Credit Problems Top Consumer Complaints

In observance of National Consumer Protection Week, Attorney General Spitzer today issued his annual "top ten" list of consumer complaints to his office.

According to an analysis of nearly 55,000 written consumer complaints in 2004, credit and banking complaints - including credit cards, identity theft, debt collection and credit reporting - eclipsed auto-related complaints. Internet concerns continued to receive the third most complaints to the Attorney General’s office.

"Consumers are encouraged to contact my office for assistance in handling disputes with commercial entities and for tips on protecting themselves before making purchases," Spitzer said. "My staff is dedicated to aggressive enforcement against fraudulent and illegal business practices and has an impressive track record in mediating individual consumer complaints."

Consumers in the Watertown area complained most about automobile problems. Credit issues received the second-most complaints, followed by telecommunications.

The Attorney General’s office - through its Consumer Frauds and Protection Bureau, Internet Bureau and Telecommunications and Energy Bureau - investigates and prosecutes businesses and individuals engaging in fraudulent, misleading, deceptive and illegal trade practices. It also mediates thousands of complaints from individual consumers.

Last year, these three public advocacy bureaus, joined by the Attorney General’s 13 regional offices, were responsible for nearly 120 enforcement actions - including lawsuits and settlements - to protect consumers.

Based on these efforts alone, in 2004, Spitzer’s office obtained more than $18 million in restitution through settlements, court judgments and mediation of consumer-oriented cases. An additional $13 million was recovered by consumers through the New and Used Car Lemon Law Arbitration Programs administered by the Attorney General’s office. The office also collected nearly $4.8 million in civil penalties and costs. The foregoing figures do not include recoveries by the Attorney General’s office in cases brought by other public advocacy bureaus.

The following is a list of top statewide consumer complaints by industry in 2004:

Industry Complaint Numbers

1. Credit 6,724
2. Automobiles 6,255
3. Internet 6,013
4. Telecommunications 5,091
5. Mail Order 2,757
6. Home Repair/Construction 2,610
7. Services (non-auto) 2,512
8. Retail Sales 2,274
9. Landlord/Tenant 2,064
10. Travel 1,639

This list does not include cases and complaints handled by the Attorney General’s Health Care helpline, which each year handles nearly 7,800 calls. A separate report analyzing health care complaints and providing consumer tips is available at the Attorney General’s website at http://www.ag.ny.gov/bureau/healthcare-bureau.

The following is a list of top complaints to the Watertown Regional Office, which covers the counties of Jefferson, Lewis and St. Lawrence.

Industry Consumer Complaints

1. Automobile 192
2. Credit 152
3. Telecommunications 97
4. Home Repair/Construction 63
5. Landlord/Tenant 58
6. Retail Sales 43
7. Subscriptions 32
8. Direct Mail/Unsolicited Fax 36
9. Services 30
10. Utilities 30

In 2004, Spitzer’s Watertown Regional Office handled over 1,000 consumer complaints and obtained over $1 million in restitution for consumers through mediation efforts and enforcement actions. In addition, this regional office obtained over $102,000 in fines.

Some of the 2004 cases significant in the region include:

• In a settlement with a Jefferson County home furnishings store, the store agreed to stop its illegal financing and aggressive debt collection practices and to provide refunds to certain military customers, some of whom are currently on duty in Iraq. The Junction agreed to refund at least $23,000 in garnished wages and to forego collection of interest on debts associated with the improper financing arrangements, a savings to consumers of $200,000. Spitzer’s investigation revealed that the store’s special financing required soldiers to sign "confessions of judgment" admitting that they failed to stay current with their loan repayment plan even before they began making payments;
• A lawsuit filed in September against NY Catalog Sales, which has storefronts in Queensbury and Watertown, alleged that the company was engaging in illegal and usurious payday lending. Aware that these loans are illegal due to the excessive interest charges - as much as 400% APR - NY Catalog Sales tried to disguise its interest charges as payment toward "catalog sale" purchases. In January 2005, Spitzer’s case resulted in a state judge issuing an order voiding the illegal loans and directing restitution to consumers in the amount of the excessive interest payments;
• A settlement with the operators of five North Country auto dealerships penalizing them for repeated incidents of false and misleading advertising. FX Caprara agreed to pay $57,500 in penalties and costs and to comply with state and federal advertising laws and regulations. Spitzer’s investigation revealed that Caprara’s ads: falsely implied that sales events were forced liquidations providing special bargains to buyers; misled consumers with price comparisons using "wholesale" prices that did not reflect the dealer’s ultimate vehicle cost; and promoted a price that was materialy modified or contradicted in a small print footnote.

Spitzer noted that his office stands ready to assist consumers in resolving their problems. He encouraged individuals to contact his consumer helpline at (800) 771-7755. Consumers can access a wide range of consumer tips by visiting his website at www.ag.ny.gov.