Attorney General Consumer Protection News
National Association of Attorney General
The National Association of Attorneys General elected New Hampshire Attorney General John Formella as President, Connecticut Attorney General Willam Tong as President-Elect, and South Dakota Attorney General Marty Jackley Vice President. The elections occurred at NAAG’s annual Capitol Forum meeting.
Multistate Actions
A bipartisan coalition of 50 attorneys general and the FTC reached a settlement with Marriot for a data breach involving the Starwood Guest reservation database. The settlement resolves allegations by the attorneys general that Marriott violated state consumer protection laws, personal information protection laws, and, where applicable, breach notification laws by failing to implement reasonable data security and remediate data security deficiencies, particularly when attempting to use and integrate Starwood into its systems.
The Federal Trade Commission (FTC) and a bipartisan group of nine state attorneys general successfully enjoined the proposed Kroger-Albertsons merger in the United States District Court of Oregon, prohibiting what would have been the largest supermarket merger in U.S. history. On the same day, the Washington Attorney General’s Office succeeded in blocking the Kroger-Albertsons merger under Washington’s antitrust statute.
The bipartisan Attorney General Anti-Robocall Multistate Litigation Task Force issued warning letters to four voice service providers (KWK Communications, Inc., Inbound Inc., AKA Management, Inc., and CallVox LLC) alleging transmission of millions of suspected illegal robocalls. The letters notify companies that their actions may violate state and federal consumer protection and telemarketing laws.
A coalition of attorneys general sent a letter to the FCC demanding better customer service from internet, cable, voice, and broadcast satellite providers seeking information and comment regarding ways to ensure consumers have appropriate access to customer service resources.
Individual Attorney General Actions
California Attorney General Rob Bonta secured an early win defending California Senate Bill 976 protecting children from social media addiction. The U.S. District Court for the Northern District of California’s Order upheld most of SB 976, a bill limited children’s access to social media. It blocked two portions of SB 976 from taking effect on free speech grounds which the Attorney General contend was erroneous claiming no part of the law regulates speech. ,
Connecticut Attorney General William Tong announced an antitrust settlement with asphalt paving companies and their principles over alleged bid rigging. The $360,756 and their principals resolving an investigation initiated in early 2023 into illegal bid-rigging on a state paving contract in violation of the Connecticut Antitrust Act.
Illinois Attorney General Kwame Raoul and the FTC announced a $25 million settlement with Grubhub over alleged deceptive business practices. The investigation revealed that Grubhub’s deceptive business practices allegedly negatively impacted participants in nearly every aspect of its transactions: cost of delivery and the benefits of a Grubhub Plus subscription; misled drivers about the amount of money they could make; and listed restaurants on Grubhub’s app without their knowledge or consent, and in some instances, over their explicit objections. The stipulated Order provides a permanent injunction, monetary damages, and other relief. Attorney General Kwame Raoul and the FTC also announced a proposed $20 million settlement with Leader Automotive Group to resolve allegations leader defrauded consumers into buying vehicles. The proposed settlement agreement puts to rest allegations the dealership engaged in bait-and-switch tactics only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission.
Indiana Attorney General Todd Rokita filed six lawsuits on behalf of used car buyers. The lawsuits against Cars R Us, MG Motors, Merliot Auto Sales, Phoenix Motors, Redelman’s Deals on Wheels, and W. Main Auto Sales allege defendants engaged in deceptive acts, broken promises, failing to deliver title, and ed to disclose salvage titles.
Iowa Attorney General Brenna Bird saved an Iowa couple more than $16,000 and warned Iowans to beware of sweepstakes scams. Attorney General Bird, coordinating with the local postmaster, was able to intercept a couple’s cashier’s check sent via express mail to a Miami scammer for purported “fees and taxes” before receiving a promised sweepstakes payout.
Maryland Attorney General Anthony G. Brown announced a final order against Prince George’s County home builders ordered to pay over $950,000 for violating consumer protection laws . The Final Order states that the companies violated Maryland’s Consumer Protection Act, Custom Home Protection Act, and New Home Deposits Act over 800 times when they took over $1 million in deposits and progress payments from consumers to construct modular homes in Anne Arundel, Baltimore, and Montgomery counties, but failed to finish construction or correct serious defects in the homes, pay subcontractors, or protect consumer money as required by Maryland law. Instead, they misappropriated consumer money for personal expenses unrelated to the construction of the consumers’ homes.
Michigan Attorney General Dana Nessel applauded the passage of a Michigan Senate Bill restoring protections in the Michigan Consumer Protection Act. Senate Bill 1022 clarifies the Michigan Attorney’s power to investigate illegal business practices overcoming previous restriction imposed through prior Michigan Supreme Court decisions.
New Hampshire Attorney General John M. Formella announced a Merrimack County Superior Court Order denying Meta’s Motion to Dismiss in its case alleging manipulative design features targeting teens. The Order denying the motion to dismiss allows the State’s five-count complaint, which centers on allegations that the company uses manipulative design features that it knows harms children’s mental health, to proceed.
