A New York City company is accused of ripping of immigrants through the sale of fraudulent international calling cards.  The company will pay a $500,000 fine and has to stop running the scam.

Diamond Phone Card sold cards to hundreds of newsstands and grocery stores promising minutes that weren’t delivered.  They also failed to tell buyers about the hidden fees according to the FTC’s complaint. 

The phone cards were marketed for calls to countries in Latin America, Asia, Africa and the Carribean.  The phone cards were sold to stores in several states including New Jersey, Connecticut and Texas.  The cards had names like “Oops”, “DJ”, “N”, and “Karive”. 

According to the FTC, the $2 Oops card advertised 50 minutes to Guatemala but only delivered 20 minutes.  The $2 N card promised 400 minutes to Mexico City but only delivered 106 minutes. 

Victims could not be located because no records were kept of who purchased the cards.

The Colorado Attorney General has issued an order barring the David Faith Corporation from collecting debts in Colorado. According to the order, the company engaged in fraudulent and threatening debt collection practices that are barred under Colorado law and attempted to collect debts prior to obtaining a license from the state. The company’s owner also lied on the company’s application to become a licensed debt collection agency concerning his criminal history.  The order denies the David Faith Corporation’s application for a debt collection license and bars the company and its owners from starting any other debt collection firm in the state.

The Connecticut Attorney General has sued Health Net, claiming the insurance company failed to adequately protect the medical records of 446,000 customers whose private data was contained in a computer disk drive that was found to be missing last spring.

The lawsuit says that Health Net waited six months before notifying customers of the data breach.

The company is offering people whose personal information was compromised two years of credit-monitoring services at no charge. The package includes $1 million of identity theft insurance coverage and enrollment in fraud resolution services for two years, if needed.

According to the lawsuit, the company discovered in mid-May 2009 that the portable computer disk drive was missing from Health Net’s office, but did not send letters to customers or post a notice on its Web site until Nov. 30.

The missing disk contained health information, Social Security numbers, and bank account numbers for 446,000 past and present customers. The data was contained in 27 million scanned pages of more than 120 different types of documents, including insurance claim forms, membership forms, appeals and grievances, correspondence, and medical records.

Despite the sensitivity of the information, the data was not encrypted. An investigative report by Kroll, a computer forensic consulting firm hired by Health Net, said the data was viewable through commonly available software.

By failing to encrypt the data, Health Net possilby violated the Health Insurance Portability and Accountability Act and its own company policies. Failing to promptly notify customers and state authorities of the data breach was also a possible HIPAA violation.

Contributing to the problem was Health Net’s alleged failure to effectively supervise and train employees on policies and procedures on the appropriate maintenance, use, and disclosure of protected health information.

A Kentucky hospital is notifying 5,000 patients of a data breach that occurred when computer equipment containing patient information was stolen from its mammography suite. Hospital officials reported that the information on the hard drive was not encrypted, but was maintained in a locked, non-public area.

Officials at The Medical Center at Bowling Green said the stolen equipment held the data of patients who had bone density testing done between 1997 and 2009.

Hospital officials have determined that the information on the stolen device included each patient’s full name, date of birth, address, medical record number and physician name. Some patients’ records also included information such as social security numbers, weight, height, and menopause age.

The hospital became aware of the theft on April 1, conducted an investigation of the incident, and reported it to the Bowling Green Police Department.

The Medical Center is allegedly following the requirements of the American Recovery and Reinvestment Act of 2009 and the Health Information Technology for Economic and Clinical Health Act, which include: notification of the U.S. Secretary of the Department of Health and Human Services; notification of patients who may have had their personal protected health information accessed by the breach; public disclosure to the local media; and posting information about the breach on The Medical Center’s Web site.

New York Attorney General Andrew Cuomo filed a lawsuit against three lenders and their affiliated companies for targeting members of the military by selling them high-priced electronics, then luring them into illegal credit plans.

The suit names Frisco Marketing of New York LLC, doing business as SmartBuy and SmartBuy Computers and Electronics; Integrity Financial of North Carolina Inc.; Britlee, Inc., doing business as MilitaryZone; GJS Management Inc. and Rome Finance Company Inc. and Rome Finance Co. LLC.

The Attorney General’s investigation found that SmartBuy and its affiliates bought laptops, gaming systems, televisions and electronics from other retailers and then relabeled them for sale at grossly inflated prices. The company aggressively targeted members of the military – some of whom were about to deploy to Iraq and Afghanistan – and their families to get them to purchase the items.

The investigation found that salespeople were trained to specifically seek out people in uniform and people with military-style haircuts.

The AG’s investigation found that SmartBuy sold products that were marked up 225% to 325% above the original retail price and financed the sales illegally. The sales were made only to members of the military through monthly direct withdrawals from payroll, and backed up with agreements giving the company access to the soldiers’ bank accounts.

The soldiers were rarely told the final price of the product up front, nor was it explained that they were really opening a line of credit. If a soldier defaulted, SmartBuy and its affiliates illegally contacted the soldiers’ commanding officers. The tactic put service members in an untenable situation because Army regulations forbid soldiers from putting themselves in a financially precarious situation.

The Maryland State Collection Agency Licensing Board (CALB) released an advisory notice clarifying licensing requirements for debt purchasers that collect debts by filing lawsuits.

The notice acknowledges a June 2007 letter provided by CALB may have created confusion over licensing requirements for debt purchasers who collect only through litigation. The notice clarifies that a debt purchaser who collects a consumer debt by filing a lawsuit is a collection agency under Maryland law and required to be licensed as such.

