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Bedbugs, penny auctions, energy 'audits' among newest consumer headaches

Bedbugs, penny auctions, gold buying-companies and solicitations for home improvement work disguised as “free” energy audits are among the newest complaints that local and state consumer protection agencies dealt with during the past 12 months, according to a survey released Tuesday.

The fastest-growing complaints in the survey by advocacy groups the Consumer Federation of America and the North American Consumer Protection Investigators involved debt collection abuses, Do Not Call list violations, mortgage-related problems and home improvement scams.

The report’s top 10 complaints include familiar issues, such as auto sales and repair and credit/debt issues. But a set of real estate related complaints cracked the top 10 for the first timecovering issues with timeshare sales and resales, retirement and assisted living facilities and real estate fraud. The full top 10 list is below. 

Tenant bedbug problems and home repair firms using high energy bills to dupe consumers were among the fastest-growing complaint categories, giving consumer agencies around the country a new set of issues to deal with. 

The agencies' report was generated by a survey of 38 state, county and city consumer protection agencies from 22 states from March 2011 through May 2012.

“State and local agencies are essential components of the consumer protection system in the United States,” said Susan Grant, director of consumer protection at CFA. “Their services save consumers and businesses money, relieve the burden on courts, foster confidence in government, keep the public safe, and help ensure fairness in the marketplace.” 

Click here to read the full report (.pdf)

The report also includes numerous cautionary tales.

In Georgia, the Governor’s Office of Consumer Protection told surveyors that more than 100 consumers complained that a penny auction company named Wavee charged their credit cards $179 for "bid credits" without their permission after they signed up. After an investigation, Wavee refunded more than $1 million to 16,000 consumers.  In another penny auction case, refunded $22,000 to Georgia consumers when it allegedly failed to deliver sporting events tickets and other merchandise.

In Virginia, the Fairfax County Department of Cable and Consumer Services said it fielded numerous consumer complaints that a debt collection agency was taking money from their bank accounts without their knowledge or consent.

"In one case, a consumer said that she had paid her dentist directly for the $40 she owed him, but in the meantime the collection agency that the dentist hired took the account information from her check and created a ‘remotely authorized’ check in her name to electronically debit $30 for late fees from her bank account," the report said. 

In Florida, the state's Department of Agriculture and Consumer Services said bogus "free energy audit" solicitation phone calls were among the fastest-growing Do Not Call violation complaints.  Callers often falsely claimed that because the audit was free, the call was not subject to the restrictions of the Do Not Call law. 

The Pinellas County (Fla.) Department of Justice and Consumer Services reported that consumers also received postcards or flyers promising free audits to help lower their utility bills.

"In one case, the consumer was told that his electric bill would be reduced by at least $130 a month and that he was eligible for a $360 rebate from the federal government if he agreed to have a special ‘energy efficient radiant barrier’ that was used by NASA installed in his home," the agency said. "He was pressured into opening a $5,800 line of credit for the work. The company started the job but never completed it."

The fastest-growing set of complaints to the California Department of Consumer Affairs involved bogus locksmiths and other firms that practice without proper licensing.  Locksmiths use the Internet to advertise low prices to consumers in crises, including being locked out of their homes. But after disassembling locks, they often sharply raise their quoted prices.  The department said it forced several such security companies to close, and made hundreds of others obtain proper licenses.

A new type of identity theft combining computer hacking and old-fashioned telephone tricks showed up among complaints reported to the New York State Department of State Division of Consumer Protection. A woman received an unsolicited call from a man who said he was a computer security professional and that her computer was infected with a virus.  He then tricked the woman into divulging her password and promised to fix her issue.

"The next day, however, she noticed an unauthorized charge on her credit card and realized that she had allowed an identity thief to gain access to the personal information stored on her computer," the agency reported.

Also in New York, the demise of Hollywood Video turned into a headache for many consumers. After the video rental store shut down and filed for bankruptcy, the New York consumer agency received many complaints from consumers who said that Universal Fidelity Corp. -- which is managing the bankruptcy -- was demanding payment for unreturned videos, even though they had returned the videos and owed nothing. The agency says it is resolving complaints through mediation.

Top 10 Complaints (with last year’s rank in parenthesis)

1. Auto (1): Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes.

2. Credit/Debt (2): Billing and fee disputes, mortgage modifications and mortgage-related fraud, credit repair, debt relief services, predatory lending, illegal or abusive debt collection tactics.

3. Home Improvement/Construction (3 -- Tie): Shoddy work, failure to start or complete the job.

4. Retail Sales (3 -- Tie): False advertising and other deceptive practices, defective merchandise, problems with rebates, coupons, gift cards and gift certificates, failure to deliver.

5. Utilities (4); Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas service.

6. Services (5): Misrepresentations, shoddy work, failure to have required licenses, failure to perform.

7. (Tie) Internet Sales (6): Misrepresentations or other deceptive practice, failure to deliver online purchases.

7. (Tie): Landlord/Tenant (8): Unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, deposit and rent disputes, illegal eviction tactics.

8. Fraud (9): Bogus sweepstakes and lotteries, work-at-home schemes, grant offers, fake check scams, the “grandparent scam” and other common frauds.

9. Real Estate (not in top 10 last year): Timeshare sales and resales, retirement communities and assisted living facilities, real estate fraud.

10. (Tie) Household Goods (7): Misrepresentations, failure to deliver, faulty repairs in connection with furniture or appliances; Home Solicitations:

10. (Tie) Misrepresentations (10): Failure to deliver in door-to-door, telemarketing or mail solicitations, do-not-call violations.

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