The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly August 2020
Consumer Chief of the Month: Amy Haywood, Missouri
Missouri is often referred to as the Show Me State, and I could not be more proud of what Missouri Attorney General Eric Schmitt's consumer protection team, as well as the entire NAAG consumer protection community, has shown the people they serve over these past few months. From all of us taking thousands of complaints in our own states to banding together with each other and our federal partners to combat fraud in these unprecedented times, we all rose to the occasion when COVID-19 struck our communities. Before that, we stepped in to try to turn the tide on the opioid crisis, and every day, in cases big and small, from home or back in the office, we are continuing to show our constituents what we can do. I am grateful to work with such amazing colleagues across the country on consumer protection issues.
It's fitting to serve as August Chief of the Month, because this August marks my 7th year at the Missouri Attorney General's Office. I originally joined the Litigation Section in August 2013. Three years later, I joined the Consumer Protection Section working on antitrust matters. In early 2017, I was promoted to Chief Counsel of the Consumer Protection Section.
Using Consumer Protection Laws to Ensure Consumers' Access to Affordable Healthcare
Audrey Udashen, Assistant Attorney General, Consumer Protection Division, Washington Attorney General's Office
In 2015, the Consumer Protection Division of the Washington State Attorney General's Office ("Washington AGO") began an initiative to prosecute unfair and deceptive trade practices that affect Washingtonians' access to affordable healthcare under our state Consumer Protection Act ("Washington CPA"). This initiative has resulted in a number of successful enforcement actions that improve access to healthcare in Washington. Although some of the legal theories used in these cases were based upon Washington-specific laws, they drew upon foundational consumer protection concepts and could be replicated under other states' unfair and deceptive trade practice laws.
Become a Subscriber
To subscribe to the Center for Consumer Protection Monthly Newsletter, click here.
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The Consumer Financial Protection Bureau (CFPB or Bureau) announced a settlement with TD Bank, N.A. regarding its marketing and sale of optional overdraft service. The Bureau alleged that TD Bank's overdraft enrollment practices violated the Electronic Fund Transfer Act and Regulation E by charging consumers overdraft fees for ATM and one-time debit card transactions without obtaining their affirmative consent, and that TD Bank engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act. The Bureau also found that TD Bank engaged in practices prohibited by the Fair Credit Reporting Act and its implementing Regulation V. The consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a civil money penalty of $25 million.
- The CFPB issued a Request for Information to examine the impact of the rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. In seeking comments on the consumer credit card market, the Bureau must conduct a review of the market every two years. Comments must be received by October 27, 2020.
- The CFPB announced that it will provide an additional 60 days for public comment on its Request for Information on how best to create a regulatory environment that expands access to credit and ensures that all consumers and communities are protected from discrimination in all aspects of a credit transaction. The original deadline for submissions was October 2, 2020. The comment period will now close on December 1, 2020.
Federal Trade Commission:
- The Federal Trade Commission (FTC) is mailing checks and sending PayPal payments totaling more than $9.1 million to customers who paid for an "Amazing Wealth System" workshop. According to the lawsuit brought by the FTC, the defendants, FBA Stores and related companies and individuals, falsely claimed their "Amazing Wealth System" would enable people to create a profitable online business selling products on Amazon. However, the defendants had no affiliation with Amazon.com, buyers did not earn the advertised income, most consumers lost significant amounts of money, and many of the customers experienced problems with their Amazon stores, including losing their ability to sell on Amazon.com. The FTC is sending checks to 13,348 customers with an average refund amount of $684.24.
- The FTC filed suit against three online merchandisers for failing to deliver on promises that they could quickly ship COVID-related safety products like face masks, sanitizer, and other personal protective equipment (PPE) related to the coronavirus pandemic. The lawsuits allege that the companies violated the FTC's Mail, Internet and Telephone Order Rule, which requires that companies notify consumers of shipping delays in a timely manner and give consumers the chance to cancel orders and receive prompt refunds.
