NY State judge convicts Dell of fraud

A New York state judge ruled against consumer computer giant Dell Tuesday, ruling the company committed fraud when it duped consumers into high-interest loans.

The judge says Dell lured customers with a promise of no-interest financing only to get them into high-interest loans. He said this practice is deceptive. Dell is undecided whether it will appeal the decision.

Dell and Dell Financial Services engaged in fraud, false advertising, deceptive business practices and abusive debt collection practices, according to the NY State Attorney General’s office.

A further hearing will determine financial restitution for consumers.

NY State AG Andrew Cuomo said “We have won an important victory that will force Dell to live up to its responsibilities and pay back its customers for profits that were pocketed but not deserved.

Only a select few New Yorkers ended up being eligible for the no-interest financing offered by Dell, and others were offered a loan with interest percentages over 20.

The AG’s office filed the lawsuit in May 2007.

Rent-to-own schemes leaving “homeowners” out of house

Rent-to-own mortgage plans offer a way to build equity through rent payments, supposedly applied to a mortgage payment.

But companies that come in to offer a budding homeowner a way of avoiding foreclosure often end up evicting their new clients.

A homeowner is convinced to sign over the title of their rent-to-own property to the rescue lender, but the lender is then turning its back on the rescued.

Florida Attorney General Bill McCollum has filed a lawsuit against these mediation lenders, specifically National Foreclosure Management for “allegedly defrauding troubled homeowners.”

The State of Illinois has increased penalties against these firms who practice their business fraudulently.

The Commonwealth of Massachusetts has banned the firms from practicing.

In April, two percent of the nation’s homes fell into foreclosure.

Home Buyers’ Consulting Network a Credit Repair Scam, FTC Charges

The Federal Trade Commission (FTC) has charged the Home Buyers’ Consulting Network (HBCN), a home-buying and credit repair business based in North Carolina, with illegally charging advance fees for its services, and falsely claiming it could remove negative information from customers’ credit reports, ConsumerAffairs.com reports.

According to the complaint, the company would advertise to prospective clients that it had the power to improve their credit scores from 50 to 100 points, so that they could then qualify for fully-financed mortgages at better rates, and could buy homes through the company’s network of lenders and referral agents.

“Before performing the promised credit repair services, [HBCN’s] representatives typically request and require at least partial payment for those services, specifically, advance payment of at least $99 for the pure credit repair services and $399 for the bundled credit repair and home-buying consulting services,” the agency said in its complaint.

The FTC charged HBCN under the Credit Repair Organizations Act (CROA), the law that governs credit repair companies’ conduct. It imposed a civil judgment of $573,000 and ordered restitution to customers of $40,000, but agreed to suspend much of the penalty after HBCN claimed it was financially destitute.

Many “credit repair agencies” falsely claim that negative information such as bankruptcies, liens, judgments, and delinquent payments can be removed from credit reports, even if the information is accurate. Most regularly bill their customers hefty advance fees for the job, and many are in fact scams. The FTC and state legislators regularly target companies that claim they can permanently remove negative information from credit reports or otherwise rehabilitate their credit histories, but unfortunately there are a lot of credit repair scams out there — and most folks don’t find out they’re being taken until it’s already happened.

HMOs profit on single-source drugs

Several New York HMOs are being accused of blocking patients from getting critical single-source drugs in order to boost profits.

The report is authored by N.Y. Senator Jeffrey Klein and will be released Sunday.

Single-source drugs have no generic competition and command top dollar. The HMOs accused of charging patients high co-pays or not covering the drugs at all are Aetna, Oxford, Cigna, HIP, GHI and HealthNet of New York were among those surveyed by the Senator for the report.

These companies used this practice on such commonly prescribed drugs like Vytorin and Crestor, Lexapro, Actos and Avandia, Singulair and Advair Diskus.

“The HMOs are doing it to make more money,” the Senator said.

Mortgage Fraud Rate Increased 176%, FBI Reports

The FBI’s 2007 Mortgage Fraud Report revealed the agency investigated 1,200 cases in which individuals intentionally misrepresented information a lender used to fund a mortgage in the past year, Consumer Affairs reported today. This figure reflects a 47 percent increase of mortgage fraud investigations from 2006 — and a 176 percent jump in the past five years.

