Attorneys General Respond to COVID-19 Challenges and Maintain Strong Efforts Across Full Range of Consumer Issues
The COVID-19 pandemic brought unprecedented challenges to state and territory attorneys general in 2020, including price gougers, charlatans peddling bogus treatments or cures, and companies refusing to provide refunds for cancelled travel and other events. For many attorney general offices, complaints were at record levels and mediation staff worked hard to resolve complaints in several challenging areas, most notably those seeking refunds for cancelled events. But work on other issues that pre-dated the pandemic did not just stop when the virus emerged as a global threat and brought a new rash of consumer protection ills, as can be seen from many attorney general “Top 10 Complaint” lists posted as part of National Consumer Protection Week. Attorneys general continued to pursue important work on many other fronts besides those related to the pandemic and obtained significant results in cases involving opioids and other healthcare issues, privacy, robocalls, Internet access, automobile safety, and loan servicing. Attorneys general also provided important information to consumers about the latest scams and COVID-related consumer news through consumer alerts and other methods.
As we observe National Consumer Protection Week, the NAGTRI Center for Consumer Protection is taking this opportunity to highlight many of the accomplishments of state and territory attorneys general during the last year. As the list of settlements and actions below demonstrates, attorneys general met the challenges of 2020 with focused, aggressive enforcement of consumer protection laws and achieved meaningful results to protect consumers. During 2020, in bipartisan multistate actions, attorneys general recovered more than $3.1 billion through enforcement actions and settlements, including nearly $2.5 billion for consumers in restitution. The list of efforts below is by no means complete – it does not include individual state actions – but the report on multistate work illustrates both the depth and breadth of attorney general consumer protection activities and their remarkable success during a difficult year.
On the COVID front, attorneys general used their consumer protection authority and bully pulpits to achieve important results in the following areas:
Price gouging on scarce personal protective equipment (PPE), hand sanitizer, and other consumer products. Attorneys general across the country reported dramatic increases in consumer complaints related to price gouging, particularly in the early days of the pandemic, as citizens scrambled to obtain protective masks, hand sanitizer, cleaning products, and, yes, toilet paper. Attorneys general met this flood of complaints by sending warning letters advising businesses of price gouging laws and worked with online platforms Amazon, Craigslist, eBay, Facebook, and Walmart to identify and halt exorbitant pricing activity on their sites. Attorneys general also took enforcement actions, obtaining settlements and injunctions to stop unlawful activity and obtain remedies for consumers. The dozens of actions of attorneys general to enforce price gouging laws are chronicled on Consumerresources.org.1 Those efforts also included taking bipartisan action to protect their authority to combat online price gouging, by filing an amicus brief in the U.S. Sixth Circuit Court of Appeals to reverse a decision holding that the Kentucky price gouging law, as applied to online sales, violated the dormant commerce clause of the U.S. Constitution. The case is pending.
Bogus testing, prevention products, treatments, and cures. Attorneys general warned consumers to beware of those offering unapproved testing, and unproven prevention products, treatments, or cures for COVID-19. Early in the pandemic, amid uncertainty about what treatments worked and when a vaccine would be developed, charlatans hawking such items burst on the scene and were swiftly met with enforcement actions shutting them down in several states including, Arkansas, Missouri, New York, and Washington.
Denial of refunds for cancelled travel or events. Air travel, school band trips to Europe, concerts, vacation rental and hotel bookings – the pandemic caused abrupt cancellations across the economy as governments imposed mandatory lockdowns and restrictions on travel and mass gatherings and public health authorities advised social distancing. After price gouging complaints, refunds were the most frequent COVID-related complaint received by many AG offices. Attorney general mediation staffs, investigators, and attorneys worked with consumers and businesses to review the complaints, gather the facts, and review cancellation policies, and then attempted to reach fair results for consumers who were unable to travel or attend an event, or who felt unsafe doing so through no fault of their own. 2 Where necessary, enforcement actions were filed to compel refunds and, overall, attorneys general recovered millions of dollars for consumers.
