Consumer Protection

LOS ANGELES —Attorney General Kamala D. Harris today issued the following tips to help California servicemembers and veterans protect themselves from scams.  Scammers target those serving our country, attempting to prey on their steady and hard-earned incomes.  The youngest men and women in uniform are particularly vulnerable as they are often living away from home for the first time and are only beginning to manage their finances independently.

“On Memorial Day, we honor the military veterans who made the ultimate sacrifice in service of our nation,” said Attorney General Harris. “While we remember the bravery, courage and sacrifice of our veterans, we are also reminded that too many men and women who serve our nation are targeted by scam artists and predators.  My office remains vigilant in support of all veterans, will protect servicemembers from fraud, and will hold accountable those who prey upon members of our military.”

WHAT TO LOOK OUT FOR

There are many different scams targeting servicemembers and veterans, but scammers tend to follow similar patterns.  Here are some of the most common scams of which to be aware:

• Predatory auto sales and financing.  Car dealers located near military bases may try to lure servicemembers with false promises of special deals for military personnel.  Often, these so-called deals conceal the terms of purchase for the vehicle and result in the servicemember drastically overpaying for both the vehicle and cost of financing.  For example, dealers may insist that military personnel will not qualify for financing unless they purchase overpriced add-ons they do not need.  Other times, the dealer may contact a servicemember who previously completed a transaction and drove a car off the lot to inform him that the initial financing fell through and insist on renegotiating for far worse terms.  Servicemembers should not rely on oral promises nor feel pressured to enter into any purchase without first reading and understanding the contract. 

• Storage units.  Servicemembers may spend months or years away from their belongings and often must rely on storage services while they are gone.  During deployment, stored possessions benefit from additional legal protections to prevent them from being sold at auction as a result of a default in rental payments.  Unscrupulous storage complexes may claim ignorance of military status or induce servicemembers to sign away their rights in order to auction their property while they are away.  Military personnel should notify storage companies of their military affiliation and should not agree to waive the rights designed to protect them. 

• Rental scams.  Because they may relocate frequently to unfamiliar places, servicemembers should be particularly vigilant about online scammers who use websites like Craigslist to lure would-be renters into paying deposits for non-existent rental properties.  The online advertisements may appear legitimate on the surface, but rentals listed at abnormally low rates or landlords requiring a deposit prior to showing the property usually signal a scam.  Particularly with peak Permanent Change of Station (PCS) season fast approaching, military renters should watch out for insistent demands that instill a false sense of urgency and should avoid wiring money to reserve apartments sight unseen.  Using installation housing services offices or established property management companies to locate potential housing is advisable.

• Education rip-offs.  Veterans Administration education benefits provide a unique and valuable opportunity for military personnel to pursue higher education.  Too often, however, recipients become the targets of disreputable for-profit colleges that are happy to pocket hard-earned benefits but provide little education in return.  Servicemembers and veterans should take great care to ensure that they use their benefits wisely by thoroughly researching educational opportunities before using their benefits.  The G.I. Bill Comparison Tool may be helpful in determining how to best utilize these benefits.   

• Pension scams.  Organizations professing a sincere concern for veterans may approach a veteran or his/her family about helping them qualify for VA pension benefits under the Aid and Attendance Program.  These organizations purport to employ financial wizardry to help veterans meet the program’s income and asset limitations.  But the organizations often charge high fees and receive lucrative undisclosed commissions for the financial products they sell to unsuspecting veterans.  Applicants who utilize this assistance may later discover that they no longer have access to their assets or that they are disqualified from other government programs, such as Medicaid.  For additional information, see Attorney General Harris’ Consumer Alert on Veteran “Pension Poaching” Scams.

HOW TO PROTECT YOURSELF AND YOUR FAMILY

• Be vigilant in any consumer transaction in which your military affiliation is involved.  While there are certainly many respectable businesses that offer special deals to servicemembers and veterans, there are also plenty of dishonest merchants who will try to use that information to take advantage of you.

• Be very careful when you encounter testimonials from your fellow servicemembers or from veterans working for merchants.  Many scammers set up their businesses near military bases and hire veterans as salespeople, in an attempt to prey on the trust between military personnel.  Sometimes they also offer special deals or discounts to servicemembers in exchange for promoting their goods and services to other members of the military.  You should be aware of these practices and careful about relying on claims that seem too good to be true.

• Know all the terms of any installment purchase you make and look out for attempts to hide any terms from you.  Salespeople will often focus a servicemember’s attention on the monthly payment for a particular purchase, which can distract attention from a sales price inflated well beyond what a buyer would ordinarily pay.  Beware of bait and switch tactics and never sign incomplete documents or contracts you have not reviewed in detail.

