A bipartisan coalition of attorneys general announced a nationwide investigation of TikTok to determine whether the company violated state consumer protection laws that put the public, especially young children and young adults, at risk. The investigation is led by attorneys general from California, Florida, Kentucky, Massachusetts, Nebraska, New Jersey, Tennessee, and Vermont. On a related note, Mississippi Attorney General Lynn Fitch and North Carolina Attorney General Josh Stein led a bipartisan coalition of 44 attorneys general urging TikTok and Snapchat to give parents more control over their children’s social media usage in a letter to the two social media companies.
A group of 9 attorneys general announced a settlement with members of the Sackler family, owners of Purdue Pharma LP (Purdue), in which the family agreed to pay up to $6 billion in cash to resolve litigation alleging they and Purdue fueled the opioid crisis. The settlement provides for additional payments of $1.175 to $1.675 billion over the $4.325 billion settlement reached last August.
Led by Illinois Attorney General Kwame Raoul, 19 attorneys general urged the Consumer Financial Protection Bureau (CFPB) to ensure that buy-now-pay-later (BNPL) lenders are not engaging in practices that trap consumers in a cycle of debt. BNPL loans are a form of point-of-sale financing that allows consumers to divide the cost of purchases into multiple installments. The attorneys general communication was in response to the CFPB’s request for comments regarding its inquiry into the BNPL industry.
Attorneys general celebrated National Consumer Protection Week by issuing press releases sharing consumer tips, identifying the leading types of complaints their offices received during 2021, and alerting the public about current scams
Individual Attorney General Actions
Arizona Attorney General Mark Brnovich obtained $4.8 million in restitution for consumers harmed by high-interest lender CashCall, Inc. The company allegedly charged interest rates as high as 169 percent, greatly exceeding the rate allowed under Arizona law. In addition to providing restitution for consumers who were harmed, the proposed judgment requires the defendants to cease all collections and to forgive all outstanding loans. Attorney General Brnovich also announced $405,000 in restitution stemming from a settlement with two Nissan dealerships owned by Berkshire Hathaway Automotive. Brnovich alleges that the dealerships advertised low vehicle prices online but told consumers they had to purchase certain “add-on” accessories, such as nitrogen in the tires, an exterior protective coating, door edge guards, door cups, or window tint, raising the vehicle’s cost substantially above the advertised price.
California Attorney General Rob Bonta announced a court decision imposing $22.37 million in penalties against online, for-profit school, Ashford University, and its parent company Zovio, Inc. (formerly Bridgepoint Education). The decision found that the defendants violated the law by giving students false or misleading information about career outcomes, cost and financial aid, pace of degree programs, and transfer credits, in order to persuade them to enroll at Ashford.
Colorado Attorney General Phil Weiser’s GAP insurance investigation of three companies has resulted in $6.5 million in refunds for Colorado vehicle owners, Weiser announced. Guaranteed automobile protection (GAP) is an add-on product sold to car buyers who finance their purchase. If a buyer’s car is totaled in an accident, the buyer’s auto insurance typically pays only the fair market value of the car, which can be less than the amount owed on the buyer’s loan. If a borrower pays off the loan early, or the car is repossessed before the loan is paid off, Colorado law requires that the lender automatically refund borrowers any unearned GAP payments. Following the investigation, Ent Credit Union, Premier Members Credit Union, and Credit Union of Denver distributed refunds to Colorado borrowers after failing to make required refunds.
Connecticut Attorney General William Tong announced a $5 million stipulated judgment against Safe Home Security and its president David Roman after the Middletown-based company allegedly repeatedly failed over many years to comply with court-ordered consumer protection measures. Tong’s office filed a motion for contempt in 2019 claiming that the company continued to block consumers from terminating long-term contracts, misrepresented the terms of contracts to consumers, charged consumers for services when the consumers’ alarm systems weren’t working, and other conduct.
District of Columbia Attorney General Karl Racine filed a lawsuit against food delivery company Grubhub for allegedly charging hidden fees, misleading District residents, and exploiting local restaurants to boost its own profits. In addition to charging hidden fees, the suit alleges Grubhub also used bait-and-switch advertising tactics and failed to disclose that prices are higher on its app and website than at restaurants.