- A leading provider of merchant cash advances used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed, according to an FTC lawsuit. The FTC's complaint against Yellowstone Capital LLC, Fundry LLC, their founder and CEO Yitzhak Stern, and president Jeffrey Reece, alleges that they unlawfully withdrew millions of dollars in excess payments from their customers' accounts, and to the extent they provided refunds, sometimes took weeks or even months to provide them.
- The FTC announced it has sent letters warning 20 more marketers nationwide to stop making unsubstantiated claims that their products and therapies can prevent or treat COVID-19. Several of the letters target "treatments" the Commission has warned companies about previously, including intravenous Vitamin C infusions, ozone therapy, and supplements. Others challenge claims that nasal spray, skincare products, or acupuncture can prevent or treat COVID-19. There is no scientific evidence that these, or any, products or services can prevent or treat the disease.
In other federal news:
- Federal Communications Commissioner Geoffrey Starks sent letters to AT&T Inc. and Verizon Communications inquiring about the aggregation and monetization of sensitive consumer data that is generated for advertising placement purposes. Recent reports indicate that this data is being used to track Americans' locations to protests and places of worship. In the letters, Commissioner Starks seeks details about AT&T and Verizon's participation in real-time bidding exchanges for mobile advertising. The letters also request details on each provider's policies and procedures to prohibit or minimize tracking of Americans to protests, including the Black Lives Matter protests, and other sensitive locations, including places of worship and medical providers.
- The FCC announced steps taken to reduce fees and telephone calling rate charges for incarcerated individuals. In a Further Notice of Proposed Rulemaking, the FCC proposed new rate caps for interstate inmate calling services (ICS) from current rates of $0.21 per minute for debit and prepaid calls and $0.25 per minute for collect calls to $0.14 per minute for debit, prepaid, and collect calls from prisons, and $0.16 per minute for debit, prepaid, and collect calls from jails. The Further Notice also proposes to adopt rate caps for international ICS calls for the first time.
- The Office of the Comptroller of the Currency (OCC) assessed an $80 million civil penalty against Capital One, N.A., and Capital One Bank (USA), N.A. related to a 2019 data breach based on the bank's failure to establish effective risk assessment processes prior to migrating significant information technology operations to the public cloud environment and the bank's failure to correct the deficiencies in a timely manner. The OCC found the deficiencies to constitute unsafe or unsound practices and resulted in noncompliance with 12 C.F.R. Part 30, Appendix B, "Interagency Guidelines Establishing Information Security Standards." The OCC penalty will be paid to the U.S. Treasury.
- The U.S. Court of Appeals for the 10th Circuit issued a decision in favor of the U.S. Consumer Product Safety Commission, reversing the district court which had held that a 2017 recall order violated due process based on statements by one commissioner which the manufacturer for the recalled products (Zen Magnet LLC) alleged showed bias. The recall order was issued by the Commission based on the conclusion that the magnets constituted a swallowing hazard for children.
- The Securities and Exchange Commission charged former Georgia state legislator and former member of the Georgia Board of Regents Clarence Dean Alford with defrauding at least 100 investors in his now-bankrupt energy development company, Allied Energy Services LLC. According to the SEC's complaint, from 2017 to 2019, Alford fraudulently raised at least $23 million by selling promissory notes to investors, primarily Indian-American professionals, that he guaranteed would provide high annual rates of return.
- The U.S. Food and Drug Administration (FDA) warned consumers about alcohol-based hand sanitizers that are being packaged in containers that may appear as food or drinks and may put consumers at risk of serious injury or death if ingested. The agency has discovered that some hand sanitizers are being packaged in beer cans, children's food pouches, water bottles, juice bottles and vodka bottles. Additionally, the FDA has found hand sanitizers that contain food flavors, such as chocolate or raspberry. Drinking only a small amount of hand sanitizer is potentially lethal to a young child, who may be attracted by a pleasant smell or brightly colored bottle of hand sanitizer.