• If you are a victim of consumer fraud, law enforcement is here to help.  Contact your local district attorney, consumer affairs department, or the California Attorney General’s Office.

HELPFUL RESOURCES

• The Federal Trade Commission maintains a website full of resources for military consumers.
• Servicemembers in need of legal assistance should start by contacting their local JAG legal assistance office or the California National Guard legal assistance program.
• Veterans in need of legal assistance may want to start with LawHelpCa, a website with veteran-specific resources and links to legal aid organizations that offer FREE legal help. 
• Consumers can report predatory consumer activity targeting servicemembers, veterans, or anyone else, to the Office of the Attorney General.  To submit a complaint, please use one of the following forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf?

中文: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf?

Tiếng Việt: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf?

LOS ANGELES – Attorney General Kamala D. Harris today filed a lawsuit against Johnson & Johnson (J&J) for false advertising and deceptive marketing of its surgical mesh products for women.  The complaint alleges that J&J neglected to inform both patients and doctors of possible severe complications and misrepresented the frequency and severity of risks.

California co-led a multistate investigation, including 46 states and the District of Columbia, into J&J’s surgical mesh products for women, and is seeking injunctive relief and monetary penalties to ensure that J&J stops its deceptive practices.

“Johnson & Johnson put millions of women at risk of severe health problems by failing to provide critical information to doctors and patients about its surgical mesh products,” said Attorney General Harris. “Johnson & Johnson’s deception denied women the ability to make informed decisions about their health and well-being.  My office will continue to hold companies accountable for misleading consumers and patients for financial gain.”

The surgical mesh device is designed to treat common health conditions in women such as stress urinary incontinence and pelvic organ prolapse. The lawsuit alleges that J&J misrepresented the safety of these devices by concealing the possibility of serious and irreversible complications caused by mesh, including permanent pain with intercourse and/or loss of sexual function, chronic pain, permanent urinary or defecatory dysfunction, and potentially devastating impact on overall quality of life.  

J&J also misrepresented the severity and frequency of common complications, and failed to disclose that its surgical mesh devices presented risks not present in alternative treatment options.

The suit further claims that J&J knew about potential risks and side effects prior to the launch of their mesh products, yet omitted that information from educational and marketing materials provided to doctors and patients.  

J&J sold 787,232 devices nationally from 2008 to 2014, including more than 42,000 in California for that same time period.  Worldwide, more than 2 million women had been implanted with these mesh products. 

In addition to the lawsuit filed today, J&J faces over 35,000 personal injury lawsuits in state and federal court related to its surgical mesh products. 

A copy of the complaint is attached to the online version of this news release at www.oag.ca.gov/news.

SANTA BARBARA - Attorney General Kamala D. Harris and Santa Barbara County District Attorney Joyce E. Dudley today announced that Plains All-American Pipeline has been indicted by a grand jury on 46 criminal charges related to the May 2015 oil spill in Santa Barbara County.  A Plains All-American Pipeline employee was also indicted on 3 criminal charges.

On May 19, 2015, a pipeline operated by Plains All-American Pipeline ruptured, releasing into the environment approximately 140,000 gallons of heavy crude oil onto land, beaches, and the Pacific Ocean near Refugio State Beach.  Federal, state and local governments have spent millions of dollars to clean up the spill, which resulted in substantial damage to natural habitats and wildlife over a large area. 

Attorney General Harris partnered with local and state law enforcement agencies to conduct a criminal investigation and jointly prosecute the criminal case with Santa Barbara County District Attorney Dudley. 

“Crimes against our environment must be met with swift action and accountability,” said Attorney General Harris. “The carelessness of Plains All-American harmed hundreds of species and marine life off Refugio Beach. This conduct is criminal and today’s charges serve as a powerful reminder of the consequences that flow from jeopardizing the well-being of our ecosystems and public health.”

On May 16, 2016, a grand jury indicted Plains All-American Pipeline on 46 charges, including 4 felony charges and 42 misdemeanor charges. The company was charged with felony violations of state laws regarding the spilling of oil and hazardous substances into state water.  Both the company and James Buchanan, an employee, were charged with misdemeanor violations for failing to provide timely notice of the oil spill to the Office of Emergency Services.  In addition, the company was indicted on three dozen misdemeanor charges linked to the spill’s impact on birds and mammals.

“This indictment came as a result of many local and state agencies working together to present both inculpatory and exculpatory evidence to a hard-working Santa Barbara Grand Jury,” said District Attorney Dudley.  “The indictment is a response to the evidence presented and speaks to the alleged criminal culpability of both the corporation and an individual who are alleged to have caused harm to Santa Barbara County’s magnificent natural surroundings and death to some of it’s majestic wildlife.”

