Con men are demanding payment of a non-existent tax

By James Limbach of ConsumerAffairs

Have you ever heard of the “Federal Student Tax?” Well, that's because there is no such thing.

But that's not stopping the con men who are working their back-to-school tax scams

The Internal Revenue Service (IRS) is warning taxpayers to be on the lookout for scammers pretending to be from the tax agency calling students and demanding that they wire money immediately to pay a fake “federal student tax.”

If the person refuses, the scammer becomes aggressive and threatens to report the student to the police to be arrested. With schools around the nation re-opening, it's important for taxpayers to be particularly aware of this scheme going after students and parents.

“Although variations of the IRS impersonation scam continue year-round, they tend to peak when scammers find prime opportunities to strike”, said IRS Commissioner John Koskinen. “As students and parents enter the new school year, they should remain alert to bogus calls, including those demanding fake tax payments from students.”

A variety of scams

Scammers are constantly identifying new tactics to carry out their crimes in new and unsuspecting ways. This year, the IRS has seen them use a variety of schemes to fool taxpayers into paying money or giving up personal information. Some of these include:

• Altering the caller ID on incoming phone calls in a “spoofing” attempt to make it seem like the IRS, the local police, or another agency is calling
• Imitating software providers to trick tax professionals
• Demanding fake tax payments using iTunes gift cards
• Soliciting W-2 information from payroll and human resources professionals
• “Verifying” tax return information over the phone
• Pretending to be from the tax preparation industry

If you receive an unexpected call from someone claiming to be from the IRS, here are some of the telltale signs to help protect yourself.

The IRS will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card, or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
• Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
• Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
• Ask for credit or debit card numbers over the phone.

What to do

If you get a suspicious phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

• Do not give out any information. Hang up immediately.
• Search the web for telephone numbers scammers leave in your voicemail asking you to call back. Some of the phone numbers may be published online and linked to criminal activity.
• Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
• Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Be sure to add “IRS Telephone Scam” in the notes.
• If you think you might owe taxes, call the IRS directly at 800-829-1040.

These machines are making dating scams even more dangerous

By Mark Huffman of ConsumerAffairs

You're expecting a package from Amazon, or from one of the package delivery services. An email pops into your inbox about a problem, and there's a link where you can get more information.

Only the email is not from any legitimate company. It's a scammer posing as the legitimate company.

While it's a big problem for consumers, it's a huge problem for the companies that are being impersonated. Their brand can suffer as a result.

MarkMonitor is in the brand protection business, on the lookout for cases where a client's brand has been misappropriated, for any reason.

“We are basically monitoring across multiple digital channels – websites, marketplaces, social media, mobile apps and emails,” Akino Chikada, MarkMonitor's Senior Brand Protection Manager, told ConsumerAffairs. “We're scanning through the entire internet looking for any potential online abuse of that brand.”

It's a never-ending job because scammers keep getting more technologically powerful. The latest wrinkle is the deployment of bots – web robots – to seek out and engage victims, meaning one scammer can become a million times more effective.

“As we know there is a significant number of bots driving internet traffic,” Chikada said. “A recent report found humans account for about 51% of traffic. The rest is driven by bots.”

Whole new dating game

And these bots have added a whole new dimension to the online dating scam. A decade ago, this scam consisted of an individual scammer seeking out and engaging a potential victim, building trust, then swindling him or her out of thousands of dollars. It was a labor-intensive and time-consuming enterprise.

Today, bots do the work, engaging males on Tinder, pretending to be females. Chikada says it's easy to program these bots to engage in dialog.

“They can remember user details like names, age, location, so it's easy to start engaging a victim,” she said. “They're definitely a lot smarter and more sophisticated.”

Tinder's popularity makes it a target-rich environment. Scammers are using bots to persuade victims to send them money, and also download malware.

How to spot a bot

How can you tell if the “person” you are engaging with on Tinder is actually a machine? If you pay close attention, you can do it.

Bots tend to type faster than the average human and yet they don't make as many typos. Also, responses can be generic and not always specific to what you have said.

The big tip off? Chikada says they will eventually ask you to do something for them, and it either requires clicking on a link or giving them your credit card information.

And finally, if the “person” is really attractive, you just might be conversing with a machine.

Iowa AG Tom Miller has sued three companies for conducting an office supply scam

Small businesses and non-profits are frequent targets of scam artists, includingtoner pirates, who trick employees into paying invoices for exorbitantly priced printer toner.

Iowa Attorney General Tom Miller has begun cracking down on the practice and last weeksued three companies for allegedly preying on libraries, care facilities and others.

Miller said the companiescalled libraries, care facilities, and other companies and tricked them into paying large sums for photocopier toner that was never really ordered.

The three companies Central Supply Solutions, Elite Supplies, and Central Supply Center purportedly told victims that they were the regular toner suppliers in order to get a foothold. After gaining information on the companys copier through cold calls, the scammers would send an invoice about an order that was never actually placed.

The employees, not wanting to cause a fuss, often paid hundreds for supplies that were actually much cheaper.

Offices with staff changes may be the most vulnerable to this scheme. Weve seen complaints where a new employee assumes he or she is dealing with an established supply arrangement, and gets charged $400 to $500 for about $60 worth of toner, said Miller.

What to do

Millers lawsuit seeks a permanent injunction against the three companies and their owners. Additionally, the suit will seek to impose civil penalties and provide refunds to victims of the scam.

In order to avoid similar cons, Miller advises that companies inform new employees, and remind old ones, about the possibility of the scam. Businesses can also tape warnings near their copier to warn employees not to give out information over the phone and to report any calls that request it.

