where you have for workers over 55 with diseases, that's an impact you want if your premiums will come back a lot. on the other hand, if you're a small business, hairstylist under 35, you could potentially see some very big increases in many states. my guess is there will be some steps taken, either administratively or that could be the kind of thing that might even give a little bit of legislative support, along with that, too, i think the individual did something we're going to have to keep reconsidering. chris listed that as one of his pillars, a pillow that is the right now, pretty then read. the first year or two of the program, it's what, $95? >> yes. >> not been compared to the cost of insurance, especially for a

younger, healthier person. and my guess is that if there some challenges in the months ahead in terms of knowing just what health plans are going to be available where and with the premiums are going to turn out to be, this may be one of the first things that gets delayed. the administration is already just this past week said hey, those states don't expand medicaid, when i going to impose penalties on those people. i can see the same thing happened administratively, or legislatively. and it doesn't if you want to make these insurance reforms work overtime, you need some alternatives to try to keep people in the market, even if don't have a big penalty. there are ways to do that. medicare does and have an ongoing penalty. it does have basically upend if you don't sign up on your first eligible, you pay more later, reflecting your costs are likely to be higher at that point. there are other things like that

that could be done. so those are the kinds of things that are going to get adjusted and addressed over the coming months. we will probably see some states where things are going relatively smoothly, maybe it is a disruptive. other states where maybe it's bigger and going to take more time. i don't think i think -- [inaudible] the last thing the administration would want to something called a quote unquote delay. they want this thing started, but their start option, phased-in start option. >> i think it reflects the geographical variety of states where they start. and it's not just the political dynamics. it's the health dynamics. is the coverage dynamics. it's the reimbursement incentive, all these things are going to have a different impact

on which states go and how quickly. you know, it's really interesting about health care reform. we all say we need a fundamentally reform health care system but we can't disrupted. and that's really, and that is the principal health reform. and what does that mean? it means we can't create too much destruction because it went to must disruption with too much negative reaction to it and we won't be able to have the reforms that we need to be done. and any policymakers and any politicians efforts, they have to work toward finding out what that policy is. if your insurer, of course you want to make sure that the disruption isn't so great that people who are healthy choose to opt out of the program, and yet unsustainable costs and premiums. and you know, most people don't want to hear about the dynamics

risk selection but that's really what health care insurance is all about, and how we do that, how we mitigate that problem. and we really have a few variables. one is the amount of subsidies we insure to make it affordable, whether we have a requirement or not, and our success at making health care affordable overtime in terms of our ability to purchase health care in a sound and thoughtful way. i think we have to interviews all those tools very thoughtfully. you know, the degree to which there is movement away from the current law, probably more related to fear of destruction and it'll be almost anything else. and that maybe the in some cases and it may be bad in some cases. that's a really thoughtful conclusion, isn't it? [laughter] >> you covered the basics. >> completely covered. >> you know, much of the opening

comments that mark, you put out there, sort of frame a picture of where we could be in the system. with real emphasis on wellness, taking fee-for-service element and deemphasizing it, maybe even eliminating it from the system. i think most of us think that's exactly where we like to go. but which when here and there, i think there's a concern about what that looks like as it launches. and so maybe you can talk a little bit about some of the other things that might help us because you that such great experiences with medicare d. this is a much bigger scale obviously. any other thoughts you have about how we get from here to the vision of what it looks like i've years out? >> it's going to be a lot of -- i think the corollary of core principle, health care reform needs to get to fundamental

changes, to get to this new health care system you're describing, but it's got to do very carefully without being disruptive. the corollary to that is we're going to muddle through all this. is not going to be a simple boom that we're going to get to overnight. now be a whole lot of things that happen along the way that are step forward. there are steps back and will hopefully find out that the right path sooner or later. i think things that could help us get there, and by the way, i'm an optimist. we are going to get there. technological imperative, nothing that americans care about more than the health and the health of their loved ones. and we will find a way to get there. it just may be a mess and take a well. so things that could help in getting their if congress does actually get to a longer-term vision of where we could go, on the other hand if they don't have to get a whole lot of new savings in the short term for medicare, this may be a time where the pressure caused by the

long-term deficit outlook could spur some action but there's no question, as chris said, that it's not that we need to get lots of savings from medicare this year to balance the budget. but if we don't do something about health care entitlement over the next decade, we are never going to get to a financially sustainable federal government. medicare, medicaid, the growth in the subsidies together are going to add about 5% to gdp over the next 20 years, and that is the big part of defending side of our nation's long-term fiscal imbalance. if there is some pressure, do something about the long-term, this would be the time to do it, to put in place some steps now so we'll get more confident slow down in medicare spending we have seen in the short term. made us more confident about that, into in a way that moves forward as i was saying before, payments, benefit design, future of health care that really has

what we want, medicare, lower cost. not just more services. i think we're going to get there. >> i'm sorry, i think you can get to the new design mechanism that accelerate a movement away from fee-for-service. the one thing i would say about fee-for-service is that it is all the incentive problems we now. it drives volume. it doesn't value value. and would have been huge problem on that front but on the other hand, we are not certain that our alternative will absolutely certainly squeezed down the city states of this a bit of faith-based belief that because we all conclude that there is so much fat in the system, and it does seem to be fat in the system. and we can do so much better for patients. and this is the key. if we sell this as a fully cost

driven enterprise, then the public and seniors will say, wait a second, is that going to hurt me or is it going to help me? this has to be a part of patient and physician engagement where they see this vision as far better for them. and i honestly believe it is. i believe that the outcome, if you really do focus on the outcome, if we do focus much more on the prevention and wellness come if we do focus on individual responsibility, and would really to focus on a small population of people who incur the greatest cause, into a much of job of preventing and caring for that population, we can save significant dollars. but far more important, or at least as important, improved not just the outcome but shift the experience of going toward health care system. and to me, that is the ultimate opportunity, both political and policy. >> i have one more question and then we'll open it up to audience questions, but as we

all hear this discussion of the fiscal cliff, and i vesely we've got historically low interest rates, which is another added pressure, and we understand that we've got to get health care spending under wraps, but there's the potential for the fear that is out there. i do this for my customers regularly, whether or not the subsidies are going to survive the fiscal cliff negotiations. because they're obvious a clear critical underpinning of what we need to have to make this bill work. [inaudible] >> if you are, say i'm mr. and mrs. budget year that figure out ways to get horrible cities. there are really kind of for places to go. one is medicare, one is medicaid, one is aca subsidy, and i get back to that, and the fourth really is the subsidy

that we provide to the tax code, to the tax, employer code. those are the big, look at the big pots of money, that's where you go. and everyone who is involved in these big budget discussions, whether it's coming in the, if it's going to be bowles-simpson office can be an extension of the miniature ribbon, they look at those four and safe way to the come from? medicare as we talked about going pretty slow right now. so you have to, and with hit providers pretty hard implants pics i'm not saying that you can't get more savings. you should always get more savings or get more savings. but we are growing at below gdp per capita growth rate him as mark said. >> are going to be more sustainable. >> i will come there. and medicaid as i mentioned very difficult because you're asking all the states and the law.

so you can get a lot of the squeezing. although i think the big pipe which was to focus on -- [inaudible]. third is the aca subsidy. and i don't see this president signing any law legislation into law that will reduce subsidies. so for the next four years, no. and the last is, i would -- i agree with mark. lastly, is the tax exclusion, the employer sponsoring incentive for the tax code, which is a very regressive policy. mark, probably one of the things what mark was saying, -- [inaudible] i probably did say is that positive or negative. but i will tell you it's hard to ignore forever. it's a huge amount of dollars

that we subsidize. but you keep rejecting all for them, then you have nothing and they can't afford nothing. okay? so i'll go back to what mark was saying, and he's telling me we have today committed to which i agree we do. and i think we need competitive think you hear senator daschle and others, that you do need to restructure the system. why? because medicare drives the system more than any other purchaser in this country. and i think we can send the right signal. and yes, beneficiaries can make contributions and have more skin in the game. but, you know, that's going to be hard. so that's what i a little bit like, if we can send a message, yes let's start right now and here is our vision, and we don't need to please so much in years, you know, for the next five years but we need to really squeeze in a five plus years and into the 10 and 15 year window

budget window, that's where you ultimately have a chance to a real agreement that can both change the trajectory of health care spending in this country, and potentially get a political deal in washington. that fundamentally is what everyone is working toward and is very, very difficult environment spent a couple things real quick. one is i do think that there are some opportunities for savings in medicare. that includes dual eligible beneficiaries for coordinated care. and this is with about as chris said, medicare which ends up costing less, not about achieving savings. unfortunately, for medicaid more generally, this whole lot of rules, a lot of operations on this one off waivers rather than a systematic focus. >> and the savings accrue more -- >> and that can be reformed and give states a lot more incentive to save money. on the employer coverage if there is a provision in the law

that says after 2018, the excise tax. so there's some precedent for eliminating the tax subsidy come if there were real tax reform legislation that we always keep saying, broaden the base, lower the rate, that would be a way to get savings in health care that would not necessarily make middle-class households were softer in fact that could be done, theoretical on the table, not future, sometimes and i don't think there'll be savings in the aca subsidies to in part because i think the cost in the next few years for the subsidies will be lower than projected because it's a facing. but if you look at the law, after -- they are capped to the share of gdp, and there's a lot of republicans would like to take that approach and apply it to medicare and medicaid. >> this is by the, interestingly, i know you want us to shut up, is that communism ultimately these parties have a

similar vision and they don't know what. the republicans basically want exchanges by the medicare population, and the democrats don't understand that, you know. so that, but they don't understand, therefore there can oppose with what for for the medicare program. and really if we have a workable change of a period of time within an employer based system, and we have a much better transition on the exchanges in the under 65 population, they can get to where they want to see, and mark wants to see people going, which is more of a market oriented competitive approach. but i have to tell you, and this is policy and politics, you can't go from here to tomorrow

in a nanosecond. tell me, you can't implement the aca in a nanosecond without some significant destruction. it has to be successes -- successes along the way people can point you. as they do they become more control and integrate other approaches. so the vision thing and the success thing is imperative for the types of outcomes and think we all want to do, which is a sustainable, affordable responsive health care system in which we get a much better return on our investment. >> great, thank you. we will open the floor up to any questions we have from now in the audience. >> there are microphones in the aisles for anybody would like to ask a question. >> right here, please. >> goldberg, chicago. a lot of the problems or fat as you call it exist, really exist because of a problem process. when we talk about drugs, for

instance, one of the fixes that we put in has been commute from the insurance companies and the pharmacies taking care of this problem, with generics, et cetera. but as a practicing physician, the process begins in my office. and i've been on electronic medical records for 10 years. i don't have the capability right now to have an intelligent conversation with the patient where i can sit down, and my record can tell me this drug is going to cost you this much at this pharmacy. that's one fault of the process but could easily be corrected and generally have savings. >> comments? >> i fully agree with it. and i think good news is, as chris says, success stories along the way, failures and barriers and frustrations in a

medical practice. there are some companies, probably yours, that are trying to make it much easier for people to find out the alternative way they can meet their medical needs at a lower cost. and that includes giving information clear in front of them, alternatives or lower cost options. unfortunately, it isn't nearly as widespread as it could be. they are some later panels that will talk about that. >> there's a lot of development in that space and ilogistics on the part of our company, not just with drugs but with lots of other services, we do provide a service called know before you go. our retail centers which penny mentioned in her into our places where you can either do that or you can go online and do that so you can see what the range of prices are. you can also see from a patient

standpoint what your personal obligations would be. spent i do think electronic records vendors have the way to go. >> next question. >> we talk about health reform as if some brand-new concept but we seem to be revisiting this on a regular basis. a decade ago the medicare modernization act gave us the sustained growth rate but dr. mcclellan mentioned. that was an act that was bipartisan compared to what we have now. but each time the politics hit the economics, things change. are things really going to be different with the affordable care act a decade from now? >> i think we talked about the aca to let me visit about the scr for me because i think that is a point with interchange. by the, lynn chris for that. -- by the way, blame chris for

the. it was bill thomas. spent said no blaming this morning. >> okay, no blaming. but anyway, it has turned into this like year after year, you know, and exercise that i think the last, it turns out to be the last minute approach to medicare cost control. so one of things happening like the past year, congress will pass at the end or maybe wait until early next year and to offset the cost in the short term they will squeeze somebody else's pain a little bit, the wilbur is in the least and lobbying position. this year i think the winners were the skilled nursing facilities, the hospitals, home health. hospital just to do pretty well. >> hospitals did a lot of his time spent you can envision that happening year after year. it's saved in effect 30 to