- The U.S. Department of Justice (USDOJ) announced entry of a consent decree imposing a permanent injunction shutting down telecom carriers who facilitated hundreds of millions of fraudulent robocalls into the U.S. telephone system. Under the terms of the consent decree, defendants Nicholas and Natasha Palumbo of Scottsdale, Arizona, and their companies, Ecommerce National LLC d/b/a TollFreeDeals.com and SIP Retail d/b/a sipretail.com, agreed to be permanently barred from, among other things, using the U.S. telephone system to: deliver prerecorded messages through automatic means, carry voice-over internet protocol calls destined for phones in the United States, and from providing any U.S. phone numbers to other individuals or entities. In addition, the defendants are permanently barred from serving as employees, agents, or consultants to any person or entity engaged in these activities.
- USDOJ announced that it obtained a temporary restraining order in federal court to combat fraud related to the coronavirus (COVID-19) pandemic. Defendants Thu Phan Dinh, Tran Khanh, and Nguyen Duy Toan, all residents of Vietnam, are alleged to have engaged in a wire fraud scheme seeking to profit from the COVID-19 pandemic. According to the complaint, defendants operated more than 300 websites that fraudulently purported to sell products that became scarce during the pandemic, including hand sanitizer and disinfectant wipes. Thousands of victims in all 50 states attempted to purchase these items from defendants' websites. Victims paid for items supposedly sold through the websites but never received the purchased products. An emergency ex parte temporary restraining order required that the registrar and registries of defendants' fraudulent websites take immediate action to disable them.
Attorney General Consumer Protection News and Other Items of Interest
Editor's Note: Attorneys general from across the country have issued numerous consumer alerts and guidance for avoiding COVID-19 related scams. Attorneys general have also issued cease and desist letters and engaged with private industry urging action to halt price gouging on important consumer goods and safety equipment. Space does not permit inclusion of a summary of each such release in the Center for Consumer Protection Monthly, however a representative sample of such releases is provided in the news items below. Each such release is available on consumerresources.org, our public-facing consumer protection website.
Led by South Carolina Attorney General Alan Wilson and an executive committee of Connecticut, Arkansas, the District of Columbia, Florida, Georgia, Maryland, New Jersey, Oregon, South Dakota, and Texas, 48 attorneys general announced a multistate settlement of more than $85 million with American Honda Motor Co., Inc. and Honda of America Mfg., Inc. (collectively "Honda"), over allegations Honda concealed safety issues related to defects in the frontal airbag systems installed in certain Honda and Acura vehicles sold in the United States. The systems were designed and manufactured by Takata Corporation, a long-time Honda supplier, and were first installed in Honda vehicles in the 2001 model year. The settlements provide for injunctive and remedial relief.
A bipartisan coalition of 44 attorneys general urged Congress to help senior victims of fraud by including Edith's Bill in COVID-19 relief legislation. The legislation would amend the Victims of Crime Act of 1984 to include victims of senior fraud as eligible for reimbursement by the Crime Victims Fund for states that provide compensation to victims.
Led by the Alaska and Illinois attorneys general, a bipartisan coalition of 30 attorneys general urged the U.S. Senate to provide relief for all federal student loan borrowers impacted by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) currently only covers federal student loans owned by the federal government, excluding nearly 8 million borrowers whose federal student loans are owned by private entities.
Led by California Attorney General Xavier Becerra and Louisiana Attorney General Jeff Landry, a bipartisan coalition of 34 attorneys general sent a request to the U.S. Department of Health and Human Services, National Institutes of Health, and Food and Drug Administration, urging them to use their legal authority under the Bayh-Dole Act to increase the availability of Remdesivir, a drug which has shown promising results in reducing mortality and hospitalization from COVID-19. In the letter, the bipartisan coalition urges the federal government to license Remdesivir to third party manufacturers to scale up production and distribution and ensure the drug is made available to all those in need at a reasonable price. If these agencies are unwilling to exercise this authority, the letter requests that the agencies assign this authority for the states to use.
A multistate coalition of 24 attorneys general submitted a comment letter opposing the Consumer Financial Protection Bureau's proposed rule on the collection of time-barred debt. In the letter, the coalition argues that the proposed rule is contrary to both the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act and also fails to adequately protect consumers' rights.