Students going back to school should be especially wary of these cons

With September finally here, students across the nation have been making their way back to college campuses. Whether theyre returning for another year or are going for the first time, many will be eagerly awaiting the arrival of online purchases or care packages from home to make their stay more comfortable.

However, students and parents should beware of emails that claim to include shipping information for packages. While some will undoubtedly be honest, others are sent by scammers in the hopes that youll infect your computer with malware or reveal personal information.

Fake shipping scams occur year-round, but the new school year gives crooks a unique opportunity to sneak them in around legitimate shipping emails that students and their family members might be receiving. Any link or attachment in a fake shipping email is a ploy to get you to download malware or turn over personal or banking information, warns Frank Frassetto of the WisconsinTrade and Consumer Protection Department.

Red flags

Consumers should be especially aware of shipping emails that ask them to click on an attached file or open a link. Scammers will often tell their victims that the files are shipping labels or forms that need to be filled out with personal information due to a shipping problem, but its all a ruse.

There are several other red flags that consumers can look out for to avoid a fake shipping scam. Some of them include:

• Sender addresses that dont match the URL of the shipping company if the email is meant to be from Fed-Ex but the From: line lists a persons name or an unrelated email address, then its probably a fake.
• Shipping emails that lack specific details about the package contents or sender.
• Emails that have poor grammar or spelling errors a professional company is more careful about messages they send out.
• Emails that include threats that the package will be returned to the sender or processed with a late fee this is just one way to coerce consumers into acting rashly and clicking scam email contents.

In order to avoid falling victim to a fake shipping scam, all consumers need to do is approach any shipping email calmly and rationally. If you suspect that your package has been delayed, contact the shipping company directly rather than clicking on a suspicious link. Keep in mind that many companies offer free tracking of packages as a standard feature.

If you do receive a fake shipping email, be sure to delete it without clicking on any of its contents. In some cases, you can report the fake email to the shipping companys fraud center.

Survey estimates 10 million Americans reveal their Social Security numbers

By Mark Huffman of ConsumerAffairs

Scammers are really good at playing head games with their victims, in hopes they will reveal things they shouldn't. Sensitive information can be used to steal identities, money, or both.

Whatever the scammers are doing, it appears to be working. The 2016 American Mobile Usage Survey found consumers are revealing twice as much sensitive information than they did last year.

First Orion, the company sponsoring the survey, says consumers are bombarded by dubious telemarketers placing over 30 million calls to their mobile phones every day. With those kinds of numbers, it only makes sense that many consumers getting these calls will spill too much information.

In particular, the survey found consumers are a bit too willing to give out their credit card numbers. First Orion estimates about 15 million consumers fell for a caller's pitch and request for a credit card. Worse, an estimated 10 million consumers gave scammers their Social Security numbers in response to a call.

Getting more aggressive

"Scammers are getting more aggressive and becoming more effective at targeting our mobile phones," said Jonathan Sasse, CMO of First Orion. "Nearly three quarters of the people we surveyed received a scam call this year, which is over 60 million more mobile phone owners than in 2015.

Sasse says scammers have moved to mobile phones in a big way, with 3% of consumers saying they got at least 10 such calls in the last month. Many people said they changed their mobile phone number in an effort to stop the calls.

First Orion, of course, is in the business of blocking unwanted calls. Its PrivacyStar service is marketed to phone companies as well as consumers as a way to identify and block calls from robocallers, who are often scammers.

As we reported last year, the PrivacyStar app also has a feature that could allow consumers to profit from all those unwanted robocalls, if they are from a real company doing business in the U.S. For consumers hounded with hundreds of robocalls from the same company, the app will refer them to consumer lawyers in their area.

PrivacyStar provides the lawyers with the documentary evidence and the lawyers pursue settlements, often in the thousands of dollars.

In the meantime, it goes without saying that anyone calling your cellphone out of the blue and trying to sell something or solicit information is probably up to no good. It's best to hang up, then use the feature on your smartphone to block the number in the future.

Wisconsin authorities have uncovered numerous card 'skimmers' that can steal data

By Mark Huffman of ConsumerAffairs

There are some places you simply don't use a debit card. A restaurant, for example, if the server takes the payment from the table to the cash register. A good rule of thumb is to never pay with a debit card if you can't see the card at all times.

It may be time to add gas stations where you pay at the pump to the list of places where you should not use a debit card. Scammers are able to use two different techniques to steal card data and both are increasingly difficult for consumers to detect, until they look at their next statement.

What's happening in Wisconsin provides a good illustration. The state Department of Agriculture, Trade and Consumer Protection has issued a consumer alert, warning that skimmers have been founded at numerous gas stations across the state.

Two types of skimmers

The department said its inspectors have found two types of skimmers. External devices fit over the actual card reader on the gas pump. When the consumer swipes a debit card, it can steal the data and record the PIN.

Internal skimmers can be even harder to detect. They typically are made of a simple cable with an in-line recording device that runs between the card reader and the main board. It records the card data, which is later retrieved.

"A consumer may likely have no indication that they used an altered dispenser until they find a discrepancy on their bank statements," said Frank Frassetto, Division Administrator of Trade and Consumer Protection.

Playing defense

Frassetto says the best defense is to closely monitor bank and credit card statements, looking for discrepancies. However, only using a credit card, rather than a debit card at pay-at-the-pump stations, will provide an extra level of protection.

Fraudulent charges on your credit card are usually limited to no more than $50 if promptly reported. But a thief with access to your debit card data can clean out your bank account. Some banks have policies that limit consumer losses in the event of this kind of fraud, but policies vary from bank to bank.

