American Honda Motor Co., Inc. and Honda of America Mfg., Inc.
American Honda Motor Co., Inc. and Honda of America Mfg., Inc. (collectively “Honda”) entered into an $85.1 million multistate settlement with Georgia and 47 other states, territories and the District of Columbia over allegations that Honda concealed safety issues related to defects in the frontal airbag systems installed in certain Honda and Acura vehicles sold in the United States. The systems were designed and manufactured by Takata Corporation, a long-time Honda supplier, and were first installed in Honda vehicles in the 2001 model year.
The settlement concluded a multistate investigation into Honda’s alleged failure to inform regulators and consumers that the frontal airbags posed a significant risk of rupture, which could cause metal fragments to fly into the passenger compartments of many Honda and Acura vehicles. The ruptures resulted in at least 14 deaths and over 200 injuries in the United States alone.
The states alleged that Honda engineers suspected that the airbagg’ propellant, ammonium nitrate, could burn aggressively and cause the inflator to burst. Despite these concerns, Honda delayed warning consumers or automobile safety officials, even as it began partial recalls of affected vehicles in 2008 and 2009. Further, Honda continued to represent to consumers that its vehicles, including its airbags, were safe. Since 2008, Honda has recalled approximately 12.9 million Honda and Acura vehicles equipped with the suspect inflators.
The states alleged that Honda’s actions, or perhaps more accurately its failures to act, as well as its misrepresentations about the safety of its vehicles, were unfair and deceptive, and that Honda’s conduct violated state consumer protection laws, including Georgia’s Fair Business Practices Act.
Under the terms of the Consent Judgment, filed in the Superior Court of Fulton County, Honda agreed to strong injunctive relief that, among other things, required it:
- To take steps to ensure that future airbag designs include “fail-safe” features to protect passengers in the event the inflator ruptures.
- To adopt changes to its procurement process for new frontal airbags, to ensure that its suppliers have the appropriate industry certifications and satisfy key industry performance standards, as well as improve record-keeping and parts tracking.
- To implement recurrence prevention procedures designed to prevent a tragedy like this from ever happening again, such as requiring that Honda approve all new frontal airbag designs before the company will consider them for use in new Honda vehicles.
- To abide by prohibitions on misleading advertisements and point of sale representations regarding the safety of Honda’s vehicles, including the airbags.
- To make improvements in critical areas such as risk management, quality control, supplier oversight, training and certifications, and implementing mandatory whistleblower protections.
Honda also agreed to pay the participating attorneys general a total of over $85.1 million, of which Georgia’s share was $3,287,636.15.
The Momentum Group d/b/a Gwinnett Mitsubishi and Gwinnett Suzuki and Fawad Ahmad, individually
The Respondents entered into a Consent Judgment with this office to resolve numerous allegations of unlawful and deceptive advertising and sales practices. The Consent Judgment was the culmination of a lawsuit filed by our office in August 2017. One month after the suit was filed, The Momentum Group shut down permanently. The settlement resolved the State’s allegations that The Momentum Group and Mr. Ahmad, its sole owner:
- Represented that they would apply for vehicle titles in purchasers’ names within the 30-day period required by Georgia law and failed to do so;
- Failed to pay off liens on trade-in vehicles in a timely manner;
- Sold vehicles without a valid emissions certificate, as required in 13 Georgia counties;
- Accepted payment from consumers for third-party products, such as extended warranties and “gap coverage,” and failed to timely remit payment to the third parties, and;
- Failed to refund consumers who cancelled third-party products.
The settlement enjoins The Momentum Group from ever selling vehicles again. It also severely restricts Mr. Ahmad’s role in any Georgia dealership in which he has an ownership interest by preventing him from exercising control of the day-to-day operations that directly impact consumer transactions and from the conduct that was the subject of the lawsuit. The settlement also provides for a six and a half year monitoring period during which time a compliance monitor will submit regular reports to the Attorney General’s office evaluating Mr. Ahmad’s compliance with the agreement.
Additionally, the Defendants are required to pay $198,089.14 in consumer restitution and an initial penalty to the State of $59,029.59. An additional penalty payment of $250,000 will become due at the end of a six and a half year monitoring period unless the Defendants comply with all requirements of the settlement. In the event of any violation of the terms of the settlement during that time, any part of the $507,000 not yet paid will immediately become due to the State.
Attorney General Carr alleged that Carvana, an online used car dealership, consistently misrepresented the amount of money required by government entities for vehicle title and registration. For instance, the Georgia Department of Revenue (“DOR”) charges $18 for title fees and $20 for standard tags. Carvana’s sales documents, however, charged fees that ranged from $50 to $65, and sometimes more, and characterized these fees as those “paid to public officials.” Additionally, our investigation confirmed that Carvana failed to disclose all material terms of its “Worry Free Guarantee,” Carvana’s 100-day limited warranty provided with each vehicle, on its Used Car Buyer’s Guide. The Federal Trade Commission has disseminated a guide to dealers on properly completing the Buyer’s Guides, which requires disclosure of deductibles. Carvana’s deductible of $50 to $100 was not disclosed on the Buyer’s Guide.