Led by California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey, a coalition of 23 attorneys general filed a lawsuit against Secretary of Education Betsy DeVos and the U.S. Department of Education (ED) challenging their action to repeal and replace the 2016 "borrower defense" regulations. The complaint alleged that ED's repeal of the 2016 regulations violated the Administrative Procedure Act and replaced them with new regulations that make it nearly impossible for victimized students to obtain financial relief, while rolling back oversight over unscrupulous and predatory schools.
A multistate collation of eight attorneys general filed a lawsuit challenging the Federal Deposit Insurance Corporation's (FDIC) final rule that allegedly creates a loophole allowing predatory lenders to evade state laws that forbid excessive interest-rate charges. Under existing federal law, federally insured state-chartered banks are exempt from state interest-rate caps. The FDIC's final rule extends these exemptions to any non-bank lender that buys loans originated by an exempt bank. In the lawsuit, the coalition argues that the FDIC's final rule conflicts with the Federal Deposit Insurance Act, exceeds the FDIC's statutory authority, and violates the Administrative Procedure Act.
Arizona Attorney General Mark Brnovich announced a $22.5 million judgment and a permanent injunction against vaping seller Eonsmoke, LLC, resolving a consumer fraud lawsuit filed in January 2020 to stop Eonsmoke from selling illegal vaping products and targeting youth in Arizona. In February 2020, the trial court issued a preliminary injunction, ordering Eonsmoke to immediately cease the sales of illegal vaping products. Arizona's action followed an October 2019, FDA warning letter informing Eonsmoke that it was manufacturing and selling 96 illegal products that did not receive proper FDA approval. The judgment included $21,974,000 in civil penalties, $511,136 in disgorgement of revenues, and $50,000 in attorneys' fees.
Arkansas Attorney General Leslie Rutledge applauded the decision dismissing a lawsuit against the State of Arkansas, filed by Jim Bakker and his production company, Morningside Church Productions, Inc., d/b/a The Jim Bakker Show. The U.S. District Court for the Western District of Missouri issued its dismissal holding that it lacked personal jurisdiction over the Attorney General, sued in her official capacity, due to a lack of minimum contacts. General Rutledge has a separate lawsuit against Jim Bakker and his production company in Arkansas state court for allegedly falsely telling Arkansas consumers that colloidal silver products would cure, eliminate, kill or deactivate COVID-19. Approximately 385 Arkansans made purchases from Bakker's company totaling approximately $60,524 for colloidal silver products between January 1 and March 9, 2020.
California Attorney General Xavier Becerra filed a petition seeking a court order requiring two companies in the egg supply chain to comply with investigative subpoenas and interrogatories. California Farms LLC, a California egg distributor, and its parent company and main supplier Dakota Layers LLC, located in South Dakota, are suspected of charging excessive prices during a state of emergency and violating California's price gouging laws. General Becerra also announced approval by the Office of Administrative Law (OAL) of final regulations under the California Consumer Privacy Act. Proposed final regulations were submitted to the OAL by Attorney General Becerra on June 1, 2020. During OAL's review process, additional revisions were made to the proposed regulations. The approved regulations go into effect immediately. General Becerra also announced $11.375 million settlement with Honda regarding faulty frontal airbag systems manufactured by Takata.
Colorado Attorney General Phil Weiser announced a $3 million judgment obtained against a for-profit college, College America. The court's 160-page Findings of Fact, Conclusions of Law and Judgment followed a four-week bench trial in late 2017 and awarded $3 million in civil penalties. The court painstakingly detailed evidence presented by the state of College America's actions and concluded that the college had knowingly made false and misleading representations about potential wages and types of jobs graduates could expect. The $3 million penalty was the statutory maximum for what the court deemed to be six series of violations. General Weiser also announced that his office has reached a settlement in two precedent-setting lawsuits involving Colorado's right to enforce its interest rate limits on consumer loans to protect residents from predatory lending practices. Under federal law, certain out-of-state banks can lend in Colorado at interest rates that exceed Colorado's limits. The Attorney General alleged that non-banks Avant and Marlette illegally partnered with two out-of-state banks, WebBank and Cross River Bank, respectively, in a scheme to "rent" those banks' ability to lend above Colorado's rate limits. Under the settlement, WebBank, Cross River Bank, and all of their non-bank partners, agreed not to lend to Colorado consumers at rates above 36%, will maintain a Colorado lending license, and pay $1,050,000 to the state. General Weiser also announced $1.2 million in debt relief and the return of more than $66,000 to former Art Institute of Colorado students who were allegedly defrauded when the school's corporate owner, Dream Center Education Holdings, failed to inform them that it lost its accreditation from the Higher Learning Commission.