40 billion inches spread out from positions to other providers. it's a really nasty way for the needed reforms in health care delivery. but i think what's changing, we will see what happens next year, is there is a lot more position leadership going on, pushing not just for getting rid of the sgr which everybody agrees is not by itself a sustainable way or an effective way. it's all these short-term steps and long-term plan. but reform physician payment. the law wasn't as this you. there was a nod to efforts by groups, set of clinical registry to track other patient an overall anti-bill to show certain kind of practices that duty to lower overall costs. talked about before, physician payments like 50% of medicare, physician decisions control or

influence 80% of oral medicare spending on drugs, on hospitalizations, on everything else. we need a payment system that reflects that anything we're getting, potentially getting closer to it. the other point, the point i want to make which is the one chris said, effective health reform isn't going to be about just saving money, especially saving money in the short term. if we get to the point they will be more and more of what happens in the sgr ever you. we can't find a better solution, squeeze the provider payments down for the that's not a good way to get the better health care system. the alternative has been more position and provide a way because that's who people trust. they say these are ways to really save money while improving care. that's got a lot more chance than other efforts. i think this can be a lot more position leadership to make this happen. >> on the sgr i will just say i agree with mark that the environment is changing, to some extent did -- to some extent.

it's not just fix it permanently freezing the rates. we are open to real reform. that might even incentivize us away from fee-for-service as long as we can get this off the table. that's actually somewhat encouraging. and because of this last year where in this case the hospitals got hit really hard, most providers are fed up of being to go to players to pay for this fix. and so i think what you're going to see, not just engagement by the physician community but more now by the rest of the health care sector to really seriously talk about these alternatives. and i see that as being actually -- [inaudible] because if you want to know who is the most serious about this every year, it's the members of congress. that's bipartisan.

>> next question, please. >> hi. i'm judy gordon, and i'm the practice administrator or our mom and pop practice. and for those of you who are not somewhere with the field of rheumatology, we treat patients who have rheumatoid arthritis, lupus. we're frequently a detective. when nobody else can figure out what's going on, they say calling the rheumatologist. now, we in our field, we also have some very expensive drugs that are out there. but i also remember when we were first in business 30 some years ago, we used to go to the nursing home to treat our patients because they were so crippled. now we have these drugs that make things positive to make patients love and active life. we did not do hospital consult

as rupert we are an outpatient practice, as are many other rheumatology practices. and there are other specialties such as endocrinology and around you. they have the same issues as we do with out patient base. and over the past three years of listening to people and talking to experts, but talk about all the different payment reforms, and i am very curious, because i've not heard a clear answer yet, on where these fields like ours it in. we have tremendous administrative task groups, prior authorization, unbelievably, that always approved. spent so let's address the question. where would rheumatology fit in? >> rheumatology is a great example of what i think will be the lead of the future of medicine says much more about personalized care. you are all eating with very

complex patients. involved in these cases are very individualized. these are areas where we are starting to get a better handle on a combination of genetics, posing a threat and so forth, environmental factors that drive the diseases and have a lot of potential for further improvement. and we've seen that with some of the new specialized drugs that come on the market the last few years that can do a lot more for certain patients, for the traditional generic gene modifying agents were able to do. but that does come at a significant cost. and this is the kind of thing, two things. number one, this is why it's so important to government all these other reforms in the rest of the health care system so that when our new treatments that are really valuable for some patients have had measurable diseases up until now, we can actually afford it. and number two, there are payment reforms that are taking place in rheumatology practices around the country that forced

some of the kind of efforts, the ways of the effort you're describing. the future here is not a bunch of -- further reductions in payment rates. it's paying more and providing more support for better results for your patience. i'll give you one example of this. one of the main factors of one of those new special dialogues has payment contracts now with some health plans. it's not just based on whatever the dollar applies produce. it's quite substantial but it's based in part on whether, when those patients received the drug, their subsequent can't -- complications improve. they end up with fewer hospitalizations. they end up with at least some cost savings as a result, so that's more of an outcome for value oriented payment in rheumatology, that kind of direction again is not easy. it's not going to happen overnight. it's that kind of direction that i think can really help.

>> since she's part of a profession that comes up with the answer when no one else can, maybe she should be up here rather than us. [laughter] >> we are at time to i will just say, last question, that there are going to be lots, in florida, they're going to be lots of different payment arrangements that will bury all across the state in some cases you're going to see small physician practices that have to be in combination with other physician practices. in some places you've got the hospital that after going to step up to take the master contract. and other places, physicians will attempt to continue to be independent. most of the new payment arrangements work better if you got some scale attached to them. and so those are decisions that practices are going to have to make. and that's part of the change process that would be playing out here. with that, let me thank the university of miami.

let me thank my two guests here, mark mcclellan and chris jennings, and thank all of you. [applause] >> on c-span2 we are live at an event hosted by the consumer protection working group that will focus on the latest fraud scams and what consumers can do to protect themselves. this working group was greeted by the obama administration as part of the financial fraud enforcement task force. they investigate financial crimes and consumer related fraud attorney general eric holder will address the summit with some prerecorded remarks. stuart delery, the principle deputy assistant attorney general for the civil division, and the coaches of the consumer protection working group will talk about the decisions efforts to combat fraud. some of the issues they will discuss later on conclude lottery scams, that relate protection scans, dietary

supplements, and taxis and scans the we will have all of that live for you here on c-span2. president obama next week will be on capitol hill to continue some of his discussions with both republicans and democrats next week on the budget and deficit reduction. to get dinner of course with about a dozen republicans on wednesday evening in the nation's capital. we spoke to capital reporter his point about the president's so-called charm offensive. >> [inaudible conversations] >> we will try to show that to you in just a minute. a conversation from this morning's "washington journal." news from this one in washington from the labor department, u.s.

employers jumped out their hiring in february, adding about 236,000 jobs. the unemployment rate in february dropped the 7.7% from 7.9%. "the associated press" writes that the government's february employment report was filled with mostly encouraging details that rate the unemployment rate its lowest level in four years, and hiring has averaged more than 200,000 per month. and we will now show you the conversation we had this morning on this morning's "washington journal" about president obama's efforts to reach out to republicans on capitol hill. >> host house of representatives thanks to getting up with us this morning. >> guest: thanks for having me. >> host: talk about the strategy behind this charm offensive and where it came from aspect of course the president is doing things he has never done, which is invite

republicans to dinner outside the white house he is reaching out. earlier this week he had a dinner with nearly a dozen senate republicans yesterday. he had congressman paul ryan to the white house for lunch. this wiki is headed to the hilt to sit down with members of the senate republicans and leader house republicans. this is a big shift. he has taken a lot of criticism for being aloof and not really engaging with members across the aisle even to his own members in congress. the sad thing behind this is basically the white house has to try something else, efforts to get a deal to block the sequester, automatic across the board budget cuts. to work the white house and republican leaders couldn't get a deal to do that. so now the president is trying something else. and the house is trying to come in, build bridges with members across the aisle in hopes of dividing and conquering, getting rank-and-file republicans to

agree to a deal. certainly leadership has been reluctant to agree to. >> host: is it working? >> guest: it's too early to tell. and serving the white house has acknowledged limitations of their strategy to. there's still a lot of -- >> all of the in our video library. c-span.org big event getting underway on consumer about the justice department. live on c-span2. >> i'm delighted to be here along with my colleagues, former colleagues in any event billboard to make the financial fraud enforcement task force a success. 40 years -- four years ago the economic downturn unleashed a tsunami of fraud. the agencies represented here today and her sister agencies or members of the task force join forces to ensure that government work collaboratively to fight fosters, to shut them down, to return whatever money we could

find to consumers, and to take these fraudsters off the playing fields once and for all. we've had great success over the last four years, but much remains to be done, and today's summit will discuss some of the issues at top of the task force's agenda. i want to just say a couple of words, thanking the leadership of the task force. the task force was created by attorney general holder, and staffed manual but our colleagues at the department of justice. michael sim on this done a stellar job, and his colleagues, natalie a just a fabulous job keeping the task force moving, and we both in our collective thanks. i'm also grateful for the invaluable assistance provided by the legal services community and advocacy groups that have worked with the task force. they, too, have played an

important job identifying targets, finding us complaints and getting the message out to the public. we are all in this together. understrength together is far greater than the sum of its parts. it's my great pleasure to introduce stuart delery, acting assistant attorney general, is that still your title? principle deputy. stewart has taken over for tony west and it's in a really remarkable job in keeping the task force moving. we are greatly appreciative of your issue. the podium is yours. >> well, thanks, david, very much for that introduction. and for hosting us here at georgetown today, and for your leadership on these efforts. i'm pleased to attend this

second annual consumer protection summit as part of national consumer protection week. and want to thank the co-chairs, the executive director and the members of the consumer protection working group for making this event here possible today. as many of you know, the consumer protection working group is a part of a broader financial fraud enforcement task force, which president obama credit in 2009. the mission of this working group is to bring resources to bear from across the federal government and in partnership with the state counterparts to strengthen consumer protection, to enhance civil and criminal enforcement efforts, and to educate the public in an effort to prevent consumers from being victimized. as head of the civil division at the department of justice, i'm particularly proud of our work to protect the health and safety of americans into combat financial fraud and other scams. protecting consumers to the

vigorous civil and criminal enforcement of federal consumer protection laws is the mission of the civil division's consumer protection branch. we use all the tools at our disposal to confront challenges that threaten the economic security of our families, as well as the health and safety of our citizens. we have made protecting consumers a centerpiece of the department overall and the front effort, because consumer fraud affects ordinary people every day and can devastate victims. fraudsters and scam artists target multiple populations who can least afford it. such as the elderly, and families of servicemembers who have been deployed. victims can lose more than money. they can lose trust in the marketplace. they can lose opportunities, and the ability to take control of their finances and their future. they can lose confidence in the critical products we need, like the medicines we take and the food we eat. and they can feel a loss of

security from having been taken advantage of. in the panel this morning you will hear about some of the work of the civil division, and our partners in the justice department, and across the government, as we work to protect consumers. you will hear about dietary supplement safety, debt relief scams, phantom debt scams, payday lending, lottery scams, and even romance scams. but our work is much broader than even this list because consumer fraud comes in many, many forms, and our enforcement efforts reflect that threat. so to give you some examples, we pursue cases against companies that manufacture food under in sanitary conditions, and that mislead consumers about the tasty and efficacy of the drugs they market. we bring cases against debt collection companies who employ the abusive tactics or try to collect debts that aren't even old. against those who import and try to sell passages children's

toys, against individuals and companies who purport to sell business opportunities but instead defraud victims out of their money, their time and their credit. and against those who offer help to consumers, facing debt or foreclosure but instead take the money and leave them worse off than when they started. the results demonstrate that we're making a difference. in 2012, the consumer protection branch, working with united states attorneys offices across the country, secured over $1.95 billion in criminal fines, forfeiture, restitution and civil discourse with him and saw 23 defendants convicted criminally. just as important, however, we have made many companies change their ways and deal fairly with consumers through injunctive relief we obtained from the courts, internal corporate reforms that we negotiate in settlements, and the deterrent that comes from vigorous enforcement. now, although we are proud of our work, we know that

enforcement alone is not enough. we cannot prosecute our way out of consumer fraud. we need collaboration and education and outreach as well, and that's why this summit here today is so important. because it allows all of us who are dedicated to consumer protection to harness our collective experience, discuss enforcement to protect consumers, and increase public awareness so that ordinary citizens can protect themselves. with the assistance and knowledge of people here today, and additional discussants with experts, advocates and stakeholders, we will develop strategies and solutions for preventing and combating consumer fraud. this is my goal. it's the civil division school, it is the goal of the department of justice and our partners. now, attorney general holder has made protecting american consumers a top priority, and, in fact, he said those words at this summit last year. although the attorney general was then able to be here today, he asked me to share a video that he prepared for this

summit, and so i thank you for coming today ever join in this vital discussion. and now i want to use the video from the attorney general of the united states. >> [inaudible conversations] >> angood morning. i'm sorry i can't be with you in

person today, but i appreciate this opportunity to thank you for taking part in this important summit. and for your tireless work in preventing and combating consumer fraud. protecting the health and safety of the american people and ensuring the financial security of the united states. from consumer advocates illegal a providers, industry supporters and dedicated public servants, each of this summit participants bring an important perspective to our fight against fraud. and all of you are standing on the front lines of this struggle each and every day. especially in recent years, consumer fraud schemes have grown both in complexity and scope, i know many of you've seen the impact of these crimes firsthand. you recognize that they can devastate individuals, families, and entire communities. and you understand the importance of taking on comprehensive anti-fraud efforts to a new level. fortunately, thanks to the leaders in this room, we are point to the threats not with despair, but with resolve.