Carvana entered into a settlement with our office, requiring it to accurately characterize all fees charged to consumers, and in particular, only characterize as government fees those fees that are actually remitted to the government. The company has also agreed to properly disclose all deductibles on the face of its Buyer’s Guide and to pay fees and penalties to the State of Georgia in the amount of $26,500.
Cherokee Ford, Inc. d/b/a Krause Family Ford Woodstock
Attorney General Carr alleged that this motor vehicle dealership ran an advertising campaign that deceptively marketed, among other things, that consumers could receive a check for the amount of their stimulus checks up to $6,000. In order to qualify for the advertised check, the consumer had to purchase a particular vehicle and trim level. The Consumer Protection Division’s investigation revealed that the check amount was contingent on the number of manufacturer rebates available for a particular vehicle, so that only the most expensive vehicles qualified for the $6,000, while all other vehicles received significantly fewer rebates and discounts. This fact was not disclosed. Out of all new vehicles sold during this event, less than 10% of the buyers received the $6,000 offer. The advertisement also prominently featured a “stimulus package” that included not only the check offer but the ability to combine attractive, low rate, financing offers. In reality, despite the express representation to the contrary, the dealership conceded that that the offers were mutually exclusive and consumers could not qualify for both the check and financing offers. Other problematic representations included representations that consumers would receive trade-in vehicle values over Kelly Blue Book prior to the dealership even evaluating the vehicle; representations that created a false sense of urgency telling consumers that packages were limited when that was not the case; and inaccurate suggestions that this was a loan “forgiveness” event. Finally, the dealership failed to make clear and conspicuous disclosures in the ad.
In resolution of these allegations, Krause Family Ford Woodstock agreed to bring its advertisements into compliance with the law and to pay a $4,000 civil penalty.
Don Jackson Automotive Group, LLC d/b/a Don Jackson Chrysler Dodge Jeep
Attorney General Carr alleged that over the span of many months, this motor vehicle dealership repeatedly failed to honor its advertised prices for certain purchasers by adding a $600 “dealer” fee to its advertised prices. The dealership was also allegedly charging an excessive fee for its electronic registration services. These services, which the Georgia Department of Revenue requires dealers to use, cost approximately $15 per transaction, but the dealer charged over $100.
To resolve these allegations, Don Jackson Chrysler Dodge Jeep entered into a settlement that required it to bring its advertising practices into compliance with Georgia’s Fair Business Practices Act and to pay a $20,000 civil penalty.
Nissan of South Atlanta, LLC d/b/a Nissan South
This auto dealership created and marketed a so-called “Rent to Own” program, participation in which would allegedly enable purchasers to improve their credit and purchase a vehicle. Nissan South targeted consumers with subprime credit, who, after being informed by the dealership that they were unable to qualify for vehicle financing, were directed to the dealer’s program as an “alternative to car financing for challenged credit.” As a requirement of the program, consumers participated in credit repair offered through a third party and executed monthly rental agreements on late model vehicles in the hopes of later purchasing a vehicle. Ultimately, after completion of the program, the consumers were told that they would receive a voucher of $1200-$1800 for use toward purchase of their vehicle.
Attorney General Carr alleged that few consumers, even if within the program for the requisite time period, were able to purchase vehicles. Despite this fact, Nissan South continued to advertise its “Rent to Own” program as a means to ultimately finance and own a vehicle. The program was discontinued and the dealership agreed to never run or offer a comparable program, represent that purchase or rental will rebuild consumer’s credit, or encourage consumers to participate in credit repair. The office further alleged that the dealership represented to lenders that certain vehicles had options or trim levels that the vehicles did not have in order to raise the overall loan value. This practice, which consumers would have been unlikely to ever have been aware of, ultimately increased the loan value from several hundred to several thousands of dollars effectively overcharging the consumer for the vehicle and possibly increasing the chance of consumer default. Finally, the dealer represented that its electronic filing fee was a government fee, when no part of the fee was paid to the government.
The dealership entered into settlement, in which it agreed to compliance terms, payment of $30,000 in consumer restitution and payment of a $70,000 civil penalty.
Nissan of Newnan, LLC
This automobile dealership entered in a settlement with Attorney General Carr to resolve allegations of unfair and deceptive business practices related to advertised trade-in policies and prize promotions. The company agreed to correct its trade-in policies and to ensure that all future prize promotions comply with statutory disclosure requirements. The company also paid a $7,500 penalty.
Accomplishments of the Division
Listed below are some of the 2020 civil achievements for the Office of the Attorney General, Consumer Protection Division (CPD).
Automotive – Sales and Advertising
Credit, Debt and Loan Issues
Santander Consumer USA Inc.
