Multistate Actions
A bipartisan coalition of fifty-one attorneys general and the Federal Trade Commission (FTC) announced a telemarketing fraud enforcement sweep: Operation Stop Scam Calls. The initiative which included more than one hundred federal and state law enforcement partners nationwide, targets telemarketers and the companies that hire them and takes action against lead generators who deceptively collect and provide consumers’ telephone numbers to robocallers and others, falsely representing that these consumers have consented to receive calls. This enforcement effort also targets Voice over Internet Protocol (VoIP) service providers who facilitate illegal robocalls which often originate overseas.
A bipartisan coalition of thirty-two attorneys general and the U.S. Department of Agriculture (USDA) launched a partnership to enhance competition and protect consumers in food and agricultural markets, including in grocery, meat and poultry processing, and other markets. This new partnership will assist state attorneys general in tackling anticompetitive market structures in agriculture and related industries that are raising prices and limiting choices for consumers and producers.
Led by Oregon Attorney General Ellen Rosenblum and Washington Attorney General Bob Ferguson, a bipartisan group of 11 states and the CFPB sued Prehired for alleged deceptive marketing and debt collection practices. According to the complaint, Prehired operated a 12-week online training program claiming to prepare consumers for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee” with no obligation to pay unless they obtained a job. In reality, the company’s contract allegedly included deceptive terms including a requirement that participants pay even if they never got a job.
Connecticut Attorney General William Tong led a bipartisan coalition of twenty-three attorneys general urging senators to reform and strengthen the 340B Drug Pricing Program to ensure that essential “safety net” health providers can more effectively provide affordable medicines and a comprehensive range of health-related services to financially vulnerable patients. The letter recommends that Congress grant the Health Resources Services Administration (HRSA) clear statutory authority to harmonize existing reporting requirements for each type of 340B covered entity and ensure that HRSA is empowered to police abuse of the program.
Led by New York Attorney General Letitia James, twenty-two states submitted a comment letter to the Consumer Financial Protection Bureau (CFPB), wholly endorsing its recently issued policy statement on abusive conduct in consumer financial markets. In the comment letter, the attorneys general applaud the CFPB for providing a clear analytical framework for what constitutes abusive acts or practices, using its existing enforcement actions as examples of illegal abusive conduct, emphasizing flexibility and guidance throughout its policy statement, and accounting for the realities of modern consumer markets, including by clarifying that both acts and omissions can materially interfere with the ability of a consumer to understand terms and conditions.
Led by West Virginia Attorney General Patrick Morrisey, twenty-seven states filed an amicus brief asking the U.S. Supreme Court to uphold a lower court’s ruling that found the CFPB’s funding mechanism unprecedented and unconstitutional. According to the amicus brief, the CFPB has resisted congressional oversight, engaged in misbehavior before federal courts, and locked states and other parties out of key regulatory decisions.
Colorado Attorney General Phil Weiser and Nevada Attorney General Aaron Ford both announced settlements with Walmart for allegedly overcharging customers. Under the terms of the settlements, the company will pay $3 million to Colorado and $2 million to Nevada, which will be used to help fund local food pantries and other programs that people who earn low incomes lean on to afford food and other necessities. In addition to the settlements, Walmart implemented new policies including additional price change training.
New York Attorney General Letitia James led a coalition of sixteen attorneys general calling on the Federal Communications Commission (FCC) to expand language access for severe Weather Emergency Alerts (WEAs). In the comment letter, the attorneys general urge the FCC to adopt its alternative proposal to use human translators and to increase the number of available languages from thirteen to at least twenty-five. To reach more of these communities now and in the future, the attorneys general recommended that WEAs are offered in all languages spoken by at least 300,000 people in the U.S. over five years old as well as adding additional languages every few years based on the most recent U.S. Census Bureau data.
Oklahoma Attorney General Gentner Drummond led a coalition of nine attorneys general urging the Federal Deposit Insurance Corporation (FDIC) to reverse course on its proposed rule to impose a special assessment on banking organizations. According to the letter, the proposed rule is an effort to recover the costs of bailing out elite depositors like venture capitalists and foreign nationals at Silicon Valley Bank (SVB) and Signature Bank.
Individual Attorney General Actions
Arizona Attorney General Kris Mayes, and the FTC sued Vision Solar LLC and one of its lead generators, Solar Xchange LLC for allegedly making unsubstantiated savings claims and illegal phone calls. According to the complaint, this residential solar installation company and telemarketer allegedly also claimed to be affiliated with a utility company or government agency. Under a stipulated order, Defendants were required to pay $125,000 in civil penalties, with a further $13 million civil penalty suspended and agreed to injunctive terms addressing the alleged violations.
Arkansas Attorney General Tim Griffin, the Texas Attorney General’s Office, and the FTC announced a $10,760,000 settlement in the 2020 lawsuit against Blessings In No Time, an alleged Texas-based pyramid scheme. According to the complaint, the alleged pyramid scheme targeted financially distressed consumers across the country during the pandemic, encouraging consumers to recruit their friends, church members and communities to join on the promise of a quick return on their risk-free investment of $1,400 or more. The order requires the defendants to provide restitution to consumers and prevents future similar conduct.
