The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly June 2019
Consumer Chief of the Month: Christopher J. Curtis, Vermont
Greetings from the Green Mountain State! Thank you NAAG and NAGTRI for inviting me to participate in the "Chief of the Month" Club to share a little about myself and the exciting work that General Donovan and our office are doing on behalf of Vermont consumers. I confess that I love this series because it provides a glimpse into what motivates you and your offices, the issues you're working on and it gives me ideas. So, thank you for all you do to bring justice and progress to your constituents. In doing so for your state and its citizens, you inspire creativity and action in other jurisdictions as well.
Article of the Month:
States Can Apply Established Consumer Protection Theories to Emerging Higher Education Issues
Matt Liles, Assistant Attorney General, North Carolina Department of Justice
The more than $1.5 trillion in student debt held by 43 million Americans is not only a significant economic problem, but one that has in part arisen from abusive industry practices. But for attorney general offices, deciding what an office can do to combat the student debt crisis can be challenging.
This is understandable. Higher education is largely governed by a hyper-technical federal regulatory scheme that includes accreditors, state authorizers, and the U.S. Department of Education. But even with this regulatory overlay, there may still be garden variety deception actionable under our consumer protection laws.
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB and the Federal Reserve Board jointly published amendments to Regulation CC that implement a statutory requirement to adjust for inflation the amount of funds depository institutions must make available to their customers.
- The CFPB announced a settlement with Student CU Connect CUSO, LLC, a company set up to hold and manage private loans for students at ITT Technical Institute.
- The CFPB announced a settlement with Freedom Mortgage Corporation, one of the ten largest Home Mortgage Disclosure Act reporters nationwide. Under the terms of the consent order, Freedom must pay a civil penalty of $1.75 million and take steps to improve its compliance management to prevent future violations.
Federal Communications Commission:
- FCC Commissioner Geoffrey Starks asked phone companies to provide robocall blocking free of charge to consumers.
- The FCC approved a Declaratory Ruling to affirm that voice service providers may, as the default, block unwanted calls based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking.
Federal Trade Commission:
- The FTC and its law enforcement partners announced a major crackdown on illegal robocalls, including 94 actions targeting operations around the country that are responsible for more than one billion calls pitching a variety of products and services including credit card interest rate reduction services, money-making opportunities, and medical alert systems.
- The defendants behind a New York-based debt collection scheme will be permanently banned from the debt collection industry under a settlement with the FTC and the New York Attorney General, who alleged that the defendants bilked consumers out of millions of dollars by brokering and collecting on fake debts that people did not owe.
- At the FTC's request, a federal court has temporarily halted and frozen the assets of Grand Teton Professionals, an alleged credit repair scheme that charged illegal upfront fees and falsely claimed to repair consumers' credit. The company and other defendants are charged with violating the FTC Act and several provisions of the Credit Repair Organizations Act, the Telemarketing Sales Rule, the Consumer Review Fairness Act, the Truth in Lending Act, and the Electronic Funds Transfer Act.
- The operators of a deceptive newspaper subscription scheme are permanently banned from the direct mail marketing business under a federal court order obtained by the FTC.
- The FTC reached a settlement with a background screening company over allegations it falsely claimed to be a participant in the EU-U.S. Privacy Shield program. In separate actions, the FTC also sent warning letters to more than a dozen companies for falsely claiming participation in other international privacy agreements.
- The FTC announced that an Iowa company that sells software and data services to auto dealers has agreed to take steps to better protect the data it collects, to settle FTC allegations that the firm's poor data security practices led to a breach that exposed the personal information of millions of consumers.
- The FTC and the U.S. Food and Drug Administration sent four warning letters to firms that manufacture and market flavored e-liquid products. E-liquid is a tobacco product. The letters cite postings by influencers on social media sites such as Facebook, Instagram, and Twitter that endorse the target companies' products, without any warnings that the products contain nicotine, an addictive chemical.
- The FTC has issued two administrative complaints and proposed orders enforcing the Consumer Review Fairness Act, which prohibits businesses from using form contract terms that bar consumers from writing or posting negative reviews online, or that impose financial penalties for doing so.