Attorney General Carr, along with a bipartisan coalition of 34 attorneys general, was part of a multistate settlement with Santander Consumer USA Inc. (“Santander”) that included approximately $550 million in relief for consumers, with more relief in additional deficiency waivers anticipated. The settlement resolved allegations that Santander, the largest subprime auto financing company in the country, violated state consumer protection laws by exposing subprime consumers to unnecessarily high levels of risk and knowingly placing these consumers into auto loans with a high probability of default.
The settlement stemmed from a multistate investigation into Santander’s subprime lending practices initiated in March 2015. The coalition alleged that Santander, through its use of sophisticated credit scoring models to forecast default risk, knew that certain segments of its population were predicted to have a high likelihood of default. Santander exposed these borrowers to unnecessarily high levels of risk through high loan-to-value ratios, significant backend fees, and high payment-to-income ratios. Santander also improperly underestimated risk by turning a blind eye to abusive practices by the dealers originating many of these loans and failing to meaningfully monitor dealer behavior to minimize the risk of receiving falsified information, including the amounts specified for consumers’ incomes and expenses. Finally, the coalition alleged that Santander engaged in deceptive servicing practices and actively misled consumers about their rights, and risks of partial payments and loan extensions.
Under the settlement, Santander must provide relief to certain consumers and, moving forward, is required to factor a consumer’s ability to pay the loan into its underwriting.
The settlement included significant consumer relief by way of loan forgiveness. In all, Santander agreed to waive the deficiency balances for certain defaulted consumers, with approximately $433 million in immediate forgiveness of loans still owned by Santander, and additional deficiency waivers of loans that Santander no longer owns but is required to attempt to buy back. Santander waived a number of Georgia consumer loans for a collective value of approximately $35 million. In the event that Santander is able to buy back certain loans, additional Georgia loans totaling approximately $27 million could be waived.
Also Santander must pay $65 million to the 34 participating states for restitution for certain subprime consumers who defaulted on loans between January 1, 2010 and December 31, 2019, of which Georgia consumers will be eligible to receive $6,254,427.66. For consumers with the lowest quality loans who defaulted as of December 31, 2019 and have not had their cars repossessed, Santander must also allow them to keep their car and waive any loan balance, up to a total value of $45 million in loan forgiveness. Santander will also pay up to $2 million for Rust Consulting, the settlement administrator that will administer the restitution claims, and pay an additional $5 million to the states.
Going forward, Santander cannot extend financing if a consumer has a negative residual income after taking into consideration a list of actual monthly debt obligations. Additionally, Santander must test all loans that default in the future to see if the consumer, at the time of origination, had a negative income. The test must include an amount for basic living expenses. If the loan is found to be unaffordable and the consumer defaulted within a certain amount of time, Santander is required to forgive that loan.
Santander is barred from requiring dealers to sell ancillary products, such as vehicle service contracts. Santander must implement steps to monitor dealers who engage in unlawful practices such as income inflation, expense inflation, power booking, and Santander must enact additional documentation requirements for those dealers. Further, whereas Santander previously allowed these problematic dealers to waive documentation requirements on income and expenses, Santander no longer can allow such exceptions. If Santander has to use a default mortgage or rent payment value, the amount input must reasonably reflect the payment value for the geographic location. Finally, Santander must maintain policies and procedures for deferments, forbearances, modifications and other collection matters that all employees must follow.
PEAKS Trust and affiliated Deutsche Bank entities
Attorney General Carr, along with 47 attorneys general and the Consumer Financial Protection Bureau, reached a settlement with PEAKS Trust, a private loan program run by the for-profit college ITT Tech and affiliated with Deutsche Bank entities.
PEAKS was formed after the 2008 financial crisis when private sources of lending available to for-profit colleges dried up. ITT developed a plan with PEAKS to offer students temporary credit to cover the gap in tuition between federal student aid and the full cost of the education. ITT filed bankruptcy in 2016 amid investigations by state attorneys general and following action by the U.S. Department of Education to restrict ITT’s access to federal student aid.
It was alleged that, ITT and PEAKS knew, or should have known, that the students would not be able to repay the temporary credit when it became due nine months later. Many students complained that they thought the temporary credit was like a federal loan and would not be due until six months after they graduated. When the temporary credit became due, ITT pressured and coerced students into accepting loans from PEAKS, which for many students carried high interest rates, far above rates for federal loans. Pressure tactics used by ITT included pulling students out of class and threatening to expel them if they did not accept the loan terms. Many of the ITT students were from low-income backgrounds and were left with the choice of enrolling in the PEAKS loans or dropping out and losing any benefit of the credits they had earned, because ITT’s credits would not transfer to most schools.
The default rate on the PEAKS loans was projected to exceed 80 percent, due to both the high cost of the loans as well as the lack of success ITT graduates had getting jobs that earned enough to make repayment feasible. The defaulted loans continue to affect students’ credit ratings and are usually not dischargeable in bankruptcy.
