Thanks to Reggie James [Director, Consumers Union/Southwest Regional Office] for that warm introduction. Thanks also to the Consumer Federation of America for inviting me here today. It’s an honor to be with you, the country’s leading consumer stakeholders, experts, and advocates, as well as industry representatives, federal, state and local officials—all of you have engaged in the daily work of exposing consumer fraud and constructively finding solutions that the American consumer deserves.
Although this is my first time addressing this group, let me assure you that I’m no stranger to the work that you do or the issues that you champion. Over a decade ago, as a lawyer in the California Attorney General’s office, I worked on a variety of consumer protection issues, from identity theft to the victimization of elder consumers. And over the last three years, President Obama, Attorney General Eric Holder and I have made protecting consumers a centerpiece of the Justice Department’s overall anti-fraud efforts.
From the creation of the Financial Fraud Enforcement Task Force and the Consumer Protection Working Group chaired by the Consumer Financial Protection Bureau and the Department of Justice, to the record-breaking law enforcement results we’ve been able to achieve, which I’ll talk about more in a moment, to the convening last week of an extraordinary summit meeting—the first of its kind—between many of the advocates and organizations represented in this room and the Attorney General. All of these underscore an unprecedented level of commitment to confronting challenges that threaten our personal economic security, our health and safety; challenges that affect not just investors on Wall Street, but the folks on Main Street.
It’s a commitment that comes from the recognition that consumer fraud can cause crippling, sometimes devastating financial impacts; effects that can go beyond losing money -- and extend to a loss of trust in the marketplace; a loss of confidence in the critical products we need like the medicines we take or the food we eat; a loss of faith as we lose our bearings about whom to trust; and a loss of self-esteem when we fall victim to a scam.
And so our commitment to pursue consumer fraud vigorously and persistently—that commitment must be real. It must be one that puts prosecutorial experience and resources into enforcing our federal consumer protection statutes; one that uses all of the tools in our enforcement toolbox, administrative, civil and criminal; it must be a commitment to sharing information, data and investigative practices among various governmental agencies; one that emphasizes prevention as much as prosecution; and one that recognizes the importance of a vibrant collaboration with you, individuals and organizations who have been at the heart of this effort.
And over the last three years at the Justice Department, we’ve done exactly that. Three years ago when I became the AAG of the Civil Division, one of the gems I discovered was the Division’s Office of Consumer Litigation, a small office that already had a record of achievement in the criminal and civil enforcement of laws administered by a core group of consumer protection agencies — agencies like the Federal Trade Commission, the Food and Drug Administration and the Consumer Product Safety Commission. I didn’t want to change the good work that Office had been doing, but I did want to build on its solid foundation and expand it.
So we reorganized, refocused and redoubled our consumer protection efforts. We added more resources and new career staff to lead those efforts. And we rolled all of that work into a new branch of the Civil Division, the Consumer Protection Branch. And as part of this reorganization, we stepped up our civil and criminal enforcement efforts in a host of new and existing areas.
So today, three years later, the Consumer Protection Branch is open for business. We are bringing more independent cases, not just pursuing referrals. We are extending our reach to include a more diverse docket of fraud cases. And we are building broader and better partnerships with U.S. Attorneys, our consumer protection federal and state partners, and with many of you in this room.
And the results demonstrate that our efforts are making a difference. Since 2009, the Consumer Protection Branch has secured over $3.7B in criminal and civil fines, penalties, and restitution ordered to victims. And the Consumer Protection Branch over that same three-year period has boasted a 95% conviction rate, obtaining convictions against 118 individuals and sentences totaling nearly 300 years in prison.
And the cases we’ve pursued reflect the spectrum of consumer fraud—from criminal prosecutions of companies that market drugs the FDA has not approved as effective or safe to lottery rip-off scams; from cases against individuals and corporations for importing products that fail to meet our national safety standards, to the illegal sale of dangerous explosives.
