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Holding Accountable Financial Institutions that Knowingly Participate in Consumer Fraud
May 7, 2014 Posted by

Courtesy of the Civil Division’s Consumer Protection Branch 

Frauds targeted at consumers threaten to cause significant harm to the American public.  The Justice Department has made it a priority to hold the perpetrators of consumer fraud accountable.  In the past few weeks, we have successfully prosecuted the operators of lottery scams, the promoters of fake business opportunities, and the criminals behind a telemarketing fraud targeting Spanish-speaking customers.  But fraudsters often can’t act alone.  They need access to the banking system to get money from their victims.  And when financial institutions choose to process transactions even though they know the transactions are fraudulent, or willfully ignore clear evidence of fraud, they are profiting from illegal activities as well as breaking federal law. 

That’s why we are proud to highlight an important result in one of the first civil cases we have brought against a financial institution for unlawfully facilitating a fraudulent scheme to take money from consumers’ bank accounts.  On April 25, 2014, the U.S. District Court for the Eastern District of North Carolina entered a consent order and approved a settlement resolving the department’s complaint against Four Oaks Bank.  According to the department’s complaint, Four Oaks unlawfully allowed third party merchants to work through the bank to defraud consumers.  Four Oaks’ clients included a Texas-based third-party payment processor – a company that acts as an intermediary between a bank and a merchant in a financial transaction, and often provides access to the national payment system to a wide variety of merchants.  At a merchant’s direction, a payment processor will originate a debit transaction against an individual consumer’s bank account, receive the consumer’s money into its own bank account, and transmit the money to its merchant client.  

Four Oaks, according to the complaint, was specifically informed that many of the transactions requested by the third-party payment processor and facilitated by the bank were reported as fraudulent.  Four Oaks received hundreds of notices from consumers’ banks that the people whose accounts were being charged had not authorized a debit transaction originated by the third-party payment processor.  The bank also knew that at least 13 of the merchants served by the third-party payment processor had over 30 percent of the attempted debit transactions returned or charged back, including one merchant with a return rate of over 70 percent.  (A 30 percent rate is more than 20 times the national average.)  And the bank had substantial evidence of efforts to conceal the true identities of the merchants that were serviced by the third-party payment processor.  Nevertheless, according to the department, Four Oaks permitted the third-party payment processor to originate $2.4 billion of debit transactions against consumers’ bank accounts in exchange for more than $850,000 in fees that were paid to the bank.

The consent order approved by the court requires Four Oaks Bank to pay $1 million to the U.S. Treasury as a civil monetary penalty and to forfeit $200,000 to the U.S. Postal Inspection Service’s Consumer Fraud Fund.  It also obligates Four Oaks to comply with a series of measures designed to prevent it from ever again permitting fraudulent merchants access to the national payment system.  Specifically, the order permanently prohibits Four Oaks from providing banking services to any third-party payment processor that serves merchants determined by banking regulators to be high-risk absent a strict regime of investigation and monitoring designed to prevent future consumer fraud.  The Four Oaks case was prosecuted by Assistant U.S. Attorney Joel Sweet of the Eastern District of Pennsylvania, and Trial Attorneys John W. Burke and James W. Harlow of the Civil Division’s Consumer Protection Branch, with assistance from Assistant U.S. Attorney G. Norman Acker, III of the Eastern District of North Carolina.  Investigative assistance was provided by the U.S. Postal Inspection Service. 

The result in this case demonstrates that banks and third-party payment processors cannot profit from violating federal law.  Of course, we recognize that most of the businesses that use the banking system are not fraudsters.  We’re committed to ensuring that our efforts to combat fraud do not discourage or inhibit the lawful conduct of these honest merchants.  Our goal in investigations like Four Oaks is simply to enforce the laws that make the financial marketplace work for consumers.

