Led by Louisiana Attorney General Jeff Landry, Mississippi Attorney General Lynn Fitch, and New Mexico Attorney General Hector Balderas, a bipartisan coalition of 28 attorneys general sent a letter to crowdfunding charity platform GoFundMe asking it to provide greater transparency regarding its terms of service. The letter calls for GoFundMe to provide a range of information including how it determines fundraisers are supporting acceptable purposes, how the platform determines whether to block donations and handles blocked donations, and whether those terms are adequately disclosed. The letter follows criticism of the platform following actions taken in connection with donations supporting the truckers protest in Canada.
Led by Illinois Attorney General Kwame Raoul, 22 attorneys general urged the Consumer Financial Protection Bureau (CFPB) to prohibit mortgage servicers from charging “pay to pay” fees charged by servicers for the convenience of using a certain type of payment method, for example, payment over the phone or through a website. The letter was written in response to the CFPB’s Request for Information Regarding Fees Imposed by Providers of Consumer Financial Products or Services.
Led by Maryland Attorney General Brian Frosh and Pennsylvania Attorney General Josh Shapiro, a bipartisan coalition of 6 attorneys general called on the U.S. Department of Education to cancel the federal student loan debt of thousands of students who attended schools operated by the for-profit company Education Corporation of America (ECA) including Brightwood Career Institute, Virginia College, Ecotech, and the Golf Academy of America. The borrower defense application submitted by the states alleges ECA made misrepresentations regarding accreditation status and lifetime counseling, among other violations.
Individual Attorney General Actions
California Attorney General Rob Bonta announced an investigation into the fossil fuel and petrochemical industries for their alleged role in causing a global plastics pollution crisis. As part of the investigation, the attorney general issued a subpoena to ExxonMobil which is one of the largest polymer producers in the world. Bonta stated that plastic pollution is pervasive in California and costs the state an estimated half a billion dollars each year in clean up and prevention.
Illinois Attorney General Kwame Raoul and the Federal Trade Commission announced a $10 million settlement with an Illinois-based auto group over allegedly illegal fees and racial discrimination. The settlement with North American Automotive Services Inc., also known as Edward Napleton Automotive Group (Napleton), resolves allegations dealerships charged illegal fees, discriminated against Black customers by charging more for financing, and violated Illinois motor vehicle advertising regulations by including coupons and offers of free gifts in its advertisements.
Kansas Attorney General Derek Schmidt announced a Topeka roofer has been ordered to pay more than $18,000 in restitution for violating the Kansas Consumer Protection Act and the Kansas Roofing Registration Act. Kevin Wilkinson, of Topeka, doing business as Topeka Roofing and Gutters LLC, agreed to a consent judgment to repay 12 northeast Kansas consumers at total of $18,268.29 in restitution and to pay an additional $6,731.71 in civil penalties and comply with state law in the future.
Maryland Attorney General Brian Frosh announced a $1.1 million settlement with a Kia dealership in Owings Mills, Maryland. Koons Kia allegedly charged consumers hidden fees not included in the advertised price and freight charges although the shipping cost was already included in the advertised price. $1 million will be returned to consumers and $100,000 paid to the state for its investigative costs.
Massachusetts Attorney General Maura Healey announced agreements with two companies that allegedly facilitated discrimination against tenants through “pre-qualification software” they sold to property managers and landlords in Massachusetts. The assurances of discontinuance allege that Buildium, LLC and Tenant Turner, Inc., which provide web-based property management services, falsely marketed and sold the software as providing “fair housing-compliant” tenant screening for landlords but offered the option for landlords to unlawfully exclude recipients of housing vouchers and tenants with certain felony convictions from consideration as tenants. Attorney General Healey also announced more than $930,000 in debt relief and restitution for consumers with dog leases. The settlement with California-based finance company Monterey Financial Services, LLC includes a waiver of outstanding debt held by consumers, provides payments to eligible consumers, and transfers full ownership of the dogs to hundreds of Massachusetts residents.
Michigan Attorney General Dana Nessel reached an agreement with Frontier Communications (Frontier) to improve internet service and resolve allegations the company failed to provide consumers connection speeds it promised to deliver. The agreement includes a $15 million commitment by Frontier to improve its Michigan infrastructure over the next four years and $20,000 in restitution to consumers who filed complaints.