And our expanded enforcement efforts include: counterfeit pharmaceuticals peddled on the Internet (because we’ve found instances of drugs sold online that contain all sorts of adulterants -- highway paint, floor wax, or even rat poison); we’re pursuing immigration services fraud, sometimes called notario fraud, where scam artists target immigrant populations and seek hefty, upfront fees for promised legal and other assistance navigating the immigration benefits system—assistance they are neither trained nor licensed to provide; and we’re bringing cases to address fraudulent and misleading debt collection, which has become one of the highest sources of consumer complaints: debt collectors who use abusive tactics to pressure and scare consumers, even when the debt is beyond the statute of limitations or, worse yet, not even correctly attributed to the consumer. And, by the way, we and our close partners at the FTC recently announced a $2.5 million settlement with Asset Acceptance – the second largest fine placed on a debt collector in history – as well as a landmark consent decree with Asset Acceptance that seeks to curtail these abusive practices.
In addition to these, we are aggressively pursuing all kinds of financial fraud, including mortgage fraud, telephone cramming, and business-opportunity schemes. And we’ve been particularly focused on scams that target vulnerable populations: the foreclosure rescue scams we see with increasing frequency – scams that are so appalling because they prey on people at a time when they need help the most. Or the sweepstakes scam that targets a senior in her 70s, living alone, that tells her she’s won $5 million – she’ll never have to worry about choosing between paying the rent or buying her prescription medicine again – all she has to do is send in a few thousand dollars to cover the taxes, insurance, and fees on her winnings – funds that make up all the money she has. Or Anna, a Florida woman who had to find a way to work from home to care for her child, whose chronic illness required round-the-clock attention; who invested her life savings in a business opportunity to own an ATM in a great location that always had high foot traffic; an opportunity that she pursued not to get rich quick but to meet the competing demands in her life and to make ends meet. Anna, who lost everything.
These true stories can break your heart. But they can also motivate us to redouble our resolve to pursue, prosecute and prevent the scams behind stories like these.
And sometimes, you come across a scam that leaves you shaking your head. For me, that case was one we pursued against a guy named Willoughby Farr.
Let me see a show of hands real quick: How many of you examine every page of your monthly phone bill? Should have figured in this crowd most of you would. But most people don’t. And Willoughby Farr knew that. And that knowledge made him rich. He figured out a way to place small charges —a few cents here, a dollar there—on people’s phone bills. Usually on the last page. And unsuspecting customers would pay it. It was a classic telephone cramming scheme. What’s remarkable is that he made over $30 million doing that. Even more remarkable: Willoughby Farr did all this from a jail cell. You see, he was serving a sentence for another crime—and he had free time and computer access. When we caught him and convicted him, he was sentenced to 20 years—without computer privileges.
So in the last three years, working with our partners at the FTC, the FDA, the Consumer Products Safety Commission, U.S. Attorneys throughout the country, the state AGs, and others,
we’ve done more cases, covered more ground to protect more consumers and achieved record-breaking results.
And as good as that is, it’s not enough. It’s not enough because enforcement alone is never enough; we can’t prosecute our way out of consumer fraud.
That’s why our partnership with you is so important.
You all are best-positioned not only to identify emerging trends affecting consumers, but to engage in the kind of outreach and education that can help prevent consumers from becoming victims in the first place.
That’s why last Friday, during National Consumer Protection Week, the Attorney General and I as well as other Co-Chairs of the Consumer Protection Working Group, convened what turned out to be an unprecedented and incredibly productive conversation with several members of the consumer advocacy community, including the Consumer Federation of America and many of you who are here today.
It’s a dialogue we must continue and we must build on going forward. And it’s a dialogue that, in my new role as the Number 3 official at the Justice Department, I’m committed to seeing take place at the Department’s highest leadership levels. Because we need your talent and your determination; your perspectives and your expertise.
You are the advocates who bring novel, and sometimes unwinnable cases – cases that no one else will risk but that you will pursue to raise awareness about a consumer threat. You are the educators who draft reports, issue alerts and post web pages that warn consumers about new scams and help level the playing field with accurate, consumer-friendly information. You are the voice that answers the call from a victim who's been defrauded and just doesn't know where to turn.
Friends, you have so much to teach us, and we have so much work yet to do. And no one in this room expects that work to be easy. But working together, sharing ideas, and drawing on one another’s unique insights and diverse perspectives, I know we will make great strides in meeting these challenges we face and achieving the goals we share.
Because consumers across this country are depending on us to do nothing less.
So thank you very much, and I look forward to working with you in the months and years ahead.