from crimes that debt relief scams, romance scams and lottery scams, too, and tax fraud schemes, you're helping to raise awareness about the comment offenses and educate ordinary citizens and vulnerable populations on how to avoid being victimized. you are lending your voice is and your considerable expertise to help prevent fraud crimes and call attention to their serious impacts. and you are rallying additional partners to help us fight back an increasingly bold, collaborative and innovative ways. for my colleagues at every level of today's justice department, advancing this critical work and expanding on the record of progress we established, constitutes a top priority. and i'm proud to report that our consumer protection efforts have quite simply never been stronger, or more effective. in fact, since 2009, the department's consumer protection branch has received nearly $5.9 billion in criminal fines,

forfeitures, restitution and civil discourse with it over the same period we obtained convictions and prison since his against more than 100 individuals. last year alone we received nearly $2 billion in recoveries of pharmaceutical, food safety and financial fraud matters. through it right of working groups we are having every a provincial, resource and authority to enhance our investigative and prosecutorial capabilities. alongside a host of federal law enforcement officials, regulatory agencies and state and local partners, we are responding aggressively to financial and mortgage rescue fraud, false debt collection schemes come immigration services fraud, identity theft, misleading product information and telemarketing abuse. and we are developing cutting edge strategies for helping consumers report and stop these activities whenever and where ever they are encountered. all of these achievements built

on the remarkable success of the presidents financial fraud enforcement task force which has enabled us over the last three fiscal years two ohio nearly 10,000 financial fraud cases against nearly 15,000 defendants. including more than 2900 mortgage fraud defendants. just last month we filed a civil complaint against standard & poor's financial services seeking more than $5 billion in damages for alleged conduct that goes to the heart of the recent economic crisis your moving forward will continue to exchange ideas, ma promote best practices and strengthen cooperation between allies across the country in order to better protect americans from all walks of life, particularly the most vulnerable among us. now, of course, fully understanding and addressing the threats that consumers face is not something that the justice department would be able to do on its own. each of you will always have an essential role to play in defending the interests of consumers and ensuring the integrity of our marketplaces.

so today, more than ever before we need your help. we need your perspectives and expertise. we need your talents and determination. that's precisely what consumers national protection week is all about. to put it simply, my colleagues and i are counting on your assistance, and your leadership. ..

the former director as the acting director. i am honored to be here today representing the ftc and i want to particularly thank the department of justice for actually putting together this task force working group. it's been a great experience for all of us. it's really brought to bear some important resources. i also want to thank the georgetown law school for hosting this conference. this conference is the second we've done. it's a great way to cap national consumer protection week which is what we are in right now, national consumer protection week. national consumer protection week is an annual event that involves many partners from throughout the united states. we get together and spend a week emphasizing the importance for the united states and for consumers educating and focusing on consumer protection issues. let me say a couple things briefly and i will be back to talk about more specific things the ftc is working on but i want to talk briefly about consumer protection means in law

enforcement. so when you think about law enforcement, you may think in terms of a property crime or something like that, where there is a place of a crime has occurred, and there may be some witnesses right there at the scene and there's certainly evidence. that's the kind of thing you may see on a tv cop show or something like that. the difference is the consumer protection law enforcement is nothing like that. instead, it involves scams that can cover the entire globe, it involves perpetrators who can be far, far removed from the victims, and victims maybe throughout, located throughout the world. how do you deal with that kind of problem? you're certainly not going to be about to solve it if in an hour like mind on a tv show. when you need to give his partner with many individuals and many people all of whom have a little piece of the information you need. you need to employ come as the attorney general said, all the tools at your disposal to try to put together a solid case that brings together the victim's and

the circumstances and identified the partners of the scammers who may be in a different location. in partnerships -- that's what this task force and working group is about, helping us combine together more effectively address consumer protection by bringing to bear all those tools, bringing to bear all the intelligence each of us has separately collected and applied in a way that helps consumers and businesses from scammers and fraudulent schemes. at the ftc we talk about consumer protection involving three things. it is involving first law enforcement. second we talked about in terms of involving regulation, and third, we talk about it involving education. all three of those are critically important. but the fourth leg of the school, we don't have a three legged stool, we have a fourth leggitt school and its partnership, that the task force is all about and that's why it's been important to participate come important for the ftc to be part of it and we are grateful to the department of justice for setting it up.

with that i'm going to talk to you further but i will now turn it over to ken marcus with the cfpb. >> thanks, chuck and all of you for being here. mining is ken marcus with the consumer protection financial bureau. the consumer protection bureau is a still quite new agency that has been established in the aftermath of the financial meltdown through attempts to bring it focused attention on issues associated with financial services and products and to work to protect both consumers and honest businesses that plea by the rules in the consumer financial marketplace. we do that working in quite close conjunction with colleagues throughout the federal government and throughout state government so we work in close conjunction with our colleagues at the

department, the ftc, other agencies like the department of education, housing and urban development, department of veterans affairs but also state attorneys generals, regulatory authorities all working together to try to bring about the best possible service we can on behalf of american consumers. the emphasis that we get comes by choices we make about where we think and perceive the greatest need may be at any given time. the best i can do in just a couple minutes is to remind folks of some remarks that our director richard cord ray talked about last week for the consumer financial protection bureau. one was the area of deceptive marketing practices and it's an area we focus substantial time and energy in the last year and have brought a number of actions that resulted in over $400 million being returned to consumers who have been deceived in the purchase of credit card add-on products. but we've also been concerned about deception that occurs in the area of mortgage and debt

relief scams and other things other speakers have addressed here. the second area director talked about last week was what he called deathtraps -- debt traps that lead the borrowers to borrow time and time and time again in a way that they just can't escape the cycle that they've entered. that is a problematic concern for us and one that gets consumers in deeper trouble and we are paying closer attention to what is going on in that realm. the third area is what he labeled dead ends and what he meant his those places in the consumer financial protection area consumers are left without a trace. there are many areas here that unlike most consumer transactions, consumers don't get to pick who they do business with. so when there is a debt collector collecting their debt they don't get to choose to the debt collector is. when there is a mortgage servicer managing their mortgage, they don't get to

choose who the mortgage servicer is. when there's a credit reporting agency affecting their life, they don't get to choose to the credit reporting agencies, so they don't have the normal power in the relationship to walk away and say i don't like the when you're doing business with me to the i'm going to take my business elsewhere. so when the consumer is disempowered and that we, we tend to be more concerned whether they are being properly treated, treated well and whether ball is being followed. the for fearing that that our director referenced in that talk is discriminatory activity and that is where loans or the absence of loans, that is the denial of credit, either one are being made based upon the discriminatory race, gender, those kind of considerations. so together with our colleagues we will continue to work on issues of deceptive marketing, debt traps, dead ends and discriminatory lending to try to bring more satisfactory results for consumers throughout america. we think the georgetown law school in justice department for

putting this together and agree with my colleagues this is an important piece of the work we do each year. thanks very much. >> good morning, everybody. thank you all for being here. david, it's terrific to see you again in your role at georgetown university. what evens like today in a summit that we had last year proved more than anything else is that we in government can accomplish a whole lot more when we work together than when we work in isolated compartmentalized loads. that is a word i think every one of the speakers have been up here today has emphasized. that really is the essence of the financial fraud enforcement task force that we work together. now the members and the leaders of the consumer protection working group here today and others who can't be here today all share a unity of purpose and a common result which is to

protect the american consumers from the frequently devastating effect of the financial crimes can have on their lives. they are committed and dedicated to working together to achieve justice and all of its forms whether it's preventing the fraud from occurring in the first place, whether it's in forcing it after it's happened, or whether it's protecting the victims of these fraudulent activities. and i think we've been quite successful so far. we've done quite a lot and we are continuing to do a lot better it is in the summits like today where we are our main consumers with the information they need to protect themselves from becoming victims in the first place, whether it's through a robust enforcement initiative, looking at third-party payment processors and financial institutions that would facilitate the fraud schemes from occurring, with its from protecting service members and their families from becoming victims of financial fraud through disseminating tool kits which we did yesterday to the military community and to the u.s. attorney's offices and to

the state attorneys general offices. or whether it's looking at the palin industry and the sometimes troubling events that we see there. we all are committed to working together to achieve justice for the american people. thank for appearing here today and for being a part of the summit. again, thank to georgetown university for hosting a second time. thank you to the leaders of the consumer protection working group for your really leadership and efforts to move our efforts forward, and i hope you'll enjoy the summit. thank you very much. [applause]

>> [inaudible conversations] >> good morning. my name is jeff free and ayman attorney, assistant director of the consumer protection branch of the civil division of the u.s. department of justice to be the consumer protection branch is responsible for civil and criminal enforcement of the federal law and is designed to protect the health, safety and

welfare of the american people. the branch actively prosecute individual companies who have committed fraud or violated other laws and acted to protect consumers. our first panel this morning is focused on lottery and romance scams. house will be discussed, the lottery scam spray on the elder li and other potentially vulnerable individuals. unfortunately, the scams are increasingly prevalent and a devastating to its victims. romance scams involved fraud esters to contact people by the phone or over the internet, create an emotional bond, and then use the strong emotional ties to convince their victims to send or why your money to them. the panel of experts that we have assembled today is uniquely qualified to discuss these types of fraud and scams and educate the public how to not fall prey

to these type of scams. the panel includes law enforcement, federal prosecutors and government and nonprofit leaders who are dedicated to protecting individuals and consumers from deceptive and fraudulent practices. i'm going to briefly introduce the panel and then we will get into the discussion. our first panel member is gregory campbell. gregory campbell is the united states postal inspector. he is the deputy chief inspector of the western field offices. he is responsible for the management of minefield divisions throughout the western united states. his duties include providing strategic planning, program guidance and policy interpretation for all criminal and security programs including programs to prevent mail theft, fraud, violent crimes and child exploitation. deputy chief campbell has earned his ph.d. in management from

olden university. he has a master's degree in behavioral science and his b.a. in sociology from california state university. chuck harwood you heard from this morning a little earlier is the acting director bureau of consumer protection at the federal trade commission. chuck previously served as the deputy director in the bureau of consumer protection and before that served for 20 years as the director of the ftc's northwest regional office in seattle where he led law enforcement efforts and consumer education efforts involving a wide variety of antitrust and consumer protection issues. chuck joined the ftc in 1989 after six years of council on the u.s. senate committee and he's a graduate of william f. university college of law and whitman college. jon russia is deputy chief of strategy in the fraud section of

the criminal division of the u.s. department of justice. john co-chairs the international mass marketing fraud working group and chairs the national level identity theft enforcement interagency working group. john has been with the fraud section since 1988 and is a graduate of the university of virginia law school. craig is a trial attorney in the asset forfeiture money-laundering section of the criminal division of the u.s. department of justice. he specializes in the prosecution of financial institutions involved in fraud and money laundering as well as financial institutions that fail to maintain effective antimoney-laundering programs or violate u.s. economic sanctions. prior to joining the asset forfeiture section, craig was then ausa in arizona and is a graduate of northwestern

university school all. finally, john brail, the final panel list come joined the national consumer league in december, 2008. john's focus of the national consumers league is on advocating for stronger consumer protections. before congress and federal agencies on issues related to telecommunications, fraud, technology and other consumer concerns. he earned his b.a. in the international relations and george mason university. i'd like to begin the discussion today by asking a question to inspector campbell. the postal inspection service has been actively involved in combating watery fraud from jamaica. how is this fraud committed and what is the inspection service doing to combat this fraud? >> -- to be a part of this panel. yes, the inspection service has been actively involved in these

type of scams and investigating these types of scams. since 2009, the postal inspection service has been part of a task force that was initiated by the department of homeland security, immigration and customs enforcement and the operations are linked to telemarketing. and as a result of that, it is a task force that focuses on investigating crimes that involves advanced scams and lottery scams. how the work is the individuals are victims are predominantly older citizens and contacted via the internet, telephone or the male and they are told that they have won some type of crime is on an award or car or lottery to be the ones that individual is told in order should receive their winnings the need to pay a fee or taxes, and once they do that, then it continues and it's all on and on. the main thing, the prize is always just one payment away,

