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2005 Accomplishments - Enforcement

A few highlights of our achievements for consumers in 2005 in the civil arena are:

Price Gouging During a Declared State of Emergency

Sixty-five (65) cases involving allegations of price gouging during a state of emergency were resolved in 2005.  Three Executive Orders were issued in 2004 in anticipation of existing or approaching hurricanes.  The three resolved cases involved hotels or online reservation services which charged increased room rates during the state of emergency, in violation of Georgia law, to consumers fleeing the storms.  Sixty-two (62) cases involved gasoline prices following the August 31, 2005, Executive Order Governor Perdue issued to control spiraling motor fuel costs in the wake of Hurricane Katrina.  Each matter was resolved on a case-by-case basis, and the settlements included consumer restitution and/or civil penalties up to $10,000, depending upon the severity of the violation. 

Unfair and Deceptive Marketing Practices

• Azhar Said d/b/a Azhar's Oriental Rugs - This Persian rug dealer operated a going-out-of-business sale in Atlanta for a period in excess of 90 days, in violation of the Fair Business Practices Act.  Prior to entering into an Assurance of Voluntary Compliance which settled all issues, Azhar maintained that the business located at 3500 Peachtree Road in Atlanta had ceased operations.  The dealer agreed not only to cease the sale, but also to refrain from operating a retail Persian rug business in the future at the store location in question.  Additionally, the dealer agreed to abide by the terms of the statute in any future going-out-of-business sale.  The company paid $3,000 in administrative expenses.  (Filed January 11, 2005)

• Robert A. Haye, Sr. d/b/a Supreme Community Services - This magazine subscription company, which used young adults to sell magazine subscriptions door-to-door, settled its case with OCA in January 2005.  The agreement resolved claims of violations of the door-to-door sales rules, deceptive marketing tactics, and failure to either deliver the magazines ordered or refund consumers’ money.  Although the company declared bankruptcy, it paid $5,593 restitution to all consumers with verified complaints, as well as administrative and investigative costs to the State of Georgia.  (Filed February 15, 2005)

• EarthLink, Inc. – The Internet provider agreed to pay approximately $60,000 in consumer restitution and $150,000 to the State of Georgia to "ensure future monitoring of compliance."  Consumer complaints included allegations of DSL customers who had no access to the service, transfer of service without customer consent, unauthorized billing, and Earthlink’s failure to offer various advertised benefits to consumers after giving them free trial services.   (Filed March 10, 2005)

• Hawk Communications, LLC - In December of 2005, this local Internet provider and its affiliate entity JOI Internet, LLC, entered an agreement addressing issues that included advertising “unlimited” access (when users would in fact be disconnected after only 5 uninterrupted hours of online usage); failure to provide timely or accurate refunds upon users’ cancellation of their subscriptions; and ads that touted exaggerated dial-up speeds.  Hawk ceased doing business as an Internet service provider, and agreed to pay a $10,000 civil penalty, as well as administrative fees, investigative costs, and restitution for certain Georgia consumers.  (Filed December 27, 2005) 

Debt Adjustment and Credit Repair

• Debt Management Credit Counseling - The investigation into the practices of Debt Management Credit Counseling, a Florida not-for-profit corporation, revealed that the fees that were charged to Georgia citizens for debt adjustment services were in excess of Georgia's 7.5% fee cap.  Additionally, the company had failed to comply with Georgia's statutorily required registration process.  OCA entered into an Assurance of Voluntary Compliance (AVC) with the company that required it to bring all annual insurance and audit registrations into compliance, cap all fees for its services at not more than 7.5% of the monthly amounts paid by consumers for distribution to their respective creditors, pay restitution to consumers in the amount of $295,025 and pay $30,500 in administrative fees.  (Filed May 26, 2005)

• J.K. Harris & Company, LLC - J.K. Harris advertised tax related services to consumers in such a manner as to represent or imply that the services had characteristics or benefits (such as obtaining IRS settlements at pennies on the dollar) that they did not have.  In settlement of this matter, J.K. Harris agreed to refrain from using unsubstantiated written testimonials and statements out of context.  The company further agreed to correct all outstanding advertisements, implement new internal policies and procedures for development of future advertisements, and pay consumer restitution and administrative costs.  (Filed May 27, 2005)

• J.K. Harris Financial Recovery Systems, LLC and JK Harris Debt Negotation Services, LLC - This limited liability company located in South Carolina provided debt management and related services to Georgians.  It was alleged that J.K. Harris:

  1. provided debt adjustment services in Georgia prior to July 1, 2003, when such activity became legal;
  2. following that date, failed to file requisite documents with the state and utilized a fee schedule that was not in compliance with O.C.G.A. Section 18-5-2; and
  3. advertised offered credit repair services which the company neither provided, nor was authorized to provide.

  Under the terms of the settlement, J.K. Harris agreed to

  1. cease and desist offering debt adjustment services until it was in compliance with Georgia laws,
  2. halt all advertising expressly or impliedly offering credit repair services, and
  3. require servicing agents to make adequate disclosures to consumers about the specific fees to be charged for services provided.  

