriers identified by the agreement. equals one percent of the loan principal. what mortgage loan terms the lender is willing to offeryou; make To date, over 1,300 Massachusetts bankers In addition, the new law allows lenders sure you understand the terms; get have attended a variety ofeducational to charge their borrowers "interest rate the offer in writing. conferences focused on fair lending. buydowns" underwhich the interest • rate will be reduced in exchange forone Ifyou don't like the offer, ask Additional areas ofaccomplishment: or more points. Points can also be for betterterms or see ifa different recruitment and training of minority financed as opposed to being paid for brokeror lendercan give you a loan specialists - over 100 students have up-front in cash. Ifthis option is better deal. completed training and have been hired or exercised the buyer should be aware are in the application process; that the financing will affect the loan's Don't be afraid to ask questions and consumereducation - programs in Annual Percentage Rate (APR). demand straight answers. eight urban areas have been held and materials are being published in eight foriegn languages; compensation arrangements relevant Consumer Problem? Consumer Complaint? to lending practices - industry seminar held regarding alternatives to ensure compensa- Call your Local Consumer Complaint Office S 8 tion plays no discriminatory role in for assistance. mortgage lending; methods for reviewing and amending Local Consumer Complaint Offices are funded in part by the Attorney adverse loan decisions - methods have been General's office and have been established to assist Massachusetts consumers put forth in a conference attended by 130 in obtaining fair and equitable results when they have been unlawfully bankers and in a "best practices" guide, treated by retailers, manufacturers, telemarketers and the like. including second reviews of provisionally See Page for a directory of locations and contact the declined applications; and, II the encouragement of bank self-testing one nearest you for assistance. in a forum attended by 125 bankers. AGenda: Consumer Page 7 August, 1995 HSomce Iampromvemsent faulty systems. The injunction barred the contracting in Massachusetts for five two from performing any home improve- years. ment work in Massachusetts until they obtain a valid certificate of registration Finally, two Central Massachusetts Spring, summerand fall are excellent from the State Board of Building contractorswere also barred from doing seasons to get home improvement Regulations and Standards. AG Harsh- furtherwork in the state until they projects completed. These seasons, barger is also seeking a $10,000 civil registerwith the State Board of Building however, are also prime times for home penalty foreach violation of the injunc- Regulations and Standards. Each repair scams as con artists entice tion and an order prohibiting the contractorwas ordered to pay a civil vulnerable consumerswith affordable, contractors from home improvement penalty in the amount of$5,000 and an quick fixes which seldom turn out to be additional $576 for the cost ofthe either quickoraffordable. prosecution. Follow these tips when considering a The AG's office has been aggressive in its home contractor for repairs investigation of home improvement scam artists. In June, a Lowell roofing or improvements: contractor from Boston Slate and Coppersmith was arraigned on charges Get three estimates before selecting a contractor; that he allegedly stole more than $43,000 from an 89-year-old Somerville Make sure the contractor is registered with the Board of woman and a Cambridge family. In the Building Regulation and Standards at (6I7) 727-8598; first case, the contractoraccepted a series ofchecks totalling $26,000 for Have the contractor put into writing the specific work that work promised but never provided, will be undertaken; disappearing afterthe final payment. In the second case, he took $17,500 from a Cambridge family forworkvalued at only Pay little in advance, and not more than one-third ofthe about $6,000. He allegedly misrepre- total cost of the work; sented that he wasa licensed contractor in Massachusetts. Ifconvicted on both Ask for and check three references for the contractor, and; counts, the defendant faces up to 10 years in state prison. Check with the AG's Complaint Section at (6I7) 727- 8400 or your local consumer program (see page II for listing) Also in June, a contempt oF court action regarding whether the contractor has been the was filed against Springfield home subject of past complaints. improvement and security systems contractors forviolating the terms ofa preliminary injunction. The two contractors allegedly used high-pressure sales tactics to sell home security systems and replacement windows and doors to vulnerable consumers, and installed AGenda: Consumer Page 8