- The FTC has approved a proposal to rescind its Guides for the Nursery Industry because they no longer appear necessary and thus serve little purpose for industry or consumers.
- The staff of the FTC has provided its 2018 Annual Financial Acts Enforcement Report to the Consumer Financial Protection Bureau on its enforcement and related activities regarding Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act).
Securities and Exchange Commission:
- The SEC announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 11 soliciting entities, four impersonators of genuine firms, and nine bogus regulators.
- The SEC voted to adopt a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors' relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products.
In other federal news:
- The U.S. Department of Justice announced that opioid manufacturer Insys Therapeutics agreed to a global resolution to settle the government's separate criminal and civil investigations. As part of the criminal resolution, Insys will enter into a deferred prosecution agreement with the government, Insys's operating subsidiary will plead guilty to five counts of mail fraud, and the company will pay a $2 million fine and $28 million in forfeiture. As part of the civil resolution, Insys agreed to pay $195 million to settle allegations that it violated the False Claims Act. Both the criminal and civil investigations stemmed from Insys's payment of kickbacks and other unlawful marketing practices in connection with the marketing of its drug Subsys.
- IC3 posted to its website a PSA titled "Cyber Actors Exploit 'Secure' Websites In Phishing Campaigns."
- The Government Accountability Office released a study on the Department of Justice's efforts to prevent elder fraud.
- The Commodity Futures Trading Commission charged a company and its principal in connection with a $147 million fraudulent bitcoin trading scheme.
Attorney General Consumer Protection News and Other Items of Interest
Forty-four attorneys general reached a settlement with a loan company linked to ITT Tech, a now-bankrupt for-profit college. The settlement will provide more than $168 million in student loan debt relief to former students of ITT Tech. The settlement with Student CU Connect CUSO LLC (CUSO) will benefit more than 18,000 students nationwide who took out loans with CUSO to attend ITT Tech.
Forty-three attorneys general submitted comments in response to the FTC's request for public comments for its June 12, 2019 Roundtable with State Attorneys General, which is part of the FTC's public hearings on Competition and Consumer Protection in the 21st Century.
Sixteen attorneys general reached a settlement to resolve allegations stemming from a data breach that exposed the medical records of more than 3.9 million individuals.
Arizona Attorney General Mark Brnovich reminded those looking for employment to be on the lookout for possible employment scams. Scam artists are finding new ways or creating twists on old scams to take advantage of those looking to earn money.
Arkansas Attorney General Leslie Rutledge warned consumers of scammers targeting flood victims.
Delaware Attorney General Kathy Jennings announced the filing of a civil complaint against a developer, Regal Builders, LLC, its president, Harry Miller, and related entities for allegedly making misleading and deceptive statements in its advertising to prospective homebuyers, and failing to provide disclosures required to prospective home purchasers under Delaware law.
District of Columbia Attorney General Karl A. Racine sued opioid manufacturer Purdue Pharma L.P., Purdue Pharma Inc., and a former top executive, Dr. Richard Sackler, for allegedly making false and misleading claims about the safety and effectiveness of opioids to get more people to take these addictive drugs and to increase profits.
Florida Attorney General Ashley Moody launched an app called NO SCAM to help consumers quickly and effectively report price gouging during a declared state of emergency.
Idaho Attorney General Lawrence Wasden sued opioid manufacturer Purdue Pharma L.P. (Purdue), and the family who owns the company, alleging the company misled and deceived doctors into prescribing more of Purdue's opioids, in increasingly dangerous doses, and for longer periods of time, while persuading doctors and patients alike to forego safer alternatives.
Illinois Attorney General Kwame Raoul and Connecticut Attorney General William Tong announced an investigation into the data breach at American Medical Collection Agency, which may have exposed the personal information of nearly 12 million patients of Quest Diagnostics and 7.7 million Laboratory Corporation of America patients.
Maryland Attorney General Brian E. Frosh warned consumers of a scam in which thieves posing as law enforcement swindle money from Marylanders by threatening arrest for missing jury duty or failure to appear as a witness.
Massachusetts Attorney General Maura Healey announced that a former auto dealer and associated lending and leasing companies have agreed to provide debt relief and credit repair to consumers relating to high-cost auto loans and leases that allegedly violated Massachusetts law.