The advisory notice states no action will be brought against a debt purchaser for not being licensed when filing suit on a defaulted consumer debt, provided the debt purchaser applies for a license on or before Aug. 31, 2010.

The advisory notice and applicable regulations do not require all debt purchasers to obtain a license. It still appears debt purchasers that do not actively engage in collection activity or engage in civil litigation are not required to obtain a collection agency license.

New York City announced new collection regulations designed to stop abusive collection tactics.

The regulations state that any collection agency attempting to collect from a New York City resident must provide proof the debt is owed at the consumer’s request. The collector must offer a copy of the original debt documentation, a copy of the final account statement of the originating debt, a document itemizing the remaining amount due – including any additional fees or charges claimed to be due – and the basis of the consumer’s obligation to pay them.

The New York City Department of Consumer Affairs (DCA) has received over 2,600 collection complaints in the past three years.  In that time, the agency restored $4.2 million in wrongful debt, charging back on average $1,559 per violating company.  DCA has forced some violating companies to pay fines or surrender their licenses. Between January 2008 and March 2010, at least 32 paid a median fine of $300. During that time, at least 11 had their licenses revoked.

Other provisions of the new regulations include disclosing the consumer’s rights regarding the statute of limitations and providing written confirmation of the debt payment schedule or settlement within 21 days of the agreement. Also, collection agencies must provide New Yorkers with a phone number that must be answered by a live operator and not an answering service.

During 2009, the DCA erased more than $1 million in debt that New Yorkers didn’t legally owe but were pressed to pay anyway. Wrongful debt collection topped the list of complaints to DCA for the second consecutive year. Last year, the city received more than 830 complaints against collectors.

A federal judge has put a stop to three companies’ allegedly deceptive telemarketing calls, including robocalls, that promised to reduce consumers’ credit card interest rates.

According to the FTC, over the past two years, the companies made calls to consumers claiming that they could negotiate with credit card issuers to substantially lower the interest rates on the consumers’ credit cards. They also allegedly delivered prerecorded “robocalls” that consisted of urgent-sounding messages from “Card Services” or “Financial Services,” stating that consumers needed to “press one” to speak to a representative about their credit card interest rates. Many consumers believed the calls were from their credit card companies.

Consumers who signed up for the services were charged from $499 to $1,590 up-front and promised their money back if the companies failed to deliver at least $2,500 in interest rate savings. Instead of arranging reduced interest rates, the companies sent consumers instructions to pay down their credit card debts early, thus saving money on interest. Consumers who complained and demanded refunds allegedly were denied or had a $199 “nonrefundable fee” deducted from their refund.

The FTC alleged that AMS, Rapid Reduction, PDMI, and their owners violated the FTC Act and the Do Not Call and other provisions of the Telemarketing Sales Rule by (1) deceptively promising consumers they could reduce their credit card interest rates; (2) misleading consumers about their refund policies; (3) illegally calling numbers on the National Do Not Call Registry; (4) failing to honor consumers’ requests not to be called again; and (5) making pre-recorded telemarketing calls to consumers without their express written consent. Nearly all such calls have been illegal since September 1, 2009.

U.S. District Judge Lonny Suko has issued an order appointing two receivers to take over the businesses and freezing the assets of Advanced Management Services NW LLC, doing business as AMS Financial, Rapid Reduction System LLC, and PDM International, Inc., doing business as Priority Direct Marketing International, Inc. (PDMI).

Bank of America had the highest reported rate of credit card delinquencies and charged-off the greatest percentage of its credit card loans in April, according to SEC filings by six major consumer credit card issuers.

Bank of America had the highest rate of total delinquencies at 6.73 percent of all credit card accounts. Bank of America also reported the highest net charge offs in April with 12.71 percent of card accounts charged off.

A federal court has eight companies from selling credit repair and mortgage relief services and ordered them to pay more than $7.5 million for deceiving consumers.

The Federal Trade Commission charged seven companies with making false promises that they would improve consumers’ credit scores by removing negative information such as late payments, chargeoffs, collection information, delinquencies, judgments, and accounts discharged in bankruptcy. The companies charged consumers up to $2,000, including illegally charging an advance payment of $300, and failed to provide written contracts and other materials required by law.

Another company was later added to the case for falsely claiming they would help consumers get mortgage loan modifications or stop foreclosure in virtually all instances.

The credit repair companies are: United Credit Adjusters Inc. (also known as: United Credit Adjustors and UCA; United Counseling Association Inc. (also known as: UCA); Bankruptcy Masters Corp.; National Bankruptcy Services Corp.; Federal Debt Solutions Ltd.; and United Money Tree Inc. The loan modification companies are The Loan Modification Shop Ltd., Casey Lynn Cohen (also known as Casey Lynn Collins), and Rishty.

The federal court entered default judgments against the companies after they failed to respond to the lawsuit. The court order bars the companies from trying to collect payment from their customers and from selling or otherwise disclosing their customers’ personal or financial information. The order imposes a $7,500,334 judgment against the credit repair companies and a $32,710 judgment against the loan modification defendants.

Other details of the order include prohibiting the credit repair companies from selling credit repair services, and banning the loan modification companies from selling mortgage loan modification and foreclosure relief services. The order further prohibits the companies from misleading consumers about financial goods and services, such as loan terms or rates, how much a consumer will save by enrolling in a debt relief service and credit terms other than those a lender actually offers. Finally, the order bars the companies from misleading consumers about any good or service – such as refund terms, government affiliation and total cost.