Meanwhile, it's best to avoid getting entangled in this kind of fraud, regardless of the payment type you are using. Wisconsin consumer authorities say you should quickly inspect a gas pump's card reader before sliding your card in the slot.

First, lightly wiggle the keypad. External skimmers may feel loose, or even fall off with pressure. Internal skimmers are harder to spot, but check to see if any security seals have been broken on the dispenser cabinet. That's a sign of tampering.

And just because this rash of skimmers was uncovered in Wisconsin doesn't mean you can relax if you live in Ohio. Scams are not limited by geography. This fraud was exposed in Wisconsin only because inspectors there found it. It could easily be happening where you live,but it just hasn't been uncovered yet.

Sextortion demands sex instead of money

By Mark Huffman of ConsumerAffairs

Scammers normally like to target senior citizens because they are considered a vulnerable population.

But a dangerous new scam targets another vulnerable population children.

The crime is called sextortion, because money is not the prime objective, sex is. Unfortunately, parents of vulnerable children are mostly clueless about the danger.

Here is how it works: the scammer, often a pedophile, reaches out to an adolescent on social media, pretending to be someone her own age, usually of the opposite sex.

After developing an online relationship, the scammer asks his victim to send him a sexually revealing photograph of herself. If she does, he then drops the ruse and threatens to expose her technically, she may have broken child pornography laws unless she meets his demands.

Increasing the demands

Those demands might include sending even more explicit photographs, or even meeting him for a sexual encounter.

Its not uncommon, its something that we see every day and its something thats concerning because it can inflict a tremendous amount of damage on a child, Michelle DeLaune, CEO of the National Center for Missing & Exploited Children, told the Washington Post.

Federal law enforcement officials have recently stepped up their efforts to prevent the crime and educate both parents and children about its dangers.

Advice from the FBI

The FBI says children should be aware that these scammer/predators like to hang out in chat rooms to make contact. Sometimes they may record young people who post or live-stream sexually explicit images and videos of themselves.

If they are really clever and often they are they may even hack into a child's device, gaining access to not only files but the device's camera as well.

What to do

The FBI suggests parents of teenagers, especially those who are under-age, have a conversation with their children about the danger. Children should understand the legal dangers of sending a sexually explicit image of themselves, or anyone else, over the internet.

Children should also understand how to secure their devices from intrusion. They should know to never open an attachment from someone they don't know. If their computer has a camera, it should be covered with a piece of tape when not in use.

Most importantly, the FBI says, if a child falls victim to a sextortion threat, they should tell someone. Letting a child know in advance that a parent will be understanding and helpful in such a situation may make it less likely she will get even deeper into a sextortion plot.

Meanwhile, the FBI says it wants to know if you have been a victim of this scam by calling 1-800-CALL-FBI.

Millions of elderly Americans have been duped by the schemes

By Truman Lewis of ConsumerAffairs

We've all seen or heard about the letters and emails that claim the recipient has won a huge prize and needs only pay a few hundred dollars to collect their winnings.

These are all scams, of course. You can't win a lottery you didn't enter and there's no logical reason you would have to pay a fee to collect your supposed winnings. But the schemes are profitable even if only a tiny percentage of consumers fall for them.

That's why the U.S. Justice Department and other agencies have launched an effort to attack the schemes with criminal charges and lawsuits aimed at scam artists in the U.S. and abroad.

Every year, fraudulent mail schemes target millions of Americans with false promises of wealth and riches, swindling hundreds of thousands of our fellow citizens, said U.S. Attorney General Loretta E. Lynch.Todays actions send a clear message that the Department of Justice is determined to hold the perpetrators of these harmful schemes accountable.And they make unmistakably clear that we are committed to protecting our people from exploitation especially our older citizens, who are so often the focus of these shameful ruses."

In a series of actions today, criminal and civil cases have been openedagainst multiple direct mailers who, collectively, are responsible for dozens of schemes involving tens of millions of dollars every year.In addition, todays actions also seek to shut down several other actors who work with the mailers, including:

• an India-based printer that manufactures the solicitations and arranges for bulk shipment to U.S. victims;
• list brokers who buy, sell, or rent "sucker lists" of victims from one mailer to another so that once a victim has fallen prey to one scheme, others are able to target this victim; and
• a Canadian payment processor that, for more than 20 years, has helped dozens of international fraudsters gain access to U.S. banks and take money from victims.

The defendants targeted the elderly and vulnerable by selling false promises of cash and lavish prizes, said U.S. Attorney Robert L. Capers for the Eastern District of New York. Not surprisingly, the only good fortune befell the defendants.We will employ every available means, including educating consumers, to protect the public from these schemes.

Canadian payment processor

PacNet Services Ltd. (PacNet), an international payments processor and money services business based in Vancouver, Canada, today was named a "significant transnational criminal organization(TCO)," along with a global network of 12 individuals and 24 entities across 18 countries.

According to court filings made public today, PacNet has a 20-year history of engaging in money laundering and mail fraud, by knowingly processing payments on behalf of a wide range of mail fraud schemes that target victims in the United States and throughout the world.According to these records, in 2016 alone, PacNet has processed payments for the perpetrators of more than 100 different mail fraud campaigns, collectively involving tens of millions of dollars.

Turkish direct mailer

In a criminal complaintfiled in the U.S. District Court for the Eastern District of New York, the government charged Ercan Barka, 34, a resident of Turkey, with conspiracy to commit mail fraud. According to the criminal complaint, Barka arranged for fraudulent solicitations to be mass-mailed to victims across the United States, telling recipients they had won cash awards or lavish prize items and needed to pay a fee to claim their winnings.Victims allegedly received nothing in return for their fees.