one tashkent away. so that is how they operate. and as part of the task force, what is the postal the inspection service doing to investigate and to combat this type of crime? >> with 18 field offices across the country, and all of our offices, postal inspection services have been working fraud scams for years. what happened is the scams have become more complex, more organized and as a result 80% of americans using the internet, it's offered these scammers and approach to be strategic company they go after. what we are doing as part of that multi agency task force domestically in the united states by going after interesting as many criminals as we can but we also have agencies working in jamaica and working with law enforcement in jamaica to provide intelligence to help

them do their job better actually in jamaica to protect american citizens. and i think that's important. it is a multifaceted approach. when you think of these type of scams coming you think that is just a criminal-justice issue, but it's not. it's a social services issue, it's a criminal-justice issue, and also a consumer protection issue coming and we are attacking it from all of those approaches, and specifically also looking at the enforcement side. >> and you had mentioned that the postal inspection service has some individual working in jamaica now. can you talk about that briefly? >> we do have resources that are working in jamaica. but more importantly, we are leveraging our resources partnering with other agencies but we are using the resources that we hear domestically that have victims in the united states or cases right here in the united states and then we provide that intelligence to the law enforcement officials in

jamaica to help them do their job better. they are a sovereign country, so they have to enforce law. what we do is try to help them come a partner with them and provide them the intelligence to do their job better. we work with jamaica customs. we work with the united states in the sea, and one thing that is being very successful recently working with the embassy is we have helped jamaica come up with walls directly help the victims be able to testify on the case is a little easier than actually traveling to jamaica to come up with video conferencing and using technology to allow victims here in the united states to be able to help prosecute cases in jamaica. so that is one way in addition to putting handcuffs on people we are actually trying to work with the authority of the law enforcement to help them do their job better and be more successful in their own country. this isn't just an issue in jamaica it is for west africa, nigeria, ghana, the netherlands, u.k., canada. i've been to all of those

countries, and these types of scams actually originate from all those countries as well. >> so, just one final question and then we are going to turn to the next panelist. but there obviously are postal facilities in every city around the country, and there are postmasters and there are clerks that help people with getting stamps and other things and putting money orders. or money orders one of the means the fraudsters used to perpetuate the scam and or the postal employees educated to talk with people who may come and on a regular basis and have on usually activity where they are seeking money orders what happens in a tight situation? , there is a means of getting the victims to spend money to

these fraudsters but they also ask for cash, what we call green bought cards or prepaid credit cards. so during the national consumer protection week we have over 30,000 post offices around the country. we have these lawyers out for our postal customers that come into our facilities to educate them on how not to become a victim. we are also not just focusing on the elderly or the potential elderly victims. we are also focusing this year during our national consumer campaign on the caregivers, to educate them on what to do when their family members, mother, grandmother, grandfather become victims of these types of scams. so education is a key component in yes, money orders or a component that are sent back to jamaica and we are educating not only our employees that we are also educating our postal customers who come to our over 30,000 retail outlets. >> thank. i would now like to turn to chuck harwood to it as a trustee

for comegys the acting director of the bureau of consumer protection at the ftc. chuck my interest and the ftc has a system to collect information from individuals who believe they have been saddam or think they've been contacted by a scammer. can you talk about the system that the ftc employee uses to fight this type of fraud? >> thank you. let me talk briefly about an amazing resource that frankly deserves more promotion than it gets. when i talked earlier i talked about the fact none of the other crimes or violations the consumer protection violations involved people locate oftentimes throughout the world, it may be in jamaica that they can also be somewhere else in the world. the perpetrators may be in

jamaica and they may be after somebody someplace else in the world. its scattered all throughout the world. sometimes somebody in jamaica has a piece of it and in new york state may have a piece of it. the evidence is sprinkled around everywhere. the consumer network effort is to try to bring together the information to make it possible for the law enforcement agencies to more efficiently and effectively collect the information and use it and consumer protection efforts. so a number of years this dates back probably ten or 15 years now, and it's a system that is available to about 2,000 law enforcement agencies are around the world. the way it works is we ask consumers with complaints about the consumer protection experiences. they can do that through ftc.gov an on-line forum or they can call if they want to. and then we also get many complaints from our partner

agencies. i talk about the importance of partner agencies. so some of these are the people you see sitting up here. the postal inspection service and all of their complaints, we get many every year that we make available through the consumer system. cfpd which you heard kent markus earlier gives many complaints. one of our major data contributors. we get complaints from parts of the department of justice. one of our hosts today. we also get complaints from the better business bureaus. many complaints in the better business bureau or around the country and a number of other private sector organizations, and finally we get complaints from many states, 14 currently in the system to read all those complaints to get there are made available to the 2012 law enforcement agencies and in fact in 2012, we collected a total of 2 million consumer complaints in one year from law enforcement -- from all these data contributors and we turn around and make those available to consumers.

half of those are private, so over a million, actually more. they are fraud complaints. we make them available to law enforcement agencies to use the research cases to identify victims come and to track identified targets. so it's a fabulous resource, and finally i should note that it's free to law enforcement agencies. and it's a resource we would love to see even more law enforcement agents use and more people contributing to the system because its only as strong as the number of complaints we get in the system. this is a summary report for everybody in the system in the complaint can go on the ftc website, ftc.gov coming and you will see over 100 pages of information talking about the kind of complaints we receive. it's broken down by state and locality. we talk about it a contributors and top ten complete areas. fattah as for anybody interested

>> so if you are a lot one, parent who has been contacted by fraudsters or a scam or something you think is suspicious, you can go to the ftc.gov web site, you can click on the button for the consumer complaints and you can fill out a relatively brief for -- forum. are you seeing with respect to the millions of complaints are you seeing any trend in that type of fraudulent activity that we are talking about on this panel this morning? >> thank you. yes, we are in fact. so what we see is a real increase over the past few years in the complaints particularly involving jamaican companies. we received about 1,000 complaints from individuals. we said it appeared to them a source of the compound was somebody located in jamaica. in 2012, that number was almost 30,000. so come from 1800 to 30,000 complaints is in five years.

so it is a huge increase. second, in terms of the kind of complaints that we see, it's interesting. the age range of the complaints almost half that complain about jamaica are over 70-years-old. almost half. and we had 57 the age vans it is well over half. second, consumers reported an $201,224,000,000 in losses from jamaica complaints and that is a drop because many consumers don't tell us how much they lost. all of the complaints, the $24 million in one year representing only a small part of the loss is huge. and then finally, most of the people that come clean about the jamaican scams are complaining about prizes and lottery and things of that nature. so it really is a private lottery related scan operation. finally, what we see is most of

these are using a variety of one year related mechanisms. so they are wider and money were using green dot in some cases. they are associated with someone like publishers clearing house. we see things of that nature as well. some of the consumer sentinel receives complaints out weigh more than just lottery fraud. >> this past year we received complaints about romance scams and more generally all kinds of scams about 5% of the complaints of 2012 involved a wide range of impostor scams come somebody claimed to be someone else come sometimes a government officials, sometimes a private organization. sometimes they plan to be someone but they are really not that they try to get your money. >> thank you. we will come back to you in a little bit about how access to

the system is made available to law enforcement and how law enforcement actually uses the comments and the complaints that come into the consumer sentinel. before we do that, i want to turn to jonathan rush with the fraud section of the criminal division. he's an expert on research in these type of fraud, and jonathan, i want to ask you about the research that you're familiar with has shown with respect to these types of scams including romance scams. >> thank you. i think one of the things traditionally the law enforcement has lacked is an understanding of how prevalent these types of consumer scams can be sensed as chuck said a few moments ago, many times consumers don't report the tide of consumer schemes and wishful enforcement would be very interested partly because of embarrassment given the amount of money that they may have paid out to one or multiple scams,

and perhaps they feel some sensitivity about what will happen if their adult children or others they know learn how much they have lost. interestingly, in the united kingdom, last year the university issued the results of a study they had done specifically focusing on on-line romance scams targeting residents of the united states hit according to the university of western study, something like 200,000 residents of the u.k. had actually been victimized by romance scams. when we look at the broader range of consumer scams that are going to various places around the globe, and the suggestion of how many countries there are around the world where the lottery scams, romance scams are operating from it seems very clear to the law enforcement not just in this country but a

growing lubber of countries around the world that these types of scams, lottery sweepstakes and romance scams are literally being targeted a global consumer marketplace. and it's one of the issues that concerns not just law enforcement agencies like the postal inspection service, the ftc, the justice department, but a growing number of investigative police and prosecution services around the world. >> has the internet made these types of scams easier and more prevalent? >> i would say in a word, yes. while we continue to see many instances where scammers are using traditional methods of outreach like the mail to be sending purported romancing communications or purported guarantees of lottery sweepstakes winnings outside of the united states into the united states there is no

question. but what we are looking at involves a substantial exploitation of the internet. one because it saves time and money instead of taking the time has many scams did ten and 20 years ago to evin copy and mail out solicitations now costs virtually nothing to stem the world quite literally with all kinds of fraudulent communications and of course one of the great virtues scam artists employee is the fact that unlike a traditional post letters or physical location, one has no idea that responding to an e-mail where that person that sent the e-mail literally is coming and that quite frankly is a teacher of the internet that of course is part and parcel to the way the internet operates the can be targeted to

the advantage if they say i am living in countries x and i want a romantic relationship with you. that can be a complete lie because there is nothing on the face of the e-mail communication that tells you where the person really is to get that obviously means it is more challenging for the law enforcement both kuran and abroad to track down the true point of origin of these lottery sweepstakes or romance scams come and do things that can have a meaningful investigative intact. >> is it fair to say the criminal division and other parts of the department of justice are working closely with law enforcement to understand how these types of fraud are going on the bidding underneath these anonymous addresses or purported to be what are anonymous addresses people per to be in a particular place for their souls available for the law enforcement to get under that? >> absolutely.

it's something we work closely, and i mean the criminal division, the civil division, and the u.s. attorney's offices across the country work closely with the postal inspection service, the fbi, the secret service and the ftc. we have tools that allow us to track down these types of schemes and take effective enforcement action. one of the keys to the law enforcement standpoint is doing what we can to ensure more timely reporting by the victim's. months and months or a year before the report these type of schemes it does become more difficult to track someone down. the sooner we know we can take immediate steps either to try to stop the money from going out or have the opportunity to trace of that and because as people have talked about, these schemes have a global reach and basis we also

need to do more to work with our officers to share information. we recognize that the department we can't prosecute our way out of these types of consumer schemes and one of the ways we have to address that is not just effective prevention, but working with more so that we can collect the relevant intelligence to find out what everyone knows about these type of scams and who is behind them and so on. those international collaborations' have become increasingly important in law and for said efforts to combat all the types of schemes we've been talking about. john you are with the national consumers league to get the league has a web site, fraud.org. can you describe that and what the organization does with the

data that it collects? >> fraud.org is the outgrowth of more than 20 years of consumer education and advocacy in the consumer league to help consumers who are victims of telemarketing and international scams. it is an effort to was started through an organization called the alliance against fraud and my colleague is here. but the alliance brought together more than 30 stakeholders from law enforcement and nonprofits from the union community in the business is to talk about emerging issues and fraud and how we can come together and work on advocacy. fraud.org is an outgrowth of that. we launched it back in the 90's in response to the growing number of consumers who were victims of telemarketing scams and thanks to a grant from the

doj and others to have one of the first hot lines where consumers could call and report being victims of saddam and get counseling on what to do about it. as the internet has become the motive choice for scammers to reach consumers, fraud.org has become a way to the trusten organization and submit complaints and to get education about the different kind of scams. everything from romance scams to lottery scams to mortgage and telemarketing scams, you name it. there is currently an article on fraud.org about that. we recently relaunched the site to provide functionality to consumers. all of the information has been reorganized to make it searchable for the consumers to find. it's also important to us to make sure all of our information is compatible.

one of the reasons it exists is because we are a nonprofit organization. as was mentioned by my other panelists, consumers are reticent to report scams. they are embarrassed by how much they lost, worried about what their kids will do, put them in a home and sometimes they are even the consumers themselves may be involved in the scheming and helping somehow to find new leads either consciously or through no fault of their own. so the latest is only 26% of americans trust the government so fraud.org is a way for consumers to not submit to their complaints or indirect in the government agency to work with those. we've been around since 1899. so we have a pretty great historical record to work with consumers to trust. what we do is at fraud.org we

review them when there is an instance where the consumer actually seems to be of eminem danger sending money to the scam artist who will direct them and provide counseling to try to keep them from sending the initial money sending more money that they've already said. but then we also send those complaints out. we have a network recall the fraud alert system of more than 90 state and international consumer offices we send our complaints to. the ftc database is one of those that we contribute to for a number of years. so, and then out of that data we produce reports and look at the trend we are seeing. we rely a great deal on partners like the ftc spotting trends that help us decide where we are going to focus on our consumer education initiative. so that is in a nut shell what we are doing at fraud.org.