Plains All-American Pipeline faces up to $2.8 million in fines plus additional costs and penalties.

Attorney General Harris and District Attorney Dudley launched a joint criminal investigation 72 hours after the spill was discovered and in June, Attorney General Harris traveled to the site of the spill and met with command staff leading the cleanup and investigation.  More information is available here: https://oag.ca.gov/news/press-releases/photo-release-attorney-general-kamala-d-harris-tours-oil-spill-clean-refugio.

In 2011, Attorney General Kamala D. Harris joined federal, state, and local officials in securing a comprehensive settlement with the owners and operators of the M/V Cosco Busan over the major 2007 oil spill in the San Francisco Bay.  

LOS ANGELES — Attorney General Kamala D. Harris issued a consumer alert today to warn homeowners about mortgage loan modification scams.  The California Department of Justice has received an increased number of complaints from homeowners and has also been contacted by mortgage servicers that have expressed concern about these scams.

Scammers are calling and mailing homeowners, pretending to be their mortgage servicer or a representative from the Home Affordable Modification Program (HAMP), to offer fake loan modifications and “trial payment plans” to lower mortgage payments.  These scammers may send genuine-looking letters with the logo of the homeowner’s mortgage company, the homeowner’s account number, and deceptive contact information that routes homeowners to the scammers instead of their mortgage servicer.  They may also call from telephone numbers that show up on caller ID as the homeowner’s mortgage company. 

As with legitimate HAMP offers, homeowners are told that their loans may be permanently modified if they make three trial period payments and follow certain other requirements.  Homeowners are usually instructed to send payments via wire transfer or money order to sham addresses that supposedly belong to their mortgage company, only to later discover that they have been sending payments to scammers and have lost thousands of dollars while their real mortgage company has not received any payment during the duration of the scam. Currently, the federal HAMP and HARP programs are set to end on December 31, 2016.[1]

Other common mortgage modification scams include:

• Illegally charging homeowners upfront fees for mortgage modification services and then providing little or no assistance;

• Falsely guaranteeing or implying that modification applications will be approved (often through falsely claiming affiliation with HAMP, other government programs, or mortgage servicers); and

• Tricking homeowners into transferring part or all of their property interests to a scammer, usually in an effort to drain equity from a property.

Important Tips

Homeowners should keep the following tips in mind to protect themselves from mortgage modification scams:

• Be wary of unsolicited telephone calls and mailings that offer a mortgage modification or claim to be a pre-approved modification, especially if the homeowner is asked to provide any payment or personal information.
• Homeowners who have applied for a mortgage modification should confirm any modification offers or approvals directly with their mortgage servicer to ensure that the modification offer or approval is legitimate before paying money or providing personal information.
• Because scammers may provide fake contact information, homeowners should contact their mortgage servicer using the contact information on their regular mortgage statements to make sure that an offer or approval is legitimate.  If the offer or approval is for a HAMP modification, homeowners can also call the federal government’s Making Home Affordable hotline at 1‑888-995-HOPE (1-888-995-4673) to confirm that the offer is legitimate.
• Scammers often request payment by money transfer companies, including Western Union and MoneyGram, or wire transfer, and may also use a fake address for payments.  Before sending a mortgage payment to any address other than what is on the regular mortgage statements, homeowners should verify that the address is legitimate with their mortgage servicer.
• In California it is illegal for any person, including real estate agents, real estate brokers, and lawyers, to charge upfront fees for loan modification assistance or services.[2]  Be wary of any individual or company that guarantees a successful result, since only the mortgage servicer can approve a mortgage modification offer.  Homeowners should also be wary of any individuals who encourage homeowners to stop contacting their mortgage servicer or to stop making mortgage payments. 
• Homeowners should not have to pay a fee in order to apply for a mortgage modification and can get FREE help from a U.S. Department of Housing and Urban Development (HUD)-certified housing counselor to apply for a modification or other relief.  See Additional Resources below.

Additional Resources

• To check the legitimacy of a HAMP offer or approval, report a suspected scam, or to get free mortgage loan assistance, call the Making Home Affordable hotline at 1-888-995-HOPE (1-888-995-4673) or go to www.MakingHomeAffordable.gov.
• If a fake HAMP offer or approval is received, report it to the Office of the Special Inspector General for the Troubled Asset Relief Program at 1-877-SIG-2009 (1-877-744-2009) or go to www.sigtarp.gov.
• If a fake modification offer or approval is received by mail, report it to the United States Postal Inspection Service at 1-877-876-2455 or go to postalinspectors.uspis.gov.
• For a referral to a free housing counselor approved by the U.S. Department of Housing and Urban Development (HUD), call 1-800-569-4287 or go to www.hud.gov.
• For free assistance for low- and moderate-income Californians who want to stay in their homes and maintain an affordable mortgage, call Keep Your Home California at 1-888-954-KEEP (1-888-954-5337) or go to www.keepyourhomecalifornia.org. 

