& OFFICE OF THE ATTORNEY GENERAL ANNUAL REPORT ON THE ACTIVITIES OF THE CONSUMER PROTECTION AND ANTITRUST DIVISION DECEMBER 1, 2014 PATRICK MORRISEY ATTORNEY GENERAL 2014 ANNUAL REPORT REPORT ON THE ACTIVITIES OF THE WEST VIRGINIA ATTORNEY GENERAL'S CONSUMER PROTECTION AND ANTITRUST DIVISION FOREWORD In accordance with West Virgina Coce § 464-/-102:4), it is my pleasure « submit ths “opart fo tne Gavernar 2d Legislature ot Wes: Virginia, This report ou'lnes lhe aclivties of the Consumer Protection end Anbtust Divsion from Novemaer 2 2013. through November 12, 2014, and high igus the type of consumer prctertor sssues thal are beg harilled by our office, Respectuly Suomitted, frmndge Hanh PAIRICK MORRISEY ATTORNEY GENERA wl vl u TABLE OF CONTENTS FOREWORD. “ABLE OF CONTENTS. OVE RVITW OF DIVISION KEY SSUES AND EMERGING PROBLEMS. SUMMARY OF AGTIVITY, INVFS"IGATIONS, AND ENFORCEMENT. A. CONSUMER GOMPLAINIS B, CONSUMER PROTECTION LITIGATION 1 CASF SLMARIES 2, ASSURANCES OF LISCON INUANCE AND SETTLEMENT AGREEMENTS. 6. ANTITRUST LITIGATION, D. PRENEED FUNERAL UNIT. UTS NF COUNSFI POLICY CONCLUSION 14 UL OVERVIEW OF CONSUMER PROTECTION AND ANTITRUST DIVISION As the vargest civison in Altomey General Patrisk Mortisey's Offize, the tc nsuiner Protect an and Antitrust A visian (Divisian’) is central a the “ifiae’s mission fees, The to protect the public from unfair. deceptive ans fraudulen: acts or pi Division's ‘nission § ase to foster fair and honest competition ang ensure that monopoling do not override the trax maraet In furtherance rod ane © these mssions, the Office has vigorously er advocated the States caneumer laws cfreugh an expanded base of attorneys, investigalors. and staff, We have aguressive y comballed scans agaist consumers and devotion ct resoarcas fo -ronitor and identity through: praastive puble awaron enening Feuccle"l serwnres, In addtien, we Fave continued che implementation uf the officiensy and usdated tachnology and a naw exee managam: I systor to orha svutk product the Draision ‘Overall, the Consumer Proticcion and Antiast Divisian continues to pe an rlegral comerslane of Atoney Gengial Morrisey s e"lerls to protect arid educate the noasume’s of nis State A. Legal Authority The Sivision is respons bie for enforcing te WW Virg nia Gorsumer Oredit ard Protectan Ac:, W. Va, Code § 4BA-1-191 ef sort; the West ¥ rg nla Aatirust Act. YY. Va. Soce § 47-18-41 ef seg.; and the Preneed Funeral Contracts Act W.Va, Code § 47-14" at s0q. B. Statting Overseen by a Deputy Aitorney General, the Division is comprised of over tty (30) employees who play @ significant role in the furtherance of the mission, ‘These employee postions include nine (3) attomeys, two (24 paralegals, four (4) mediators, thres (2) investigators. and riore than ten (10} support staf In aciton, the Division also utiizes eight (8) consumer compliance specialists to assist in the consumer awareness and outreach, These specialists arc located in various iocations inthe State and are responsible for a dosignated region of counties. The specialists also serve as a conduit of information from the counties to the Attomey General Ores relating to emerging prob.cms or scams thal are being experienced by consumers, C. Processing of Consumer Complalnts The backbone of the Division's efforts - and its successes is its consumer complain: procass. The complamt pruvess affords both consumers and businesses the opportunity to seek an informal resolurion of a dispute without formal Migation, The process Is intended to have the Division serve as a de facto meciator who aides in the resolution, The intent isto bring about a pos tive result for the consumer. and ensure basinoss awareness and compliance with the Consumer Protection laws. The mediation process is voluntary, but the intent is to reach a setlerrent satisfactory to both parties The complaint process is centralized around a wrillen complaint form. If a consumer has a dispute with 4 business, helshe car call the Division's tal-fras