Blue Cross and Blue Shield of Georgia Mailing Mistake Violates HIPAA, Sets Customers Up for Identity Theft

Blue Cross and Blue Shield of Georgia sent 202,000 explanation of benefits letters to the wrong addresses last week, the Atlanta Journal-Constitution reports, putting these customers at risk for identity theft in many cases.

The letters, which were mistakenly directed to the addresses of other policyholders, included names and insurance identification numbers of patients as well as the names of the doctors and other medical providers they were using, the AJC reports. A small proportion of the letters also had Social Security numbers, a spokeswoman for the company told the paper.

Vulnerability to identity theft is one concern. But EOB letters are especially sensitive from a privacy standpoint because they contain some treatment information. The security breach may be a violation of the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), which protects patients’ medical information.

Simple.Net Sued for Use of Activation Checks

If a company sends you a check for a couple of bucks, for no reason at all, don’t think they’re just being generous, the folks at Consumer Affairs warn. Cash the check, and you could find yourself signed up for a service you don’t really want.

The state of Oregon has filed a civil racketeering lawsuit against an Arizona Internet service provider, charging that it attempted to dupe thousands of businesses and non-profit organizations into depositing negotiable checks that the company claimed were actual contracts for Internet services. Named in the lawsuit is, Inc. of Mesa, Arizona, formerly Dial-Up Services, Inc. doing business as

In the lawsuit, the Oregon Department of Justice (DOJ) contends that, from January 1, 2003 through November 2005, mailed over 195,000 solicitations into the state containing “activation” checks of under $3.35, which when cashed according to created a contract to pay a monthly charge of $16.95 or more for dial up internet access.

The victims deposited the checks thinking they were small refunds or payments on small debts, not a contract for services. DOJ claims the company continued charging the recipient’s local phone bill or through a draw on a checking account even after the marketing practices had stopped. Most customers never used the Internet service or even knew they had purchased it.

“This is the fifth major investigation that the Department has undertaken concerning the use of ‘activation’ checks,” Oregon Attorney General Hardy Myers said. “We will continue to be a leader in efforts to protect small businesses and non-profits from deceptive solicitations for services such as Internet access and yellow page advertising.”

The lawsuit asks for a civil penalty of $250,000, attorney fees and investigative costs and the forfeiture of all monies and property derived from or used in the alleged illegal conduct. The suit also requests restitution for all victims, who paid the defendant for unwanted and unused Internet access billed.

New York Insurance Broker Scams Seniors, Gets Busted

The state of New York is penalizing an insurance broker who targeted seniors across the state by selling overlapping home health services policies they did not need, Consumer Affairs reports. The order issued by Justice Diane Y. Devlin requires insurance broker Thomas Piccirillo of Auburn, N.Y., to pay $500,000 in restitution to seniors he defrauded, $100,000 in penalties, plus an additional $10,000 penalty to the state for targeting senior citizens.

“This individual illegally took advantage of New York’s most vulnerable residents to increase his commissions,” said Attorney General Andrew M. Cuomo. “He used the appeal of seniors maintaining their independence in order to gain their trust, which he then broke by selling unnecessary home care policies.”

Piccirillo used the fear of being sent to a nursing home as a tactic to sell elderly clients overlapping home health services policies, including policies from a company that has since been banned from doing business in New York state, according to Cuomo’s office.

New York Mortgage Fraud: Jury Convicts Once-Feared Haitian Paramilitary Leader

Although his lawyer insists he was framed, once-feared Haitian paramilitary leader has been convicted in a New York mortgage fraud scheme to cheat lenders out of $1.7 million. A Brooklyn jury found Emmanuel “Toto” Constant guilty on Friday of fraud and grand larceny. He faces up to 15 years in prison when he is sentenced on September 10, the Associated Press reports.

Human rights groups say that in the early 1990s, Constant led a gang of thugs that terrorized and slaughtered slum-dwellers loyal to ousted President Jean-Bertrand Aristide. When Aristide returned to power in 1994, Constant slipped into the United States.

New York prosecutors said Constant helped hatch a scheme to buy dilapidated homes and resell them at inflated prices to so-called stray buyers who took out loans that were never repaid.