Michigan Attorney General Dana Nessel announced she will issue letters to three companies demanding information about a data breach affecting 12 million people around the country. The breach involved at least three companies: American Medical Collection Agency, Quest Diagnostics, and Optum360.
Montana Attorney General Tim Fox reminded consumers to exercise caution while hiring contractors to repair damage to their homes.
Nebraska Attorney General Doug Peterson warned of family emergency scams.
Nevada Attorney General Aaron D. Ford announced that the State of Nevada filed an expanded complaint in its opioid litigation. The lawsuit alleges that the manufacturers, distributors, pharmacies, and individuals created an ecosystem of addiction with deadly consequences to the state and its residents for their own profit.
New York Attorney General Letitia James announced that Bombas LLC has agreed to pay $65,000 in penalties and implement a number of data security policies to resolve an investigation by the New York Attorney General's Office into the breach of customer payment cards where the company failed to provide notice of the breach to 39,561 consumers for over three years.
Pennsylvania Attorney General Josh Shapiro announced that his Office has filed a lawsuit against former Mercer County timeshare reseller Groupwise, Inc. and its former officers, Derek J. McGuire and Andrew J. Harkins. The suit alleges that the defendants violated the Consumer Protection Law by failing to honor the terms of their service agreements.
Rhode Island Attorney General Peter F. Neronha announced a series of steps to combat deceptive and unfair practices in the ticket resale marketplace in Rhode Island.
South Dakota Attorney General Jason Ravnsborg advised all South Dakota consumers to be on the lookout for online messages offering free grants.
Vermont Attorney General T.J. Donovan announced that his office has reached a $1.75 million settlement with DG Retail, LLC, also known as Dollar General, for violations of Vermont's Consumer Protection Act. Under the settlement, Dollar General resolved claims that it sold products that were advertised on the shelf at a lower price than the price at the register, even after being told at least 50 times by state inspectors from the Agency of Agriculture, Food and Markets to correct the pricing inaccuracies. The Vermont Foodbank will receive $100,000 pursuant to the settlement.
Washington Attorney General Bob Ferguson announced that a Washington state court judge ruled that multi-billion dollar telecommunications conglomerate Comcast violated the Consumer Protection Act more than 445,000 times when it charged tens of thousands of Washingtonians for its Service Protection Plan without their consent. The court ordered Comcast to pay nearly $9.1 million in penalties, in addition providing restitution to tens of thousands of Washington Service Protection Plan customers.
West Virginia Attorney General Patrick Morrisey announced his office recently filed suit seeking to stop a rent-to-own business from practicing what he alleges are overly aggressive collection tactics on customers whose accounts are past due.
Report shows 2.8 billion consumer data records exposed in 2018 costing over $654 billion to U.S. organizations.
Maryland Attorney General Brian E. Frosh announced a $2.5 million recovery resulting from multistate litigation against the former operator of several false cancer charities.
Anti-robocall bill advanced in the House.
The Maine Legislature passed an internet service privacy bill. The bill requires consumer consent before internet service providers can sell their private data to third parties.
A bill in the New York State Senate will require companies to disclose their methods of de-identifying personal information, to place special safeguards around data sharing, and to allow consumers to obtain the names of all entities with whom their information is shared.
The Nevada Assembly and Senate passed a data privacy law that permits consumers to opt-out of data sales by web operators.
A new Tennessee bill shifts primary consumer protection authority to the Tennessee Attorney General.
Veterans and Military News
The FTC has finalized the rule implementing a 2018 law that requires the nationwide consumer reporting agencies to provide free electronic credit monitoring services for active duty military consumers.
Consumer Protection Trivia
- What month is designated by the FTC as "military consumer protection month?"
- The Military Lending Act provides for all the following protections to servicemembers except?
A. Imposes a 36% rate cap on most consumer loans
B. Bans mandatory arbitration
C. Requires disclosures for consumer credit extended to servicemembers and their dependents
D. Protects a servicemember from being fired while on active duty
*Trivia answers can be found below.
- C. July
- D. Requires disclosures for consumer credit extended to servicemembers and their dependents
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 email@example.com or call (202) 326-6263.