>> thank you. >> i want to turn to gregg. you are a federal prosecutor in the division of the department of justice. one common method that the fraudsters used to get victims to send money is through the lawyer transfer agencies. you recently worked on a case involving money gramm. if you can please describe the allegations in the case and how the case was resolved. >> absolutely. i should first say that i think that moneygram is an example of the cooperation and collaboration we talked about for about the investigation. we worked closely with the ftc on the tremendous postal inspectors from harrisburg pennsylvanian who were leaders in the case. i can get an example of when we work together in the cases they require us to work together. they are so complex. but when we work together we can achieve great results for consumers. but moneygram itself as a number of the panelists have mentioned

already, this was a lottery scam tight operation but with the fraudsters do after they find their victim committee still need to find a way to get the victims' money. they need to find a way to get the money anonymously. they can't just have you handed to them. they don't want to be i.d.ed. so what we have seen is increasingly coming in by using wire transfers. specifically money services like moneygram. banks tend to require more information to open an account and need a way to trace the money. where the money services don't. for those of you that haven't used moneygram word western union or other services you basically showed up with cash. moneygram were at just about every wal-mart or convenience stores at two under 70,000 locations worldwide. show up with cash, fell out a form where you want to send the money and then it's available

for pick up within ten minutes. so it's fast, which the fraudsters like aveda doesn't give a tremendous amount of time to change your mind. with the fraudsters did is realized one, that there was relatively easy for them to correct some of the agents, some of the people operating the outlets. or member to come moneygram at the time had such poor due diligence work they were doing when an agent would apply to work for them that the fraudsters themselves with open moneygram outlets. and once you have that, the fraudsters can have the money received at his out let come and there is really no way to know from that point where the money is going. this happened over a number of years and many consumers complained directly to moneygram. moneygram's fraga department was collecting this information and started to see a trend that certain agents had tremendously

high levels of reported fraud so there was no chance this was a coincidence. further investigation some of these agents knew what was going on. the fraud department recommended that they be terminated internally at the time and required in the termination to be approved by the sales department. you could see how sales and fraud might have a different idea from the out what's making a tremendous amount of money. many of the bad outlets were not closed. not only that, they were making so much money they were given additional outlets as fraud was allowed to perpetrate for many years. so working together with washington, pennsylvania over the last five years i think at this point the district of pennsylvania brought charges against 34 moneygram agents and just this last year reentry prosecution agreement with

moneygram where moneygram admitted to this fraud and not having the proper systems in place. more importantly, perhaps, they admit it or they agreed to completely overhaul the way they were doing business in order to prevent this from happening in the future and actually take extra steps to protect consumers. finally, they agreed to pay $100 million, which in conjunction with the postal service we are working to get back to the victims. so if anyone here today, anyone watching, if anyone knows of someone who may have been a victim of the schemes from 2004 to those in the nine, we set up a toll-free hotline, 877-282-2610. call that number, leave your information. we are going through the process now and our hope is to return as much money as possible,

hopefully all of it to the victims of these crimes. >> thank you. inspector campbell, in addition to the day-to-day work that postal inspection service was to investigate, to disrupt and combat lottery fraud, the postal service has started a public service campaign. and i'm going to try to play a video here that is part of that campaign. >> i will set the video of for you. it's about a caregiver whose mama became a victim of these types of scams and she is trying to convince her mother not to send money. >> we are going to try that in the back for a moment. okay. this video is about a minute

long. >> i think you hate me. >> i don't hate you. what are you going to tell me? you swear that you will never what? >> send any more money out. >> today's date is january 27th. january 27th. >> i swear i never going to send any more money out. >> that's terrific. i hope that happens. i would love that to happen. so when you get these calls from jamaica, and i saw it on the phone tonight i happened to see if. when you see those calls you should put the phone down. >> i'm just saying i swear i am not going to send any more money out.

i think you hate me. >> i don't hate you. >> so inspector campbell, can you talk a little bit about this video and the campaign in general what you are trying to do in terms of educating caregivers and individuals? >> yes. in my 22 year history as a postal and law enforcement as a postal inspector, one of the highlights of my career was working with jonathan and his team and actually taking the team of inspectors to nigeria and actually working with the law enforcement to interdict the mail before they enter the united states to victimize american citizens. the other highlight of my career in over 20 years of law enforcement to place yesterday. when in our partnership with working with aarp we send out a postcard mailing to over 25 million homes, and we didn't

just randomly send 25 million out to anyone. what we did is used data from our partners sitting at this table and the u.s. census data to look at residence under over 70-years-old, and then to look to see where they have caregivers that are in close proximity to those 70-year-old individuals. and just yesterday, working with aarp, a person called that hotline and they said they were holding the card in their hand which they received in the mail this week and they had received a call from an individual from jamaica to become a victim of lottery scam and she told the person on the other end that i have this card in my hand that says this is the scam and she hung up. that's what this is about. we can put as many handcuffs on people but that isn't going to stop the problem. what's going to help the problem is to educate not only the

elderly individuals but also educate caregivers. when sonya came to the inspection service in florida, it was too late. her mom had already sent out over $92,000 we were not able to get that back. but just yesterday we could somebody from becoming a victim. and i look at it as a one person at that time. if we can help one victim at a time, that could be my mother, my grandmother calling your mother, you're father. that's a lot to me. so what we are doing in the postal inspection service is because these pamphlets and over 40,000 retail postal service retail outlets. we sent over 25 million mailings and we have what we call the consumer alert news network in which we have over 86 media markets that we are doing consumer awareness media alert to the consumers, and then we are working with aarp.

as education is the key and partnering with the individuals that were at the table to work in conjunction to reach out and also the elderly that come out over 70 years of age i think is an important effort. >> chuck, from your perspective, and that is all fantastic advice, what else or what should an elderly person or a child of an elderly person with a caregiver do if these calls started coming, and we should note that these people are incredibly persistent. >> there's a variety of things that they should do. if a parent or loved one is getting these kind of calls, they should engage in the kind of conversation you just saw. that tape, you can do your own research on what's happening. make that research information known to your parent or a loved one. the ftc just like the postal

inspection service when the other entity has information on line about the lottery scams and romance scams which we talked about briefly earlier, and all of that available on ftc.org. lisalyn concise terms with the problem is, with the strategies consumers can use to try to combat, and what the risks are if you are a victim of it. so again you can get that kind of information that ftc.gov did it while you are getting that information for yourself why not get it for your neighbors and friends as well. we find in these communities it is much more meaningful if a friend or neighbor talks to people in the community or talks to the community center or something like that. you can download the information you need to do that from the website. if you don't want to download it we will mail it to you for free. on the web site we have an order option you can order the information and ticket with you

to the consumer center or senior center or some other center and talk to them about it and become the neighborhood expert on how to combat fraud and joined in our efforts to try to prevent -- jul and to try to prevent lottery fraud and romance scams. law enforcement is a key role in this area. and if you believe that you have an effect on come if you believe that a friend or resident victim, please report it to the ftc, ftc.gov, or 877-282-2610. you can report it to your local state attorney general's office and those will also be reported to us. take time to report it and let us know about the problems and that is how we are going to be able to shut this down and put an end to it.

>> thank you could buy a lot like to turn to, then and craig from the criminal division and working with our office at the consumer protection branch, yes we've heard a number of panelists say that we can't prosecute or we can't arrest, you know, ourselves out of this problem, but there are activities going on, law enforcement activities to actually prosecute fraudsters that are identified. is that a fair statement? >> absolutely. in the fraud section of the criminal division we have had success dealing with different kinds of advanced schemes even when the air based in countries like the netherlands or costa rica where we and the partners like the agency of the close working relationships and those relationships are part of what makes it possible for us to have

success tracking people down and actually being able to bring criminal charges that we have been able successfully to have local individuals expedite the countries where they thought they were safe and to be brought to the united states to stand trial or typically to plead guilty to the significant federal criminal charges to be in a key as others have already talked about is the importance of partnerships. the sooner we find out from consumers that there is a particular scam that is hurting them significantly or hurting someone that they care about, the quicker the law enforcement can react to that. more of that information we have come more we can also work with more law enforcement authorities in the esters diction's where it appears the scams are based to work collaborative and going after these kind of scams. one of the signs we've seen over the last several years is that more and more countries like nigeria, ghana, spain, and other places where these types of operations have been going on are not only looking to the united states to take action,

initiating action on their own, leaving their own criminal charges and looking to us to help where we can in sharing information, providing witnesses and support and it's that kind of mutual relationship where whether we prosecute here or there we think that could have a meaningful impact sending a strong message to the public that we are capable of prosecuting these kind of cases successfully but also sending a strong message that we can regardless where you are based track you down and bring you to justice. >> craig i want to turn to you if the moneygram case if i recall correctly if moneygram doesn't abide by that agreement, what is the result in that matter? >> it is absolutely important to hold these individuals fraudsters accountable, to

arrest them and put them behind bars, but it's also important working with these d date keepers that in the prosecution they take steps that not only hold them accountable but can help prevent these in the future and that is exactly what we have done with the deferred prosecution and moneygram. we've made them pay $100 million we made them get rid of the bad agents and all that but we made them do a number of things going forward that would prevent this. one of these things working together with the ftc we required moneygram to call the anti-fraud alert system. this is something where based on information they receive from us and other trends they have sophisticated computer models that attempt to identify the fraudulent transactions. so, for example, a high dollar transaction from jamaica they will stop it in their system and

call the person sending it and they will say they will get the details on what it is and it sounds like fraga, a -- fraud, a stop it. we have also required moneygram as was mentioned committees are international crimes, and each country has a different standard for the fraud and money-laundering. they apply to the u.s. standards and all two under 75,000 locations they have worldwide to use it if you are operating now after this agreement if he were operating the outlet in jamaica you have to follow the u.s. fraud standards and that will help deal with these. finally we recognize the importance as we mentioned earlier the consumer system. we've required moneygram to provide the ftc with every complaint they have received worldwide. so not only is the justice but

they can help the law enforcement throughout the country and throughout the world be on top of these in real time as we discussed that is a challenge in this case. >> i would like to conclude by turning it over to john in the national consumers league. what is your organization doing to educate consumers. you mentioned a hot line and contacting people. if you could discuss that a little bit more. >> one of the things we will be looking at in the coming months and years is trying to identify ways that we can reach consumers when they are at a decision point. as a, gregory was mentioning a perfect example of somebody getting the call from the scammers while they are holding the cards warning them about the scam in their hand, that is exactly the type of access that

we would like to replicate and insure that gets scaled. so one of the things we are doing is looking for opportunities to use data like the sentinel and the ftc in a way that makes it more useful to consumers. it's a law enforcement database. we want to see if there are ways that we can make that data available to consumers if not directly then innovators that can build schools on top of that to help inform consumers and give them feedback when they need it. i think we are looking for ways we might be able to use the data from sentinel and other sources around the web to help build these type of tools. for example you have complained boards across the internet that are proliferating where consumers go to the legitimate companies but there are quite a

few that are about fraud and those are complaints that we think both law enforcement should have and also people that want to help avoid these scams should have as well and we are looking through our traditional education from only the fraud but we see the trendy merging in our own data but also having fun steady stream of new content that will make it available on fraud.org about new scams because another one pops up it is a whack-a-mole problem. you shut down one avenue and they pop up somewhere else. having the ability to react to that faster and in a more nimble way is important to what we are doing at fraud.org. >> thank you. >> john, chuck and craig, you

have passed along some extremely valuable information and we appreciate your participation on the panel. thank you. [applause] [inaudible conversations]