New York Attorney General Letitia James recovered $4.8 million for consumers wrongly charged by SmileDirectClub. The settlement resolves allegations 28,000 consumers were improperly charged by the telehealth company after it went bankrupt and stopped providing services. All eligible consumers will be contacted by email with details on the refund process.
Oregon Attorney General Ellen Rosenblum The investigation found that Camping World would allegedly advertise a heavily discounted “Dare to Compare” price. During negotiations, Camping World would allegedly claw back its purported discount by double charging consumers for freight and prep charges that had already been included in the advertised price. Under the terms of the agreement, $3 million will be used to refund certain consumers that purchased an RV from Camping World between January 1, 2017, and December 31, 2018, and paid more than the advertised price for the vehicle.
Pennsylvania Attorney General Michelle Henry filed a lawsuit against Florida-based scammers who allegedly posed as the official Pennsylvania government to target new business owners. The Complaint alleges that PA Corporate Certificates, LLC, contacted Pennsylvania-based business owners to solicit purchases of a Subsistence Certificate, which is a legitimate document that costs $40, but is not necessary for all businesses. PA Corporate Certificates inflated the price to $102.50 and received payment from more than 1,000 business owners. To perpetrate the alleged scam, PA Corporate Certificates sent letters that appeared to be from the Department of State and misrepresented the purpose or benefit of a Subsistence Certificate.
Texas Attorney General Ken Paxton sued the manufacturers of allegedly toxic PFAS “Forever Chemicals” for falsely advertising household products as safe for families. The lawsuit against the largest manufacturers of per- and polyfluoroalkyl substances (“PFAS”) chemical products, 3M and DuPont, alleges misrepresentations and key omissions they made in advertising the safety of brand names such as Teflon, Stainmaster, and Scotchgard. Attorney General Ken Paxton also launched an investigation into Character.AI, Reddit, Instagram, Discord, and other companies over children’s privacy and safety practices. The investigations allege violations Texas’s Securing Children Online through Parental Empowerment (SCOPE) Act and Data Privacy and Security Act. The SCOPE Act prohibits digital service providers from sharing, disclosing, or selling a minor’s personal identifying information without permission from the child’s parent or legal guardian. The SCOPE Act also requires companies to provide parents with tools to manage and control the privacy settings on their child’s account. The TDPSA imposes strict notice and consent requirements on companies that collect and use minors’ personal data. The protections of these laws extend to how minors interact with AI products.
Washington Attorney General Bob Ferguson sent claims forms to Washington homeowners affected by Nationstar mortgage servicer mismanagement. Washingtonians can expect to receive $350 or $840 as the result of a multiyear investigation of Nationstar by state and federal government partners investigating violations resulting from records mismanagement that in some cases caused wrongful foreclosures.
Federal Consumer Protection News
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) announced the return of $1.8 billion in illegal junk fees to 4.3 million Americans harmed in a massive credit repair scheme. Consumers were charged illegal advance fees or subjected to allegedly deceptive bait-and-switch advertising by a group of credit repair companies including Lexington Law and CreditRepair.com. Together, the payments constitute the largest-ever distribution from the CFPB’s victims relief fund, which is funded by civil penalties paid by companies that violate consumer protection laws.
The CFPB filed a lawsuit to stop an allegedly illegal kickback scheme to steer borrowers to Rocket Mortgage. The complaint alleges that the mortgage company and JMG Holding Partners LLC d/b/a The Jason Mitchell Group pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which often save homebuyers thousands of dollars. The CFPB’s investigation found that Rocket Homes gave referrals and other incentives to real estate brokerages under an agreement or understanding that the real estate brokers and agents would refer real estate settlement business to Rocket Mortgage and a separate Rocket affiliate called Amrock, which handles title, closing, and escrow services. The CFPB’s investigation further found that The Mitchell Group referred thousands of clients to Rocket Mortgage and Amrock and offered awards of $250 gift cards to Mitchell Group agents who made the most referrals to The Mitchell Group’s favored partners, including Rocket Mortgage and Amrock.
The CFPB filed a complaint against JPMorgan Chase, Bank Of America, and Wells Fargo for allowing fraud to fester on Zelle. The lawsuit alleges that Early Warning Services, which operates Zelle, along with three of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo—rushed the network to market to compete against growing payment apps such as Venmo and CashApp, without implementing effective consumer safeguards. Customers of the three banks named in today’s lawsuit are alleged to have lost more than $870 million over the network’s seven-year existence due to these failures. The CFPB’s lawsuit describes how hundreds of thousands of consumers filed fraud complaints and were largely denied assistance, with some being told to contact the fraudsters directly to recover their money. Bank of America, JPMorgan Chase, and Wells Fargo also allegedly failed to properly investigate complaints or provide consumers with legally required reimbursement for fraud and errors. The CFPB’s lawsuit is seeking to stop the alleged unlawful practices, secure redress and penalties, and obtain other relief.
The CFPB finalized a rule to protect homeowners on solar panel loans and other home improvement loans paid back through property taxes. The Final Rule, mandated by Congress, applies existing residential mortgage protections to Property Assessed Clean Energy (PACE) loans, used by homeowners for clean energy upgrades and disaster readiness that are paid back through their property tax bills. Because of concerns about subprime-style lending that puts homeowners at risk of losing their home, Congress required the CFPB to enhance protections.