hotline sat 1-800-3€8.8808. If the consumer has questions or difflcully, an errplayee of the Div sion will assist the consumer over :Fe phone oF invite she pe’san to the Jivision ulfige Iu assist in person, When reycested by = pint forn ane Instrustiors are sent :0 the cansamer’s heme. The cerip'ainl form ¢ akse avaifable: an the Division's website at ynaw.avago.gav. Daring this reparing pesind, :3e Division also implementec tecknolegy thal allows consw'ners :@ fioul aed euberit a complaint arlire, This is the first ma the Division has allowed online stbmugsios. and Fas bear umpleitertee su meel the needs of consumers who desire electronic fling \ehen the complaint fons reluined, I is assignee ‘ca designated “mediator uathin the office. The nedialors ar employees ot che division tha: ara spesitina ly cratged with overseeing the complaint process ane guiding Hts resolution. Uson receiving a Complaint, the mediator ca-tacts the business. on bexalf of tho carsumter requesing a response le he sunnolain, The business then responds ellher aureeirg to he comslant ar disnuti the camplain:. Typioaly, tne “espanse neludes an oar to reso ve the matter fer 8 desayneled amour? of money as reimbursement, Depencing on the nature of apcration of the patties, the averaga med ation complain: and the process axle about 3¢ to 44 days. Ww. Key Issues and Problems Affecting Consumers During this reporting period. the Consumer Protection and Antitrust Division has seen a fase inthe prevalence of scars por consumers as well ay breaches 0 1roeally stored parscinal identifiable informatisn in the possession of besinesses, The office contivues tp acdress the scourge of substance akuse in the State, and rancle comola nts relating to centrac:ors and collection aganaias cempuiance wath the Gansumer Gredit and Protection Act Tre reporinig periad also inclusee several un.que events trat prompted Dwvision wide involvement in she handling andl “eseldvo” of euenotainis. In oarlicubar, he waler Crisis i the Kanawha Valley prompted complants ot price gouging, aume-aus calls the office. and establisnment of a designated grcup of empleyees with n the Divisier to handle Uese mrtte's. Further. the cancelation of a nssiona marl cur ie Gharlaston resulted in an avenehelming numbe’ ef compla nts tc our offes, Within 24-hours othe announced cancellation, the Division received mare than 250 fled comslants. More continues Io he led in we days ar aneeks that fol owe Ihese unique evonts, coupled with mara genera comalent matlers, rasiited in niult-facesed issues arid proslems the: needed ta be audressed during this “epert na porod Role ig a oriat surmary ul s rl problems ar issues oneaueree and bo ne addressed by ou” Divis on, ‘A. Scam Protection and Awareness subdivision During this reporting petod, one of the largest isses affecting corsumers > Winst Viginia ig the massive uplick m1 scams being perpetrated wa te eprons, mail email, anc even perso solicitation, Ihe ireraasee usa at technology and areetian at false websites and telepyone ruribers thal sniror “eal enlities Fave further enhenced the deception of consumers, Recogrigieg thet the ony ney tc cambat these scammers is by puble Beareness, and when possible, prosecution, the Divisicn nas undertaker an aggressive pulls awareness and investigation plan. Working with stale and fecera lew arfercament. che Divison 2as heen icvestigating seams and forwarling secassary nnforrration to kaw er forcement 0 aide iy *he prosec.aton of these scammers. In addit’on, the Div sio~ is proactive'y making the pub ic re of scams as they fre Uisucvered, hus assists > simiting he reach of 2 particu scary, nd aetiiana ly aids in the proscoution of that matter, In furtherance af this aggressive anprcach, in fay of 2014, che Wesl Virginia Aétarney General Garsumer Protection Diy sion start A Seam Prulestice- and Axvarerwees subvliy sion, I His sube vision wae s:2t00 s0 consumers who call 1 can rapcrt possib e searns vey have received This subidivis unt keeps lrick