Under the settlement, PEAKS and the affiliated Deutsche Bank entities agreed to provide debt relief of approximately $330 million for 35,000 borrowers nationwide who have outstanding principal balances. Of that amount, nearly $10 million is for debt relief for former ITT Tech students in Georgia. The settlement further required PEAKS to supply credit-reporting agencies with information to update credit information for affected borrowers. In addition to forgoing collection of the outstanding loans, PEAKS must cease doing business.
Point Boosters of America, Inc., Point Boosters, LLC and CEO/Owner Derrick A. Harper, Sr., (“Point Boosters")
Attorney General Carr entered into a Consent Order and Injunction with Point Boosters to resolve allegations that Point Boosters had operated a credit repair services organization in violation of O.C.G.A. § 16-9-59 et seq. and had requested a fee in advance to remove derogatory information from a person’s credit history in violation of the consumer protection statutes.
Our investigation showed that Point Boosters had advertised its services as “Attorney Based Credit Repair.” Harper himself is not licensed to practice law in Georgia and Point Boosters is not a law firm. Point Boosters did “partner” with a Georgia licensed attorney in an attempt to circumvent Georgia’s credit repair prohibition and lend credibility to the “Attorney Based” claim. (The Georgia State Bar is reviewing the attorney’s activities in this scheme.) Harper also implemented efforts to expand Point Boosters by offering “franchise” opportunities to others in the State of Georgia and elsewhere. In social media posts and credit repair discussion boards, Harper made a series of claims that he is in frequent contact with the Georgia Department of Law and Attorney General Chris Carr, specifically. Harper also cited his “close relationship” with former Attorney General Sam Olens while touting his knowledge of Georgia law.
In the settlement, Point Boosters agreed:
- To refrain from advertising, offering, or selling credit repair services in the State of Georgia either through its current names or any aliases or affiliates;
- To refrain from creating the perception in future advertisements, either originating inside or outside the State of Georgia, that it can perform credit repair for Georgia consumers or provide advice or assistance in helping a Georgia consumer obtain credit repair;
- To provide purchasers of any Business Opportunity the disclosures mandated by O.C.G.A. 10-1-411(b);
- To refrain from offering credit repair services to Georgia consumers through a Business Opportunity;
- To refrain from any acts or practices that create the perception that Point Boosters is a law firm or that Harper is a licensed attorney; and
- To refrain from any acts or practices that create a perception that Defendants are able to influence policy, procedure, or case resolution by the Georgia Department of Law as well as past, current, or future Attorneys General of Georgia.
Point Boosters agreed to pay $150,000 in civil penalties with an additional penalty becoming due should any term of the settlement be violated.
Above 701, Inc.
The company, along with its sole owner and operator, Darius Williams, (referred to jointly as “Above 701”) entered into a $145,750 settlement with this office after allegations that Above 701 violated the Georgia Fair Business Practices Act by operating an illegal credit repair business. According to Georgia law, the practice of credit repair, which is the marketing or selling of services aimed at improving a buyer’s credit record, history or rating, with unpredictable results, is generally illegal in the state of Georgia. In addition, Attorney General Carr alleged that Above 701 further violated Georgia law by:
- Requesting and accepting payment from consumers for its credit repair services before those services were provided; and
- Making misleading claims that it could get bankruptcies and debts permanently deleted from consumers’ credit reports, without adequately disclosing that negative credit information cannot be erased from a consumer’s credit report if the information is accurate.
Above 701 entered into a Consent Judgment with our office requiring it to, among other things:
- Cease all current business operations in the State of Georgia;
- Cease from advertising, offering, selling or engaging in credit repair services in the State of Georgia or to Georgia residents;
- Provide consumer restitution in the amount of $110,000; and
Pay a $35,750 civil penalty to the State, a portion of which will be waived if Above 701 fully complies with the terms of the settlement.
Lanier Collection Agency and Service, Inc. ("LCA")
LCA is a Savannah-based collector of medical debt, which has been in operation since the late 1950’s. Under the Department of Health and Human Services’ regulations implementing HIPAA, “business associates” like LCA must possess, and maintain in written form, policies and procedures to implement standards, implementation specifications and other requirements to safeguard personal protected health information. LCA admitted that it did not currently have formal policies and procedures, much less written policies and procedures, which would satisfy HIPAA and HIPAA regulations. These actions violate Georgia’s Fair Business Practices Act.
LCA entered into a settlement with our office, in which it agreed to pay $5,000 in penalties. LCA must also finish its security overhaul and come into complete compliance with HIPAA and HHS regulations, and provide this office with proof of its policies and procedures demonstrating that compliance. An additional $20,000 penalty becomes due if it violates the provisions of the settlement.
Medical – Marketing, Advertising and Sales Practices
C.R. Bard, Inc. and Becton, Dickinson and Company
The State of Georgia, along with 47 other states and the District of Columbia, reached a settlement with C.R. Bard, Inc. and its parent company Becton, Dickinson and Company requiring payment of $60 million for the deceptive marketing of transvaginal surgical mesh devices.