Colorado Attorney General Phil Weiser announced through a series of letters to businesses, sent this week, that the Colorado Department of Law will begin enforcing the recently enacted Colorado Privacy Act. The new data privacy law went into effect on July 1. Attorney General Weiser also announced a settlement ordering Denver-based PropDoks to temporarily halt operations after an investigation found the company allegedly promised to create nearly any false document, assuring customers that “We Make Proof of Almost Anything.” According to the complaint, PropDoks allegedly sold documents that would normally be generated by government agencies such as vehicle titles, tax documents, temporary vehicle license plates, U.S. military deployment papers, COVID-19 vaccination record, as well as court orders that contained a false judge’s signature.
Connecticut Attorney General William Tong sued for-profit nursing school Stone Academy and Paier College of Art following its abrupt closure and is seeking restitution and civil penalties. According to the complaint, the school offered day and evening practical nursing programs and promised students “hands on instruction from a dedicated staff.” Stone Academy did not provide the education and training it promised, through its alleged multiple failures and regulatory violations, which made many graduates ineligible to sit for the NCLEX licensing exam, the only way to obtain licensure in the State of Connecticut.
Florida Attorney General Ashley Moody and the FTC are sending more than $540,000 to consumers who allegedly fell victim to a debt reduction robocall scheme. Life Management Services allegedly tricked individuals into paying for credit card interest-rate-reduction and debt-elimination programs that rarely, if ever, provided the results as promised. According to the complaint, consumers were deceived into paying upfront fees of $500 to $1500 for false credit card interest-rate-reduction and debt-elimination services. Under the settlement, the defendants are banned from having a debt-elimination company and are required to repay consumers. Attorney General Moody also announced an injunction against Olympus Pools. According to the consent judgment, Olympus misrepresented the timeline of projects, accepted upfront payments, and then left jobs incomplete. Olympus admitted that it violated Florida’s Deceptive and Unfair Trade Practices Act and agreed to a ban enjoining it from conducting any business in Florida.
Indiana Attorney General Todd Rokita announced a $1.27 million settlement with GlaxoSmithKline to resolve allegations that it violated antitrust and consumer-protection laws. According to the settlement, The company allegedly engaged in years-long delay tactics to prevent competitors from being able to go to market with generic versions of Flonase, a corticosteroid nasal spray. This effectively forced consumers to pay more for the drug by maintaining a monopoly.
Maryland Attorney General Anthony Brown announced a settlement with CarMax, Inc. over its alleged failure to disclose open safety recalls on the used vehicles it offered and sold. CarMax allegedly failed to disclose the recall status of cars they were selling in violation of the Maryland Consumer Protection Act. The settlement requires CarMax to ensure that consumers are made aware of the recall status prior to purchase, include hyperlinks to information on open recalls in advertisements, and provide consumers with information about any open recalls before presenting any other sales paperwork. The settlement also requires CarMax to pay $240,000.
Mississippi Attorney General Lynn Fitch sued The Depository Trust and Clearing Corporation and Natura Lawn of America for allegedly violating the Mississippi Telephone Solicitation Act. Together, these companies allegedly made nearly 1,000 unauthorized calls to Mississippians on the Do Not Call Registry.
New Jersey Attorney General Matthew J. Platkin reached a $502,000 settlement with Freedom Mortgage Corp. (Freedom) to resolve allegations that it violated the state’s consumer protection laws in the sale and servicing of mortgages in New Jersey and nationally. Formerly based in New Jersey, Freedom allegedly bombarded consumers with harassing sales calls about loan refinancing, engaged in bait-and-switch sales tactics to induce them to refinance their loans, and caused them financial harm by repeatedly failing to meet its responsibilities as a loan servicer.
Pennsylvania Attorney General Michelle Henry filed a lawsuit against All American Monuments, Inc. for allegedly failing to fulfill orders for burial monuments and related services. The complaint alleges that, despite receiving thousands of dollars for engraved cemetery monuments, the company did not deliver the monuments or provide refunds to consumers.
Rhode Island Attorney General Peter Neronha announced an agreement to resolve enforcement actions against three car dealerships for charging automatic add-ons and fees not included in the advertised price and other advertising practices. According to the Assurance of Voluntary Compliance, Grieco Honda, Grieco Toyota, and Grieco Hyundai allegedly charged more for vehicles than they were advertising on their website, deceptively charged every customer a fee for a $249 paint and fabric spray, and described vehicles as available for “auction” or “wholesale” prices. The three dealerships will pay a combined $557,815 to resolve the claims, including $457,815 in direct restitution to consumers and $100,000 for investigative costs and attorneys’ fees.