COVID-related phishing and imposter scams offering testing or vaccines. Attorneys general and NAAG, working with the Federal Trade Commission, developed public education campaigns to warn consumers about phishing or texting scams offering appealing information about testing or vaccine availability in order to steal consumers’ identities or financial information. Attorney general consumer education materials are available at consummerresources.org. Thus far, the campaigns appear to have been a success, as offices have fortunately reported receiving very few complaints about such scams actually succeeding.
Protecting renters and homeowners from eviction and foreclosure. Attorneys general took steps to enforce local and federal eviction moratoriums. They also recommended in policy letters that the Federal Housing Finance Agency and the Department of Housing and Urban Development take action to help homeowners. After receiving the recommendations, the agencies strengthened homeowner protection by automatically placing forborne mortgage payments at the end of loan terms for affected loans and clarifying that the moratorium on foreclosures and evictions applies to all aspects of the foreclosure or eviction process.
Protecting relief payments from debt collectors. Attorneys general led the charge in ensuring that CARES Act relief payments went to cash-strapped consumers, not debt collectors or nursing home administrators. The attorneys general used both state laws and their bully pulpit, writing letters urging clarification of protections by the Treasury Department and Congress. Those protections were subsequently enacted.
Protecting consumers from misleading contact tracing apps. A bipartisan coalition of 39 state and territory attorneys general asked Google and Apple to guarantee that contact tracing apps, when available to consumers, are affiliated with a public health authority and removed from Google Play and the Apple App Store once no longer needed by public health authorities. The platforms are taking action to address this concern.
Continued Consumer Protection Efforts and Successes on Non-COVID Matters
Although issues surrounding the pandemic required urgent attention from attorneys general, the same issues and cases which faced the country and attorneys general prior to the pandemic did not disappear. So, despite the tremendous amount of attention and resources the pandemic required and continues to require, attorneys general and their staffs pressed on with their work in other areas and maintained their focus on protecting consumers and the markets from the full range of deceptive and unfair acts or practices. The examples below show that, despite the disruptions caused by the pandemic, important successes were achieved during 2020 on a number of fronts.
Opioids. Major multistate settlements with Mallinckrodt and McKinsey & Co. (in February 2021) have recovered more than $2 billion from firms that contributed to the opioid crisis. Suits against other pharmaceutical firms and officers, distributors, and retailers who profited from the deadly opioid epidemic continue in the courts with attorneys general leading the way.
Healthcare – Surgical Mesh. Forty-nine attorneys general obtained $60 million from C.R. Bard and its parent company Becton, Dickinson and Co. for deceptive marketing of transvaginal surgical mesh devices. This settlement followed a 2019 settlement with Johnson & Johnson for more than $116 million related to its failure to disclose risks associated with their surgical mesh products.
Healthcare – Generic Drugs. A coalition of 51 states and territories filed the third federal lawsuit stemming from the ongoing antitrust investigation into a widespread conspiracy by generic drug manufacturers to artificially inflate and manipulate prices, reduce competition, and unreasonably restrain trade for generic drugs sold across the United States. This major antitrust litigation against leading generic drug manufacturers continues with the goal of restoring reasonable, competitive prices for generic drugs in the U.S.
Robocalls. Attorneys general continued to prioritize battling the scourge of illegal robocalling and tightening the screws on scofflaws, many of which are located in other countries, who attempt to evade state and federal Do Not Call laws and perpetrate scams. Attorneys general from California, Illinois, Ohio, and North Carolina, along with the U.S. Department of Justice (DOJ), scored a major victory over DishNetwork (Dish), obtaining a $210 million settlement that concluded litigation filed more than a decade ago. The case was resolved after the 7th Circuit Court of Appeals affirmed a trial court’s holding that Dish was responsible for Do Not Call violations committed by its agents, an important precedent that will keep companies from turning a blind eye and profiting from the actions of so-called “independent contractors.” Michigan and Ohio obtained groundbreaking settlements with voice-over-Internet (VOIP) providers who were held responsible for allowing their services to be used by robocallers generating millions, if not billions, of calls. Attorneys general also filed as amici in the U.S. Supreme Court urging the Court not to invalidate the federal ban on robocalling in a case with immense significance for pending cases and investigations. The Court agreed with the position of the states and upheld the validity of the robocall ban. The attorneys general also urged the Federal Communications Commission and USTelecom, the leading organization representing telecommunications providers, to strengthen rules and continue collaboration with attorneys general to bolster technological capabilities to improve enforcement efforts.
Antitrust cases against Internet Giants Google and Facebook. A bipartisan group of more than 40 attorneys general sued Google for antitrust violations in an effort to restore competition to the search engine and related online advertising market. Separate actions also were filed by a smaller group of attorneys general targeting Google’s advertising business technology. In all, three suits were filed against Google seeking to restore competition and correct a market which attorneys general and the DOJ allege is being unlawfully restrained by the search engine giant.
A group of 48 attorneys general sued Facebook alleging predatory actions, including unlawful acquisition of competitors and cutting of services to smaller rivals posing competitive threats. The attorneys general allege that Facebook’s actions resulted in users being deprived of the benefits of competition, including privacy protections and innovative new services— all in an effort to boost its bottom line through increased advertising revenue. According to the complaint, because Facebook users have nowhere else to go, the company is now able to make decisions about how to curate content on the platform and use the personal information it collects from users to further its business interests, even if those choices conflict with the interests and preferences of Facebook users.
Internet iPhone throttling case against Apple. A bipartisan coalition of 34 attorneys general announced a $113 million multistate settlement with Apple, Inc. regarding Apple allegedly deciding in 2016 to throttle consumers’ iPhone speeds to address unexpected shutdowns in some iPhones due to battery issues.
Data breach cases. Multistate settlements were announced in several major data breach cases affecting millions of American consumers including Anthem, The Home Depot, Sabre Hospitality Solutions, and Café Press.
Student loans. Attorneys general continue to work to provide relief to students harmed by unscrupulous for-profit schools and shoddy and deceptive student loan servicing companies. Former ITT Tech students obtained $330 million in debt relief through a settlement with PEAKS Trust, which operated a private loan program for the benefit of the bankrupt for-profit school. Forty-eight attorneys general partnered with the Consumer Financial Protection Bureau (CFPB) in reaching the settlement.
Mortgage Servicing. Fifty-one attorneys general, along with the CFPB and multiple state banking regulators, reached a $86.3 million settlement with Nationstar Mortgage, the fourth-largest mortgage servicer in the U.S. The consent judgment provides approximately $79.2 million in relief affecting 55,814 loans nationally.
Predatory subprime auto loans. Attorneys general from 34 states obtained approximately $550 million in relief for consumers from Santander Consumer USA, Inc., the leading U.S. subprime auto lender. Santander allegedly placed borrowers in risky loans with a high probability of default, some of the same conduct that led to the mortgage crisis.
Faulty air bag litigation. A bipartisan coalition of 48 attorneys general announced an $85 million multistate settlement with Honda over allegations it concealed safety issues related to defects in the frontal airbag systems installed in certain models.
As the list of accomplishments demonstrates, attorneys general, who often work in coordination with each other, are meeting the challenge of protecting consumers, even during a global pandemic.
Conclusion: Challenges Remain
Despite the hard work and accomplishments of attorneys general in 2020, many challenges remain.
COVID-related issues: With the advent of vaccines, there appears to be light at the end of the pandemic tunnel, but attorneys general must remain vigilant and agile to respond to any new outbreak of COVID-related scams or issues that threaten the public.
