The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly January 2020
Consumer Chief of the Month: Ann, Haight, West Virginia
I have tried to continue a family legacy of commitment to the practice of law through my time in private practice, my commitment to the West Virginia State Bar, where I now serve as President after two terms of service on the Board of Governors, and in my position as chief of the state Attorney General's Consumer Protection and Antitrust Division.
Coming from an extended family of lawyers, I decided to take the LSAT, as well as the GRE, after I received my psychology degree from Denison University in Granville, Ohio. The results pointed me to law school. I graduated from the West Virginia University College of Law in 1982. I spent more than three decades in private practice and shattered my firm's glass ceiling as its first female partner. For five of those years, I was also an evening instructor at the West Virginia Junior College, teaching legal assistant courses and general studies courses.
"The New Referral:" Innovative Ways to Tackle Consumer Protection Issues Involving Fake Social Media Influencers
Merna T. Hoffman, Deputy Attorney General, Pennsylvania Attorney General's Office
Competition is a vital component in the global market. Technology is changing the way we learn and gather information about products and services. In the "old days," word-of-mouth was one factor influencing purchase decisions, i.e., your neighbor tells you how happy she is with her new lawn mower. These days, if you are a consumer who does proper due diligence, you are likely to read and compare online review before making a purchase. Depending on the product or service involved, online reviews, ratings, and popularity of the product or service will likely influence and be a persuasive factor in your decision to buy.
Bogus Texts Purporting to Involve FedEx Shipments
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB issued a policy statement providing a framework on how it intends to apply the "abusiveness" standard in supervision and enforcement matters under the Dodd-Frank Act.
- The CFPB and the Office of Utah Attorney General Sean Reyes announced the first joint office hours to be held as part of the American Consumer Financial Innovation Network. These joint office hours provide innovators with the opportunity to discuss issues such as financial technology, innovative products or services, regulatory sandboxes, no action letters, and other matters related to financial innovation with officials from the CFPB and state partners.
- The CFPB announced a suit against Monster Loans, Lend Tech Loans, and associated student loan debt-relief companies and individuals involved in allegedly obtaining consumer reports illegally, charging unlawful advance fees, and engaging in deceptive conduct.
- The CFPB named five members who will serve on the Taskforce on Federal Consumer Financial Law.
Federal Trade Commission:
- The Federal Trade Commission (FTC) will mark Tax Identity Theft Awareness Week, February 3-7, 2020, by co-hosting a series of free events highlighting the warning signs of tax identity theft and government imposter scams, ways consumers can protect themselves, and what to do if a consumer is a victim of tax identity theft.
- Webinar: On February 6, at 2:00 p.m. ET, the FTC and the Identity Theft Resource Center will co-host a 30-minute Tax Identity Theft Awareness Week webinar on government imposter scams. The presentation will address IRS, Social Security Administration, and U.S. Census Bureau imposters, red flag warnings, how to protect yourself, and how to recover if fraud happens to you. Sign up here to get an email reminder with the webinar link a few minutes before the webinar begins.The FTC announced changes to its data security orders, increasing order specificity, third party assessor accountability, and elevating data security considerations to the corporate officer and board of directors level.
- Three individuals and a telephone call center that helped Florida-based Grand Bahama Cruise Line LLC and others to make millions of illegal robocalls to consumers settled a FTC complaint and are permanently barred from making telemarketing robocalls.
- A California-based mortgage broker will pay $120,000 to settle FTC allegations that it violated the Fair Credit Reporting Act and other laws by revealing personal information about consumers in response to negative reviews posted on the review website Yelp.
- The FTC has granted final approval to a settlement with a Utah-based technology company, InfoTrax Systems, L.C., related to allegations that the firm failed to put in place reasonable security safeguards, allowing a hacker to access the personal information of more than a million consumers.
- The FTC announced that FTC staff sent letters to 19 Voice over Internet Protocol (VoIP) service providers warning them that "assisting and facilitating" illegal telemarketing or robocalling is against the law. The letters warn the VoIP service providers that the FTC may take legal action against them if they assist a seller or telemarketer who they know, or consciously avoid knowing, is violating the agency's Telemarketing Sales Rule. The FTC is not disclosing the names of the companies and/or individuals to whom it sent the warnings.