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The Department of Justice Recognizes National Consumer Protection Week
March 7, 2014 Posted by

Courtesy of Stuart F. Delery, Assistant Attorney General for the Civil Division

Those who violate consumer protection laws can cause devastating harm, often hitting our most vulnerable consumers the hardest. Victims of fraud, misrepresentation, and unsafe drug manufacturing and food production practices can lose significant amounts of hard-earned and much-needed money. But they also face a loss of trust in the marketplace, a loss of confidence in products we need like medicine or food, and a loss of security when we fall victim to a scam. That is why it is critical to expose these insidious practices and hold perpetrators accountable. Or as President Obama said in his proclamation of National Consumer Protection Week: “[O]ur Nation’s economy is only as strong as its people, and we recommit to fostering a sense of basic fairness in our marketplace.”

For that reason, I am particularly proud of the work the Justice Department’s Consumer Protection Branch, a part of the Civil Division, is doing to enforce federal consumer protection laws and protect our communities. We employ all of the tools at our disposal—administrative, civil, and criminal—to protect consumers from the misdeeds that cause harm. But we also know this is a team effort. So, we collaborate with other federal agencies and state partners—sharing information, data and investigative practices where we can–and we engage in vibrant collaboration with the consumer advocacy community.

Without effective enforcement, those who prey on consumers will feel free to continue. So, we are fighting fraud and misrepresentation wherever they may lurk, recognizing that violations of the federal consumer protection laws come in all shapes and sizes. We continue to bring consumer cases involving financial fraud, including mortgage fraud, lottery scams, abusive and deceptive debt collection practices, and business-opportunity schemes. We are also pursuing new forms of telemarketing fraud, and immigration services fraud. We enforce laws against products that are unsafe for children – such as toys made with toxic materials. And we continue to investigate the sale of counterfeit pharmaceuticals and violations of the rules for manufacturing and marketing of drugs, medical devices, and food.

The following are recent examples of the range of cases we bring to protect our most vulnerable consumers:

We prosecuted two Miami residents who owned and operated companies that targeted Spanish-speaking consumers with a fraudulent telemarketing scheme. The telemarketers lied to consumers about products they would receive and threatened them with false consequences for the failure to pay for shipments of products they did not order and did not want. Both defendants pled guilty and received significant prison sentences; one defendant was sentenced to nine years in prison, the other to ten years in prison.

The recent civil and criminal case against Ranbaxy USA Inc., a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories Limited, demonstrates our commitment to ensuring that pharmaceutical companies comply with current good manufacturing practices so that the drugs they produce have the identity and strength and meet the quality and purity characteristics that they purport to possess. In this ground breaking case—because of its focus on overseas manufacturing —Ranbaxy USA pled guilty to felony charges relating to the manufacture and distribution of certain drugs made at two of Ranbaxy’s manufacturing facilities in India. Ranbaxy agreed to pay a criminal fine and forfeiture totaling $150 million.

A recent injunction against Pennsylvania-based dairy firms and individuals illustrates our vigilance to make sure that the food on our tables is safe to eat. The Consumer Protection Branch obtained a permanent injunction designed to prevent the distribution of foods that contain excessive drug residue in a case concerning the sale of cows that contained antibiotic residues in their edible tissues. Excessive levels of certain drugs in the edible tissues of animals pose a significant public health risk. In this case, the defendants had received numerous warnings from both FDA and the United States Department of Agriculture that their conduct violated the law, and they failed to take steps to correct those violations.

Violations of the federal consumer protection laws may not always make the headlines, but they affects millions of Americans each year. As we mark National Consumer Protection Week at the Department of Justice, we reaffirm our commitment to using the authorities we have been given to protect consumers from all manner of harm that these legal violations can cause.

The Consumer Protection Branch leads the Justice Department’s efforts to protect the health, safety and economic security of the American consumer. The Branch, together with its partners in the Department’s U.S. Attorney’s Offices and in consumer protection agencies, fulfills this mission through civil and criminal enforcement of federal consumer protection statutes across the country. Since 2009, the consumer protection efforts of the Civil Division, working with U.S. Attorneys’ Offices around the country, have led to recoveries of more than $6.7 billion, to over 175 criminal convictions, and to total sentences of confinement exceeding 397 years. Visit for the latest Civil Division news, to learn more about the Consumer Protection Branch, or follow the Department of Justice (DOJ) on Twitter @TheJusticeDept.

