Agenda: consumer issues

30 Pages·1995·1.9 MB·English

by  Massachusetts. Attorney General's Office

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cott Harshbarger
COLLECTION
August 1995
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[sachusetts Consumers,
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Throughout my administration as your Attorney General, have consistently pursued new and effective ways to ensure that
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|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

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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.
[phone], 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.
[phone]
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