Veterans and Military News
Led by Massachusetts Attorney General Andrea Joy Campbell, New Hampshire Attorney General John Formella, and Illinois Attorney General Kwame Raoul, a bipartisan coalition of 24 attorneys general sent a letter to Congress supporting H.R. 1255, the Sgt. Isaac Woodard, Jr. and Sgt. Joseph H. Maddox GI Bill Restoration Act of 2023. In the letter, the attorneys general assert that although the legislative text of the G.I. Bill was race neutral, the administration of benefits was discriminatory, and Black World War II veterans were often denied opportunities. The proposed legislation would help rectify past wrongs and fuel continued economic growth in communities across the country through expanding access to homeownership and education.
Federal Consumer Protection News
Consumer Financial Protection Bureau
The Consumer Financial Protection Bureau (CFPB) ordered Bank of America to pay more than $100 million to customers for allegedly systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization. The Office of the Comptroller of the Currency (OCC) also found that the bank’s alleged double-dipping on fees was illegal. Under the consent order, Bank of America will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC.
The CFPB also sued Snap Finance for allegedly deceiving consumers, obscuring the terms of its financing agreements, and making false threats. The complaint alleges that Snap Finance provided millions of “rental-purchase” financing agreements through misleading advertisements. Those agreements allegedly had insufficient disclosures and interfered with consumers’ ability to understand the terms and conditions. The CFPB further alleges Snap Finance’s illegal conduct continued in servicing those agreements, including misrepresenting consumers’ payment obligations, and making false threats in collections.
Additionally, the CFPB released a new Supervisory Highlights report which found unfair, deceptive, and abusive acts or practices across many consumer financial products. The report noted certain industries that are ripe for abuse, such as auto, consumer reporting, debt collection, fair lending, mortgage origination and small-dollar lending. The Bureau stated that a key aspect of its supervision program is identifying compliance issues before they become significant problems.
Federal Trade Commission
The Federal Trade Commission (FTC) and United States Department of Justice announced that Amazon has agreed to a permanent injunction and a $25 million civil penalty as part of a settlement to resolve alleged violations of the Children’s Online Privacy Protection Act (COPPA), the Children’s Online Privacy Protection Rule (COPPA Rule) and the FTC Act relating to Amazon’s voice assistant service, Alexa. The complaint alleges that Amazon retained children’s voice recordings indefinitely by default, in violation of COPPA’s requirement that these recordings be retained only as long as reasonably necessary to fulfill the purposes for which they were collected.
Additionally, the FTC finalized an order requiring online counseling service BetterHelp to pay $7.8 million and prohibiting it from sharing consumers’ health data for advertising. The complaint alleged that BetterHelp used and disclosed consumers’ email addresses, IP addresses, and health questionnaire information to Facebook, Snapchat, Criteo, and Pinterest for advertising purposes despite promising consumers that it would only use or disclose personal health data for limited purposes. The order also bans BetterHelp from sharing consumers’ personal information for re-targeting.
The FTC also announced a lifetime ban for an alleged telemarketing scam pitching extended automobile warranties. In the complaint, the FTC first charged Kole Consulting Group with running American Vehicle Protection (AVP). AVP allegedly scammed consumers out of millions of dollars in February 2022. The complaint alleged that AVP made unsolicited calls claiming to be affiliated with vehicle makers and fraudulently claimed its products, which cost thousands of dollars, offered “bumper to bumper” protection. The order also includes a lifetime ban and a judgment of $6.5 million, which is partially suspended based on the defendants’ inability to pay.
The FTC also took action regarding Sobrenix, a supplement marketed to reduce and even eliminate alcohol cravings and consumption. According to the complaint, Rejuvica, the makers pf Sobrenix, allegedly made unsupported and misleading claims and paid endorsers to create deceptively formatted advertising that resemble social media posts. The defendants also allegedly used fake review sites to trick consumers. The defendants were charged under the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act of 2018.
In Other Federal News
The Federal Communications Commission (FCC) announced a proposed fine of $20 million against Q Link Wireless LLC and Hello Mobile Telecom LLC for apparent violations of FCC rules that require carriers to authenticate customers’ identity before providing online access to Customer Proprietary Network Information (CPNI). The Notice of Apparent Liability alleges that the companies relied on biographical information and account information to control online access to CPNI, which placed customers’ sensitive personal data at risk. The companies also allegedly failed to use reasonable data security standards, which placed customers at increased risk for misuse of this sensitive personal data.
The Securities and Exchange Commission (SEC) obtained a temporary asset freeze, restraining order, and other emergency relief against Digital Licensing Inc., doing business as “DEBT Box,” as well as 17 other defendants. The complaint alleges that the defendants sold unregistered securities they call “node licenses.” In hundreds of online videos and social media posts, as well as at investor events, the defendants told investors that the node licenses would generate various crypto asset tokens through crypto mining activity and that revenue-generating businesses in a variety of sectors would drive the value of the various tokens DEBT Box mined, resulting in exorbitant gains for investors. In reality, the complaint alleged, the node licenses were a sham intended to obscure the fact that the total supply of each token was created by DEBT Box instantaneously using code on a blockchain.
Other articles in this edition include: