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Center for Consumer Protection Monthly December 2017

Consumer Chief of the Month: Deborah Hagan, Illinois

I joined the Illinois Attorney General’s Office in 1982 as an Assistant Attorney General in the Consumer Fraud Bureau. I have served under 5 attorneys general and have worked in the Consumer Protection Division for over 36 years. Since 2004, I have headed up the Consumer Protection Division which includes Consumer, Charitable Trust, Franchise, Health Care, and Veterans’ and Servicemember Bureaus. I supervise approximately 40 lawyers and at least that many more non-attorneys who handle consumer, health care, and veterans’ complaints as well as process charitable trust and franchise report filings.

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Article of the Month:
Getting Parents Involved: How to Establish Personal Jurisdiction Over Parent and Affiliate Companies

Travis Brown, Assistant Attorney General, Office of the Attorney General, Tennessee

A successful case requires more than simply prevailing at trial; it requires a solvent defendant. But what happens when the defendant cannot pay the judgment? In state civil enforcement actions, we often seek restitution payments for consumers in our states. How do we ensure that restitution (or civil penalties, attorney fees, etc.) is paid? One method is through parent and affiliate liability. Parent companies can engage in deceptive and unfair conduct through their subsidiaries. In other contexts, parents hold gains obtained illegally by subsidiaries. However, establishing personal jurisdiction over these solvent entities can present problems. These companies often interact with different states only through subsidiary or affiliate entities, never actually making contact with most states.

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Scam Alert: New Year's Weight Loss Scams

The FTC is warning consumers to avoid any garment, gizmo, pill, or potion that promises weight loss with no effort.

Federal Consumer Protection News

The CFPB Ombudsman’s Office 2017 annual report is now available. In other CFPB news, the Bureau released its biennial report on the state of the credit card market.

The Department of Justice and Department of State launched the Intellectual Property Law Enforcement Coordinator Network. In other DOJ news, two defendants plead guilty in federal court in Las Vegas, NV, in regard to multimillion dollar prize promotion scams targeting elderly victims.

The Public Safety and Homeland Security Bureau of the FCC is seeking comment on the resiliency of the communications infrastructure, the effectiveness of emergency communications, and government and industry responses to the 2017 hurricane season.

The FCC voted to repeal net neutrality rules. The FCC and FTC entered into an MOU under which they agreed to coordinate online efforts pursuant to the FCC’s planned rollback of net neutrality rules. Under the MOU, the FCC will review informal complaints concerning ISP compliance with disclosure obligations, and the FTC will investigate and take enforcement action against ISPs regarding the accuracy of those disclosures. The two agencies will share legal and technical expertise and will collaborate on consumer and industry outreach and education.

The FTC is mailing 442,898 refund checks totaling more than $8 million to people who bought weight loss supplements that were deceptively marketed using illegal spam email, baseless weight loss claims, and fake celebrity endorsements. In other FTC news, the commission provides some FAQs on the Equifax breach to help consumers decide how to protect themselves.

The Securities and Exchange Commission charged a biopharmaceutical company with committing a series of accounting controls and disclosure violations, including the failure to properly report as compensation millions of dollars in perks provided to its then-CEO and then-CFO.

Attorney General Consumer Protection News and Other Items of Interest

Arizona Attorney General Mark Brnovich announced that blood testing company Theranos will pay $4.6 million in refund checks to consumers who purchased a Theranos blood test. Attorney General Brnovich alleges Theranos’ advertisements misrepresented the method, accuracy, and reliability of its blood testing and that the company was out of compliance with federal regulations contained in the Clinical Laboratory Improvement Amendments of 1988.

The Better Business Bureau released a study of the increasing problem of computer tech support scams.

Delaware Attorney General Matt Denn and the Department of Justice Consumer Protection Unit warned Delawareans about scam calls regarding jury duty being made to residents.

Florida Attorney General Pam Bondi confirmed that her office issued a subpoena to ride sharing company Uber as part of an investigation into Uber’s alleged cover up of a data breach that occurred more than a year ago.

Guam Attorney General Elizabeth Barrett-Anderson warned Guam consumers about scammers claiming to be from the IRS.