Thousands of women implanted with surgical mesh have made claims that they suffered serious complications resulting from these devices, including erosion of mesh through organs, pain during intercourse, and voiding dysfunction. Although use of surgical mesh involves the risk of these serious complications and is not proven to be more effective than traditional tissue repair, millions of women were implanted with these devices. The attorneys general, including Attorney General Carr, allege that C.R. Bard misrepresented or failed to adequately disclose serious and life-altering risks of surgical mesh devices, such as chronic pain, scarring and shrinking of bodily tissue, recurring infections and other complications.
Although C.R. Bard stopped selling transvaginal mesh, the settlement provides injunctive relief, requiring both C.R. Bard and Becton, Dickinson and Company to adhere to certain injunctive terms if they reenter the transvaginal mesh market. Under the terms of the settlement, the companies are required to:
- Provide patients with understandable descriptions of complications in marketing materials.
- Include a list of certain complications in all marketing materials that address complications.
- Disclose complications related to the use of mesh in any training provided that includes risk information.
- Disclose sponsorship in clinical studies, clinical data, or preclinical data for publication.
- Refrain from citing to any clinical study, clinical data, or preclinical data regarding mesh, for which the company has not complied with the disclosure requirements.
- Require consultants to agree to disclose in any public presentation or submission for publication Bard’s sponsorship of the contracted for activity.
- Register all Bard-sponsored clinical studies regarding mesh with ClinicalTrials.gov.
- Train independent contractors, agents, and employees who sell, market, or promote mesh, regarding their obligations to report all patient complaints and adverse events to the company.
- Ensure that its practices regarding the reporting of patient complaints are consistent with FDA requirements.
Georgia's portion of the penalty is $1,428,123.00.
Johnson & Johnson Services, Inc.
The Georgia Attorney General’s Office, along with 40 states and the District of Columbia, entered into a multistate settlement with Johnson & Johnson and its subsidiary Ethicon, Inc. to address their deceptive marketing of transvaginal surgical mesh devices. The multistate investigation found the companies violated state consumer protection laws by misrepresenting the safety and effectiveness of the devices and failing to sufficiently disclose risks associated with their use.
The investigation found the companies misrepresented or failed to adequately disclose the products’ possible side effects, including the risk of chronic pain and inflammation, mesh erosion, incontinence developing after surgery and scarring. Evidence showed the companies were aware of the possibility for serious medical complications but did not provide sufficient warnings to consumers or surgeons who implanted the devices.
The settlement provides injunctive relief, requiring full disclosure of the device’s risks and accurate information on promotional material, in addition to the product’s “information for use” package inserts. In addition, Johnson & Johnson agreed to pay $116.86 million to the 41 participating states and District of Columbia. Georgia will receive $3,375,570.03.
Grow Smart Marketing, LLC, David Neil Gass and Chad Howald
Grow Smart Marketing, LLC (“GSM”) is a Georgia company that operates a marketing business specializing in providing marketing services for medical practices that offer regenerative medicine products. The company and its principals, David Neil Gass and Chas Howald, provided marketing services for Superior Healthcare, LLC (“SHC”) since 2014 and Elite Integrated Medical, LLC f/k/a Superior Healthcare of Woodstock, LLC (“Elite”) since 2016. GSM created and published marketing content for both companies on websites, social media platforms and through emails. Our office alleged that the content contained false and misleading representations about the regenerative medicine products offered by both businesses. GSM also created a testimonial of Gass and published it on Elite’s website but did not disclose the connection between Gass, GSM and Elite.
The settlement prohibits GSM, Gass, and Howald from making representations on behalf of their clients about regenerative medicine products that are not substantiated by “competent and reliable scientific evidence”, defined as: (1) randomized, double-blind, and placebo-controlled, and (2) conducted by researchers qualified by training and expertise to conduct such testing. The settlement also required GSM to pay a $40,000.00 civil penalty, a portion of which may be waived in September 2021 if there have been no defaults under the settlement.
Pending matter against Elite Integrated Medical, LLC, f/k/a Superior Healthcare of Woodstock, LLC d/b/a Superior Healthcare Group, Superior Healthcare Sandy Springs, and Superior Healthcare Morrow and Justin Paulk, individually (collectively “Elite”)
Attorney General Carr filed suit against Elite, which offers regenerative medicine products, asserting that Elite made over $6.4 million through the use of aggressive marketing techniques and high-pressure sales tactics to convince at least 842 consumers, most of whom were elderly and/or disabled, to purchase expensive, unproven medical treatments that are not covered by Medicare or health insurance. In addition, the complaint states that Elite represented that it has a staff of medical doctors who provide its products to patients, when in fact, medical doctors administer a very limited number of product injections. The vast majority of patients interact only with chiropractors and nurse practitioners, and most of the injections are administered by nurse practitioners. The Attorney General’s office also alleges that Elite acted deceptively by featuring on its website a customer testimonial from a purported customer who is actually an owner of Elite’s advertising agency, without disclosing the material connections between itself and this person or the fact that this “customer” received his treatments for free.