To submit a consumer complaint about a mortgage loan modification scam to the Office of the Attorney General, visit oag.ca.gov/contact/consumer-complaint-against-business-or-company.

[1] https://www.hmpadmin.com/portal/news/docs/2016/hampupdate030316.pdf, http://www.harp.gov/About

[2] See SB 94, passed in 2009, and 16 C.F.R. Part 322 

LOS ANGELES – Attorney General Kamala D. Harris today issued an information bulletin to California law enforcement agencies to reinforce integral eviction procedures under the California Homeowner Bill of Rights. Under current California law, occupants of a foreclosed property who are not named in eviction documents - such as tenants - can present a “Claim of Right to Possession” form to temporarily stop the eviction process up to and including when the Sheriff comes to remove them from the property.

Following the 2012 national mortgage settlement, Attorney General Harris sponsored the landmark California Homeowner Bill of Rights (HBOR), which took effect on January 1, 2013. The legislation package included additional protections for homeowners and tenants facing foreclosure. Although HBOR has been in effect since 2013, advocacy groups have reported cases in which Sheriffs proceed with the eviction process despite being presented with a Claim of Right to Possession form. This bulletin provides guidance for Sheriffs performing evictions following a foreclosure. 

“This bulletin clarifies integral protections and due process available under the Homeowner Bill of Rights,” said Attorney General Harris.  “I sponsored this bill to provide a fair process for vulnerable Californians who are facing the loss of their homes. I thank the advocacy organizations for their tireless work on behalf of those affected by the foreclosure crisis."

Prior to HBOR, occupants who were not named in an Unlawful Detainer Complaint were required to respond to a “Prejudgment Claim of Right to Possession” within 10 days of service. This is no longer the case.  Under HBOR, certain post-foreclosure occupants, such as tenants, can temporarily stop the eviction process by presenting a Claim of Right to Possession, including at the time of the lockout, to the Sheriff at the property. Once a claim is presented, the Sheriff should take no further action until notified by the court.  The bulletin further instructs Sheriffs on how to respond when presented with a Claim of Right to Possession. 

“HBOR provides critical protections for tenants in foreclosed properties.  Western Center on Law & Poverty is grateful to the Attorney General for providing guidance to the sheriffs who play a key role in implementing these protections and ensuring that innocent tenants will not be evicted without notice,” said Madeline S. Howard, Senior Staff Attorney at the Western Center on Law and Poverty. 

“Over 1 million California tenants suffered displacement after their landlords’ foreclosure from 2008-2012.  The tenant protections of HBOR helped address this crisis, and the Claim of Right to Possession gave tenants a new tool to assert their rights. However, many tenants have had difficulty using this procedure because it was new and education was limited.  Tenants Together believes that this Bulletin will significantly improve the use of the Claim of Right to Possession and ensure that Sheriffs across the state are able to properly follow the legal process,” said Leah Simon-Weisberg, Legal Director at Tenants Together. 

Western Center and Tenants Together have received calls asking for assistance with the prejudgment claim process and reports of post-foreclosure eviction abuse from tenants in the Central Valley, Inland Empire, and the San Francisco Bay Area. 

Attorney General Harris has worked to ensure that California’s homeowners are treated fairly and with consideration during the foreclosure process. In 2011, she created the Mortgage Fraud Strike Force, which was tasked with the responsibility to investigate and prosecute misconduct related to aspects of the mortgage process. In February 2012, Attorney General Harris secured more than $20 billion for struggling California homeowners from the nation’s five largest banks.

The Attorney General has also taken steps to improve relations between the public and law enforcement agencies. In 2015, she directed a review of her Division of Law Enforcement's policies on implicit bias and the use of force. Following the 90-day Review, Attorney General Harris created the first POST-certified course on Procedural Justice and Implicit Bias in the United States. In 2016, she sponsored legislation that would create a stand-alone course for peace officers on principled policing, procedural justice and implicit bias. She later formed the 21st Century Policing Working Group, which has convened several times to discuss its current progress and strategies to improve policing policies to fit the needs of today.   In addition, Attorney General Harris sent a bulletin to law enforcement making clear that federal immigration detainers are voluntary and that law enforcement agencies should direct resources in a manner that best serves their community.

LOS ANGELES – On Saturday, April 30, Attorney General Kamala D. Harris, AARP CA, and the District Office of Councilman Curren Price will hold Shred Fest 2016, a Los Angeles event where consumers can learn about how to prevent identity theft by shredding personal documents and other sensitive records for free. 