[inaudible conversations] >> good morning. i am an assistant director for financial practices and the federal trade commission. the next panel is going to discuss several schemes that target consumers and stress including debt relief schemes, and some online payday lending schemes. in many ways there is no common thread between all of these other than they do target consumers who are in financial distress. but for a small subset of consumers, those who are looking

for online payday loans they can run across all three of these issues. very briefly, my background and then i'm going to introduce the panelists and what they are going to be discussing and give their speed and then jump into the panel discussion. i've been with the federal trade commission for over 20 years. i have done telemarketing fraud litigation. i have in the last 12 years been supervising federal court litigation dealing with all sorts of different types of scams including mortgage relief, debt relief scams, paid a lending issues as well as many other issues that deal with consumers who are in financial distress. first, we are going to have jeff erlich discuss scams any consumer facing mounting unsecured debt is looking for ways to lower that debt or try to settle at debt in. there are a number of schemes out there that try to take

advantage of these financially distressed consumers, and jeff is going to talk about at least some of those type of schemes and then i will after that ask a couple of q's and a's to pull out some of the other variations of the scheme. jeff currently is at the cftc, the consumer financial protection bureau. he joined in july, 2011. he is the assistant litigation that to the for field litigation ennis efp's enforcement shop. before joining the cftc, jeff was a trial attorney at the u.s. department of justice where he defended the u.s. litigation in putting to seeking to hold the government liable for losses resulting from hurricane katrina as well as the bernie madoff ponzi scheme. he was an associate at washington, d.c. and clerked for the honorable james lawrence king in the southern district of

florida. after jeff, lashon johnson is going to discuss consumer protection issues surrounding all pay lenders. i would like to point out that there is no national news recap for the pay loans. so what lashawn is going to be talking about isn't an issue a lot of states are concerned about regarding the user caps but instead some of the federal protection issues focusing on how the balloons are marketed, whether the terms and conditions of the loans or one of the loans will automatically rolled over or being disclose to consumers more interested in taking out a pay loan. lashawn johnson is entering with the federal trade commission and the division of financial practices. she works on a broad range of consumer credit and financial service issues including challenging unfair deceptive acts of practices by online pay lenders, and most recently she focused on issues related to the

lending and debt collection practices of online payday lenders with native american tribes. prior to joining in 2003, lashawn was in litigation is as yet with the washington, d.c. law firm. she reached her b.a. with honors from harvard university and graduated from the university of berkeley's school law. katie is another attorney who will discuss what we have claimed phantom debt collectors. the overseas for instance in india and they call consumers and aggressively pursue the zero them for a payday lonnae. in many cases there is no real debt or they have no authority to collect on but never payday loan and a consumer may have to get out and so in fact these are no more than shakedowns. katie is also an attorney with

the ftc division of financial practices. she is working the cases involving debt collection, unfair and deceptive conduct under the ftc act and the field of lending law. she can to the ftc first in 2006 after working at the law firm of wilmer haile and clerking in the eastern district of pennsylvania. jeff i would like to first turn it over to you to talk about the debt relief scams and specifically wanted to talk about the case that the cfpb recently brought against the debt relief scam. >> the case i want to talk about is one of the first at the bureau and a federal court last year. it's against an entity called payday loan that solution and as the names of what implies, this was a company that purported to help consumers settle their payday loan debt they could no longer afford to make payments on and i will talk about this case because some of the

characteristics that were present in this case are common and many schemes although there are a different variety of different levels of wrongdoing involved in some of the outright scams where the company's prey on people and they take money never with the intent to provide the services. and then there are others where companies do things that harm or injured consumers although it might not rise to the level of the flat out fraud or scam but they cause a financial harm to consumers, and so we identify the company has won the was injuring consumers primarily through an advanced fee arrangement that it had come and again, this is a common practice even after the ftc's amendment

to the telemarketing seals rule in 2010 that band the use of debt relief. even after that we see instances companies are charging these advanced fees and often consumers are unaware they are being charged these fees and part of that is the result of the way these companies do business. the model is like this. there is an internet presence, some sort of advertisement, so someone might go to the internet and they are having problems taking payments on their pay loans. they might just type in payday loan debt and a company like this comes up. the consumer would call the company and that begins the relationship. i want to say a word about these victims because it is something that we have heard earlier today. these are people who are conscientious and who are bothered by the fact that they can't make payments on their

debt. there are people who have debt who don't care and, you know, probably don't try to take any action themselves to solve the problem. but the people who most i guess vulnerable are people who actually care about this. and you also see a lot of the same things we heard earlier about victims of these types of arrangements are ashamed. they are ashamed that they have racked up a debt they can't afford to pay come and they are ashamed again if they've fallen victim to an unlawful act of practice. so these people who really take to heart the fact they can't make these payments are looking for solutions, and unfortunately sometimes they find debt relief service providers who do not comply with the law. the telemarketing sales will. the first thing these providers

do is tell the consumers to stop taking their creditors. often they will tell consumers they want the debt to steve linus of the creditor is more amenable to selling the debt. when the consumers stopped making the payment on their debt, whether it is a payday loan debt or unsecured credit card debt, there are consequences to that, and often these consumers find themselves hounded by their creditors and sometimes their debt is turned over to collectors and dealers subjected to harassment in the context of collecting that debt. often consumers can't stand that anymore, so they try to drop out of a program they've entered into which would be fine if the companies they were dealing with were complying with the ftc's

rule. .. money that they paid in the fees to the debt relief service provider. and then, of course, that upsets the whole incentive. if companies are providing by these entities, they have incentives only to involve consumers who complete the program as they will only be

paid when the consumers and that's our salt. if they are committed to take advance fees, their incentive is to get consumers who will not complete the program. because once they collect the fees, they would rather not do any work. and so once they've collected their feet, and there's nothing more to get from the consumer, the incentive is for them to the consumer drop out of the program. so you find with these advanced these are present you have often situations where consumers are enrolled in programs that they have no hope of. that's particularly true with respect to credit card debt. off the debt relief programs that people enroll in, it takes three years or four years to complete. and consumers may or may not be told that when they enroll in these programs, but if they

enroll in a program that takes four years to complete and every month they are sending money to a debt relief company or to a payment processor that is acting as an intermediary between the consumer and company come if they can't complete the program, they will be charged advanced fees they will be harmed. and that was a case that we found with payday loan debt solution, a company that was charging advanced fees, hundreds of the consumers, had no debt relief services provided whatsoever. and yet they had paid thousands of dollars in fees in some cases, and so we were able to get restitution for those consumers. so like i said, the fees are not the only unlawful act. ftc has done a very good job with this in bringing

enforcement actions against debt relief service providers that are flat-out fraud, where they're not intending to do any work for consumers by taking very large sums of money, especially consumers of very high credit card debt. and that's a very common scheme that you see in this area. but this model of signing up consumers or programs that, they largely often can't afford and that sometimes provide no benefit is also still a big problem after the rule. >> jeff, one of the things i've learned while working at the ftc is that oftentimes a successful scam will take a colonel of truth and expand on it. and the colonel of truth here is that our credit card companies

that will negotiate down, correct? >> there are some. >> so, when they're hitting us and they've heard on the radio or seen on the internet, they have heard that this does happen. but how do going to be able to recognize a company that is legitimately offering what they really can do versus somebody who may be further along the prospect? >> well, the first thing that a consumer can do is contact is our own creditor. you can call your own credit card company and explain that you're having problems making payments. you can attempt yourself to obtain a payment plan, or some range but that will allow you to resolve your debt or at least recover without attaining the services of the debt relief provided. but beyond that there are obvious red flags that i think if consumers were aware of, they

may be able to avoid some of these unscrupulous debt service providers. anytime a debt relief service provider tells a consumer that you have to pay a fee up front, that should be a red flag because that is unlawful. and ought to be a clue that consumers should stay away from that company. there's a lot of information available publicly on the internet. consumers can go to the internet, do google searches for companies there looking to do business with, and search for the word complaint. often they will find the worst players in this field will come up. people will often voice complaints on the internet, and consumers can find that. a lot of states regulate licenses for debt relief service providers your so consumers can

look in their state agencies that regulate, to learn whether there are complaints about particular companies. the payday -- who brought parallel claims, asserting violation of the state laws come often they were state licensing laws. cities are companies that were doing business with consumers in various states but had no license to do business in those states. and with respect a couple of states, they were filing state filings. so consumers can also check with their states. is a debt relief service provider makes a guarantee, a type of relief they can get or someone says i will reduce your debt by 30%, 40% or 60%, they can't make guarantees like that because, as pointed out, some

creditors will deal with the debt service providers, others will not. some will not compromise the amount. anytime someone is guaranteeing, that should be a red flag. >> thanks. we could spend another hour on debt relief scams, but we have a lot to cover so want to move onto lashawn johnson who is going to talk about online payday lending and some the consumer protection issues with regard to how these are being marketed and kind of what happens after a consumer has taken out an online payday loan. >> what happens when consumers can't repay the debt, i'm going to go back to talk about the process, what happens when consumers take a payday loan online. typically -- will shop online. these particular individuals go online and search for payday loans and they will get a whole list of different entities.

and so sitting at their house or wherever the our with a laptop, they can just put in the information and tell them how much money they want to loan, have loaned to them, and it can be like a day or two you will have that money automatically deposited to their account. so from that point of view, life is great. however, the nightmare begins to the point where the actually stop. about the ftc has done is brought a number of cases that target the practices of the lending practice and debt collection alone. typically what happens once the consumer, they upon the terms they weren't aware of or if they get you some point where they can't pay the loan, alone that the actual payday lender will be debt collection processes that totally violate the law. so in 2010 the tt brought a case -- the ftc brought a case for

debt collection activities. and basically what loan point was doing was moving federal government forms that actually the federal agency could do to guard consumers with, without a court ordered so they would use these forms and send them out to consumers, employers and tell them that the consumer owned debt and based upon the debt collection act they could garnish the wages. unfortunately, smaller companies were not necessarily a where. they were official looking documents. they may have honored that, actually garnished payment. they were, in fact, larger companies who knew and they moved on. the harmless oxygen. so the reason they set out was because -- [inaudible]. so low point was the first case.

the wage garnished it was not actually valley. they basically used the wage assignment clause to comply with federal law. so we went after these federal violations, and so after that case of loan point we brought another case in 2011 against payday financial for similar practices. however the caveat with payday financial as this particular payday lender a side to associate itself with someone who was a tribal member. the owner for the defendants belong to a nation recognized, but the corporate entities that he actually used to offer payday loans were incorporated by the state. so they are state entities. although he hasn't raised this argument with the federal government in state actions he is arguing that the states can go after them because he's entitled to tribal sovereign immunity. you can figure that one out but let me know. so what happened here is, unlike

rely on the debt collection improvement act, logo, this particular entity said tribal law authorizes us to garnish consumer wages who of course don't live on the reservation, don't even live in a state with a company is operating, lives in another state based upon tribal law. of course, that was necessary to so we brought an action against them. they also was required consumers to the electronic signature belief -- to sign up for a pre-authors i should car payment. and nordic of the loan you had to say i give you permission to go to my bank account and take these charges at recurring paypal violates the law. you can't condition credit on someone going to take these automatic withdrawals. so the other things that were different from loan point is they decided because there were some particular employers that were not in these garnishing cases were suing the defendants the, the consumers in tribal

court. so the ftc amended our complaint to bring a complaint because the tribal court as a court with jurisdiction. they don't have subject matter jurisdiction over these particular consumers because they have never been to the reservation. they basically transacted a business over the phone, and they're still right for the tribal court to actually get them in court, to defend this action. that particular case is still pending. it's at the summary judgment stage. i would like to set low point, with that summary judgment on that. although they have appealed it. so the last case we brought was in 2012 and that is against ang services. as i said, these cases start to evolve. they are actually allegedly owned by entities that are chartered by the national recognized american try. and what amt services and is in not disclosing to the consumer how much i going to have to pay back and payment, repayment terms.