Securities and Exchange Commission:
- The Securities and Exchange Commission (SEC) announced the charging of a California-based couple with orchestrating a nearly billion-dollar Ponzi scheme involving alternative energy tax credits. According to the SEC's complaint, Jeffrey and Paulette Carpoff raised approximately $910 million from 17 investors between 2011 and 2018 by offering securities in the form of investment contracts through their two solar generator companies, DC Solar Solutions Inc. and DC Solar Distribution Inc.
- The SEC announced that its Office of Compliance Inspections and Examinations issued examination observations related to cybersecurity and operational resiliency practices taken by market participants.
- The SEC filed an emergency enforcement action and obtained a temporary restraining order and asset freeze against Illinois resident Kenneth D. Courtright, III and his company, Todays Growth Consultant Inc., in connection with an alleged Ponzi-like scheme that raised at least $75 million from more than 500 investors throughout the United States and abroad.
- The SEC obtained a court order of distribution of over $63 million to investors in connection with a New York real estate investment fraud scheme alleged against Morgan Mezzanine Fund Manager LLC and Morgan Acquisitions LLC.
Department of Justice:
- The Department of Justice (USDOJ) announced that John Kapoor, Founder and former Chairman of the Board of Insys Therapeutics, was sentenced to 66 months in prison for his role in bribing practitioners to prescribe highly addictive pain medication, often when medically unnecessary.
- The USDOJ recouped more than $3 billion in 2019 from settlements and judgments from false claims and fraud. Of these cases, $2.6 billion came from the healthcare industry, with cases including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories and physicians.
- The USDOJ filed civil actions for temporary restraining orders in two cases against five telecom companies and three individuals allegedly responsible for carrying hundreds of millions of fraudulent robocalls to American consumers.
- A San Francisco-based health information technology company will pay $145 million to resolve criminal and civil charges that it helped set up an electronic health records system that encouraged physicians to prescribe opioids to patients who might not need them, federal prosecutors in Vermont announced. Practice Fusion, Inc., admitted that it took kickbacks from a major opioid company in exchange for using its software to influence physicians to prescribe opioid pain medication.
- Two Mississippi men were sentenced for their roles in a long-running odometer tampering scheme, the USDOJ announced. The men were also ordered to pay more than $900,000 in restitution. The National Highway Traffic Safety Administration Office of Odometer Fraud Investigation, assisted by Mississippi Attorney General's Office, investigated the case.
- The USDOJ announced that a New York man was sentenced to 60 months in prison followed by three years of supervised release for participating in a scheme that used secret card-reading devices and pinhole cameras on various New Jersey bank locations to steal at least $390,141.
- The USDOJ announced two Peruvians pleaded guilty to overseeing call centers that threatened and defrauded Spanish-speaking U.S. consumers.
- The USDOJ announced that three individuals were sentenced to prison for their roles in an $11 million telemarketing scheme that defrauded primarily elderly victims in the United States from call centers in Costa Rica.
In other federal news:
- The Commodity Futures Trading Commission issued an order simultaneously filing and settling charges against Korean firm Mirae Asset Daewoo Co., Ltd. for spoofing in the Chicago Mercantile Exchange E-mini S&P 500 futures market. Spoofing in this context refers to the practice of placing orders with the intent to cancel them before they close for the purpose of giving a false impression of market depth and inducing other market participants to trade opposite the orders. The order finds that Daewoo Securities Co. Ltd., a company Mirae acquired following the spoofing conduct at issue, engaged in the spoofing through a trader located in Daewoo's Seoul office. The order requires Mirae to pay a $700,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act's prohibition on spoofing.
- The Office of the Comptroller of the Currency (OCC) said that it is bringing enforcement actions against five former Wells Fargo executives and has reached settlements with three others over their alleged roles in the bank's sales practices scandal affecting millions of bank customers and thousands of lower level bank employees from 2002 through October, 2016. The settlements include a Consent Order imposing a $17.5 million fine for former CEO John Stumpf.
- The Internal Revenue Service and the Department of the Treasury issued Revenue Procedure 2020-11 that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school and whose federal loans are discharged by the Department of Education based on Closed School or Defense to Repayment discharge processes, or whose private loans are discharged based on a settlement of a legal action alleging unlawful practices, including deceptive trade practices.
- The U.S. Department of Defense Office of Inspector General released an audit concluding that military treatment facilities potentially overprescribed opioids from 2015 through 2017 because the Defense Health Agency and Military Departments did not have policies and processes in place to identify and monitor beneficiaries who were prescribed over 90 MME per day.