Children’s Toys: Ensuring Safety
March 8, 2013 Posted by

The following post appears courtesy of the Consumer Protection Branch of the Civil Division and is part of the department’s National Consumer Protection Week series.

Dangerously high lead content.   Toxic phthalate levels.  Aspiration and ingestion hazards. 

These may sound like the perilous byproducts of a front-page environmental catastrophe – but they are actually threats associated with some children’s toys.

Today, as part of National Consumer Protection Week, we focus on raising awareness of the dangers posed by unsafe children’s products.  

The Department of Justice, along with the U.S. Consumer Product Safety Commission (CPSC), works to intercept unsafe toys and products before they do harm, and to hold accountable the individuals and companies that profit at the expense of the health and safety of our children.

Our campaign against these dangers has two parts: criminal enforcement actions and aggressive civil accountability initiatives. 

On the enforcement side, the Department of Justice and the CPSC have stepped up their efforts against importers who bring unsafe products into the country.  In the last several years, CPSC has intercepted millions of dangerous products that fail to meet federal safety standards, and the Department of Justice has brought action against the responsible parties.  These products pose significant threats – they may be flammable, contaminated with toxic chemicals, or pose choking hazards.

For example, in 2011, the DOJ’s Consumer Protection Branch brought a criminal action against several individuals who submitted false child-resistance testing data to the CPSC for cigarette and multi-purpose lighters: a fraud that allowed manufacturers and importers to sell, in the United States, lighters that preschool-age children could easily operate.  Child-resistance testing is designed to prevent the numerous fires and injuries caused each year by such young children playing with lighters.  

Likewise, in February of 2013, the Justice Department’s Criminal Division and the U.S. Attorney’s office for the Eastern District of New York charged five individuals and five corporations in Brooklyn, N.Y., for allegedly importing and trafficking hazardous and counterfeit toys from China for sale in the United States.  These toys, riddled with lead and choking hazards, were sold to unsuspecting consumers.  The case was jointly investigated by the Consumer Protection Branch, the Homeland Security Investigations Intellectual Property Rights Group, the NYPD, and CPSC.

On the civil side, along with the Federal Trade Commission (FTC), the Consumer Protection Branch works to enforce the Children’s Online Privacy Protection Act (COPPA), which prevents companies and individuals from exploiting minors through the internet.  For example, in January 2013, Path, Inc. (a social media company) agreed to pay an $800,000 civil penalty to resolve the complaint filed by the Consumer Protection Branch alleging that Path collected personal information from children under the age of 13 without parental consent.

In addition to our ongoing case work, the Consumer Protection Branch is committed to raising awareness of resources consumers can use to keep themselves safe. For example, the Consumer Product Safety Commission created an important tool consumers can use to educate themselves and better protect their children: is a publicly accessible, searchable database of consumer product incident reports that allows anyone to submit reports of harm related to consumer products.  Manufacturers receive a copy of reports and have the opportunity to comment on them, but the public can search these reports to see what other consumers have experienced.

Together, we are committed to attacking the problem of unsafe children’s products.  We want families to be able to trust the toys and products they purchase, whether at their local stores or through online retailers. We fight to ensure that consumers are secure in the knowledge that products are safe for the intended use – and will not bring harm to those they love.

For more information on these and other consumer safety issues, visit:,, or the official website for National Consumer Protection Week,

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Protecting Those Who Protect Us
March 7, 2013 Posted by

The following post from Principal Deputy Assistant Attorney General Stuart F. Delery of the Civil Division originally appeared at and is part of the department’s National Consumer Protection Week series.

When servicemembers board the plane to return to the United States from deployment overseas, their family and friends are not the only ones waiting for them. Scam artists are also busy setting up store fronts, phone lines, and websites specifically targeting servicemembers.

These consumer predators know that servicemembers have to deal with distinct pressures, such as spending extended periods of time abroad, moving to different cities multiple times, and being held to a higher standard for debt repayment under the Uniform Code of Military Justice. In addition, servicemembers are known for having a steady income and trying to do what is best for their families.