The CFPB finalized a rule on the oversight of popular digital payment apps to protect consumer data, reduce fraud, and stop illegal debanking. The Final Rule would help the CFPB to ensure that these companies – specifically those handling more than 50 million transactions per year – follow federal law like large banks, credit unions, and other financial institutions already supervised by the CFPB. The CFPB estimates that the most widely used apps covered by the rule collectively process over 13 billion consumer payment transactions annually.
Federal Trade Commission
The FTC and Maryland Attorney General Anthony Brown filed a complaint against Lindsay Auto for falsely touting low prices and overcharging consumers for unwanted fees and add-ons. The Complaint alleges the business systematically deceived and overcharged car-buying consumers for years, costing them millions of dollars in junk fees and unwanted add-on products.
The FTC announced a bipartisan rule banning junk ticket and hotel fees to prohibit bait-and-switch pricing and other tactics used to hide total prices and bury junk fees in the live-event ticketing and short-term lodging industries. The Junk Fees Rule is designed to ensure that pricing information is presented in a timely, transparent, and truthful way to consumers of live-event tickets and short-term lodging. With the new rule, consumers searching for hotels or vacation rentals or seats at a show or sporting event should no longer be surprised by a pile of “resort,” “convenience,” or “service” fees inflating the advertised price. By requiring up-front disclosure of total price including fees, the rule will make comparison shopping easier, resulting in savings for consumers and leveling the competitive playing field.
New FTC data shows skyrocketing consumer reports about game-like online jobs scams. Task scams typically start with an unexpected text or WhatsApp message offering online work but no specifics. Second, they say you will be completing “tasks” and will often use buzzwords like “product boosting” or “app optimization.” And third, they are designed to hook you – these scammers know it can be hard to cut your losses, and the apps they use make those fake earnings seem very real. Crypto currency is the reported currency of choice for these scams.
In Other Federal and International News
The U.S. Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) seek information about food date labeling to provide further clarity, transparency and cost savings for U.S. consumers. The RFI seeks information on industry practices and preferences for date labeling, research results on consumer perceptions of date labeling and any impact date labeling may have on food waste and grocery costs. The RFI also asks questions about how consumers interpret date label information, including whether consumers are confused by this information – especially if they believe the dates determine whether food is safe when in fact, they indicate quality – or whether it has impacts on decisions made while grocery shopping or discarding food. Finally, there are questions that explore any relationship between date labels, food waste and household expenses.
The Office of the Comptroller of Currency discussed the increasing prevalence of financial fraud at the Women in Housing and Finance Public Policy Luncheon noting its everyday impact in people’s daily lives warrants attention. Acting Comptroller Michael J. Hsu noted that banks and bank regulators can and will need to do more to address fraud. But they cannot solve the problem on their own. Social media platforms, telecommunication companies, email hosts, the U.S. Postal Service, and law enforcement need to step up and do their part as well to keep the proverbial streets clean, safe, and trusted.
The Securities and Exchange Commission, CFPB, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, National Credit Union Administration, Office of the Comptroller of the Currency, and state financial regulators issued a statement on elder financial exploitation. The interagency statement provides institutions supervised by the agencies examples of risk management and other practices that can be effective in identifying, preventing, and responding to elder financial abuse.
Charities News
Minnesota Attorney General Keith Ellison shut down a charity after an investigation found alleged self-dealing transactions and governance violations. The settlement with Youth Leadership Academy d/b/a Gar Gaar Family Services (“Gar Gaar”), requires the organization to dissolve in the wake of its violations of state laws. Attorney General Ellison alleged Gar Gaar paid more than $100,000 to a for-profit company owned by two of Gar Gaar’s officers and that an audit found several significant deficiencies in Gar Gaar’s internal controls, among other issues.
The National Association of State Charities Officials (NASCO) issued its Annual Report on State Enforcement and Regulation. Readers will find reports of enforcement cases, registration activities, outreach efforts and published guidance, as well as regulations and legislation adopted.
At the 2024 NAAG/NASCO Annual Conference, NASCO announced the creation of the Karen Kunstler-Goldman Award for Excellence recognizing excellence in the field of state charity regulation and oversight. The inaugural award, given to New York Deputy Bureau Chief of Charities Karin Kunstler-Goldman on October 9th, and hereafter to be made periodically and at the discretion of the NASCO board of directors, honors select charity regulators who demonstrate many of the qualities and achievements of the award’s namesake. During the conference, NASCO also announced its 2024-2025 officers, naming Beth Short, Director of Outreach and Education, from the Ohio Attorney General Office’s Charitable Law Section as President.
Military & Veterans News
The Department of Justice and the CFPB highlighted federal protections for servicemembers in a letter to financial service providers. The joint letter reminded financial services providers of their responsibility to recognize interest rate protections that exist for servicemembers, recent veterans and their spouses under the Servicemembers Civil Relief Act (SCRA).