Barka was arrested by U.S. Postal Inspectors at JFK International Airport in New York on Sept. 3, as he was about to board a plane bound for Turkey.

Swiss/Singaporean direct mailer, Indian printer, and Connecticut list broker

In a separate civil action, the United States brought suit to shut down entities and individuals, some of whom have engaged in numerous predatory mail fraud schemes for more than a decade, targeting primarily the elderly and vulnerable.

Among them isBDK Mailing GmbH, which allegedly acts as a direct mailer responsible for mailing millions of multi-piece solicitations to potential victims throughout the United States that profess to come from financial entities, scholars, and world-renowned psychics, with contrived names like Harrison Institute, Dr. Grant, Finkelstein & Partner, and Marie de Fortune, among others.

The solicitations are written to give the impression that they are personalized and inform recipients that they will receive large sums of money, guaranteed money-making methods, and/or powerful talismans in return for payment of a fee of $50 to $55.In reality, the complaint alleges, the purported senders and the promised winnings are fictitious.Although victims send in the requested fees by cash, check, or credit card, they receive nothing in return.

The complaint alleges that tens of thousands of victims send approximately $50 to $60 million annually in response to the defendants fraudulent solicitation packets.

Iowa actions

In separate but related actions, IowaAttorney General Tom Miller filed consumer fraud lawsuits against two out-of-state mailing operations that Miller alleges are predatory businesses that use deceptive mailings to profit from the elderly and other vulnerable Iowans.

Miller also announced the settlement of a third case involving a New Jersey list broker company that markets consumer lead listsincluding so-called sucker liststo mass mailers.

Our civil enforcement actions here in Iowa exemplify our ongoing efforts to pursue operations that we allege prey upon older Iowans and vulnerable Iowans, Miller said. Fighting this kind of consumer fraud is one of our highest priorities. Were very pleased to work with our federal partners in this unprecedented attack on mail fraud to help protect people from this kind of financial exploitation.

Miller filed aconsumer fraud lawsuitin Polk County District Court against Waverly Direct Inc. and company owner and president, Gordon F. Shearer, both of Lynbrook, New York.

The lawsuit alleges that the company sends Iowans a congratulatory letter from the fictitious Gerald St. John, supposed director of the Numerological Resource Center, which, according to the lawsuit, is also a sham. The letter claims that the recipient has been specially selected to receive life-changing benefits, which would begin upon payment of a $20 service/handling fee.

These solicitations, which we allege used a variety of falsehoods to take money from elderly Iowans, was bad enough, Miller said. But we further allege that one of the main functions of this deceptive mailing was to locate vulnerable people whose names could be sold to other scammers.

Thesecond lawsuit names Nicholas Valenti and three of his companies, WB Co., TL Distribution, and Southwest Publishing, all of Las Vegas.

The lawsuit alleges the defendants send deceptive mailings to Iowans promising to reveal for a price methods for consistently winning large sums of money in lotteries and other forms of gambling. The lawsuit also alleges that Valenti sells the rights to use his deceptive mailers to other would-be scammers.

Both of these lawsuits allege wrongdoing on two levels, Miller said. In both suits we allege that the defendants not only sent deceptive mailings to Iowans, but also make money by selling the tools for others to pursue similarly predatory fraud-by-mail.

In a separate case, Miller today reached anagreement with Macromark Incorporated, of Danbury, Connecticut, over Millers concerns that the company engaged in consumer fraud through its role in providing consumer lists to other companies, or list brokering.

In our view, Macromarks own files showed that the company knew it was helping scammers defraud vulnerable consumers often the elderly, Miller said. We make every effort to deprive scammers of the support systems they need to prey on consumers, particularly the elderly, and we alleged that Macromark provided exactly that kind of support.

Travel deal site warns consumers that scammers are using its name

By Mark Huffman of ConsumerAffairs

While fax machines would seem to be outdated technology, many are still in use, especially at small businesses.

Scammers are relying on this fact to steal money from unsuspecting victims.

Travel deal site Hotwire.com has issued a warning that its name is being used in one of these scams. The company reports it has learned that businesses, and even individuals, have received faxes that appear to come from Hotwire.

The faxes even display on old Hotwire logo and appear to offer vacation packages at steep discounts. The faxes appear to be memos from the H.R. Department, alerting all employees of the travel bargains.

Consumers should be aware that the only legitimate way to book travel on Hotwire is through its website: www.hotwire.com, or by calling the customer care number: 1-866-468-9473, Hotwire said in a statement. Hotwire does not engage in telemarketing or send faxes soliciting travel deals.

Don't respond

The company advises anyone who receives one of these faxes not to respond. If the fax says the offer is from Hotwire, it is not. If you call the number listed on the fax you will be connected with someone whose sole purpose is to steal your money.

Consuners should never provide personal or payment information over the phone to any individuals reached at phone numbers listed on the fax solicitations.

Hotwire says it would also like to be notified of any of these bogus travel offers you receive. They can be reported at support@hotwire.com.

Your escalations help to ensure we are aware of any new variations on the scam, and may aide in identification of the fraudulent actors responsible, the company said.

More travel scams

Travel scams are a common trap because travel can be expensive and consumers are often attracted to what they perceive as a deal. The Federal Trade Commission (FTC) spends a lot of time investigating travel scam complaints.

Among the things the agency says consumers should look out for arepromises of free or discounted trips and phony rental listings.