cf all calls (hal some nly the eff cobeeting the name of the consumer and tho araz of the state they aro caling from, tne type of gram telephane ermal and any stone numbers oF skldtesses that the consumer may have obtained. The Atimey Generals Ofice currently has ane tut time empoyee to iraes all of hase alls and speak wit consurners, The emplayee s also able to ef the sonsuner <anw whether ar ratit's a knoAWn, repairs saan, The Nps. of coamns tual have been reported ure varied. To date, seme of the more prevalent soars inclue those ‘alse purporing 1c be Publishes Clearing House, Mega Milions IRS. Credit Cerd Serviows, Mirage! or Wilains, and varous medical device compares The repeitng prices negihs ‘with a consumer cailag tn repor a seam. 1 is centered nto the ‘scam’ database anc the corsumer can also fil out a format eamzlaint torn. Ifa certain seam begins to tresd, tha office wil send out a press ra gase to the area where the consumers are receiving these calls or statewide, Our office necives Cover 400 calls # month solely retated to scams. Given the signiicant impact upon our state, cur office will continue to make the publ amare of these scams es they happen and cooperste with law enforcement brng these scarnmers to justice, 68, Data Breaches of Personal Identifiable Information ‘Over the past year, the Consumer Protection Division saw an unprecedented inerease in sophisticated computer hacking andor data breac’ incidents affecting farge corporations, financial institutions and health organizations, Some of the businesses ~whose systems were breached were eBay (antina rataller); Community Health Systems, Ine. (a Tennesseebased health corporation that ovis 207 hospitals ir 29 states, including 4 in West Viginia); Home Depot (which has six stores in West Virginia) aad JP. Morgan Chase Bank {vith banks throughout West Virginia). Even the federal government was not immune when hackers recently stole personel identification information of 800.000 US. Postal Service employees. Sophisticated international comouter hacking organizations have been identified by law enforcement ae being responsible for infirating the computer ayetems af these enfilies ard stealing the personal lenteation infarmation of rilions of customers anc patiants. In most cases, the businesses are unuware that their systems have been breached unt an outside source, usually @ security firn, notiies them of unusual acchity 11 thelr systems. What is clas’ for thase data breac*es is the eromeus cost te earsumers ard businesses le the breach, to netfy #s customers of the breach snd to take mnesures kr corre the breach and preverit i flor happening the in uluie Ie a react ews arti ‘Target is stl in litigator ever & massive dala broach that occurred 2 year 2¢9, It most cases, the cosls to the businesses have been in the millions, thus the phrase ‘eyser teverism! has boon coined by the data breach n¢ustry to describe this type of vo'rputer hacking: Virginia ek can attoctad by these data broachas by having thelr personal Iforrration stolen, lnding unauthonzee chases ar alternpts te charge on their erect accaurts and having .nautrarized charge accounts ancned in trait names The Altorney Gererai has dedicated an stlomey nthe Cons.mer Protectan Divisiow -0 be the soiw of contac: fer data hreaches affecing West Virgirians. The aitomey is a-nember of he NAAG Privacy Working Group. is auxiva n muliclsle effarts agains: hssinesses whisk have “alled 1 propery sacure pevsnnal_iepmtitcatina information ued is mwolved ir efforts to mace West Virgnis ok zens and businesses aware of steps they can take ta protect themse ves acainst data breaches and identty brett ©. Substance Abuse Task Force One of Ise centeal initiatives by Attemey Gereial Morisey continued 4 be scdressing the scourge of prescription drug abuse in the Stale, The souse of prescriptions orgs, soeeiticaly onlak’s, has nereasec dramatioaly in recent years bug abuse in Wost Virginio and thraugheut the vation has reached & menumental