- The White House released an Executive Order signed by President Trump unveiling a number of new steps the administration is taking to crack down on the sale of contraband and counterfeit goods online.
Attorney General Consumer Protection News and Other Items of Interest
The U.S. Supreme Court accepted certiorari of a petition to review a 4th Circuit decision holding that that the government debt exception to the TCPA's automated-call restriction violates the First Amendment. The question presented in the Department of Justice's petition for writ of certiorari is "whether the government-debt exception to the TCPA's automated-call restriction violates the First Amendment, and whether the proper remedy for any constitutional violation is to sever the exception from the remainder of the statute."
Led by California Attorney General Xavier Becerra, Illinois Attorney General Kwame Raoul, and New York Attorney General Letitia James, a bipartisan coalition of 22 attorneys general submitted a comment letter opposing a proposal by the Office of the Comptroller of the Currency to exempt entities that are not national banks (including payday and other high-cost lenders) from state usury laws.
Alaska Attorney General Kevin G. Clarkson issued a consumer alert warning of a telephone scam affecting Alaskans, with callers pretending to be from the Social Security Administration.
Arizona Attorney General Mark Brnovich's office filed a consumer fraud lawsuit against Juul Labs, Inc. (JUUL), regarding the advertisement and sale of JUUL's vaping devices and vaping pods to Arizonans, including JUUL's allegedly exploitative marketing towards Arizona's youth. In other Arizona news, General Mark Brnovich announced that the U.S. Department of Justice (USDOJ), Arizona, and several other states negotiated an Amended Final Judgment with Live Nation after it was uncovered that Live Nation allegedly violated terms of a 2010 Consent Judgment by engaging in retaliation and conditioning activities.
Arkansas Attorney General Leslie Rutledge announced a lawsuit against an unlicensed Little Rock contractor and his company for unlawfully misrepresenting services and taking more than $20,000 in fees from consumers without providing any roofing or remodeling services. Rutledge's complaint alleges the roofer violated several provisions of the Arkansas Deceptive Trade Practices Act and the Home Solicitation Sales Act.
California Attorney General Xavier Becerra's office secured a Superior Court judgment of nearly $344 million in civil penalties against Johnson & Johnson for false and deceptive marketing of its pelvic mesh products for women. Additional injunctive terms may be added after further briefing. According to Becerra's office, the judgment marks the first time a court of law has issued findings of fact and ruled that Johnson & Johnson did indeed engage in illegal false and deceptive business practices. In other California news, General Becerra has issued an advisory for consumers highlighting their new rights as part of the California Consumer Privacy Act (CCPA), which went into effect on January 1, 2020. The advisory describes consumers' basic privacy rights under the CCPA and methods for consumers to exercise those rights, information about the data broker registry, and new guidelines related to data security. Enforcement of CCPA is the responsibility of the Office of the Attorney General.
Colorado Attorney General Phil Weiser announced that CenturyLink will pay $8,476,000 for unfairly and deceptively charging hidden fees, falsely advertising guaranteed locked prices, and failing to provide discounts and refunds it promised to consumers who signed up for Internet, television, and telephone services in Colorado. Also in Colorado, General Weiser hosted a Conference on Data Privacy and Cybersecurity Compliance. General Weiser's remarks touched on issues affecting small businesses as well as recent efforts taken by Colorado to address the issue, including issuance of a $500,000 grant to the Colorado Northwestern Community College to establish a cybersecurity degree program.
Florida Attorney General Ashley Moody launched a Consumer Alert webpage with tips and resources to help Floridians avoid scams. The webpage, MyFloridaLegal.com/ConsumerAlert, aggregates the latest OAG alerts about emerging scams, fraud tactics and what Floridians can do to avoid falling victim.
Illinois Attorney General Kwame Raoul announced the filing of two requests with the Illinois Commerce Commission to rehear and reconsider its decisions in the ComEd and Ameren Illinois formula rate cases that allow the companies to hold onto hundreds of millions of dollars in consumer refunds for a period of more than 35 years. Attorney General Raoul requested a far shorter refund period of five years.
Indiana Attorney General Curtis Hill filed a civil action against Pierce Automotive LLC and its owner Steven Pierce for violating the Indiana Deceptive Consumer Sales Act. Pierce Automotive allegedly took money from consumers and promised auto repair work that it never completed, according to a complaint filed this month. After Pierce Automotive closed its doors, the company removed the consumers' vehicles from the premises and never returned them to consumers, the complaint alleges.