Our office is seeking injunctive relief, consumer restitution and civil penalties of up to $5,000 per violation of the Fair Business Practices Act (FBPA) and up to $10,000 per FBPA violation committed against elderly and/or disabled consumers.
Other Unfair and Deceptive Practices
Voyageurs International Ltd. and Gilford Mahaffy, individually (referred to collectively as “Voyageurs”)
Voyageurs International Ltd. is a Colorado-based company that plans and facilitates “Ambassadors of Music” travel tours to Europe for high school music students and their parents. The company and its owner, Gilford Mahaffy, had scheduled tours for the summer of 2020 and collected payments from thousands of participants throughout the country, including Georgians. The cost of the trip was considerable, well exceeding $6,000 per participant. When Voyageurs canceled the trip on March 17, 2020 due to the pandemic, it refused to give consumers a full refund, instead retaining a $1,900 “cancelation fee” per person. In doing so, it cited a contract provision that purported to allow the company’s president in his sole discretion to cancel the trip for any reason and to retain the “cancelation fee.” The company, however, failed to adequately disclose to consumers that important contract term. Voyageurs also claimed to consumers that the “cancelation fee” was necessary to offset travel expenses it had been unable to recoup. The Consumer Protection Division disagreed and stated that the company was ultimately able to recoup a substantial portion of the trip expenses from the hotels, airlines, vendors, venues and transportation companies.
Voyageurs entered into a Consent Judgment, which required it to pay $231,560 in consumer restitution to the Attorney General’s Office to be disbursed in its entirety to Georgia consumers whose trips were involuntarily canceled. The office also obtained from the company a substantial partial refund for additional students and parents who themselves voluntarily canceled their trips in March 2020 due to the pandemic.
Built Rite Mobile Concessions, LLC, Built Rite Cookers, LLC and Built Rite Cookers/Smokers, LLC and Donald Boston, (collectively “Built Rite”)
Built Rite markets and sells food trucks, trailers, barbecue cookers and smokers, and drawing designs for the aforementioned merchandise to customers throughout the U.S. and Canada. Attorney General Carr alleged that after customers paid the company an upfront deposit, the company failed to deliver the merchandise by the promised time period or within 30 days, and failed to provide refunds when customers tried to cancel their orders. In addition, the company allegedly:
- Solicited orders for the sale of merchandise when it had no reasonable basis to expect that it would be able to ship the ordered merchandise within the stated shipment time or within thirty days, and failed to ship the merchandise to the buyer within either time period;
- Failed to offer buyers the option to consent to a delay in shipping or to cancel the buyers’ orders and receive prompt refunds when the company was unable to ship merchandise within either the stated shipment time or within thirty days;
- Intentionally delayed work on merchandise that buyers had ordered, when those buyers had complained to the company or to third parties;
- Intimidated and threatened to sue customers who complained to Built Rite or to others about the company’s failure to deliver ordered merchandise or to provide refunds;
- Sent photographs to customers purporting to show the company’s progress on customers’ merchandise, when those photographs were actually of other merchandise;
- Altered customer invoices post-sale to add terms of sale that were not on the original invoices, including terms that were contrary to what customers were told prior to sale or not disclosed to customers prior to sale;
- Threatened to impose a “restocking fee” that was not part of the original terms of sale and/or was not disclosed to customers prior to sale in cases where customers complained or requested refunds;
- Operated unauthorized raffles; and
- Took payments for raffle tickets, but failed to provide the merchandise to the raffle winner.
In resolution of these allegations, Built Rite entered into a Consent Judgment requiring it to, among other things:
- Pay $338,545.72 in customer restitution;
- Comply with the Georgia Fair Business Practices Act and the Ga. Comp. R. & Regs;
- Cease advertising, soliciting or taking payments for, operating or conducting any raffles; and
- Pay a civil penalty, which could be waived if Built Rite complies in full with the provisions of the Consent Judgment and if our Office does not receive, between now and November 20, 2024, any additional verifiable, actionable complaints against Built Rite that indicate violations of the Consent Judgment.
1 Stop Electronics Center, Inc. d/b/a Appliances Connection
This online retailer of home appliances based out of Brooklyn, NY. Consumers complained that the company failed to ship or deliver items timely – sometimes the delay extends to almost a year – despite representations that shipment is 24-48 hours after purchase and that delivery will be one week thereafter. Consumers were not given the opportunity to consent to a delay in shipping, and when a refund was offered due to shipping delays, a restocking fee was charged. Consumers also reported that items sometimes arrived damaged or defective, which was often not observable until the packaging was removed and the item installed, by which time consumers could no longer return the items per the company’s return policies.
The company entered into a settlement, which required it to pay $60,000 in civil penalties, a portion of which can be waived if the company does not violate any provision of the settlement.