Saturday’s event is part of an ongoing partnership between AARP and Attorney General Harris’s office to protect consumers from identity theft and fraud and is one of several Shred Fest 2016 events scheduled for communities nationwide.  Shred Fest is also part of Money Smart Week®, supported by AARP’s Fraud Watch Network and the AARP Foundation.

“We must be vigilant in prosecuting those who take advantage of seniors and work to educate all Californians on how to avoid the increasing risks of identity theft, fraud and scams,” said Attorney General Harris. “‘Shred Fest 2016’ will help seniors safely dispose of sensitive documents and learn key strategies to protect themselves against identity theft.”

Information about Los Angeles Shred Fest 2016:

Saturday, April 30, 2016
4301 S. Central Avenue, Los Angeles, CA  90011
Shredding service begins at 10 a.m. and will continue until 2 p.m.

“Financial fraud causes millions of dollars in losses each year,” said Councilman Curren Price. “With the tax-filing season behind us, we’re encouraging taxpayers to do a spring cleaning of their old financial documents and other records.” 

“Identity thieves routinely search through dumpsters and trash cans, looking to find confidential information.  Our Shred Fest 2016 event will allow consumers to discard this paperwork in a safe and secure manner,” said Nancy McPherson, AARP CA State Director.

To avoid having your sensitive information compromised, security experts recommend shredding of the following types of materials:

• Old documents: Papers that carry your Social Security number, birth date, signature, account numbers, passwords or PIN numbers.
• Banking: Canceled or unused checks.  Shred deposit slips and ATM and credit card receipts, once you receive your monthly statements.
• Credit Cards: Preapproved credit card applications and incentive/gift checks from credit card companies.
• Medical: unneeded medical bills.
• Investments: Investment account statements.
• Obsolete ID cards: Expired driver’s licenses, medical insurance cards and passports.

Last year, Attorney General Harris partnered with AARP to protect seniors from fraud and abuse in a collaboration that includes tele-town halls and webinars to educate seniors, their families and the general public about legal protections designed for people age 50 and over. Together with the AARP Fraud Watch Network, Attorney General Harris’s office has created and disseminated consumer and educational resources to protect seniors against scams and schemes.

More resources to protect against identity theft are available on the Attorney General’s website at: http://oag.ca.gov/idtheft.

SACRAMENTO -- Attorney General Kamala D. Harris today announced her support for the Homeowner Survivor Bill of Rights, California Senate Bill 1150, legislation authored by Senators Mark Leno (D-San Francisco) and Cathleen Galgiani (D-Stockton).  The proposed bill would require companies that collect payments from borrowers—mortgage loan servicers— to communicate with the widowed spouses and survivors of homeowners to ensure that survivors receive accurate information about assuming responsibility for a mortgage and avoiding foreclosure. This legislation builds on Attorney General Harris’ work in 2011, when she secured $20 billion in relief for California homeowners.

“Following the devastating loss of a loved one, too many Californians also face the possibility of being stripped of their home. This proposed legislation requires mortgage servicers to communicate with spouses and children of deceased homeowners and gives them a fighting chance to stay in their homes,” said Attorney General Harris. “I thank Senators Leno and Galgiani for their efforts to extend critical financial and legal services to Californians facing unnecessary foreclosures.”

The proposed legislation would allow survivors or heirs to simultaneously apply for both loan assumption and loan modification and provide a single point of contact with the lender. The California Senate Banking Committee will hold a hearing on the legislation this afternoon.

“Instead of getting basic information on how to proceed with a home loan following the death of a loved one, surviving spouses and children face a labyrinth of paperwork and conflicting directions and requests, which only prolongs their grief,” said Senator Leno. “Many family members unnecessarily lose their homes without ever knowing they had the right to assume the loan or seek foreclosure remedies. Before more families give up, we must step in.”

"As California's senior population increases, so does this problem. Through its common-sense protections, SB 1150 would prevent additional, unnecessary, ‘red-tape foreclosures’ on widows, widowers, and other heirs,” said Kevin Stein, Associate Director at California Reinvestment Coalition.

In 2013, the Consumer Financial Protection Bureau issued guidance stating that “servicer[s] must have policies and procedures reasonably designed to ensure that, upon notification of the death of a borrower, the servicer promptly identifies and facilitates communication with a successor in interest of the deceased borrower with respect to the property that secures the deceased borrower’s mortgage loan.”  Despite this guidance, the California Department of Justice continues to receive reports that mortgage servicers are refusing or failing to communicate with widows and orphans of deceased homeowners.  SB 1150 would require servicers to communicate with successors and prevent families from facing unnecessary foreclosures after the deaths of their loved ones. 