Kansas Attorney General Derek Schmidt filed a lawsuit against Caney Guest Home, Inc., d/b/a Caney Nursing Center, and James R. Laidler, owner of the facility, alleging the company operated a nursing home in violation of the Kansas Consumer Protection Act by failing to secure or properly dispose of patient records containing personal information.

Maryland Attorney General Brian E. Frosh warned consumers to be wary of telephone calls that appear to be from a utility company. The callers threaten to shut off power for non-payment unless the consumer sends money.

Massachusetts Attorney General Maura Healey obtained a court order against a man operating a mortgage scam.

Mississippi Attorney General Jim Hood is warning Mississippians about tax-related phone scams as tax season approaches.

Missouri Attorney General Josh Hawley issued a warning to consumers reminding them to check their bank and insurance statements for irregular activity.

Montana Attorney General Tim Fox announced his office filed a consumer protection lawsuit in Montana District Court against Purdue Pharma LLC, for alleged ongoing deceptive marketing practices involving its prescription opioids, including OxyContin.

New York Attorney General Eric T. Schneiderman announced that his office won a lawsuit for consumers against John Kniery, a Buffalo-based home improvement contractor that allegedly bilked New Yorkers out of over $10,000.

Pennsylvania Attorney General Josh Shapiro is encouraging Pennsylvanians to carefully examine any contract they sign before joining a health club, and offering tips so they understand their legal rights.

South Dakota Attorney General Marty Jackley is warning South Dakota seniors that the grandparent scam has resurfaced targeting all parts of the state.

Texas Attorney General Ken Paxton announced that the Travis County District Court granted a temporary injunction halting the alleged deceptive practices of HPC Techs LLC, Escutcheon Technologies LLC, The Rhombus Techs LLC, and nine other tech support companies, as well as the four individuals who own and operate them.

Uber admitted in a post on the company’s website that hackers stole the personal data of 57 million riders worldwide in a breach Uber did not disclose for more than one year. The disclosure was made the same day as Bloomberg reported Uber paid the hackers $100,000 in an attempt to prevent disclosure. The City of Los Angeles has sued Uber, alleging it violated state law requiring companies to report data breaches as soon as discovered or as soon as possible. In Europe, the Article 29 Working Party, an advisory committee composed of data privacy watchdogs from each EU member, established a task force to coordinate investigations into the breach.

Washington Attorney General Bob Ferguson filed a consumer protection lawsuit against a Massachusetts-based company alleging it deceptively advertises and sells training packages to potentially thousands of Washingtonians for as much as $35,000 with promises of inside information on how to make money selling on Amazon. In other Washington news, Attorney General Ferguson announced a consumer protection lawsuit against TVI, Inc., the for-profit company that owns Value Village, alleging Bellevue-based TVI, Inc. has deceived thousands of Washington consumers and donors for more than a decade.

Wisconsin Attorney General Brad Schimel and 50 other state attorneys general have reached a $13.5 million settlement with Boehringer Ingelheim Pharmaceuticals, Inc. regarding its alleged off-label marketing and deceptive and misleading representations made in its promotion of four of its prescription drugs: Micardis®, Aggrenox®, Atrovent®, and Combivent®.


Florida Attorney General Pam Bondi filed a complaint seeking to shut down a Florida charity falsely claiming to use charitable donations to provide financial support to families of firefighters lost in the line of duty.

New Mexico Attorney General Hector Balderas announced he is launching the New Mexico Charities Compliance Sweep. The Office of the Attorney General has started sending out notices to charities across the state that are delinquent in their registration and reporting requirements as required by the Charitable Solicitations Act. The sweep offers delinquent charities the opportunity to come into compliance without having to face formal legal action.

Washington Attorney General Bob Ferguson announced a lawsuit against a Leavenworth man and his family for pocketing most of $1.5 million in donations that thousands of Washingtonians thought were going to disadvantaged children.

Veterans and Military News

Service members are often targeted for financial scams and have a harder time defending themselves. New York Special Assistant Attorney General Deanna Nelson is doing it for them.

Blake Bee, 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 or call (202) 326-6263.

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