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NOTE!

The Council on Virginia's Future, which created Virginia Performs, was sunset on July 1, 2017. This site is no longer updated and is maintained for archival purposes only. For questions, please contact Ashley Colvin at the Virginia Department of Planning and Budget, ashley.colvin@dpb.virginia.gov.

State Agency Planning and Performance Measures are not affected, and continue to be available on DPB's website at http://dpb.virginia.gov/sp/sp.cfm

Government and Citizens

Consumer Protection

Consumer Protection

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 2016 alone, the Consumer Sentinel received slightly more than 3.0 million consumer fraud, identity theft, and related complaints, with victims reporting losses of $744 million. Although identity theft and related complaints declined in most states, nearly every state in the country saw another marked increase in the rate of consumer fraud complaints.

Consumer Fraud

In 2016 Virginians reported a total of 58,991 fraud and other cases, an increase of 4,898 cases over 2015.

The top fraud categories, regardless of location, were:

• Debt collection
• Identity theft
• Telephone and mobile services
• Prizes, sweepstakes, and lotteries
• Banks and lenders

Virginia had the 13th highest rate of consumer fraud and other related problems in 2016: 701 per 100,000 population, but below the national average of 724. Among peer states, North Carolina (641) had a lower consumer fraud rate than Virginia, while Tennessee (767) and Maryland (807) were higher. Nationally, the lowest rate of fraud and other complaints in 2016 occurred in North Dakota, with 285 complaints per 100,000 population.

Identity Theft

Although its rate of identity theft complaints actually declined in 2016, Virginia's national ranking dropped to 30th, with 104.3 complaints per 100,000 population. The national average for identity theft was 114.9. Peer state Maryland topped that at 137.1, while both North Carolina (96.1) and Tennessee (86.0) were lower than Virginia. Hawaii again had the lowest rate of identity theft at 55.2.

In 2016, 8,772 Virginians reported some form of identity theft -- down from the 10,329 cases reported in 2015. 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

Physician Disciplinary Actions

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.