In 2012, Attorney General Harris helped to enact the California Homeowner Bill of Rights (HBOR), a landmark package of laws establishing key mortgage and foreclosure protections to California homeowners and borrowers.  The laws, which took effect on January 1, 2013, restrict dual-track foreclosures, guarantee struggling homeowners a reliable point of contact at their lender, impose civil penalties on fraudulently signed mortgage documents, and require loan servicers to document their right to foreclose.  Dual-track foreclosures refer to a practice whereby a lender forecloses on a home while homeowners are simultaneously seeking a loan modification.

The California Homeowner Bill of Rights also extended the statute of limitations to prosecute mortgage fraud-related crimes to three years and allowed the Attorney General’s office to use statewide grand juries to investigate and indict the perpetrators of financial crimes involving victims in multiple counties.  For more information, see http://oag.ca.gov/hbor.

In May 2011, Attorney General Harris created a Mortgage Fraud Strike Force within the California Department of Justice to investigate and prosecute misconduct at all stages of the mortgage process and in February 2012, Attorney General Harris secured an unprecedented settlement with the nation’s five largest banks, securing $20 billion in relief for California homeowners.

SB 1150 is sponsored by the California Alliance for Retired Americans, Housing and Economic Rights Advocates and California Reinvestment Coalition.

LOS ANGELES – As students prepare to enroll in college this year and take out loans to pay for higher education, Attorney General Kamala D. Harris issued the following tips, encouraging Californians to know all the facts—and avoid potentially harmful scams—before taking on or paying off substantial student loans.  

In advance of enrolling in a college or university, students should thoroughly research the types of financial aid they may qualify for and determine which loans, scholarships, grants, or work-study programs would be most beneficial to their personal situation.   Student borrowers should be aware of factors that may impact their ability to repay student loans, such as changing the status of student enrollment, future job prospects, the amount of interest accruing on loans, and any loan prepayment penalties.          

Students should also be cautious of private companies that charge for what would normally be free student loan services.  Certain companies may impose fees for assisting with federal student loan consolidation or in submitting the Free Application for Federal Student Aid (FAFSA), without disclosing that such services are actually free.  Student borrowers are strongly encouraged to use free student loan resources to avoid being charged unfair and unnecessary fees.

Consumers who take on student loans should be sure to make their payments on time.  Contact the student loan servicer promptly to discuss options if repayment of loans becomes difficult.  Eligible borrowers may be able to lower monthly payments or may be eligible for loan deferment, forbearance, or cancellation.  Late payments could adversely affect credit scores and harm future ability to make purchases or qualify for additional credit.    

What to look out for

The Attorney General offers student borrowers the following tips in order to educate themselves and take advantage of resources regarding student loans:

• Before taking on a student loan, research the types of financial aid that are available and consider ways to lower the cost of higher education programs.  To the extent possible, carefully consider job prospects, including salary information, in deciding whether and how to take out student loans.

• Do not sign a loan document electronically without first reviewing and understanding the terms of the loan agreement.  Make sure to understand how much money is being loaned, the interest rate of the loan, and when the loan will need to be repaid.  Inquire about the available options if loan payments cannot be made on time (which can come up during periods of unemployment, economic hardship, or enrollment in a graduate program).

• Be aware of the differences between federal and private student loans.  Federal student loans may offer lower, fixed interest rates, while private student loans may have higher, variable interest rates.  Additionally, federal student loans generally do not need to be repaid until the student graduates and loan consolidation and income-based or other more flexible repayment plans may be available.  In contrast, private student loans may need to be repaid while the student is still in school and may not offer deferment or forbearance options.    

• Be wary of private companies that charge a fee for assisting with filling out and submitting the FAFSA.  Such companies are unaffiliated with the government.  The U.S. Department of Education provides free assistance with filling out the FAFSA.

• Beware of companies that charge an application fee and monthly fees for assisting with consolidating federal student loan debt.  Consolidating federal student loans is FREE through the Federal Direct Consolidation Program.  The loan consolidation process combines several federal student loans into just one loan.  Consolidated loans may be eligible for various repayment plans, including income-driven repayment plans. 

• Ask about the student loan’s grace period and be aware that the grace period may change depending on circumstances.  Engaging in active military duty, returning to school, and consolidating loans may alter grace periods.  Make sure to stay in contact with student loan servicers to stay informed regarding the repayment time frame.
• Defaulting on student loans will adversely affect credit and will impede the ability to make purchases down the road.  It is important to stay in touch with student loan servicers, especially if there is a difficulty in making timely payments.

HELPFUL RESOURCES

The U.S. Department of Education provides information on the types of federal aid available to students.  The website includes basic eligibility requirements for federal aid.  Additionally, the FAFSA4caster assists consumers with calculating the amount of federal student aid for which they are eligible.