New York Car Dealer Consumer Fraud: Attorney General Goes After Five Towns Mitsubishi

New York Attorney General Andrew M. Cuomo says that a Nassau County auto dealer will pay consumers for persistently using misleading promotions intended to lure them into the dealership. The consumers, once baited into the dealership, were also subject to other fraudulent and unfair sales practices, Cuomo charged. Consumer Affairs reports that Five Towns Mitsubishi of Burnside Ave. in Inwood must pay $115,000 in restitution to consumers and $35,000 in penalties and costs to the state. The Attorney General’s Nassau Regional Office received more than 50 complaints regarding Five Towns’ business practices.

Five Towns, owned by Lester Wu, Vladimir Zana and Clara Shvartser, caused advertisements to be mailed to thousands of Nassau County consumers featuring a scratch-off ticket called Dash for Cash in which a consumer could win a cash prize, a free vehicle, a vacation, a free gas voucher or a $1,000 shopping spree. A winning ticket contained three like symbols in a row but it did not explain, what, if anything, the consumer won. Instead, they had to bring the ticket to the dealership in order to claim the prize. Once at the dealership, consumers found that nearly all of them had won the vacation or $1,000 shopping spree. However, the vacation and shopping spree prizes had minimal value due to either blackout periods or expenditure requirements, including shipping and handling costs.

Cuomo said that Five Towns also misled consumers by:

• Obtaining signatures on contracts and finance agreements from consumers who mistakenly believed that they were filling out paperwork for vehicles they had won as part of the Dash for the Cash sweepstakes

• Offering false discounts off the sales price of a vehicle by selling it at a higher retail sales price which essentially nullified the value of the discount offered

• Having consumers sign documents with blank sections for figures and terms, and then later filling them out with terms that were not agreed upon

• Failing to give all necessary documents to consumers at the time of purchase

• Promising consumers that they could refinance at a better interest rate after making several car payments, or promising to pay one or more months of the insurance payments for the vehicle – and then reneging on those agreements

• Inserting additional cost items without consumers’ knowledge or consent, including VIN etching, service warranties, theft deterrent systems, GPS devices and other expensive options.

Also, Five Towns repeatedly sold consumers used cars that had previously been used as rental cars without expressly notifying the consumers of their prior use, in violation of Vehicle and Traffic Law.

Midas Franchises Accused of Consumer Fraud in California

Should consumers trust the Midas touch? Apparently not in California. Twenty-two Midas Auto Services franchises in the Bay Area and Central Valley have been found routinely billing customers for unnecessary services and undelivered parts, according to state officials.

Glenn Mason, a spokesman for the state Department of Consumer Affairs, said undercover agents spent three years investigating 22 Midas Auto Service Center franchises owned by Maurice “Mike” Irving Glad in the Central Valley and San Francisco Bay area. The agents found that all but one car sent into the shops came back with inflated bills, according to CBS13 news report.

A state board would hear evidence in the case and recommend whether Glad should lose his state business license. The state is now trying to revoke or suspend the licenses for the stores.

Following is a list of the Midas Auto Service Center franchises name in the accusation:
Bay Area Midas Auto Service Centers

* 1236 White Oaks Avenue, Campbell, CA 95008
* 2525 Monument Boulevard, Concord, CA 94520
* 6955 Village Parkway, Dublin, CA 94568
* 4045 Thornton Avenue, Fremont, CA 94536
* 3741 Washington Boulevard, Fremont, CA 94538
* 1078 La Playa Drive, Hayward, CA 94545
* 24659 Mission Boulevard, Hayward, CA 94544
* 93 S. Capitol Avenue, San Jose, CA 95127
* 4244 Monterey Hwy., San Jose, CA 95111 5
* 287 Prospect Road, San Jose, CA 95129
* 2200 Stevens Creek Boulevard, San Jose, CA 95128
* 13745 E. 14th Street, San Leandro, CA 94578
* 2710 N. Main Street, Walnut Creek, CA 94596

Central Valley Midas Auto Services Centers

* 704 Clovis Avenue, Clovis, CA 93612
* 3937 N. Blackstone, Fresno, CA 93726
* 7340 N. Blackstone, Fresno, CA 93650
* 4304 W. Shaw, Fresno, CA 93722
* 1412 W. Yosemite Avenue, Manteca, CA 95337
* 338 McHenry Avenue, Modesto, CA 95354
* 3833 McHenry Avenue, Modesto, CA 95356
* 1420 V Street, Merced, CA 95340
* 2651 Greer Road, Turlock, CA 95382