Kansas Attorney General Derek Schmidt filed two lawsuits against out-of-state pop-up sellers of counterfeit Kansas City Chiefs and Super Bowl LIV merchandise. The lawsuits were filed as a part of a coordinated enforcement action in partnership with the U.S. Department of Homeland Security, Kansas Department of Revenue and Topeka Police Department.
Kentucky Attorney General Daniel Cameron joined Kentucky Governor Andy Beshear in announcing the top financial scams to avoid in 2020.
Maryland Attorney General Brian E. Frosh settled with a dental practice to resolve allegations of violations of the Consumer Protection Act. The Consumer Protection Division alleged that the dental practice overbilled consumers and did not provide them with accurate information about expected charges.
Michigan Attorney General Dana Nessel urged customers of Michigan State University Federal Credit Union (MSUFCU) to protect their accounts and promptly respond to any fraud notices they may have received regarding suspicious activity on their MSUFCU credit cards.
Minnesota Attorney General Keith Ellison announced that his office has settled its lawsuit against Comcast/Xfinity and obtained refunds for 15,600 Minnesotans, as well as debt relief for an additional 16,000 Minnesotans. The suit alleged that the company charged Minnesota consumers more than it promised it would for cable services, including undisclosed "fees" and that it charged for services and equipment that customers did not request. The settlement also resolves the Attorney General's allegations that Comcast promised prepaid gift cards as an inducement to enter into multi-year contracts, then failed to provide the cards. Together, the refunds and debt relief are worth millions of dollars.
Nebraska Attorney General Doug Peterson issued a consumer alert regarding dietary supplements, weight loss and gym memberships.
New Mexico Attorney General Hector Balderas filed a lawsuit against four corporations that manufactured, advertised, and sold talcum powder products, including baby powder, which allegedly contained hazardous and carcinogenic asbestos to New Mexicans. The defendants named in the lawsuit are Johnson & Johnson, Johnson & Johnson Consumer Companies, Inc., Valeant Pharmaceuticals International Corporation, and Valeant Pharmaceuticals North America LLC.
New York Attorney General Letitia James launched the "Protect Our Homes" initiative with a day of action to inform homeowners in Brooklyn about deed theft and other housing-related scams. The efforts are the first step in a campaign of coordinated prevention and enforcement actions to combat deed theft in New York City. In addition, Attorney General James announced the formation of an interagency taskforce to focus on deed theft and other housing fraud issues. In other New York news, General James, joined by 23 attorneys general, filed an amicus brief in Seila Law, LLC v. Consumer Financial Protection Bureau, a case challenging the constitutionality of the structure of the CFPB, in particular, the limitations on executive branch authority to remove the CFPB Director only "for inefficiency, neglect of duty, or malfeasance in office." According to Seila Law, this for-cause removal provision impinges on the Executive Power and violates the Constitution's separation of powers clause. The attorney general's brief argues the Supreme Court should preserve the CFPB and other significant consumer protections provided by Title X.
North Carolina Attorney General Josh Stein announced a settlement of more than $825,000 with Florida-based payday lender Approved Financial Inc. related to a case he filed alleging illegal, unlicensed lending practices, usury, unlawful debt collection, and unfair and deceptive practices.
Ohio Attorney General Dave Yost is taking a Montgomery County roofing contractor to court for allegedly cheating homeowners out of thousands of dollars. Customers said some of the alleged rip-offs came in the wake of 2019 Memorial Day storms.
Oklahoma Attorney General Mike Hunter announced he has filed a lawsuit against the McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation, three leading distributors of opioid pain medication, for their alleged role in the ongoing opioid crisis. In related news, General Hunter reached an out-of-court settlement with Endo Pharmaceuticals totaling $8.75 million for the company's alleged role in the state's opioid crisis.
In commemoration of Data Privacy Day (January 28, 2020), Oregon Attorney General Ellen Rosenblum released a "Do Not Click" campaign to educate Oregonians about staying safe online. She is hoping to alert people to the dangers of clicking on links that appear to be legitimate, but are not. Scammers may pretend to be an official organization, bank, business or a familiar person in order to obtain sensitive or confidential information either through a text message or an email. These "phishing" scams usually target a bank account number, credit card number, password or usernames.