The FTC says consumers should get a trusted recommendation before booking through an unknown agency, call the hotel or cruise line directly to verify reservations, and pay with a credit card. That way, if the trip turns out to be a scam, you can dispute the charge.

The court ordered the company to stop making claims that aren't supported by scientific evidence

There aren't many good ways of getting rid of gray hair that don't involve clippers. In particular, Grey Defence dietary supplements don't reverse or prevent gray hair, a federal judge has ruled, ordering COORGA Nutraceuticals to stop claiming otherwise.

The court issued summary judgment on a complaint filed by the Federal Trade Commission and ordered the company to pay $391,335 which may be used to provide refunds to gray-hairedconsumers.

If a company says a product can get rid of gray hair or have some other miraculous result, they need the science to support that, said Jessica Rich, Director of the FTCs Bureau of Consumer Protection. Were pleased that the court agreed with the Commission that strong product claims require strong evidence backing them up.

The court held that no reliable scientific evidence supports COORGAs advertising claims that Grey Defence supplements prevent or reverse gray hair, and anyclaims that the products are scientifically proven to do so are false.

Faulty survey

The court also found that a customer survey the defendants conducted was not well-designed or scientifically controlled. Finally, the court found that company owner Garfield Coore oversaw and directed every aspect of COORGAs business and either knew, or was recklessly indifferent about, the misrepresentations and false claims made for Grey Defence.

The FTC filed its case against COORGA and Coore in in the U.S. Court for the District of Wyoming.The FTC previously reached settlements with two marketers of similar supplements, GetAwayGrey, LLC and Rise-N-Shine, LLC, both of which are now barred from making gray hair elimination claims unless they are not misleading and are supported by reliable scientific evidence.

USA Discounters, Fletcher's Jewelers reach $95 million settlement

By Truman Lewis of ConsumerAffairs

The attorneys general of 50 states and the District of Columbia have reacheda $95.9 million settlement with USA Discounters over allegations that the company used deceptive marketing and unlawful debt collection practices targeting military servicemembers.

The company, which also doesbusiness as USA Living and Fletchers Jewelers engaged in unfair, abusive, false and deceptive acts and practices, the states charged, including targeting servicemembers and hooking them into deceptively usurious loans, false advertising and illegal collection practices.

The company would also sue servicemembers out of state where they were unable to defend the action, ultimately taking default judgments against them.

Our servicemembers are not bank accounts for predatory businesses, and I will take every measure to protect them from abusive practices, said New York Attorney General Eric T. Schneiderman.We will not tolerate companies with unlawful business practices anddeceive consumers, especially veterans and current members ofourmilitary and government.

This agreement holds USA Discounters accountable for its illegal conduct and compensates servicemembers and veterans for the harm it caused, said California Attorney General Kamala D. Harris.

Consumer goods

USA Discounters sold consumer products, including furniture, appliances, televisions, computers, smart phones, jewelry and other consumer goods on credit it provided.

The company targeted members of the military and veterans, touting that military, veterans and government employees would never be denied credit.

The AGs charged that, besides the other violations,USA Discounters constantly contacted servicemembers chains-of-command and caused some servicemembers to lose security clearances and face demotions.

The states also alleged that USA Discounters only filed its lawsuits in a few Virginia jurisdictions, no matter the servicemembers location, deployment status, or residence.

In addition, the states alleged USA Discounters sold overpriced household goods at high interest rates, often using the military allotment system to guarantee payment.

USA Discounters closed its stores in the summer of 2015 before later declaring bankruptcy.

Consumer relief

Under the terms of the resolution, USA Discounters will provide relief to certain former and current customers. The total estimated value to consumers for these restitution measures is approximately $95.9 million, primarily benefiting active and veteran servicemembers.

USA Discounters will:

• Write off all accounts with balances for customers whose last contract was dated June 1, 2012 or earlier, and correct the negative comment from the company on those consumers credit reports (Approximately $71 million);
• Apply a $100 credit to all accounts whose contracts were dated after June 1, 2012, which were not discharged in bankruptcy, and correct the negative comment from the company on those consumers credit reports (Approximately $2.89 million);
• Write off all judgments not obtained in the correct state, and correct the negative comment from the company on those consumers credit reports (Approximately $21.2 million);
• Credit all judgments that were obtained in the correct state against members of the military with a credit equal to 50 percent of the original judgment amount (Approximately $728,000);

'A fraud upon the people of the state of New York,' attorney general charges

As if income tax questions and tiffs with Venezuelan beauty queens weren't enough, Donald Trump is on the wrong side of a stinging rebuke from New York Attorney General Eric Schneiderman.

Schneiderman's office wrote the Trump Foundation Friday ordering it to stop soliciting contributions in New York State, saying it had never filed the required forms.

The letter, technically a "Notice of Violation," states that the Trump Foundation is in violation of section 172 of Article 7-A New York's Executive Law, which requires charitable organizations that solicit contributions in New YorkState to register with the Charities Bureau and to provide annual financial reports and annual audited financial statements, Schneiderman's office said today.

The notice directs the Trump Foundation to immediately cease soliciting contributions or engaging in other fundraising activities in New York and to provide the [AG's] Charities Bureau with the information specified in Section 172 within fifteen (15) days of receiving the notice.

The failure immediately to discontinue solicitation and to file information and [the required] reports shall be deemed a fraud upon the people of the state of New York, said James Shaheen, chief of the Charities Bureau.

Ultimately, the Trump Foundation could be required to return money it has raised illegally.