The U.S. Department of Education offers a comparison of federal student loans and private student loans. 

The Federal Student Aid website also helps student borrowers learn about federal loan consolidation before applying for consolidation.  Students who have questions regarding the loan consolidation process can contact the Loan Consolidation Information Call Center at (800) 557-7392. 

Finally, the Federal Student Aid website has information on scholarship opportunities that may help students fund their educational goals. 

What to do if you are the victim of a STUDENT LOAN scam

The Office of the Inspector General at the U.S. Department of Education investigates education programs and collects complaints regarding fraud or schemes related to the misuse of federal student aid.  If you are the victim of a student financial aid scam, please contact the Office of Inspector General’s hotline.

The California Department of Justice protects the rights of consumers and collects complaints on student loan scams in order to identify patterns of wrongful activity.  To submit a complaint to the California Department of Justice regarding a student loan scam, please use one of the following complaint forms:

English: https://oag.ca.gov/contact/consumer-complaint-against-business-or-company.  

En Español: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_sp.pdf

中文: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_chin.pdf

Tiếng Việt: http://oag.ca.gov/sites/all/files/agweb/pdfs/contact/business_corpform_viet.pdf

SAN FRANCISCO - Attorney General Kamala D. Harris today filed a lawsuit against investment bank Morgan Stanley for misrepresentations about complex investments such as residential mortgage-backed securities, in which large pools of home loans were packaged together and sold to investors.  These misrepresentations contributed to the global financial crisis and to major losses by investors including California's public pension funds, which are responsible for the retirement security of California peace officers, firefighters, teachers, and other public employees.

The complaint, filed in San Francisco Superior Court, alleges that Morgan Stanley violated the False Claims Act, the California Securities Law and other state laws by concealing or understating the risks of intricate investments involving large numbers of underlying loans or other assets. In addition to residential mortgage-backed securities, the complaint also focuses on "structured investment vehicle" investments, which involved not just packages of residential mortgage loans but also other types of debt of individuals and corporations. 

“Morgan Stanley’s conduct in this case evidenced a culture of greed and deception that helped create a devastating economic crisis and crippled California’s budget,” said Attorney General Harris. “This lawsuit is necessary in order to hold Morgan Stanley accountable for the destruction it caused to California, our people, and our pension funds.”

Specifically, the complaint alleges that, from 2004 to 2007, Morgan Stanley assembled and sold billions of dollars in mortgage-backed securities, many of which contained risky loans made by Morgan Stanley subsidiary Saxon, or by New Century, a mortgage lender which received crucial funding from Morgan Stanley.  Morgan Stanley purchased and bundled high-risk loans from subprime lenders like New Century into seemingly safe investments, even though it knew the lenders were “not [using] a lot of common sense” when approving the loans, the complaint alleges. Additionally, the complaint alleges that Morgan Stanley did not disclose the risks because it did not want its concerns about loan quality to become a “relationship killer” that would cause it to lose its lucrative business with companies making the risky loans. 

Among other things, Morgan Stanley's offering documents, which were required to fully and accurately inform investors about the risks, actually misrepresented the quality of the loans contained in the investment packages, by failing to disclose that many of them were underwater (the mortgage was more than the property was worth) and by failing to disclose the number of delinquent loans.  They also used exaggerated appraisals which overstated the value of the properties securing the loans, and knowingly presented incorrect data concerning owner occupancy and loan purpose, which tended to understate the riskiness of the loans.   

The complaint goes on to allege that Morgan Stanley sometimes even took loans that it had already decided not to include in its investment packages because they were too risky, and then included them in later investment packages, despite knowing the problems with the loans, and doing nothing to fix them. The complaint alleges that the lack of disclosure prompted a Morgan Stanley employee to observe to his co-workers that someone “could probably retire by shorting these upcoming . . . deals,” “someone needs to benefit from this mess.”

The complaint also alleges that Morgan Stanley played a central role in crafting the Cheyne structured investment vehicle, which sold supposedly safe short-term investments based on mortgage-backed securities and other complex investments.  Investors were particularly reliant on accurate disclosure of the risks because of the complicated nature of these investments.  The complaint alleges, however, that while Morgan Stanley knew of significant risks, it nevertheless worked to portray the investments as extremely safe.  In fact, Morgan Stanley managed to procure extremely high credit ratings, in some cases the same ratings as the very safest investments such as U.S. government bonds, for investments in Cheyne notes. Morgan Stanley bragged that it “shaped rating agency technology” to “get . . . the rating we wanted in the end,” prompting a SIV manager to observe, “it is an amazing set of feats to move the rating agencies so far.”  Unfortunately, the result of Morgan Stanley's success was huge losses to investors when the SIV failed.     