At the Department of Justice, we are working hard to protect consumers like you. The Civil Division’s Consumer Protection Branch has made fighting fraud aimed at servicemembers and veterans a top priority. We are working internally with the department’s Civil Rights Division to ensure that businesses respect the rights of servicemembers. And we are working externally with other agencies, such as the departments of Defense and Veterans Affairs, to identify potential fraud earlier.

We are also collaborating with the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, led by Holly Petreaus, to engage in a dialogue with military leadership about how we can prevent this fraud together. And we have joined forces with federal and state prosecutors — as well as the JAG Corps — to identify scammers and bring more cases against them. In fact, we are sending resources to the JAG/legal assistance officers at bases nationwide, so they can help you get relief from consumer fraud, while providing referrals that help us bring more enforcement actions to stop that fraud.

We are committed to using all of the tools at our disposal to hold these swindlers responsible. But the best way to fight them is to deprive them of customers.

Servicemembers of each military branch have told us about their experiences, and we are dedicated to getting their message out — not just as we celebrate National Consumer Protection Week, but every week. Here are a few tips on how to protect yourself and your family:

  1. Be wary of up-front fees.
    • The sales pitch: “I can help you access benefits, get a good rate on a loan, and make a great investment. All you need to do is pay me an up-front fee.”
    • The defense: The military offers legal assistance, interest-free emergency loans and financial planning tools. Ask your military installation offices for details.
  2. Always find out what the total price is.
    • The sales pitch: “I’ll sell you this car, refrigerator, or anything else you want. Just give me a little bit of money every installment.”
    • The defense: Salespeople can offer misleading information about how much something really costs once all the payments and fees are added up. If the total price is too high, take your business elsewhere.
  3. Don’t trust promises about the future.
    • The sales pitch: “Just buy the car with this higher interest rate, and I’ll call you later once I get the lower interest rate for you.”
    • The defense: Make sure that everyone agrees to the final terms of a deal before you hand over any money.
  4. Find out who you are dealing with.
    • The sales pitch: “I’m a veteran of the armed forces. Sign up with my program to make sure that your family has everything they need while deployed overseas.”
    • The defense: Ask your base community service office about the company or individual. You can also contact the Better Business Bureau.

If you have been the victim of a scam, we encourage you to come forward and complain. So often, financial fraud goes unreported because victims feel embarrassed or foolish. But only when you complain is it possible for you to get the help you need. And only when we know there is a problem can we and our law enforcement partners work to stop it. So, consult your military installation’s legal assistance office or your state attorney general — and log your complaint at or at

With your help, we can continue to ramp up our fight against those who prey on the financial well-being of you and your families, and leave you free to focus on your invaluable work protecting the nation.

Thank you for your service.

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8 Ways to Keep Food Safe at Home
March 5, 2013 Posted by

The following post appears as part of a series in honor of  National Consumer Protection Week.

The Department of Justice Civil Division’s Consumer Protection Branch is hard at work to enforce food safety laws every day. But there is a lot you can do to keep your family safe at home. Every year, 1 in 6 Americans get food poisoning and 3,000 die from foodborne illnesses. Most will recover without any lasting effects from their illness. For some, however, the effects can be devastating and even deadly.

Don’t let this happen to you. These 8 food safety tips will keep you and your loved ones safe when preparing and handling food.

  1.  Wash hands and surfaces often to prevent the spread of bacteria. Be sure to clean all fruits and veggies, too.
  2. To clean kitchen surfaces effectively, use just one teaspoon of liquid, unscented bleach to one quart of water.
  3. Store and prepare meat, poultry, seafood and eggs separately from other foods to prevent cross-contamination.
  4. Cook food at the right temperatures: bacteria that cause food poisoning multiply quickest between 40˚ and 140˚ F.
  5. Use a food thermometer, keep food hot after cooking (140˚F) and microwave food thoroughly (165˚F) to ensure food is safe to eat.
  6. Refrigerate promptly: illness-causing bacteria can grow in perishable foods within 2 hours unless you refrigerate them. 
  7. Never thaw foods on the counter; bacteria grow surprisingly rapidly at room temperatures.
  8. Bacteria that cause food poisoning don’t affect food’s look, smell, or taste. Check if it’s still good at

 For more information on food safety, including recalls and alerts visit


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Keeping Our Food Safe
March 5, 2013 Posted by

The following post appears courtesy of the Civil Division’s Consumer Protection Branch in honor of National Consumer Protection Week.