so basically what happens is the consumer takes out a loan, they tell them that's going to be the amount of the loan, plus unspecified fee. they will are going to take that amount on a certain day, ma whenever the consumers next paycheck is. so what happens when th that tie comes, instead of taking full amount, the consumer thinks they'll pay back they were just take of the interest in fees and roll over the long. so they're extending the credit where the consumer is never thank on the principle. they're basically just think this interest. cephalon becomes substantially more expensive for the consumer than it initially was when they thought they signed. another thing that they are doing in terms of their debt collection is they have been threatening consumers that they will sue them or they'll go after them for permanently if they didn't pay their debt. interestingly after we brought back out they said oh, it's not as. that's some phantom debt collector which my colleague, katie, we'll talk about. so the things that we want consumers to be aware of is that, you know, the wage

garnishment is an issue, the consumer wages should not be garnished unless there is a court order. if you are looking to take out a loan you should be able, the particular entity should tell you sort of clearly what those terms will be so you have a full expectation of what's going on. and they shouldn't be able to disclose your debt to a third party, which is the employee or someone else to make you collect that day. even though you've taken out a loan, you got into a tight spot, the consumer still has rights. we wanted able to protect those rights as they relate to federal law. >> so two questions. one, what happens if a consumer receives a garnishment notice from one of these indian tribes? what should they be doing? >> now, it's basically one person saying -- one private employer saying basically to another private employer your employee owes me a debt, pay. and if that doesn't involve your

issue then you may have to get a lawyer. this will make the process very expensive, to for to protect your rights. of course we want to know about it so that the ftc know. so we can be aware of what different entities are doing, and we will detract them to try to stop t that speak you can fie a complete with the ftc, call toll-free 1877 -- >> thanks for helping. spent i know this number. ftc to or you can go online to www.fdc dot gop and there's an online complaint form to fill out the information. what are some of the other red flags the consumer should be looking at, especially kind of on the front end of deciding if they want to take out online payday loan? >> i will admit most of these loans are totally unreadable but you should be able to do whatever fresh that giving on the website, like how much money is going to cost you come and

how are you going to repay the. if you can't figure that out for me if it is probably a red flag since there something hidden there that's not clear to you. as mentioned before the rollover issue, you're never going to be paying the principle. you're just paying the interest and fees and you will care that debt over and over. another thing is, if you see the word wage assignment and your loan agreement or the fact that entities representing their failure with native american tribes are owned by these american tribes, that certainly limit what state action can be taken on your behalf, also ideally, you want to be able to do a definition in a very simple sort of internet. you be amazed at how many complaints are out there or you can simply call the ftc or your state, attorney general office or the attorney general's office, we actually entities located and you'll learn is our

complaint. so just be proactive on the front and which will save a lot of harm in the end. >> and now i would like to use the segue, to move onto katie who will talk about some of these phantom debt collectors dig in many cases, but not always, are trying to collect on alleged payday loans. >> yes, so as an arctic and the phantom debt collectors are scam artists it really matter if the individuals of companies that content consumers in order to collect money that the consumers either do not know or that the scam artists have no authority of how much to collect. and there are two cases the f. c. c. brought last year will illustrate the great egregious practices that these are engaging in order to pretty much just steal money from consumers that are already in dire financial straits. one of those cases was ftc versus america credit card.

in this case it was consumers would either previously taken at payday loans or had either just apply for payday loans and even just inquired about payday loans. they were contacted by callers who would sometimes have foreign accents, sometimes claim to be law enforcement officials who are going to come with a warrant and arrest them and take them to jail because they owed us money. and unless people paid, they would be arrested and put in jail. one consumer in particular was even threatened, the wife received a call. she was told that there was a warrant out for the husband, that they knew where she worked, that they were on their way to pick them up at work and arrest him. and unless they paid money, then he would be arrested and in jail forever. they also alleged lawsuits saying, using abusive letters but very egregious. the one thing that, perhaps previously -- [inaudible].

they could've taken out of payday loan before that they paid off but they're confused, they don't really know. when have a collar that continues to harass them every day, every night and threatens to arrest them, they think will maybe if i just say it will go away. so consumers pay. up to thousands of dollars to settle these deaths. and again, there are consumers who already in financial distress, they don't have money that's laying around today. and also these are debts that perhaps if there is outstanding debt that consumers could pay, it's not being paid to legitimate creditors. one of the things, the complaint we brought, they were falsely representing that they were collecting on debt. also a violation of the ftc. last year at october the federal court entered a settlement agreement, and a permanent injunction against american credit crunches and the

$5.4 million judgment. the agreement also include a ban against debt collections for this particular entity. the one thing is these are not, they might be fly-by-night but they also see very large operation. another case the ftc brought against -- is an example of this. in this case the ftc charged the defendants in action involved more than 2.7 million calls to over 600,000 phone numbers. and that in less than two years, that the defendant fraudulently collected more than five-point to million dollars. which is money these consumers did not go and were threatened and harassed into being. is also sometimes involve criminal behavior, and the ceo of become a was actually charged with 21 counts, criminal counts of wire and mail fraud in this particular debt collection scam. and one thing, even though some

of these complaints that have been brought involved people who apply for payday loans or have inquired about payday loans, it doesn't necessarily involve always payday loans. there are sometimes an old credit card debt that people are being harassed about, other type of debt, calling claim that they been in charge, check for. it's deathly a scam that is involving people who are in our economic times have suffered some setbacks financially. and one thing that pretty insistent is that they are persistent. these scamscome but also got some consistent methods. and consumers can the on the look out for them and know exactly if there's something fishy about what's happened to one of the things, like a caller could be a fake debt collector they are seeking a payment on a debt that you don't really remember or recognize. it is hard because often, you

might have a data from a long time ago that you think you might not go or may have owed, but usually don't recognize the debt, that's a very big red flag. the mailing address they give you sound immediately faked. they very well might make up a mailing address, but if this sounds like a fishy call then that's another red flag. if the task is a personal or financial banking information, don't give it. sometimes they have it, which is also disconcerting, if the caller calls you up and as resources to the number and your bank account information, it makes them seem more legitimate. but if you're asking for that information, don't give it. if he is really high pressure tactics to scare you into paying such as threatening arrest, saying they would get you fired, that's a red flag. and what do you do if your

consumer and you actually think that the person on the phone is a safe debt collector. one danish do is collect all the information they are willing to give and then report to the ftc, the toll-free number of 877 ftc help. what phone number there getting you to go back to make any payment where the names are, what the names they using for the company, with many address is. anytime of information that they're willing to give you, or if your caller id, the call of their -- the number they're calling from. tellico that you refused to discuss any debt and to get a written validation of it. now, the notice has to include the amount of the debt, name of the crater you all and your right if the courses were not going to send that too, that's a red flag is not a legitimate debt collector. you can stop speaking with a caller. if you have an address come you send a letter with a return

receipt that you keep a copy of, and tell them that you are discontinuing any teeny kitchen with a caller and a half two, a debt collector has to stop unless they're calling you through to say they are filing a lawsuit against you. or to tell you that they will no longer call you again. contact the creditor does see if it's legitimate, that this is out to a debt collector that is working with his creditor. and also again, put a call to the ftc. >> how are they getting this information? you said sometimes they have an awful lot of information on you. >> well, that's a very good question and that's something we are actually very interested in finding out more of. we think that there could be some, some, some people that are trading in people's personal information. but we are interested in finding

out more where, who these debt collectors are and where they're getting their leads from. >> you had said in some cases the caller said foreign accents. what if it doesn't do what is the caller doesn't have a foreign accent? does that mean it is a legitimate debt? >> no. there are more and more of these phantom debt collectors camps that are popping up everywhere. it is definitely a growing cottage industry, and even if a caller does not have a foreign accent, the two cases we brought the car -- the call centers were located abroad. [inaudible] it definitely seems to be a widespread, call centers are located everywhere spent on these scams just calling consumers or are they calling parents or siblings or children or relatives? >> because they may be collecting on very, very old debt, often they are calling

very old numbers. could be ex-wives, to be grandmothers, parents addresses where people lived seven years ago, tracking down folks. so it definitely, and one of the things is that if they do get a relative threatening the relative, that the grandson is going to be arrested is another way in order to collect money from people. so again, the same advice sort of applies is that if a parent or relative receives a call from somebody who is threatening, having personal information that might be outdated, definitely take as much information down but don't change things. the debt if it does exist won't go away. >> i'd like to thank everyone on the panel. i think we are leaving one minute early. i would like to thank each and everyone of you for joining us today and talk about that there is scams that we have been working on.

unfortunately, it can't be avoided. thank you very much. [inaudible] >> [inaudible conversations] >> [inaudible conversations]

>> good morning, everyone. my name is rich goldberg, i'm an assistant director in the department of justice's consumer protection branch. the panel this morning at the same which speakers is going to address the subject of the risks of dietary supplements. now, we would be remiss in not acknowledging first of all the passing of a legend in the food drug and dietary supplement industry. rick blumberg who passed away yesterday serve as fda's deputy chief counsel for litigation. no one was or ever will be as passionate about protecting consumers from the dangers of fraudulent dietary supplements and pharmaceuticals, medical devices. rick blumberg who protected the public for over four decades

will be missed. so on to the subject that rick blumberg cared most about, and that is the marketing of health to the public. now, before marketing health to the public, generally speaking, firms and individuals have to get approval from the government before marketing health insurance to the public, you've got to get licensed. before marketing yourself as a pharmacist or a nurse, or a dentist you have to get approval. you have to take tests. you have to show that you know what you're talking about before you become a doctor, you have to pass a couple of tests to show that you know what you're talking about. before marketing medical vices, before marketing pharmaceuticals to the public, you have to demonstrate that your products are safe and effective. why is that? wide yet to get approval before

you market these sorts of products and services? maybe it's because health is the most important thing we've got. before you take something or use a service that is health related come you want to know that that product or service is tried and true. we don't like to think of ourselves as guinea pigs. well, unlike other health related products and services, dietary supplements require no similar approval process. if you don't research the dietary supplements that you are taking, then you may be signing up to be a guinea pig. there are plenty of safe and effective dietary supplements out there, but there may be ones that present unnecessary risks to consumers that consumers need to be aware of. now, the esteemed group of speakers we have here today will talk about dietary supplements

and potential risks that they pose to our first speaker is dr. paul coates. is the director of the office of dietary supplements at the national institute of health. doctor coates' office evaluates, supports and conducts research on dietary supplements. i will introduce the other speakers in turn but first dr. coates will speak on issu on the of efficacy, that is, whether dietary supplements do what they claim to do. >> thank you very much. it's awfully nice of you to have invited me. i'm not like the other children. i'm not a lawyer. i'm not a regulator my office is very much involved in the science of dietary supplements. we work closely with our partner agencies in the federal government, notably the food and drug administration and the federal trade commission, largely as a scientific resource

for them. we are also a major source for the consumers as welcome and that's where we really feel as though we have our best opportunity to inform people about the issues related to supplements. you mentioned efficacy and is one of the three things that we're very concerned about in our own work and the work we support at the office of dietary supplements. efficacy, safety and called it are the three major issues in most everything we do. it is under those rubrics. in terms of efficacy, the fact is that there are many dietary supplement he increase for which efficacy is hard to prove. there are some for which it is not difficult because many of the ingredients of dietary supplements are already, already giving in the food supply. it's part of the reason why dietary supplements as a

commodity class are regulated as foods and not as drugs. that doesn't necessarily help a consumer who doesn't care a whole lot whether something is a food, a device, a drug or a dietary supplement. they do want to know whether something works. sometimes it's hard, as i said, to prove that ingredients and supplements which are usually been given at levels over and above what you already giving in the diet, the extra -- does the extra make any difference? sometimes it does. but it is not always easy for people to smart out the differences here. we, like others, we like to think that we provide a good clearinghouse of information for consumers, and for the health care providers whom we believe consumers should be consulting when they are preparing to think about taking dietary supplement. you don't have to.