Online scams: As consumers are increasingly spending more time online, a trend which has only accelerated due to the pandemic, so too are scammers. More and more seniors are spending time online too, isolated from their friends and families, and romance scams have exploded, costing consumers over $300 million in 2020, the largest type of fraud reported by the FTC in lost dollars by far. That amount, while staggering, is most certainly only a fraction of the harm and seniors are being targeted and losing more to romance scams than any other demographic. Fraudulent influencers, phony reviews, undelivered merchandise, counterfeit goods, and bogus crowdfunding appeals are only some of the myriad traps confronting consumers. The Internet remains the “wild west” and, as with robocalls, scammers may be located anywhere in the world, which makes identifying and catching the bad actors a difficult challenge. Attorneys general must continue to find creative ways to productively collaborate to make the Internet safe from scammers.
Opioids and other health care efforts. As the national opioid crisis persists, litigation and efforts to recover resources desperately needed to address the devastating impacts of the crisis continue. Healthcare cases, particularly the generic drug antitrust case, are moving forward, and attorneys general will continue to pursue these and other cases to keep the market free from unsafe health care products while also working to restore competition and lower prices.
Privacy and Internet. Americans deserve to enjoy the benefits of the Internet without compromising their privacy. Consumers also deserve to be able to enjoy the benefits of an Internet that is not dominated by anticompetitive companies. Whether they are enjoying streaming services, shopping online, browsing news stories, or playing games, consumer privacy and fair competition are paramount concerns. The multistate antitrust litigation against Google and Facebook continues. The advent of new state data privacy laws extending protections to biometrics and regulating data processors, the interplay with European General Data Privacy Regulations, and the possibility of a new federal data privacy law will also require the attention of attorneys general in 2021.
Attorneys general look forward to a brighter 2021. The challenges of the pandemic are not yet behind us, but attorneys general have always pulled together to meet such challenges as the accomplishments of 2020 again demonstrated. While the consumer protection challenges in 2021 may be unpredictable, as the last year has so dramatically reminded us, attorneys general will continue to meet the call to step up for consumers.
Other articles in this edition include:
- Consumer Chief of the Month
- Attorney General Consumer Protection News
- Federal Consumer Protection News and Other Items of Interest
- Consumerreources.org is a national hub of consumer protection information maintained by the NAGTRI Center of Consumer Protection.
- See e.g., Press Release, Off. of the Mass. Att’y Gen., AG Healey Secures $1.4 Million in Additional Refunds from Cambridge Educational Travel Company for Trips Cancelled due to COVID-19 Pandemic (May 21, 2020); Press Release, Off. of the Colo. Att’y Gen., Weiser Urges U.S. Department of Transportation to Investigate Frontier Airlines Consumer Complaints (Sept. 1, 2020); Press Release, Off. of the Ariz. Att’y Gen., AG Brnovich Secures $71 Million in Ticket Refunds for Arizona Events Impacted by COVID-19 (Oct. 27, 2020); Press Release, Off. of the Pa. Att’y Gen., AG Shapiro Settles with Online Ticket Platform Over Hidden Fees, Canceled Events, Refund Policies (Nov. 19, 2020); Press Release, Off. of the Wash. Att’y Gen., AG Ferguson Secures Full Refunds for Washington Students and Families Who Paid for Now-Canceled Music Trip to Europe (Dec. 30, 2020); Press Release, Off. of the Ga. Att’y Gen., Carr Secures $231K in Refunds to Georgia Students and Families for Canceled Trips (Jan. 5, 2021); Press Release, Off. of the Minn. Att’y Gen., Attorney General Ellison Secures Full Refunds for Minnesota Students and Families Harmed by Canceled Trips (Jan. 15, 2021); Press Release, Off. of the Ky. Att’y Gen., Attorney General Cameron Secures $766,765 Settlement with Travel Company to Reimburse Kentucky Students, Chaperones for Trip Cancelled by COVID Pandemic (Feb. 15, 2021); Press Release, Off. of the Mo. Att’y Gen., AG Schmitt Obtains $426,000 in Restitution for Customers of Voyageurs International (Feb. 19, 2021).