Bradees Kitchen.Bath Design, LLC and Richard F. Brady, Jr., individually (collectively “Bradees”)
Bradees offers home remodeling products and services to consumers. Attorney General Carr alleged that the company accepted payment up-front from consumers for goods and services and provided a date by which those goods or services would be delivered or completed, but then failed to deliver on those representations and failed to issue refunds.
The company entered into an Assurance of Voluntary Compliance, in which it agreed to provide clear and conspicuous disclosure of all material terms prior to sale. Bradees also agreed to pay restitution totaling $70,217 to nine consumers and pay a civil penalty of $50,000, a portion of which may be waived if the company does not violate the terms of the settlement.
Environmental Progress, Inc. d/b/a EPI Water and Kristine Kenealy, individually
Environmental Progress, Inc. (“EPI”) is a South Carolina business that sells water treatment products to consumers across the United States. The company solicits business through mailed postcards, telemarketing, and “bottle-dropping,” which involves leaving a small bottle at residences with instructions directing consumers to leave a water sample for testing.
Attorney General Carr alleged that EPI and its sole owner and CEO, Kristine Kenealy, violated the Georgia Fair Business Practices Act by making deceptive statements in its marketing and advertising, failing to disclose the source and purpose of its solicitations and misrepresenting its business as a package delivery service. One postcard sent out on behalf of the company prominently stated “package shipment” and directed the recipient to “please contact us immediately to arrange a delivery time.” The postcard did not reference any water testing or sales presentation for purification equipment, but only contained representations regarding a parcel delivery attempt. Other postcard samples referenced a free gift card, but did not disclose that consumers would ultimately need to sit through a water test and sales presentation to receive the gift card. When consumers called in response to these deceptive postcards, employees misrepresented the nature of its business, e.g. by telling consumers that the business worked with companies to “schedule gift deliveries,” that water tests were being performed “due to the recent concerns about the smell, taste, and even the color of the water,” and that “the EPA recommends everyone have their water tested yearly,” which was not true for consumers whose water comes from a municipality, which was the case for those consumers receiving the postcards. These scripts, like the postcards, did not reference a sales presentation.
When contacting consumers who responded to the “bottle dropping” by filling the water sample for collection, EPI employees were always directed by script to represent to all consumers that their test results came back “a little high on chlorine and total dissolved solids.” Employees then informed consumers that a technician was in the area to perform an in-home accuracy test, but they did not mention that the technician would primarily conduct an in-home sales presentation upon arrival. The scripts encouraged employees to disguise EPI’s true intentions up until an EPI “technician” disclosed their scheme during the in-home sales presentation.
The company and Ms. Kenealy entered into a settlement, requiring them to comply with the state consumer protection statutes, including clearly and conspicuously disclosing specific, material information in all future solicitations, and to pay a civil penalty of $50,000, some of which may be waived under certain conditions.
Forward Atlanta Appliance Service d/b/a Atlanta Appliance Shield, Alexander Izmaylov, individually and Irina Boyarinteseva, individually
Forward Atlanta Appliance Service, which is now defunct, advertised repair services for home appliances. Consumers reported that the business represented that its repairs included “new” parts but, instead, installed used or outdated parts; that the business did not properly complete repairs as represented; and that the business failed to provide additional service under its warranties when consumers notified the business that the previous repair attempt was unsuccessful. In addition to these claims, Attorney General Carr alleged that the business falsely represented that it was certified by certain manufacturers to repair certain products. Forward Atlanta appeared to use several different d/b/a names when transacting with consumers, some of which were dissolved corporate entities, causing confusion when consumers attempted to locate or contact the entity listed on the receipt when seeking recourse with the business.
The company and its principal officers, Alexander Izmaylov and Irina Boyarinteseva, entered into a settlement that prohibits misrepresentations in advertisements and other communications with consumers and requires clear and conspicuous disclosures of material terms prior to any transaction with a consumer. The settlement also required the Defendants to pay consumer restitution plus a $50,000 civil penalty, some of which could be waived if certain conditions were met.
GB Investments d/b/a GunBroker.com, LLC (“GunBroker”)
GunBroker, located in Kennesaw, GA, operates an online auction of firearms, where consumers are able to list their own firearms and other related items for sale. Consumers complained to this office and the Better Business Bureau stating that GunBroker did not properly disclose the terms and conditions associated with its Buyer’s Protection Program. The company advertised that “every purchase is automatically covered [by its Buyer Protection Program] at no charge.” However, consumers reported that after filing a claim under the program, the company denied claims based on exceptions that had not previously communicated to consumers. Other consumers indicated that even when GunBroker did approve claims, the claim amount was capped at $500.00, and the company charged a $100.00 deductible, which consumers claim they were not made aware of until after the sale. These exceptions, among others, were listed in the “Fine Print” section at the bottom of the company’s webpage entitled “Fraud Claim Process.” This page was not directly hyperlinked to or from GunBroker’s initial website representation that “every purchase is automatically covered.”