Trilegiant Settles Class Action for $25 Million Over Consumer Fraud

A Madison County, Illinois court has granted final approval of a nationwide class action lawsuit against Trilegiant Corporation, providing up to $25 million in cash benefits, along with changes in Trilegiant’s business practices, Consumer Affairs reports. This settlement resolves nationwide litigation against Trilegiant for allegedly billing and collecting unauthorized charges from consumers for products or memberships that consumers never requested or consented to receive. It also resolves disputes over alleged refusals to cancel memberships upon consumer request.

Under the settlement, consumers who had unsolicited or unauthorized charges for Trilegiant products posted to their credit cards or other accounts for such Trilegiant products as Privacy Guard, Credit Alert, Auto Vantage, Travelers Advantage, Buyers Advantage, Compete Home, Digital Protection Plus, Great Fun, Great Options, HealthSaver, Hotline, Just for Me, National Card Registry, NetMarket, Shoppers Advantage, Travel ER, and others, can file a claim to receive a minimum of $20 or whatever they were charged — up to three times the cost of each Trilegiant Product for which they were charged, according to

In addition to the cash compensation, the settlement requires Trilegiant offer consumers an easy cancellation method, affirmative relief regarding Trilegiant’s business practices, a charitable contribution, and payment by Trilegiant of all costs and legal fees related to the lawsuit.

Wachovia Raided in Auction Rate Securities Fraud Probe

After more than 70 formal auction rate fraud complaints were filed with the Missouri Securities Division over the last four months, representing more than $40 million of frozen investments, officials from Secretary of State Robin Carnahan’s securities division on Thursday raided the headquarters of Wachovia Securities, formerly A.G. Edwards, in downtown St. Louis, the St. Louis Business Journal reports.

The $330 billion auction rate securities meltdown sparked the securities division launched a full-scale investigation, requesting documents, e-mails, transcripts and other records from Wachovia Securities and other banks back in April, but Wachovia Securities had not fully complied with these requests, prompting Thursday’s inspection.

“Hundreds of Missouri investors have called my office because of inability to access their money,” Carnahan said in a statement. “They were told these investments were safe and easy to cash in, but now they cannot run their business, make medical payments or pay school tuition. Our office is doing all we can to find solutions that will make these investors whole.”

This isn’t the first time Wachovia Securities has been scrutinized by Carnahan’s office. In 2005 Wachovia Securities agreed to pay Missouri regulators $300,000 in response to allegations that it failed to supervise an investment agent.

Fed adopts new mortgage lending laws

The Federal Reserve Board adopted new rules applying to mortgage lenders, specifically.

In announcing the rules, the Reserve Board admitted that predatory or misleading lenders is not the sole reason for the mortgage crisis, but is responsible for too many loans in the hands of people who can’t pay them, and were misled to believe they could.

These new rules, according to a story in The Chicago Sun-Times, prohibit lenders from making loads without proof of income.

They require creditors to verify income and assets and restrict a lenders’ use of prepayment penalties.

The rules also mandate creditors to establish escrow accounts for taxes and insurance on all first-lien mortgage loans.

Also, advertising will now feature more information about the borrowing rate for the loans.

The rules will not take effect until October 2009 and critics of the plan say it is far too late of a reaction from the government in protecting consumers.

New Jersey suing pool company for fraud

New Jersey is suing a state pool company for violating consumer fraud and home improvement laws.

The Daily Journal, covering Vineland, N.J., reports that Castaway Pools and Spas promised to install pools or spas within days of purchase for customers but instead let the work go for weeks or months. And in some cases, the work was never completed.

New Jersey officials say they’ve logged 39 complaints regarding Castaway with its Division of Consumer Affairs.

The lawsuit was filed by the NJ Attorney General and alleges Castaway presented itself as a “registered home improvement contractor.” Castaway allegedly used another contractor’s license number to do business.

“This company clearly knew that it had to register with the Division of Consumer Affairs, but instead of doing so used the registration issued to another company in its ads and contracts,” Attorney General Anne Milgram said.