The legitimacy of Trump's foundation has been the subject of much speculation after critical press reports. The New York Times reported last month that Trump's foundation does show up on many states charity registers, and the Washington Post reported the foundation had not registered in New York.

Schneiderman successfully sued Trump in 2014, charging he waspersonally liable for running Trump University without a license.Schneiderman accused Trump ofdefraudingstudents of $40 million.

The affiliate marketing group used fake news sites to sell the supposed weight-loss potion

By Truman Lewis of ConsumerAffairs

A federal appeals court has upheld an $11.9 million penalty against an affiliate marketing group for its role in promoting LeanSpa, a supposed weight-loss supplement.

In its ruling, theU.S. Court of Appeals for the Second Circuit found that LeadClick Media, LLC recruited affiliate marketers that used fake news sites to drive internet traffic to the LeanSpa website. LeadClick knew that the news sites were phony and actively participated in creating their content, the FTC said.

The decision is the first by a court of appeals to holdthe operator of an affiliate marketing network liable for deception by third-party marketers.

LeadClick knew its affiliates were lying to consumers and took steps to help make those lies more effective, said Jessica Rich, director of the FTCs Bureau of Consumer Protection. The Circuit Courts ruling goes a long way toward ensuring that affiliate networks cant hide behind claims of immunity when their consumer fraud is exposed.

Legit sites

The court also found that LeadClick bought advertising banner space from legitimate online news sites with the intent to resell it for use with fake news sites, thereby increasing the likelihood that a consumer would be deceived by the content.

The case got its start in 2011, when theFTC and the State of Connecticut sued LeanSpa and its principal Boris Mizhen, charging them with using fake news websites to promote their products, making deceptive weight-loss claims, and telling consumers they could receive free trials of acai berry and colon cleanse products, while only paying the nominal cost of shipping and handling.

But in fact, the complaint alleged, many consumers ended up paying $79.99 for the free trial, and for recurring monthly shipments of products that were hard to cancel. The defendants allegedly made more than $25 million from consumers in the United States.

The FTC and the State of Connecticut settled with LeanSpa and Mizhen andreturned more than $3.7 million to consumers who bought the deceptively advertised product.

In early 2013, the FTC filed an amended complaint seeking an injunction against LeadClick, an affiliate marketing network operator for LeanSpa, and its parent company, CoreLogic, Inc.

A Georgia company is accused of deceiving customers wanting to sell used electronics

By Truman Lewis of ConsumerAffairs

Getting rid of old electronicdevices isn't always easy. You're not allowed to dump the stuff just anywhere and there's not much of a market for many used laptops, smartphones, tablets, and other gadgets.

So the high-dollar buyback offers from Laptop & Desktop Repair, LLC, sounded pretty good to many consumers. The trouble is that many consumers didn't get the payments they were promised and a federal court has issued anorder temporarily stopping the defendants practicesand freezing their assets.

This is a classic case of bait-and-switch updated for the 21stcentury, said Jessica Rich, Director of the FTCs Bureau of Consumer Protection. The defendants in this case lure consumers with false promises of generous payments, then hold consumers hostage once they have mailed their devices to the company.

The complaint alleges that the defendants, which have done business under a variety of names including cashforiphones.com, cashforlaptops.com, ecyclebest.com, smartphonetraders.com, and sell-your-cell.com, generated a buyback quote for consumers who visited their websites and provided some basic information about the type and condition of the electronic device they wanted to sell.

The sites made it seem that consumers would get the exact amount of the quote. But when they sent in their used gear, the offer allegedly dropped to as little as three to ten percent of the original quote, according to the FTC.

According to the complaint, consumers usually had either three or five days to accept or reject the new lower offer. The complaint alleges that when consumers would attempt to call the defendants purchasing department to ask for their device back, they would be met with long hold times, disconnected call s and an office that was frequently closed on the weekends even though those days counted against the consumers time limit to reject the lower quote.

Those few who did get through were told their devices had already been processed, the complaint alleges, adding that those who threatened to contact consumer agencies got a few dollars more for their trouble.

The company is charged with violating both the FTC Act and the Georgia Fair Business Practices Act.

A husband-wife team took in $150 million with their modern-day medicine show, feds allege

By Truman Lewis of ConsumerAffairs

To hear the infomercials and social media pitches tell it, a glucosamine and chondroitin supplement called Supple is the answer to arthritis and fibromyalgia pain. Why, it's scientifically proven effective, the ads and posts exclaim.

But theFederal Trade Commission (FTC)took a more rigid view.Companies need solid scientific evidence to back up the health claims they make, said Jessica Rich, Director of the FTCs Bureau of Consumer Protection. Consumers should not have to take it on faith that products claiming to provide pain relief will live up to their billing.

The FTC alleged that Wisconsin-based Supple, LLC and its principals, CEO Peter Apatow and his ex-wife Dr. Monita Poudyal, put on a modern medicine show presentation. Their infomercials featured Poudyal acting as medica show hostess and Apatow acting as her supposed guest.

Together, they portrayedSupple as a powerful all-natural drink that provides complete and long-lasting relief from joint pain; treats or relieves chronic or severe pain, including pain caused by all forms of arthritis and fibromyalgia; provides pain relief comparable to drugs or surgery; repairs cartilage; rebuilds joints and entire joint structures; and restores mobility and joint function to consumers with severe mobility restrictions.

A sales bonanza

It was great while it lasted. The FTC's complaint says the couple took in more than $150 million from sales of the supplement, which costs about $70 for a 24-day supply.

The FTC's complaint charged that theclaims are false or not adequately substantiated. In addition, the FTC allegedthat the defendants falsely claimed that Supple is clinically proven to eliminate joint pain.

