Like most Americans, Virginians face growing threats from fraudulent, deceptive, and illegal practices.
Why is This Important?
Consumers are potentially prey to all sorts of risks from the products they buy and the services they use. In response, governments around the world, particularly the developed world, have established a large body of safety standards (truth in advertising, bodily safety, truth in lending, etc.) and punishments (fines, civil actions, etc.) to ensure manufacturers and providers offer products that are safe for consumption and that are in fact what they say they are.
A classic example of consumer protection in action are the rules requiring safety measures in automotive vehicles. Thanks to the post-war explosion in car ownership and the development of the highway system, by 1960 automobile accidents had become the leading cause of death among all Americans under age 44 (with total fatalities nearly three times higher than current rates). Despite resistance from the auto industry, the National Traffic and Motor Vehicle Safety Act was passed in 1966, requiring a number of new safety highway and automobile standards, like front shoulder seat belts. The success of this legislation served as an example for other consumer protection legislation going forward. As a result, Americans now enjoy protections for most of the products they consume.
However, important new problems with consumer fraud and identity theft have surfaced -- mushroomed, in fact -- with the near-universal use of computers and the Internet. It is difficult to compare consumer protection statistics across states, due to the great variation in relevant state laws, definitions, standards of evidence, and record keeping. However, the Consumer Sentinel, a database set up by the Federal Trade Commission, does provide a limited view of consumer protection issues and trends, with a strong focus on fraud perpetrated via the Internet and telemarketing.
How is Virginia Doing?
In 2015 alone, the Consumer Sentinel received over 3.0 million consumer fraud, identity theft, and related complaints, with victims reporting losses of $765 million. Nearly every state in the country saw an increase in consumer fraud complaints in 2015; Virginians reported a total of 54,093 fraud and other cases.
The top fraud categories, regardless of location, were:
- Debt collection
- Identity theft
- Imposter scams
- Telephone and mobile services
- Prizes, sweepstakes, and lotteries
- Banks and lenders
Virginia had the 13th highest rate of consumer fraud and other related problems: 645 per 100,000 population, but below the national average of 713. Among peer states, North Carolina (550) had a lower consumer fraud rate than Virginia, while Tennessee (670) and Maryland (749) were higher. Nationally, the lowest rate of fraud and other complaints in 2015 occurred in North Dakota, with 279 complaints per 100,000 population.
Virginia had the nation’s 22nd highest identity theft rate in 2015 at 123.3 per 100,000 population. The national average for identity theft was 137.6. Peer state Maryland topped that 183.2, while both North Carolina (106.0) and Tennessee (107.9) were lower than Virginia. Hawaii had the lowest rate of identity theft at 62.6.
In 2015, 10,329 Virginians reported some form of identity theft -- nearly double the amount reported in 2014. The top types of identity theft include:
- Government documents or benefits fraud
- Credit card fraud
- Phone or utilities fraud
- Bank fraud
- Loan fraud
- Employment-related fraud
The Federation of State Medical Boards (FSMB) tracks disciplinary actions taken against doctors -- revocations, surrenders, and probations / restrictions for medical licenses. During 2011 (the most recent year data is available), state medical boards took a total of 6,034 disciplinary actions against doctors nationwide, an increase of 382 actions from 2010.
Data on the number of serious disciplinary actions taken by state medical boards against physicians shows that Virginia's rate in 2011 -- 3.11 per 1,000 doctors -- was 22nd highest in the nation. The national rate was 3.06 per 1,000 physicians. Among peer states, North Carolina was higher (3.56),while Tennessee (2.72) and Maryland (2.91) were lower. South Carolina had the lowest rate of disciplinary actions at 1.33.
Mediation and Enforcement Action
When there is a pattern of deception or other wrongdoing, the attorney general is authorized to take action to stop the illegal conduct, and, where appropriate, seek refunds for affected consumers. The Consumer Protection section of the Attorney General's (AG) Office serves as a central clearinghouse for the receipt, evaluation, investigation, and referral of consumer complaints. Complaints are either handled by the office or referred to the proper local, state, or federal agency with jurisdiction. The section also offers alternative dispute resolution services.
In 2015, the AG's Office handled 31,900 telephone calls through its consumer hotline, a drop from the 34,790 calls it received in 2014. 4,366 complaints were entered and 3,992 complaints (including those from previous years) were closed. In addition, 743 referrals were made to other agencies which had jurisdiction over the complaint type. The number of complaints has increased in recent years -- in line with the increased number of commercial transactions due to improved economic conditions and the transfer of consumer protection functions to the more prominent Office of Attorney General. (See Data Notes).