Minnesota Attorney General Keith Ellison sued solar panel sales companies and lenders for allegedly defrauding Minnesota homeowners. Defendants include four Utah-based solar panel sales companies, three company executives, and three lenders. The complaint alleges a host of deceptive practices including misrepresenting the companies’ relationship with local utilities, misrepresenting the benefits and cost savings, high pressure telemarketing and door-to-door sales pitches to convince consumers to sign installation and loan agreements without the consumers’ knowledge or understanding, and failing to advise consumers of their three-day right to cancel. The complaint also alleges failure to timely complete construction.
Missouri Attorney General Eric Schmitt settled with organizers of a “Lantern Festival” who failed to stage the event and refused to make refunds. Happy Fun Events, LLC and owners Owen Spencer Hunn and Martha Hunn entered into a consent judgment and will pay $300,000, including full restitution for consumers who have not yet received refunds, $20,000 in civil penalties, and more than $48,000 to the state for investigative costs and to fund future consumer protection actions.
New York Attorney General Letitia James and the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against MoneyGram International, Inc. and MoneyGram Payment Systems, Inc. (MoneyGram). The suit alleges MoneyGram failed to deliver funds to recipients in a timely manner or refund consumers when transfers were delayed. New York Attorney General James also settled with student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA). Under the settlement agreement, PHEAA, which does business as Fed Loan Servicing and American Education Services, is required to audit accounts to identify errors that may have caused borrowers to miss out on benefits, such as income-driven repayment plans or debt forgiveness for eligible borrowers under the Public Service Loan Forgiveness program.
North Carolina Attorney General Josh Stein sued a contractor for allegedly defrauding North Carolinians who were attempting to repair storm damage after Hurricane Florence in 2018. The lawsuit alleges Dennis Daugherty and his companies Green Lantern Services and Green Lantern Roofing and Restoration urged customers to sign a contract requiring them to sign over their insurance check, did shoddy work, failed to pay subcontractors, and ultimately abandoned the projects without refunding consumers.
Oklahoma Attorney General John O’Connor criminally charged a contractor who received thousands of dollars from Oklahomans for construction projects he never completed. Michael Hanson, operating through his company, Leaders Construction LLC, allegedly stole $87,031.64 from nine different victims in connection with uncompleted concrete or fencing work.
Oregon Attorney General Ellen Rosenblum sued Center for Covid Control (CCC) and its testing partner, Doctors Clinical Laboratory (DCL), for deceptively marketing testing services. The lawsuit alleges CCC and DCL falsely told consumers they could provide accurate PCR COVID-19 results within 24-72 hours of testing at one of the company’s five Oregon test sites. Instead, they allegedly produced questionable test results and lacked proper capacity to store and process the thousands of test specimens received each day.
Pennsylvania Attorney General Josh Shapiro announced that an auto dealer who violated a settlement agreement has been permanently banned from selling cars in Pennsylvania. A court found Martino Motors and Donald J. Martino, Jr. in violation of a 2014 Assurance of Voluntary Compliance stemming from allegations they misrepresented vehicles’ condition and covered up hidden repairs and defects. Attorney General Shapiro also announced a settlement with three towing companies who allegedly towed vehicles that were legally parked. As part of the settlement, the defendants will pay restitution and costs in the amount of $9,000 and were assessed a suspended civil penalty in the amount of $14,500.
Texas Attorney General Ken Paxton sued Vroom Automotive LLC and Vroom Inc., which also sells cars to Texas consumers under the name Texas Direct Auto (Vroom). The lawsuit alleges that Vroom misrepresented and failed to disclose significant delays in transferring title and obtaining vehicle registrations. The state also alleges that Vroom has misrepresented and failed to disclose vehicle history and condition and terms of financing and approval. According to the lawsuit, Vroom has not managed its growth effectively, leading to inadequate systems and procedures that have harmed Texas consumers. Attorney General Paxton also announced a settlement with an allegedly deceptive sunscreen company, Dermatology Industry, Inc. d/b/a UVO and DRINK UVO. Under the settlement, the company must pay $42,400 in attorneys’ fees and civil penalties to resolve allegations that its claims that drinking its product provided sun protection with an SPF30 rating were not properly substantiated.