GunBroker entered into a settlement with our office, which prohibits any violation of the Georgia Fair Business Practices Act and/or the Dot Com Disclosure Guide. In addition, GunBroker was obligated to pay a $40,000 civil penalty, of which a portion could be waived under certain circumstances.
Guardian of Georgia, Inc., d/b/a Ackerman Security Systems
Consumers, including at least one elder adult, complained that upon completion of the original contract term with Ackerman Security Systems, the agreement was automatically renewed for one or more years and consumers were forced to pay large cancellation penalties in order to terminate service. These consumers claimed that they never received notice of the automatic renewal at contract inception or before the renewal. Since they received no notice of the automatic renewal, the consumers were also not advised of the method of contract cancellation as required by law. Many consumers were never even provided the original service contract. The Consumer Protection Division’s investigation also determined that Ackerman advertised “no contract” services, an option which it does not actually offer; and advertised various guarantees in a misleading manner.
Ackerman Security Systems entered into a settlement to resolve these allegations. The company must implement remedial measures, which include providing notice to all consumers prior to contract renewal, the location of the automatic renewal provision in the initial Alarm Services Agreement, and the method for contract cancellation. The notice regarding an upcoming renewal must be disseminated not less than thirty (30) days, nor more than sixty (60) days before the contract cancellation deadline. Ackerman Security Systems was required to pay $100,000 in civil penalties.
Affinity Integrated Solutions, Inc. and owners Michael O’Byrne and Eric Bouvet, individually (“collectively referred to as “Affinity Integrated”)
Affinity Integrated, a North Carolina based company, advertises and sells home security equipment and alarm monitoring service contracts. Consumers reported that this business, which sold its products and services through door-to-door sales, offered to buy out their current security contract and provide a $99.00 refund or rebate if the consumers would sign up for an Affinity Integrated Solutions security systems contract, and then failed to provide that financial incentive.
Attorney General Carr alleged, among other things, that this company:
- Represented that it was licensed to sell and install security monitoring equipment in Georgia, when it, in fact, did not employ a person with a State of Georgia low voltage license;
- Represented through impression that the company had physical locations in Georgia, when it did not;
- Offered financial incentive to new customers and customers switching monitoring service, and then failed to provide the incentive;
- Falsely represented that it was running a promotion for “free” equipment, when the monthly monitoring rate already included the cost of the equipment;
- Failed to inform customers that security monitoring contract pricing and acceptance of the security monitoring contract by ADT was conditioned on a credit score that was acceptable to ADT, and that the consumers’ credit reports were accessed for this purpose prior to offering security monitoring contracts;
- Failed to adequately inform consumers of their right to cancel the contract, and failed to provide consumers with requisite cancellation information and forms, as is required in door-to-door solicitations; and
- Failed to disclose in a clear and conspicuously manner the automatic renewal provisions of the contract.
The company and owners agreed to comply with Georgia consumer protection statutes, state and federal rules regarding Door-to-Door Sales, and the Federal Electronic Signatures in Global and Commerce Act in future business operations. They also paid a $5,000 penalty to the State.
Home Warranty of America, Inc.
Consumers complained that Home Warranty of America, Inc. (“HWA”) misrepresented the nature of its home warranty service contracts and unfairly denied claims based on fine print in contracts, which was not adequately disclosed. The Consumer Protection Division’s investigation revealed that HWA’s marketing materials and website represented that its service contracts provided a warranty with comprehensive repair or replacement coverage for numerous home appliances and systems components, when in fact its contracts contain material terms and conditions that limited HWA’s obligations under the contract. HWA’s marketing materials also allegedly misrepresented characteristics of the home warranty or home warranty contract provisions and failed to disclose material terms of the contract.
HWA resolved these allegations through settlement. HWA agreed to completely rebuild its website from the ground up, including creating a disclosure page to explain in detail the exclusions and caps that apply to the plans that it sells to Georgia consumers. It also agreed to pay $10,000 in penalties with an additional sum to become due if it violates the terms of the settlement.
Septic Blue, Inc.
The company advertised septic pumping at a price that did not include an additional mandatory fee, in violation of Georgia’s Fair Business Practices Act.
Septic Blue, Inc. entered into a settlement with Attorney General Carr, in which it agreed to pay $11,000 in penalties. Any price advertised by the company must clearly and conspicuously disclose the total price including any mandatory fees including destination fees.
The Charming Experience, LLC
This Georgia-based online retailer provides wigs and hair pieces. Consumers, including elder adults, alleged that the business failed to provide beauty supplies and personal care products upon payment, failed to provide refunds, and that it advertised items with the intent not to sell the items as advertised.
In settlement, the company and and its owner-organizer, Richard Anthony Flowers agreed to:
- To adopt and implement advertising and sales policies in compliance with the Georgia Fair Business Practices Act, the federal Merchandise Order Rule, and other related consumer protection statutes;
- To pay consumer restitution of $6,812.66; and
- To pay a $10,000 civil penalty, a portion of which will be waived if certain conditions are met.