Connecticut Attorney General William Tong is alerting consumers to potentially unlawful surcharges for PPE equipment by healthcare providers that may violate the Connecticut Unfair Trade Practices Act. General Tong sent a letter to several healthcare provider associations and licensing boards to alert their members that charging patients an additional fee for PPE constitutes illegal balance billing when the charges are assessed in connection with in-network services covered by the patients' insurance plans. Connecticut laws prohibit participating providers from charging such fees to insured consumers.
District of Columbia Attorney General Karl A. Racine announced a lawsuit against Instacart, a grocery delivery service, for allegedly charging District consumers millions of dollars in deceptive service fees and for failing to pay hundreds of thousands of dollars in District sales tax. The complaint alleges that for a span of 18 months, Instacart failed to clearly disclose to consumers that optional service fees were added on their bills and led them to believe these fees were tips for their delivery workers, when the fees were allegedly kept as an extra revenue source by the company and did not increase workers' pay. Additionally, it alleges that Instacart violated District tax law and failed to collect hundreds of thousands of dollars in sales taxes on delivery and service fees it collected. General Racine also announced a suit against Town Sports International, LLC (TSI), for failing to abide by promises made to Washington Sports Club members while its facilities were closed due to the COVID-19 pandemic. In mid-April, responding to a letter sent by AG Racine and other state attorneys general, TSI had agreed to freeze memberships, credit consumers for dues paid while their gyms were inaccessible, and process requests for cancelations. Since reopening on June 22, however, the company has neither issued those credits to account holders, nor processed all membership cancelations.
Florida Attorney General Ashley Moody announced a settlement that provides restitution to businesses scammed into purchasing unnecessary corporate certificate services. The proposed stipulated consent judgment requires Leandro Rodriguez, owner of Florida State Filing Corporate and Certificate Filing Service, to pay more than $75,000 in restitution to resolve claims he sent solicitations which allegedly gave the misleading impression of being from the state, seeking payments of $68 or $78 for a certificate of status that the solicitations falsely indicated were required by the state.
Illinois Attorney General Kwame Raoul filed a lawsuit against Skokie Motor Sales, Inc. operating as Sherman Dodge, for allegedly engaging in unfair and deceptive advertising and business practices. The dealership allegedly violated motor vehicle advertising regulations relating to sales events, trade-in values, discount substantiation, and advertised prices. In the lawsuit, Raoul also alleges that Sherman Dodge violated a 2016 settlement in which Dodge agreed to not sell a vehicle for more than the advertised price, advertise a vehicle that it had already sold or leased, guarantee a specific value for a trade-in vehicle, advertise a sale without reducing the selling price of vehicles listed in an advertisement by at least 5 percent, or include limited rebates in an advertised price.
Kansas Attorney General Derek Schmidt announced that a Missouri tree care, asphalt and paving company and its owner have been permanently banned from door-to-door sales in Kansas and ordered to pay nearly $20,000 in fines and restitution for violations of the Kansas Consumer Protection Act involving elderly residents. The consent judgment also requires defendants Harlan Wayne Dilday, along with Dilday & Sons Complete Tree Care, LLC, and Dilday & Sons Asphalt and Paving, LLC, owned by Harlan Dilday to pay $10,000 in civil fines and penalties, $8,000 in restitution, and $1,705.50 in investigative fees and expenses.