you can walk into a vitamin shoppe or the local supermarket, or the local 7-11 and pickup dietary supplements of many different kinds. and you don't need someone's advice or counsel to do that. that isn't enough as far as i am concerned. i thin think you should be prepd to have the conversation with your doctor. will it be effective, is a safe under the conditions it is used? those are questions that you should always have in mind when you're thinking about whether to take dietary supplements. and one, we have an app for th that. and i only, that's a plug. that's not the at. the at is called my dietary supplement and it's available if you go to our website, you can download easily. and it's really a way that we encourage people to use, to

track the use of dietary supplements. kind of like if you're tracking your physical activity, one of these little things, or if you're monitoring your food intake is an opportunity to use a similar kind of tool to monitor your dietary supplement. support your dietary supplement for people you are caring for the other use that i think is has is that helps conduct the conversation with your physician. why do i keep saying that? because we are concerned not only about issues related to efficacy, but safety come and one of the components of safety is the interaction that might exist between ingredients and dietary supplements and prescription drugs which might be taken under a doctors care. if you think about it, and probably a good idea to let your doctor know what dietary supplements you're taking. in order to avert potential

harms associated with the interactions between some dietary supplement ingredients and some prescription drugs. there are several examples. it's not widespread. this is not the sky is falling, but there are enough examples that we should be alert to the fact that interactions with prescription drugs might be an issue for you to consider. the third i mentioned to you is quality, and this is an area where i know other speakers will have something to say about it, because it speaks to what's in the bottle. sometimes what's on the label is not in the bottle. it seems to me that because of fda actions over the last several years, increasingly manufacturers are being expected to toe the line about quality of the products, meeting good

standards and so on, and being much more conscious of the need to have on the label what's really in the bottle. don't under estimate, don't overestimate. the point is that when those regulations are fully implemented and fully implemented by the industry, that consumer stand a better chance of being confident with what's on the label, is on the bottle. in the meantime we and others in the government are trying to provide data and useful information to health care providers, the researchers, to consumers that may help them in gather that kind of information to i will stop there and see if there's a the us want to ask spent if i'm a consumer, dr. coates, how should i make a decision? how do i know whether i need a dietary supplement or should take a dietary supplement to help my condition if it's an illness, or if i were perfectly healthy individual, what kind of

consideration should i have? and what should i look to to provide guidance? >> these are very important and sort of practical questions to ask. we can offer some advice to consumers. and the one of our dimension is, i encourage you to seek advice from professionals. we have information on our website. i emphasize we're not the ones who do, but our website provides links to other valuable sources of information. health related information for example. one of my colleagues, paul thomas in the office, and other colleagues, are involved in the development and updating of fact sheets which we provide. largely for consumers and for health care providers. give them the details as well as the overview information that they might need in trying to understand whether vitamin d in a particular set of circumstances might or might not be valuable. the fact sheets provide

references to relevant literature or two other information that either consumers or health care providers might find useful. so i believe you think that coming you treat this as a health care intervention. if you pause for a second and realize what i'm telling you, it's an intervention. dietary supplements are biologically active. they may have consequences. they may have benefits. they may not have benefits for everybody. you might not know, since you're just a simple consumer, as am i, would probably benefit from having all the more information. in the age of the internet, the wonderful dichotomy, the blessing is that there's a huge bout of information available on the internet. occurs is there's a huge amount of information on the internet. and it's sometimes quite difficult to sort out which is which. a good place to start is trustworthy site to get

information like that. i think you should be asking yourself if you're planning to take supplements, why. if you're reasonably healthy, diet conscious, if you are getting in of other nutrients you need from other sources, there seems little reason to be enthusiastic about giving additional ingredients like these from dietary supplements. there are circumstances where they will benefit you, but for the most part, are you seeking your nutritional insurance? are you trying to seek coverage for shortfalls for a slight unhealthy diet? may or may not be of any value to you to take dietary supplement. i mentioned a little bit about possible safety concerns. they are not widespread when it comes to dietary supplement, but they are there looking in the

background. fowere some people who may be taking some ingredients at levels that are not recommended by the manufacturer. so very, very high levels of intake of things like vitamin a. there is toxicity. it may not be all that difficult for you to get to very high levels of vitamin a, for example, if you're taking it from supplements in your diet that is -- the window between what is recommended and what is the upper tolerable limit is not huge, for a nutrient like vitamin a. for vitamin b12, on the other hand, there is a very wide range between what is recommended and what isn't we don't even know what is a toxic level of vitamin b12. it's hard to identify. nevertheless, taking very high levels of anything, you should think about why he you're taking it. and so that gets to the notion

of dose. sometimes it is very valuable to talk to your physician about what might be a recommended intake. he can't get a prescription for. she can't tell you that this is the perfect dose for you because we don't really know those pieces of information, but you should be alert to the fact that does can make a difference. very high doses of some things can be of concern. and then the dosing schedule is another thing that you might want to be thinking about. the other piece of advice that i would give you come if you think about supplements, don't do it because you think you have a health condition that you diagnosed yourself. not a great -- ways that phrase lacks a doctor who has himself as a patient has a pretty lousy doctor. the point being that you shouldn't be making these decisions for yourself totally in in the back and think about y you're doing this.

and i do urge you again not to consider taking dietary supplements with prescribed medications unless you are doing that with the knowledge and possibly the approval of your health care provider. i think the last thing i would comment on here is, safe is not equivalent to natural. so it's clear that almost every kind of some ingredients you can find comes from some natural source or another, or has been synthesized based on what we know about its biology and its chemistry, but that doesn't mean it's safe under all conditions. so you need to be aware of all these things. >> dr. coates, one more quick question. you mentioned briefly following dosage labels on the bottles, following recommendation on the manufacturers, is it always the case that these recommendations and labels of the manufacturers

of dietary supplements are based on science and well-founded research speakers generally speaking that's the case. science that underpins some of those recommendations is very stable. and consistent with public health recommendations. sometimes the science that supports dietary supplements and some of the more exotic ones would fall into this category, are ones where we don't have a huge amount of science upon which we can base good recommendations. and often, not always, often that is reflected on the label. there are plenty of reliable, honest broker manufacturers of dietary supplements. the problem is you might not always know who they are or who they ought to be when buying products. they look like drugs, come in bottles, that are placed not next to but not far away from

the drugs that they might be intended to replace. consumers are at a bit of, can be confused by that. but i would say for the most part, recommended intakes follow dietary -- as recommendations by the government, canada, u.s., make much the same kind of recommendations. >> well, on the subject of the darker side of the industry, let's turn first second speaker, dr. jeffrey ebersole. jeff is a senior operations manager of drugs at the u.s. food and drug administrations office of from investigation. just begin his crew with oci in 2004 serving in the new york field office, investigating a variety of criminal schemes involving fda regulated products. for the past five years, five and half years, jeff hazard at

oci headquarters, managing and coordinating various investigative areas involving drugs, medical devices, biologics, veterinary medicine and tampering. so jeff, which address the issue of the claims made on dietary supplement's and fraud that you've seen and your agent sensing? >> sure, absolutely. good morning, everyone. it's a privilege to be here. i appreciate the invitation of attorney poker. gisela bit more about myself, i come from a health care background. i'm a registered pharmacist, and i've been involved in the drug ring in some sort of fashion for over 25 years. my first professional career was working in retail drug sector both at the independent drugstores and the chain drugstores. the biggest thrill that i had at the retail pharmacist was consulting consumers on their

medication usage, both prescription or over-the-counter. also dietary supplements happened to fall on my lap in consulting with patients on their particular needs. after a stint as a retail pharmacist, i begin my crew with the fda on the regulatory side as a consumer safety officer. my primary role as a consumer safety officer was to inspect fda readily this is primary in the area of drug. it was then i was hit by the law enforcement bug. coming from the law enforcement family, i begin my criminal investigative career at the u.s. department of health and human services, office of inspector general, office of investigations. they are my primary role was to investigate medicare fraud. then on to oci, fda's law enforcement arm come and as an attorney goldberg mentioned, i investigated a variety of cases,

of criminal activity, primary in the drug arena. for those of you who don't know much about oci, we are a small organization located underneath the office of regular to affairs within fda. we are fda law enforcement arms. we conduct a variety of investigations involving all fda regulated commodities, including but not limited to dietary supplements. for those of you who don't really know the structure of the framework of fda, basically speaking there are six -- known as centers. each center is responsible for overseeing and regulating particular commodities. those six centers at the center for biologics evaluation and research, the center for veterinary medicine, the center for devices and radiological health, the center for tobacco

products, the center for food safety and applied nutrition, and the center for drugs, evaluation and research. dietary supplement primary are regulated by the food safety and applied nutrition. however, in my line of work, and the drug arena, at certain times we talk about in just a few moments here, those dietary supplements are under the purview of the center for drugs. the types of criminal investigations that i see involving dietary supplements are twofold. we have tainted dietary supplements and supplements that are associated with health fraud scams. these particular investigations that we do in these areas can have potential hazards. both direct hazards, meaning that the product itself can cause serious injury or harm, including death, or there can be an indirect health hazard

whether product itself poses no health hazards but consuming it likely will delay treatment or cause a consumer to discontinue appropriate medical treatment. that being said, tainted supplements. unfortunately, this is a growing area come and when i checked earlier in the week on fda's website, where is the a list every tainted supplements that it has identified, there were 332 different dietary supplement that were identified that contain active pharmaceutical ingredients, also known as apis. i really like to hammer home the seriousness of this issue because it's very important to fda, and it's a public health issue. i'm going to provide you with a couple of examples of the apis that we are finding day in and day out. the first example would be an active pharmaceutical ingredie

ingredient, an active ingredient in an approved fda prescription drug product for weight loss. a few years back fda for information gathered in clinical trial data, suggested an increase in risk of cardiovascular system. fda noted an increased risk and strokes and heart attacks, for example. fda requested that the manufacture withdraw this product from the u.s. marketplace, and it did. however, due to unscrupulous individuals, criminals, this particular chemical is making it into dietary supplements which you can buy on the internet or in your corner gas station. cyber jamin itself in certain individuals can cause a substantial increase in in blood

pressure and blood pools. so as dr. coates mentioned early, they could be interactions with consumers that particular disease states. in this case, you can only imagine if the individual consumer looking to lose weight has a cardiovascular ailments such as congestive heart failure or arrhythmia, or coronary artery disease, active pharmaceutical ingredients for increasing blood pressure or pulse rate is not fo for the consumer and can cause serious injury, or even death. another example would be in the male enhancement area. countless numbers of times fda has identified active pharmaceutical ingredients which are already found in prescription drugs here in the u.s. and dietary supplements for erectile dysfunction. these apis also known as -- come with their own inherent

precaution. for example, these particular products are contraindicated in use, for use in individuals consuming organic nitrates. organic nitrates commonly used by heart patients to treat angina or chest pain. just, say, for example, you can imagine a consumer visiting with his physician requesting an erectile dysfunction prescription medication, or based upon the current medication that the patient has taken, for example, nitrates, the doctor decided against it. that consumer then goes to what they believe a natural dietary supplement and decides to purchase a suspected product, are products that may contain one of these apis. you can see where the danger can occur. these two products, along with organic nitrates can

significantly lower blood pressure to the point of dangerous situations. and if containing active pharmaceutical ingredients which are found in prescription drugs, is dangerous enough, the criminals have found other ways of getting other things into dietary supplements. fda has found analog's in dietary supplements. and basically speaking, an analog is a drug, a chemical that is similar in chemical structure as these approved drugs, however slightly different. and the criminals suspecting that the product will give therapeutic effect as the approved prescription drugs. however, as you can tell, some of these analogues may not actually have been studied in clinical trials. therefore, are actually playing

in the wild west. another example of drugs found inside various supplements is another prescription, or actually contained three different active pharmaceutical readings. those were a cortical steroid, a nonsteroidal drug, and for all intents and purposes a muscle relaxants. so you can only imagine that we have three different active pharmaceutical ingredients in one over-the-counter product, and depending on what type of disease states the individual consumer has come and what types of medication, whether it's prescription or over-the-counter they're taking, this is a threesome a problem now. your three active pharmaceutical ingredients. not to deliver the point of some of the other drugs, apis that

fda has found and dietary supplements, blood pressure when medication, diuretics, designer steroids, and i just found out, again learning everyday, a medication used for seizures all found in dietary supplements to date. another type of crime that i get involved in the drug arena is drug scams. the snake oils been scams. let me read to you the definition of -- it is a deceptive promotion, advertisement, or sale of products as being ineffective to diagnose, prevent, cure, treat or mitigate disease, or to provide a beneficial effect on health but which have not been

scientifically proven, safe and effective for such purposes. and i think that's particularly where we get into the drug arena. a dietary supplement regulated as a approved product tends to make statements that diagnose, prevent, cure, treat or mitigate disease. examples that we see in this arena are statements involving chronic, serious diseases such as cancer, arthritis, diabetes, and sexually transmitted diseases, including but not limited to hiv. you can only imagine what individuals can have, for what can happen to both consumer and as well as other individuals associated with this rumor when taking products that give false hope. unfortunately, these criminals that are out there providing

these type of dietary supplements with treatments and cures that have never been studied, they feed on the global public and especially in times of panic. for example, during avian influenza, the bird flu panic. what type of enforcement tools does fda have to protect the consumer? fda has both a regular sort options and criminal options. from the registry standpoint, fda can issue warning letters to the subject firm that is subject individual. they have administrative authorities where they can institute and import alerts or import refusal, meaning products that come in from overseas can be stopped at the border. they are some regulatory civil judicial actions that can occur.

seizures an injunction. and lastly, but certainly not least, fda can investigate criminally. and a lot of times our criminal investigations are parallel with civil actions. so what kind of education cannot provide to you today to help consumers educate themselves so that they are not victimized by taking dietary supplements or scams? ..