Vermont Attorney General TJ Donovan announced $215,000 in settlements with two online vaping retailers, VR Product II, LLC d/b/a www.ejuicedb.com and Magma Holding, Inc. d/b/a www.eightcig.com. The companies are alleged to have violated Vermont’s Delivery Sales Ban and Consumer Protection Act. Attorney General Donovan also obtained a consent judgment with a landlord who allegedly violated lead paint standards. Under Vermont law, owners of residential rental properties built before 1978 must submit annual compliance statements showing that “essential maintenance practices” (known as EMPs) have been performed. EMPs are maintenance activities that help prevent lead poisoning in children.
Washington Attorney General Bob Ferguson settled the state’s case with e-cigarette company JUUL for $22.5 million. The lawsuit asserted that JUUL violated the law by allegedly designing and marketing its products to appeal to underage consumers and deceived consumers about the addictiveness of its product. The settlement includes injunctive provisions prohibiting advertising that appeals to youth, most social media promotion, and practices to confirm the age of purchasers, including a secret shopper program and online purchase age verification.
Wisconsin Attorney General Josh Kaul, acting on a referral from the Wisconsin Department of Agriculture, Trade and Consumer Protection, filed a telemarketing civil enforcement action against New Jersey-based firm N.C.W.C., Inc. for violations of Wisconsin laws in marketing extended vehicle service plans.
West Virginia Attorney General Patrick Morrisey announced a $99 million settlement with Janssen Pharmaceuticals, resolving claims the company helped fuel the opioids crisis by mischaracterizing and failing to disclose the serious risk of addiction, overstating the benefits of chronic opioid therapy, and promoting higher dosage amounts without disclosing inherently greater risks of addiction. Attorney General Morrisey also announced an appellate win that upheld the constitutionality of the state’s statute regulating legal advertisements regarding medications or medical devices. The trial court, citing the First Amendment, had enjoined enforcement of the statute, which prohibits certain terms or images and requires certain disclosures.
Other Items of Interest
California Attorney General Rob Bonta announced a stipulated judgment against ZeroDivide and its directors and officers to resolve allegations that the nonprofit violated California’s charitable trust laws. ZeroDivide allegedly misspent approximately $606,000 in restricted donations meant to assist in bringing technology to low-income communities, instead using the donations to cover salaries and benefits for employees who did not work on those programs, and to fund other programs. The settlement requires dissolution of ZeroDivide and prohibits two of its officers from leading charitable organizations in California, or holding or soliciting charitable donations from Californians for three years. ZeroDivide and its directors and officers must also pay over $460,000 in damages, penalties, and other fees.
Indiana Attorney General Todd Rokita filed a lawsuit against the Black Lives Matter Global Network Foundation (BLM) to force compliance with an investigative demand issued in February 2022. The investigation seeks to examine financial management and information regarding amounts BLM has raised and distributed which have been the subject of numerous press reports and criticism from within and outside the organization.
Minnesota Attorney General Keith Ellison obtained approval for court supervision over non-profit nutrition program Feeding Our Future while it dissolves. The court’s order granted Ellison’s March 3, 2022 petition, seeking court supervision and alleging that there was reason to believe the non-profit breached fiduciary duties, made false and/or deceptive representations in connection with the solicitation of donations, and engaged in charitable solicitation without registration. The Attorney General’s investigation, which is in process, has not yet made any formal determination of wrongdoing.
New Hampshire Attorney General John M. Formella issued a report regarding the governance of non-profit hospital operator, LRGHealthcare, which filed a Chapter 11 bankruptcy in 2020. The report concludes that LRGHealthcare’s trustees made misjudgments and were too deferential to the recommendations and conclusions of the long-term executives but did not breach their fiduciary duties. The report also offers direction for the officers and trustees of other large charitable organizations so that they can avoid a similar financial collapse.
Other articles in this edition include:
- Your Bitcoin on Every Block: An Introduction to Cryptocurrency Kiosks
- Federal Consumer Protection News: April 2022