Kentucky Attorney General Daniel Cameron warned of a potential scam related to unsolicited packages from foreign countries containing personal protective equipment, such as masks or face shields which may be part of what is commonly known as a "brushing" scam. These scams are often used by third-party sellers to obtain five-star reviews for their products. Companies who employ this scam send inexpensive items to the homes of U.S. residents and then write a review of their product using the resident's name and address.
Massachusetts Attorney General Maura Healey announced a $10 million settlement with a Connecticut-based competitive electric supplier and two of its principals including $7.25 million to affected consumers. The consent judgment settles claims against Starion Energy, Inc., Ruzhdi Dauti, and Dashmir Murtishi, that they used unfair and deceptive sales tactics to lure more than 100,000 Massachusetts customers into expensive contracts with high electricity rates. General Healy also announced a lawsuit against national auto lender Credit Acceptance Corporation (CAC) for allegedly making unfair and deceptive auto loans to thousands of Massachusetts consumers, providing investors with false or misleading information regarding auto securities they offered, and engaging in unfair debt collection practices. The complaint alleges that since 2013, CAC failed to inform investors that the company topped off the pools of loans that they packaged and securitized with higher-risk loans, despite claiming otherwise in disclosures to investors. The complaint also alleges that CAC has made high-interest subprime auto loans to Massachusetts borrowers that the company knew borrowers would be unable to repay, in violation of state law.
Michigan Attorney General Dana Nessel announced a settlement agreement requiring a California-based telecom carrier, charged with carrying foreign illegal robocall traffic to exit the VoIP telecom industry and cease operations. The Attorney General's office used consumer complaints to trace illegal robocalls regarding Social Security Administration scams and auto-warranty scams to MODOK LLC. General Nessel also announced that as part of a plea deal, the former owner of a funeral home was ordered to pay back $213,000 after he used money, which was given to him by clients for their prepaid funeral contracts, to support his business. Defendant Denis Robert Johnson, 70, was also sentenced to serve up to 60 days in county jail and probation after his release. General Nessel also announced a $1.8 million settlement with foreign online car title loan company Liquidation LLC, which did business in Michigan under the names "Autoloans" and "Car Loans." These companies made online vehicle loans to Michigan consumers at triple-digit interest rates, often in excess of 231 percent APR. In addition to the civil settlement, Liquidation LLC previously pled no contest to 21 counts of larceny by false pretenses.
Minnesota Attorney General Keith Ellison announced the receipt of a 2020 Notable Document Award from the National Conference of State Legislatures. The award was conferred on the report of General Ellison's Task Force on Lowering Pharmaceutical Drug Prices. The full report, including 14 recommendations and 57 action steps, is available here.
North Carolina Attorney General Josh Stein released guidance for North Carolinians who are struggling financially as a result of the coronavirus pandemic. Included is guidance for people struggling with utility bills, rent, and mortgage payments. General Stein also announced that he is filing a lawsuit against Stephen Gould Corporation alleging price gouging on N95 or similar face masks to the North Carolina Department of Public Safety, Duke Health, UNC Health, and the Charlotte Chapter of the American Red Cross. General Stein also announced a $100,000 price gouging settlement with an Idaho water damage restoration company, Boise Disaster Services LLC/Servpro. The settlement results in the dismissal of Servpro of Boise's lawsuits against customers and cancels bills of more than $100,000 in allegedly unlawful charges for services following Hurricane Florence.
Pennsylvania Attorney General Josh Shapiro obtained a settlement with student loan company Equitable Acceptance Corporation (Equitable) requiring the company to cease operations in Pennsylvania and cancel nearly $200,000 in debt for its former Pennsylvania customers. Equitable allegedly charged consumers on average $1,300 in fees to enroll them in student loan repayment programs offered through the U.S. Department of Education that consumers can enroll in for free. Equitable then charged these borrowers interest rates ranging from 17.99% to 20.99% for the financing. Some of the student loan debt relief companies were allegedly scams that took advantage of borrowers and failed to provide any of the services as advertised. General Shapiro also announced that a Jamaican national named Kristoff Cain operating a Jamaican lottery scam taking millions of dollars from elderly Pennsylvanians has been sentenced to 70 months in prison. General Shapiro also announced that his office filed a consumer protection suit against an individual, Juliane Von Schmeling, and her company, The Baroness Consulting & Mediation, LLC, for engaging in the unauthorized practice of law. The defendants advertised mediation services.