The complaint also alleges that defendant Poudyal made unsubstantiated expert endorsement claims for the product, and falsely represented herself as an independent, impartial medical expert. The complaint further charges that the defendants failed to adequately disclose that Poudyal was married to Apatow during the time she was promoting the product.

In a settlement agreed to by the defendants, they are required to havescientific evidence to back up any future claims they make about pain relief, disease treatment, and health benefits, and are barred from misrepresenting the results of any scientific study. It also prohibits them from deceptively representing that Supples endorsers are independent and objective when those endorsers have a close personal or financial stake in the companys product sales.

The settlement includes a $150 million judgment, most of which has been suspended based on the financial condition of Supple and Apatow.

California brings criminal charges against the site's executives

By Truman Lewis of ConsumerAffairs

For years, law enforcement officials and child welfare groups have decried the role of Backpage.com, a website that they say hosts ads for escort services. The site has turned aside most protests and challenges, claiming its actions are protected by the First Amendment.

But California Attorney General and U.S. Senate candidate Kamala Harris argues that the site's activities are illegal and announced late Thursday that Backpage CEO Carl Ferrer had been arrested on felonycharges of pimping a minor, pimping, and conspiracy to commit pimping.

Michael Lacey and James Larkin, controlling shareholders of Backpage, have also been criminally charged with conspiracy to commit pimping, a felony.

Harris said that Backpage was essentially operating as an online brothel and generating millions of dollars off the illegal sex trade.

Raking in millions of dollars from the trafficking and exploitation of vulnerable victims is outrageous, despicable and illegal, she said.Backpage and its executives purposefully and unlawfully designed Backpage to be the worlds top online brothel."

While Backpage hosts ads for sales of a range of items and services, the arrest warrant alleges that the vast majority of Backpages revenue is generated through prostitution-related ads in its adult services section. Backpage collects fees from users who post escort ads, offering sex for money using coded language and nearly nude photos.

The California Department of Justices investigation found that many of the ads for prostitution services involved victims of sex trafficking, including children under the age of 18, Harris said.

Expanding operations

Far from cutting back its operations in response to protests, Harris said that since 2010, Backpage has been expanding operations, creating sites in hundreds of cities throughout the world, including over 30 cities in California.

Backpages internal revenue reports show that from January 2013 to March 2015, 99% of Backpages worldwide income was directly attributable to the adult section. During this 29-month period, Backpages self-reporting demonstrates that gross monthly income from California rose to $2.5 million per month, with over $51 million in revenue derived from California in that period.

Harris charged that Ferrer and associates created additional prostitution-related sites to promote Backpage and essentially servedas an escort directory service.

The California Department of Justice conducted a three-year investigation, including undercover operations posting escort ads and arranging meetings with people who had advertised in the escort section, confirming that commercial sex was the only purpose for both buyers and sellers, Harris said.

The investigation was sparked by reports from media, law enforcement agencies, and the National Center for Missing and Exploited Children (NCMEC). In the last five years, NCMEC has reported an over 800% increase in reports of suspected child sex trafficking, much of it the result of online activities. Since 2012, the NCMEC has reported 2,900 instances to California law enforcement where suspected child sex trafficking occurred via Backpage.

Consumers were talked into investing in schemes that promised lavish returns

You can't get rich leaving your money in the bank, but it beats losing it to get-rich-quick schemes promoted by scam artists. That's the lesson too many consumers learn too late.

In one of the latest such incidents, a federal district court in Arizona has shut down a telemarketing scheme that the Federal Trade Commission says bilked more than $9 million from thousands of consumers, many of them seniors or military veterans.

The defendants allegedly cold-called consumers and urged them to invest in popular e-commerce websites like Amazon.com. They promised lavish returns and assured the consumers that their investment was "risk-free" and came with a "money-back guarantee," the FTC complaint charges.

Of course, no investment is risk-free or guaranteed. Even experienced investors lose money. Also, it's not necessary to deal with a cold-calling telemarketer to invest in Amazon or other publicly-traded companies, since their stock is sold on stock exchanges.

Nevertheless, consumers responded with payments ranging from a few hundred dollars to more than $20,000 and were then assured that their "account" was earning substantial returns. After 90 days, the FTC said, the telemarketers broke off all contact with their victims, who received neither returns nor refunds.

Defendants named

The FTCs complaint names the scams three owners and operators, Susan Rodriguez, Matthew Rodriguez, andWilliam Matt Whitley, along withtheir six corporations, Advertising Strategies LLC, Internet Advertising Solutions LLC, Internet Resource Group Inc., Network Advertising Systems LLC, Network Professional Systems LLC, and Network Solutions Group Inc. They are charged with violating the FTC Act and the Telemarketing Sales Rule, including calling numbers on the National Do Not Call Registry.

The complaint also alleges that the defendants use mail-forwarding services to disguise their location, and that they have changed their business name and mailing and physical addresses to avoid detection by law enforcement.

For example, when the Arizona Attorney Generals office summoned Susan Rodriguez to testify about the defendants business at a Phoenix address, the defendants promptly closed that office and moved to a different location, and Rodriguez failed to appear to testify, according to court documents.

The defendants most recently have done business as Titan Income. They have previously done business as Building Money Network and buildingmoney.cash, Prime Cash and Primecash.net, and Wyze Money and wyzemoney.net.

Under the terms of the temporary restraining order granted by the court, the defendants have temporarily ceased operations and their assets are frozen for potential consumer redress.