The California Public Employees Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) – two of the nation's largest institutional investors – lost hundred of millions of dollars on these Morgan Stanley investments.  CalPERS provides retirement security and health plans to more than 1.6 million California firefighters, peace officers, and other public employees.  CalSTRS provides retirement, disability, and survivor benefits for over 850,000 of California’s pre-kindergarten through community college educators and their families. 

The lawsuit arises from a multiyear investigation into the issuance and rating of mortgage-backed securities by Attorney General Harris's California Mortgage Fraud Strike Force.

The Attorney General’s Mortgage Fraud Strike Force was created in May 2011 to comprehensively investigate misconduct in the mortgage industry. As a result of that investigation, Attorney General Harris has to date recovered over $900 million for California’s public pension funds in settlements with three banks and a credit rating agency over misrepresentations in connection with structured finance investments sold to CalPERS and CalSTRS. 

The Attorney General's additional efforts to investigate the mortgage crisis include securing an estimated $18 billion for California in the National Mortgage Settlement and sponsoring the California Homeowner Bill of Rights, a package of laws instituting permanent mortgage-related reforms.

SAN FRANCISCO - Attorney General Kamala D. Harris today announced a preliminary approval of settlements resolving allegations that LG, Hitachi, Panasonic, Toshiba, and Samsung, companies all based in Japan or Korea, fixed prices on critical components of televisions and computer monitors from 1995 to 2007.  Those critical components, known as Cathode Ray Tubes or CRTs, were used to display images on computer monitors and televisions screens before they were replaced by flat screens. The court has approved the settlement pending valid objections submitted within 60 days.    

The companies’ price fixing scheme caused damage to California consumers and government entities that overpaid for their televisions and computers. The announced settlement has led to legally enforceable judgments against these foreign companies.

“LG, Hitachi, Panasonic, Toshiba, and Samsung deliberately targeted the U.S. market to raise prices for televisions and computers worldwide,” said Attorney General Harris. “These settlements bring justice and relief to California consumers and end the malicious practice of price-fixing by these companies.”

The settlements, which were filed in San Francisco Superior Court, require all five companies to pay a total of $4.95 million to settle claims of overcharges paid by California government entities, general damages suffered by the State’s economy, and civil penalties. The settlements require that the companies pay back the illegally obtained profits to those affected by their actions. In addition, the settlements include injunctive relief, which requires that each company engage in company-wide antitrust compliance training and reporting that involves products in addition to CRTs and extends to foreign companies and subsidiaries. Finally, the settlements include requirements, enforceable by the court via fines and imprisonment, to prevent future violations of antitrust law. 

In 2011, after the Office of Attorney General Harris conducted a confidential investigation into price-fixing involving CRTs, Attorney General Harris filed complaints against these companies for having entered into a price-fixing conspiracy of critical components of television and computer screens. That conspiracy involved top-level meetings of key executive decision-makers in Asia and Europe to set prices and outputs of CRTs.  It also involved worldwide meetings among lower-level executives to exchange confidential information.  Californian subsidiaries of these companies were involved in this conspiracy and took on the role of monitoring the prices of televisions and computers in California stores.

This case, filed by Attorney General Harris, requested the court award damages to California consumers. A parallel case filed by private counsel in federal court, known as the Indirect Purchaser Plaintiffs, also requested damages on behalf of Californians, and Attorney General Harris and the Indirect Purchaser Plaintiffs coordinated their discovery and settlement efforts.

Due to these coordinated efforts, California consumers or sole proprietorships that purchased at least one television or computer between 1995 and 2007 can make a claim, with a guaranteed minimum check of $25.

All eligible California consumers and sole proprietorships can file claims for reimbursement at https://www.crtclaims.com/. The new deadline for filing those claims is June 30, 2016.

In December 2015, Attorney General Harris announced a settlement resolving allegations that Pratibha Syntex Ltd., a company based in India, gained an unfair competitive advantage over American-based companies by using pirated software in the production of clothing imported and sold in California. The settlement, which was filed in Los Angeles Superior Court, required Pratibha Syntex to pay $100,000 in restitution, prohibited Pratibha Syntex from using unlicensed software or reproducing any part of a copyrighted software program without the permission of the legitimate copyright holder, and required the company to perform four complete audits of the software on their computers and fix any violations within 45 days. That case marked the first time a state has secured a legally enforceable judgment against an international company for these types of violations. 

Copies of the complaint, memorandum in support of preliminary approval, and the order granting preliminary approval, are all attached to the online version of this release at www.oag.ca.gov/news.  Further details can also be found at http://oag.ca.gov/consumers/crt_notice.