Texas Attorney General Ken Paxton obtained a temporary restraining order against a Texas clinic for misrepresenting the character of its COVID-19 testing and failed to secure patients' sensitive personal information. According to the suit, Clinica Hispana claims its tests can diagnose an active infection, but the type of tests used by the clinic are not approved for that use. The clinic also allegedly threw away test results using an unsecured dumpster behind the clinic, which directly violates Texas identity theft laws.
Virginia Attorney General Mark R. Herring announced that he has reached a settlement with Venture Pest Control of Charlotte, L.L.C. to resolve allegations that the company failed to properly notify consumers of their three-day right to cancel a home solicitation sale, and failed to provide required disclosures in connection with a continuous service offer. Under the terms of the settlement, the company agrees to offer refunds totaling $17,463 to 145 consumers who entered into agreements with the company, and who were required to pay an early-termination fee to cancel their agreements.
Washington Attorney General Bob Ferguson announced that a state court judge ordered air duct cleaning companies and their owner to pay civil penalties of $10 million in lawsuit over deceptive advertisements and robocalls. US Air Ducts & Sky Builders Inc. and DLM Services Inc., as well as owner Rami Mornel allegedly made over 13 million robocalls within Washington state from 2017 to 2019, including calling more than 500 individual Washington consumers over 100 times. General Ferguson also announced a lawsuit against a company that marketed vapor products containing nicotine in a way that appealed to youth, then sold the products without verifying the buyers' ages. The company, E-Juice Vapors, allegedly failed to comply with numerous age verification requirements intended to prevent youth from purchasing vapor products online. Moreover, E-Juice Vapors never received a license from the state to deliver vapor products into Washington as required by Washington law.
West Virginia Attorney General Patrick Morrisey filed opioids-related lawsuits against Walmart and CVS alleging they should pay for helping create the state's opioid epidemic and act to remediate what became a public health and financial crisis. The lawsuits allege Walmart and CVS, as individual distributors, supplied far more opioids to their retail pharmacies than necessary to meet a legitimate market and ordered additional pills from other distributors to fulfill demand. The Attorney General contends Walmart and CVS each knew its obligation to halt suspicious orders to its retail pharmacies but failed to monitor for and report such activity.
A proposed class action filed in the U.S. District Court for the Western District of Virginia alleges Wells Fargo has placed certain customers' mortgages into forbearance under the CARES Act without authorization to do so as a means to increase its mortgage servicing income. Wells' actions also allegedly hurt those whose credit reports reflected the forbearance as they sought other financial services amid the economic downturn.
California Attorney General Xavier Becerra announced a settlement with Verity Health System of California, Inc. (Verity) and Prime Healthcare Services, Inc. (Prime), putting in place additional conditions on Verity's sale of St. Francis Medical Center in Los Angeles County to Prime. The settlement requires Prime to provide funding for charity care and community benefit services in the communities surrounding St. Francis over the next six fiscal years. Over the course of the six fiscal years of the deal, the settlement requires Prime to provide $9.35 million per year in charity care, and approximately $1.6 million per year in community benefit services. Under California law, any proposed sale of a non-profit health facility to a for-profit corporation must secure the approval of the state attorney general.
District of Columbia Attorney General Karl A. Racine filed a lawsuit against the NRA Foundation and the National Rifle Association (NRA) for misusing charitable funds to support wasteful spending by the NRA and its executives. The lawsuit alleges that the NRA Foundation violated District laws by allowing charitable funds to be used for noncharitable purposes, failing to operate independently, and placing the NRA's interests ahead of its own charitable purposes. The suit also alleges that the Foundation's Board of Directors was controlled by the NRA and allowed the NRA to exploit it through risky multi-million-dollar loans, including a $5 million loan that the NRA has never repaid. Additionally, the foundation allegedly agreed to pay the NRA millions of dollars in fees without documentation of the work the NRA was performing or how it supported the foundation's charitable purposes. With this lawsuit, the office is seeking to return the charitable funds improperly wasted on the NRA to the foundation and a court order imposing changes to the foundation to ensure it is operated independently and fulfills its charitable purposes.