  The company agreed to pay restitution to affected consumers and administrative costs, fees and expenses to the state of Georgia.  (Filed May 27, 2005)   

• Consumer Credit Advocacy, Inc., Jean Sandra Taffel and Lawrence Joseph Roxy -  Consumer Credit Advocacy, Inc.  advertised and offered credit repair services to Georgia consumers.  Georgia statutes prohibit credit services when offered by a company that is not exempted by virtue of having a 501(c)(3) IRS designation.  The business paid a $2,000 civil penalty and agreed to waive any outstanding debt owed the company from consumers.  Consumer Credit Advocacy further agreed to cease and desist operating their credit repair services, and their web page, until such time as their activities are in compliance with Georgia law.  (Filed April 20, 2005)

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  Multi-State Settlements

• Blockbuster Inc. - Georgia and 47 other states announced a settlement with Blockbuster Inc. that addressed allegations that the company deceived customers in advertising its “No Late Fee” program.  The states alleged that Blockbuster failed to disclose clearly that customers would be charged the selling price of the video or game if the item were kept longer than 7 days after its return due date, or would be charged a minimum $1.25 “restocking” fee for items returned after the return due date.  The program, which began January 2005, was offered at all company-owned stores and at only those franchise stores that chose to participate, including Georgia’s 154 company-owned stores and 34 franchise stores.  In the settlement, in which Blockbuster denies any wrongdoing, the company agreed to modify the terms of its “No Late Fee” program, inform consumers of the restrictions or limitations in future programs, pay consumer restitution, and pay the 48 states $630,000 for investigative costs.  (Filed March 29, 2005)

• State Farm Mutual Automobile Insurance Company - The State of Georgia, along with 48 other states and the District of Columbia, entered into an agreement in January 2005 with State Farm Mutual Automobile Insurance Company.  The case arose after State Farm found it had not complied with the legal requirement to identify those vehicles on their titles (called “branding”) that were damaged by prior accidents or theft, then written off as a total loss and acquired by State Farm after June 1, 1997.  The agreement called for the company to change its business practices to prevent any further title branding problems and to offer compensation to affected consumers, as well as providing that the titles of the identified vehicles be branded in order to disclose damage to future purchasers.  31,500 consumers nationwide, including over 2,300 Georgians, were offered this $40 million settlement.  The consumers had the option to accept, by November 18, 2005, a restitution offer based upon the current average value of the vehicle, or to reject the settlement and attempt to negotiate independently with the settlement company or pursue other rights through independent legal representation.  567 Georgia consumers did participate in the settlement and received $1,668,516 in restitution.  An additional $1 million was shared by the states to pay for consumer education, local consumer aid funds, public protection, future consumer litigation, and attorney fees and costs.  (Filed February 15, 2005)

• DirecTV - Georgia and 21 other states entered into a settlement with DirecTV that addressed various marketing and advertising practices.  Consumers had alleged that DirecTV’s advertisements contained small, unreadable print which purported to modify DirecTV’s offers and that DirecTV did not disclose to them what their monetary commitments included until they were locked into a contract.   DirecTV agreed to change its practices and clearly inform consumers of the total scope of the consumer’s obligation upon acceptance of DirecTV service or equipment.     DirecTV further agreed to pay restitution to consumers from the participating states who complained because they were charged a fee for not activating DirecTV in a timely manner; who complained that they paid for but did not receive local channels; or who complained about being assessed a fee for terminating service before the “free programming offer” period expired.  DirecTV also agreed to pay the participating states $5 million in civil penalties.  (Filed December 12, 2005)

Criminal Matters

• The alleged perpetrator operated a "gift basket" business from her house in Paulding County, which gave her access to customers’ private identifying information.  The subject allegedly used the information to create multiple Internet and walk-up credit accounts in at least six victims’ names during a 120-day period, with reported dollar losses of $39,016.47.  OCA criminal investigators arrested the alleged perpetrator during the service of a search warrant at her Paulding County residence, where computers and additional evidence were seized.  The matter is pending prosecution by Paulding County authorities.

• John Andrew Dellacorte conducted at least 49 eBay auctions, selling Total Gym home fitness products he did not possess at approximately half the usual price of $1,600 per unit.  Dellacorte created 49 bogus online credit accounts through the legitimate Total Gym website, using the true personal identifying information of auction winners.  He then ordered products on credit in the victims’ names, making only the first of 14 payments with bogus stored-value “credit cards.”  OCA’s criminal investigation determined that Dellacorte had done the same thing to five companies, with an estimated dollar loss of over $250,000.   A Cobb County Superior Court judge gave Dellacorte a 20-year sentence, with the initial 6 years in prison, and ordered him to pay $79,000 restitution to Total Gym and to forfeit all seized computers to OCA for use in fraud investigations.

• Stacey Leigh Care offered products through online auctions and then failed to deliver the merchandise sold.  OCA Criminal Investigators arrested Care and seized computers and other evidence of the crimes from her Atlanta residence.  Care was sentenced to 5 years probation and ordered to pay $3,450 to four victims.

• OCA received complaints from 175 victims who had ordered wood floor products from an Internet company.  The victims reportedly received nothing or received substandard products or a partial order, resulting in an alleged dollar loss of $708,020.33.  OCA criminal investigators arrested 2 individuals on charges of racketeering and searched the business and a residence in Hall County, Georgia, for evidence.  This case is pending prosecution by the Georgia Attorney General.

• Fulton County authorities arrested an alleged drug dealer from Alabama during a traffic stop.  The subject provided a counterfeit Georgia driver’s license, bearing the true name and identifying information of another, as proof of his identity during his original arrest.  OCA Criminal Investigators learned of this use of the victim’s identity when the victim reported difficulty in obtaining assistance from the original arresting agency after the victim’s auto insurance was canceled and he learned he had an arrest record.  OCA Criminal Investigators arrested and charged the subject with identity fraud and giving a false name to a police officer.

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