Scam artists hijacked consumers' computers, charged hundreds of dollars for unnecessary repairs

By Truman Lewis of ConsumerAffairs

Tech support scamskeep popping up, just like the pop-up ads that are often used to rope in unsuspecting victims. In the latest case, theFederal Trade Commission (FTC) has charged a group calling itself Global Access Technical Support with deceiving consumers.

The defendants allegedly useddeceptive pop-up ads to scare thousands of consumers into paying hundreds of dollars each for unnecessary technical support services.

The ads led consumers to think there was something wrong with their computer and, secondly, that the pop-ups originated from Microsoft, Apple, or other reputable technology companies.

The ads often included loud alarms or recorded messages warning of the apparent dire threat to consumers computers and hijacked consumers browsers, leaving consumers unable to navigate around the ads or close them. The ads prompted consumers to contact a toll-free number.

Call center

According to the complaint, once consumers called the toll-free number, they were connected to a call center in India and pitched by telemarketers who claimed to be affiliated with or certified by a major technology company.

Consumers were told that in order to diagnose the problem, they must provide the telemarketer remote access to their computer. The telemarketers then showed consumers otherwise innocuous screens and directories on their computers, deceiving them into believing they were evidence of problems that require technical support services to repair.

The complaint alleges that the telemarketers pressured consumers to spend anywhere from $200 to $400 for repair services that could take hours to complete and which were at best useless, and in some cases could actually harm consumers computers.

The FTCs complaint alleges that the defendants violated the FTC Act. The defendants are Global Access Technical Support, LLC (also doing business as Global S Connect, Yubdata Tech and Technolive); Global sMind LLC (also doing business as Global S Connect); Source Pundit LLC (also doing business as OneSource Tech Support); Helios Digital Media LLC; VGlobal ITES Pvt. Ltd.; Rajiv Chhatwal; Rupinder Kaur; and Neeraj Dubey.

No matter what a robocaller tells you, it's not

By Mark Huffman of ConsumerAffairs

Your smartphone rings and the screen reports this time the call is coming from Tennessee. You answer anyway.

Congratulations, a recorded voice says. Your business has been pre-approved for a $250,000 loan...

You don't have a small business so you hang up on the robocaller and immediately block the number, just like you have the dozen or so other numbers this operation has used so far.

But what if you did have a small business, one that was struggling and in critical need of working capital? Would you be tempted to listen to the pitch and try to get to a human operator?

Growing and widespread scam

If you did, you could fall for what is a growing and widespread scam that isn't particularly new, though its target is.

Remember, scammers always try to target people who are desperate, because desperate people are usually the most vulnerable and most likely to use bad judgment. It can be a lonely person looking for a relationship or a family fighting off foreclosure. These days, there are plenty of desperate small business operators.

The small business loan scam tries to convince its targets that they can easily qualify for a huge loan without having to produce years of financial data. This, of course, makes absolutely no sense because even well established businesses have to jump through numerous hoops to get much smaller loans from legitimate lenders.

The robocallers, however, have no money to lend. They are after what little money you have left.

Parade of fees

After getting their victims excited about the financial lifeline they are about to receive, they are told about a few incidental fees. At first it might be something small, like a $25 filing fee. A few days later maybe they are presented with a $100 processing fee.

The fees begin to get larger and more numerous, until the victim begins to realize he or she has been scammed. By that point, it's too late and the scammer disappears into the night.

And it can get worse. The New York Times points out that as part of the loan application process, victims have handed over all manner of sensitive information, including Social Security and bank account numbers.

Whether you own a small business or not, a robocaller telling you that you have been pre-approved for a loan is a scam. Such news is too good to be true, and as has been said many times, when something is too good to be true, it's usually a scam.

Study shows consumers' overconfidence in identifying scam messages leads to their downfall

Cyber security threats are increasingly becoming a problem for companies and consumers. Every day, scammers send out fake emails in the hopes of taking advantage of some poor, unsuspecting person, and a new study from Carnegie Mellons Security and Privacy Institute shows why the ploys areso effective.

Simply put, our overconfidence in being able to detect these harmful messages may be contributing to our downfall. Cylab researcher Dr. Casey Canfield says that the study showed consumers were most in danger when they felt most comfortable.

"When making decisions about phishing emails, people were more cautious when they were unconfident and perceived very negative consequences of opening a phishing email. Unfortunately, they were often overconfident so they would still fall for phishing attacks, she said.

Separating out the scams

The study involved participants who were tasked with reading 38 separate emails; half of them were legitimate messages, but the other half were phishing emails. For each email, participants were asked if they believed it was a phishing email, what action they should perform if they were right, how confident they were in their choice, and what they thought the consequences would be if they fell for the phishing attempt.

While the researchers said that participants were generally more cautious of each email due to the nature of the study, they still werent very able to perceive the phishing emails from the legitimate ones. The average rate of success for identifying the phishing messages was only just over 50%, though the researchers note that around 75% of the phishing links were not clicked.

While some participants had a high rate of identifying the scam emails, Canfield notes that participation bias definitely played a part. "Some users were able to identify a vast majority of the phishing emails, but only because they were biased to think everything was a phishing attack. So they didn't necessarily have a high ability to tell the difference between phishing and legitimate emails, she said.

Still, the researchers say that some of the decisions that participants made would have jeopardized whole computer systems if they had been made in real life. They believe that more should be done to educate consumers about their ability to spot a phishing attack and what the consequences might be. One suggested method, called embedded training, would involve sending out fake phishing emails that teach a user about these scam messages if theyre clicked.

The full study has been published in Human Factors.