Florida Attorney General Ashley Moody announced opioid-related settlements of more than $870 million from CVS Health Corporation, CVS Pharmacy, Inc., Teva Pharmaceuticals Industries Ltd., and Allergan PLC. CVS will pay $484 million, Teva will pay nearly $195 million, and Allergan will pay more than $134 million to resolve claims relating to the companies’ roles in the opioid epidemic. Teva will also provide $84 million worth of its generic NARCAN nasal spray to the state. Attorney General Moody also announced that she and the Federal Trade Commission (FTC) secured court orders permanently banning telemarketers operating an alleged credit card interest rate reduction scam from working in the debt-relief industry. The orders impose monetary judgments of more than $5.3 million on defendants Gino de Paz, Grace de Paz, and Shabana Khublal who allegedly engaged in abusive and deceptive practices violating the FTC Act, the Telemarketing Sales Rule and the Florida Deceptive and Unfair Trade Practices Act in selling credit card interest rate reduction services to consumers throughout the United States, including Florida seniors.
Georgia Attorney General Chris Carr entered into a settlement with former telemarketing companies Evergreen Publishing Group LLC, Readers Services, Inc., and their owner, Chris Sidhilall, resolving allegations that the companies engaged in illegal and deceptive telemarketing activities in the course of selling magazine subscriptions to older and disabled adults. The settlement requires the defendants to cease telemarketing and collection efforts, reduce owed balances to zero, and make a payment of $150,000 to the attorney general’s office, $15,000 of which is designated for consumer restitution.
Massachusetts Attorney General Maura Healey obtained more than $1.8 million from GM Financial, settling allegations of deceptive auto loan servicing practices. The assurance of discontinuance resolves allegations that Americredit Financial Services, Inc., d/b/a GM Financial, failed to pay legally-required interest after delays in providing refunds of Guaranteed Asset Protection (GAP) enrollment fees. Healey’s office also alleges that GM Financial allegedly failed to provide sufficient information to certain consumers after repossessing their vehicles. More than 2,000 Massachusetts residents may be eligible for restitution under the settlement.
North Carolina Attorney General Josh Stein sued an allegedly fraudulent timber company, Dillard Timber LLC, and its owner, Christopher Dillard, who advertised expertise in timber harvesting but actually owned no logging equipment, had no employees, and did not himself do logging, timber milling, or other timberwork. Instead, Dillard contracted with third parties to perform the services, leaving customers without options when jobs were not performed completely or as promised.
Rhode Island Attorney General Peter F. Neronha announced settlements with drug manufacturers Teva and Allergan that will deliver $28.5 million in cash as well as one million life-saving Naloxone sprays to Rhode Island over the next 10 years. Rhode Island will also receive 67,000 30-pill bottles of the treatment drug Suboxone in various doses over the next 10 years, bringing the combined settlement value up to approximately $107 million to combat the opioid epidemic. The agreements resolve claims regarding the companies’ roles in helping to fuel the opioid epidemic. Attorney General Neronha also filed lawsuits against two auto dealerships for allegedly engaging in unfair consumer pricing practices. As alleged in separate complaints, Grieco Honda allegedly refused to honor advertised prices and instead charged a previously undisclosed “addendum fee” as high as $5,000. Grieco Toyota is alleged to have deceptively advertised that vehicles were for sale at “wholesale prices” and that buyers could “pay what we pay going to auction.”
U.S. Virgin Islands Attorney General Denise George obtained a $3 million settlement with Terminix pest control company. The settlement stems from a 2017 lawsuit the Attorney General’s Office filed against Terminix after a family of four became seriously ill when the unit below them was fumigated with a pesticide that is banned for residential use. The lawsuit further alleged that Terminix employees lacked proper training and basic safety equipment to perform fumigations. Terminix no longer operates in the Virgin Islands.
Vermont Attorney General TJ Donovan filed suit against Telecom Carrier Access doing business as TCA VOIP, and its owner, Dominic Bohnett, for allegedly knowingly bringing thousands of robocalls into Vermont. The complaint alleges that the defendants violated Vermont’s Consumer Protection Act, as well as other state and federal laws, by knowingly bringing millions of illegal robocalls into the U.S., and thousands, if not hundreds of thousands, of illegal robocalls into Vermont, including government imposter and business imposter scams.
Other Items of Interest
Attorneys General around the country cautioned well-intentioned donors to do their homework before donating to fundraisers collecting for Ukraine-related causes. Delaware Attorney General Kathy Jennings, Montana Attorney General Austin Knudsen, Pennsylvania Attorney General Josh Shapiro, West Virginia Attorney General Patrick Morrisey, and others issued consumer advice for ensuring that donations intended to benefit those suffering from the Ukraine war reach those in need.
Other articles in this edition include:
- Consumer Chief of the Month
- Korean Company Has Sufficient Nexus with State to Permit Gas Price Manipulation Suit by California Attorney General
- Federal Consumer Protection News: March 2022