We are all aware of the importance of making healthy choices when it comes to foods, but some foods may be bad for your health in unexpected ways. 

In the last year, Americans have suffered through a significant number of illness outbreaks linked to such common foods as peanut butter, cantaloupe, ricotta cheese, and spinach.  The vast majority of food on our grocery shelves is safe – a historically significant accomplishment for which many people in the private and public sectors should be proud.  Yet, according to the Centers for Disease Control and Prevention, about 48 million people in America – one in six of us – get sick, 128,000 are hospitalized, and 3,000 die each year from foodborne diseases.  The dangers of foodborne illness must spur us all towards increased vigilance and, when appropriate, increased enforcement of our food safety laws.

With the Food and Drug Administration (FDA) and the Department of Agriculture, the Department of Justice is dedicated to ensuring the safety of foods eaten by Americans every day.   We are also joined in this effort by the vast majority of food producers and preparers – people from around the country who take seriously the crucial importance of preparing good, safe food. 

It is illegal for any person to introduce into interstate commerce an “adulterated” food.  Food is adulterated if it contains any poisonous or deleterious substance which may render the food injurious to health.  For example, if the food contains E. coli, it is adulterated, and the shipment of that food may constitute a crime.  Food is also adulterated if:

  • it has been prepared, packed, or held under insanitary conditions, and
  • may have become contaminated with filth, or
  • injurious to health. 

Over the last few years, the Federal government has taken a number of steps to better protect the public from dangerous foodborne illnesses.  In January 2011, President Obama signed the Food Safety Modernization Act.   The new law squarely puts the focus on preventing food safety problems in the first place and gives the FDA the power to suspend a facility’s ability to sell food in the United States and to detain food that may be adulterated.

The Department of Justice also pays close attention to food safety matters.  We will not hesitate to use the many tools at our disposal to protect Americans from unsafe foods.  The Department can initiate civil actions to prevent individuals from distributing adulterated foods.  In more serious violations of the law, the Department and its law enforcement partners can investigate potential criminal violations of the law and seek to charge individuals with criminal violations.

Over the last year, the Department of Justice has brought civil cases to prevent companies and individuals from introducing adulterated foods into our markets.  These cases have involved a wide variety of foods, such as tofu and soy products, roasted nuts, whey protein powder, and various fresh and smoked fish.  Of course, in general, these foods are perfectly safe.  But where the Government believes food has or may become adulterated due to processing conditions or other factors, the Government has sought, and Courts have granted, orders requiring defendants to clean up their facilities before they start distributing certain food again.

We can also seek criminal charges in appropriate circumstances, as it did, for example, when it charged a number of former executives and employees of the Peanut Corporation of America and a related company with a variety of crimes (including violations of the Food, Drug, and Cosmetic Act) related to multiple schemes to defraud the company’s customers and mislead those customers as to the presence of salmonella in the company’s peanut products. 

These cases demonstrate we will pursue cases where there the public is endangered, and further serve to encourage the food production industry to take utmost care in ensuring the safety of their products.  The Department of Justice will not hesitate to pursue any person whose criminal conduct risks the safety of Americans who have done nothing more than eat common, everyday foods.

The government needs partners in this effort.  There are over 171,000 registered food facilities in the United States alone, and a limited supply of inspectors.  Each food producer or processor has a responsibility to maintain its facility in a manner so American consumers know the food they buy is safe.  The majority of food producers take their responsibilities seriously and take the necessary precautions to produce safe food.  But each producer must also know that, if they fail in that responsibility, they will be held to account.

We also need you.  Prepare and handle foods safely.  Pay attention to any recall notices.  That way, we can all experience the joys of good food.

For more information, visit


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