The AG's Office also undertook 14 major law enforcement actions in FY 2015 that resulted in financial recoveries totaling $9.5 million. The number and amount of recoveries can vary widely from year to year, depending on specific cases. Many of the largest awards are the result of multi-state protection settlements, such as a $66.5 million settlement in 2012 against the nation's five largest mortgage servicers (Bank of America, Wells Fargo, CitiGroup, J.P. Morgan Chase, and Ally Financial/GMIC). In that case, charges for mortgage loan servicing and foreclosure abuses -- brought by joint action of 49 states and the federal government -- were related to the recent subprime mortgage crisis and housing market meltdown.
What Influences Consumer Protection?
The number of consumer complaints nationwide has generally continued to rise since 2008: Fraud complaints rose from 620,832 in 2008 to 1,246,849 in 2015; identity theft complaints went from 314,587 to 490,220 over the same period. Education (particularly with older Americans), legislation, timely warnings and alerts, and effective administrative regulations and law enforcement are all needed if we are to have a meaningful impact on fraud and to better protect consumers of health care and other services.
One hopeful sign is that the rate of increase for fraud complaints has slowed in recent years and actually declined in 2015 from 2014's numbers (although identity theft cases rose to their highest level ever). Serious efforts at improving cyber security overall -- in both the private and public sectors -- can also help reduce certain kinds of common, computer-related fraud and identity theft crimes.
What is the State's Role?
The state fights consumer violations in several ways by:
- educating residents to recognize scams and establish personal security protections
- enacting appropriate legislation
- enforcing regulations, and
- investigating and prosecuting offenders.
Within Virginia, responsibilities for protecting consumers are largely organized as follows:
- The Attorney General's Office enforces state and federal consumer laws, handles general consumer complaints, and prosecutes offenders.
- The Virginia Department of Agriculture's Office of Charitable and Regulatory Programs regulates charitable gaming and certain other industries not covered elsewhere.
- The Department of Health Professions issues licenses and regulates health care practitioners.
- The Department of Professional and Occupational Regulation licenses more than 40 occupations and professions. They range from architects and contractors to cosmetologists and professional wrestlers.
- The Department of Labor and Industry and the Department of Mines, Minerals and Energy enforce worker safety laws and regulations.
State rankings are ordered so that #1 is understood to be the best.
Data Definitions and Sources
Federal Trade Commission, Consumer Sentinel, "Consumer
Sentinel Network Data Book” (2008-2015)
Note: In 2008, the Federal Trade Commission expanded the types of consumer complaints that it tracks to include complaints filed about debt collection, credit issues, and financial matters. In addition, state level reporting included a new category, “fraud and other complaints,” which consists of complaints about consumer fraud, financial products, and other complaints alleging misleading and deceptive practices, fake merchandise, and defective products. For these reasons, consumer fraud complaints reported in years previous to 2008 are not directly comparable to those reported as “consumer fraud and other” here.
Attorney General Counseling, Intake and Referral Unit and Consumer Recoveries Statistics
Special Request to Virginia Office of the Attorney General
Notes: In FY2012, complaint clearinghouse, dispute resolution and general consumer protection investigative functions were transferred to the Attorney General's Consumer Protection Section. They had been handled previously by the Office of Consumer Affairs within the Virginia Department of Agriculture and Consumer Services.
The amount in recoveries reported for any specific year may be adjusted upwards in the future because collection and post-judgment efforts are ongoing.
Federation of State Medical Boards. Summary of Board Actions. library.fsmb.org/fpdc_basummaryarchive.html
Public Citizen. Ranking of State Medical Boards’ Serious
Disciplinary Actions: (2008-2011, 2007-2009, 2006-2008,
2005-2007, 2004-2006, 2003-2005, 2002-2004)
Public Citizen computes the rate of serious disciplinary actions per 1,000 doctors using 3-year moving averages of state disciplinary rates to smooth out large fluctuations that can be caused by relatively small increases in the number of actions for small states. Information on the number of disciplinary actions is obtained from the Federation of State Medical Boards (FSMB), and data on total medical doctors is obtained from the American Medical Association.
See the Data Sources and Updates Calendar for a detailed list of the data resources used for indicator measures on Virginia Performs.