“The $813 million loss denoted in this report is just the tip of the iceberg, reflecting only a small percentage of financial damage suffered by victims of mortgage fraud,” said Assistant Director Kenneth W. Kaiser with the FBI’s Criminal Investigative Division. “The FBI remains committed to working with our law enforcement, regulatory, and industry partners to unravel these complicated fraud schemes and bring their perpetrators to justice.”

Mortgage fraud victims
can include borrowers, mortgage industry entities, and those who live in neighborhoods affected by this crime.

FTC promises fuel price oversight

The chairman of the Federal Trade Commission told a Senate panel it will expand its monitoring of rising fuel prices.

According to The Houston Chronicle, Sen. Dick Durbin, of Illinois, said he and others have been asking for such an inquiry and into anticompetitive practices by oil companies.

Durbin said he’s pleased the FTC is stepping up its investigation into the skyrocketing oil prices.

Fraudulent I-PASS Fines Have Consumers Filing Lawsuits

The Daily Herald reports that a Buffalo Grove-area couple is suing over fraudulent I-PASS fines and is hoping a federal judge will grant class action status for those similarly situated. The I-PASS lawsuit, filed by Marvin and Cheri Kushner, alleges the two were fined more than $200 on April 10 for violations over the last 10 years.

The lawsuit claims the toll enforcement system violates constitutional protections for due process largely because the Kushners couldn’t get through to toll operators on multiple occasions after receiving the fines.

The increase in calls comes as the tollway digs out of a 13-month backlog of notices, which ended in August of 2007. Currently, the tollway is sending out 10,000 violation notices a day, about double the normal rate, the Daily Herald reports.

Schumer wants FTC to investigate Countrywide

N.Y. Sen. Chuck Schumer is calling for the Federal Trade Commission to join other government agencies investigating Countrywide Financial, the nation’s largest home mortgage lender.

Schumer, according to a story in USA Today, says there is an emerging pattern of apparent misconduct in the firm’s treatment of borrowers.

On May 6, borrowers of Countrywide and other lenders testified in Washington and told stories of the lenders abusing the bankruptcy court system by “filing unjustified foreclosures against struggling borrowers”. They also complained of additional fees that were piled on and mistating due amounts.

The FTC did not respond to Schumer’s request and Countrywide also ducked comment from USA Today.

New Credit Card Rules Proposed

The Federal Reserve and Federal Trade Commission have proposed new rules requiring lenders to notify consumers they are being offered certain loan terms because they have less-than-desirable credit.

The rule would require a “risk-based pricing” notice to consumers when they send out more expensive credit terms, according to a Reuters report.

“Under these rules, a risk-based pricing notice would generally be provided to the consumer after terms of the credit have been set, but before the consumer becomes contractually obligated on the credit transaction,” the Fed and the FTC said in a statement.

Credit card companies would be required to give the notice when it offers a line of credit with a higher interest rate than its lowest, which it offers to customers with a good credit rating. Lenders can avoid this rule if it provides a credit score to all of its customers along with explanatory information.

Smart Document Solutions Class Action Lawsuit Filed in Arkansas

Smart Documents Solutions, a medical records copying service, is being sued for deceptive practices for charging fees higher than allowed by Arkansas law. Arkansas laws limits the cost of copying medical records to $1 per page for the first five pages and 25 cents for each additional page, as well as allowing a $5 minimum charge and reasonable retrieval fees for stored records.

The Smart Documents Solutions lawsuit, filed under the Arkansas Deceptive Trade Practices Act (ADTPA), alleges that the company overcharged clients for postage and charged retrieval fees even though it keeps records on site. The complaint also states that Smart Documents has acquired unlawful profits at the expense of consumers as a direct result of its’ overcharging for medical records. The lawsuit asks for a maximum of just under $5 million in damages, costs, restitution and attorney’s fees for its violation of ADTPA, intentional misrepresentation, fraud, and deceit.