Minnesota Attorney General Keith Ellison asked a court to remove the trustees of a trust formed to relieve poverty in St. Paul. Trustees of the Otto Bremer Trust, Brian Lipschultz, Daniel Reardon, and Charlotte Johnson are alleged to have breached fiduciary duties, failed to administer the trust effectively and in accordance with the directives of its founder, and committed multiple violations of state laws governing charitable trusts. Two petitions and an associated memorandum of law detail the allegations.
New York Attorney General Letitia James filed a lawsuit seeking to dissolve the National Rifle Association (NRA). General James charges the organization with illegal conduct because of defendants' alleged diversion of millions of dollars away from the charitable mission of the organization for personal use by senior leadership, awarding contracts to the financial gain of close associates and family, and appearing to dole out lucrative no-show contracts to former employees in order to buy their silence and continued loyalty. The suit specifically charges the NRA as a whole, as well as Executive Vice-President Wayne LaPierre, former Treasurer and Chief Financial Officer Wilson "Woody" Phillips, former Chief of Staff and the Executive Director of General Operations Joshua Powell, and Corporate Secretary and General Counsel John Frazer with failing to manage the NRA's funds and failing to follow numerous state and federal laws, contributing to the loss of more than $64 million in just three years for the NRA.
Veterans and Military News
- On Saturday, August 8, 2020, President Trump signed into law the Veteran Treatment Court Coordination Act, which directs the United States Department of Justice to establish a veteran treatment court program to coordinate grants, training, and technical assistance for states, municipalities, and American Indian tribes to set up and operate special courts for veterans accused of nonviolent crimes. The act also directs coordination between the Department of Justice and the Department of Veterans Affairs on the program. The bill received a letter of support from 44 attorneys general in November 2019.
- The CFPB issued a consent order against PHLoans.com, Inc. (PHLoans) and Go Direct Lenders, Inc. (Go Direct) who are mortgage brokers or lenders in about 11 states that offer and provide mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). The settlements resolve allegations that PHLoans and Go Direct sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures in violation of the Consumer Financial Protection Act, the Mortgage Acts and Practices Advertising Rule, and Regulation Z. The consent orders require PHLoans to pay $260,000 and Go Direct $150,000 in civil penalties and imposes requirements to prevent future violations.
USDOJ filed a lawsuit in Florida alleging that Target Recovery Towing Inc. and Target Recovery & Transport Inc. (together "Target") violated the Servicemembers Civil Relief Act (SCRA), by failing to obtain a court order before auctioning off a car belonging to a U.S. Marine Corps Sergeant who was deployed overseas. The SCRA, which provides a wide variety of financial and housing protections to members of the military, prohibits towing companies from auctioning off servicemembers' vehicles without a court order.
The 2020 NAAG Consumer Protection Fall Conference will be held virtually from October 26-28, 2020. Details coming soon.
The 2020 NAAG/NASCO Charities Conference will be held virtually from November 17-19, 2020. Details coming soon.
Todd Leatherman, Program Counsel for the Center for Consumer Protection, is the editor of Center for Consumer Protection Monthly, a compendium of information that may be of interest to the attorney general community and others interested in consumer protection. Neither the National Association of Attorneys General (NAAG) nor the National Attorneys General Training & Research Institute expresses a view as to the accuracy of the matters, nor as to the position expounded by the authors of the hyperlinked materials. Any use and/or copies of this newsletter in whole or part must include the customary bibliographic citation. NAAG retains copyright and all other intellectual property rights in the material presented in this publication. For content submissions or to contact the editor directly, please email firstname.lastname@example.org or call 202-326-6044.