Vermont Attorney General T.J. Donovan announced that his office has reached a settlement with Maryland-based Woodbine Senior Living, LLC, for violations of Vermont's Consumer Protection Act. The settlement resolves claims that, under Woodbine's management, Spring Village, a "memory care" home, misrepresented to families of prospective residents that it would be able to care for their loved ones at all stages of dementia and aging. Attorney General Donovan also announced the release of an educational guide for consumers on the key differences between nursing homes, assisted living facilities, and residential care homes, developed in partnership with the Vermont Department of Disabilities, Aging, and Independent Living.
Washington Attorney General Bob Ferguson announced a lawsuit against Johnson & Johnson, one of the largest suppliers of the raw materials used to produce opioid pain medications, accusing the multinational company of playing a key role in driving the entire pharmaceutical industry to vastly expand the use of prescription opioids.
The BBB offered tips on how cryptocurrency works and how to avoid cryptocurrency scams.
The National Consumers League created a new website to educate consumers about and encourage reporting of fake prescription medication.
Major pharmacy chains including CVS and Walgreen Co. have filed litigation alleging that doctors in two Ohio counties are liable in the opioid crisis. The chains say the physicians should have to contribute toward penalties if a trial results in the companies being held liable for the crisis.
Led by Connecticut Attorney General William Tong and Nebraska Attorney General Doug Peterson, 21 Attorneys General settled with Paypal Charitable Giving Fund, Inc. (PPGF) to ensure donors receive adequate information and disclosures when making charitable contributions through the company's online fundraising platform. The settlement resolves concerns regarding PPGF's alleged failure to disclose to donors that charities would receive contributions more quickly if the charity maintained a PayPal account, and that in some instances PPGF redirected donors' contributions from the charity selected by the donor to other organizations with similar purposes without informing donors.
Missouri Attorney General Eric Schmitt filed a lawsuit against Vinelanders Community Land Trust, Inc. of Kansas City and its owner Alice Goodlow. The lawsuit alleges that Goodlow solicited charitable donations and membership fees from thousands of Missourians on the pretense that those funds would be pooled to provide homes to trust members.
New Jersey Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that a woman and the horse rescue charity she founded have agreed to permanently cease soliciting contributions in New Jersey and pay civil penalties to resolve allegations they accepted more than $340,000 in contributions in violation of state charity laws.
The U.S. House of Representatives passed the Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency (CREDIT) Act of 2020 (H.R. 3621), which consumer advocates believe addresses deep flaws in the credit reporting system and protects consumers from unfair credit reporting practices. Among other provisions, the Act directs the Consumer Financial Protection Bureau to enact new rules on credit reporting accuracy, establishes new rights of appeal for consumers who dispute errors, reduces the time limit for negative information in credit reports, and restricts the use of credit reports for employment purposes.
The House Committee on Oversight and Reform held its third hearing on facial recognition technology.
Washington state legislators introduced two bills seeking to regulate consumer data and the use of facial recognition technology.
Veterans and Military News
The U.S. Army Recruiting Command warned of fraudulent text messages informing individuals they have been selected for a military draft.
Attorney General Josh Stein released consumer protection information to help military servicemembers and their families as servicemembers from North Carolina deploy overseas in response to international events. The military community is frequently targeted by scammers and con artists.
2020 NAGTRI Anatomy of a Complex Consumer Case Training
March 31 - April 3, 2020, Chicago, Illinois
This intensive three and one-half day program for assistant attorneys general is intended to enhance the participants' knowledge and skills in a constructive and positive learning environment facilitated by experienced attorneys serving as faculty. The program's primary goal is to afford participants the opportunity to gain an understanding of and overcome the challenges when enforcing consumer protection laws. Although this training discusses civil litigation issues, it is NOT a trial advocacy course in the strict sense of the term. Rather, it is designed to expose the participants to the wide and varied issues they will encounter when working on complex consumer protection investigations, settlements, and lawsuits. The deadline to submit a scholarship nomination for this program is close of business on Wednesday, February 5. Attorney general offices may pay to register additional staff once this deadline has passed.
Click here for more information.
2020 NAAG Consumer Protection Spring Conference
May 19-21, 2020, Raleigh, North Carolina
This year's NAAG Consumer Protection Spring Conference will be held in Raleigh, North Carolina at the Raleigh Marriott City Center from May 19-21, 2020. The agenda aims to address pressing and relevant issues specific to your role in consumer protection. On Tuesday, May 19 from noon to approximately 7:30 pm, the private, nonprofit, and government sectors will be invited to attend the public portion of the conference, which will include lunch and an evening reception.
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 email@example.com or call 202-326-6044.