The National Attorneys General Training & Research Institute
Center for Consumer Protection Monthly September 2019
Consumer Chief of the Month: Melissa Wright, Ohio
Hello from the Buckeye State! Although Ohio is obsessed with football this time of year, I'll spare everyone the "OH - IO" chant... (Maybe).
I began my career in the Attorney General's Office as a legal intern in what was then the Capital Crimes Section. Upon graduation from law school, I started as an Assistant Attorney General in the Consumer Protection Section, where I worked on a myriad of consumer protection matters involving everything from the (unfortunately all too common) standard home improvement cases to nationwide auto recall cases to prosecuting defendants for the marketing and sale of illegal bath salts. After nine years in the section, I became the Assistant Chief in 2013 and was promoted to Section Chief in 2019 under the Yost Administration.
Article of the Month:
Eight Tips for Better Legal Writing
Rebecca McCormack, Assistant Attorney General, South Carolina Attorney General's Office
Growing up, I thought strong oral advocacy was the hallmark of a successful lawyer, In practice, however, I have found that effective legal writing skills are equally valuable. Judges place significant weight on arguments made in your legal writing, and a compelling brief is often the best way to make an impact on the court. With that in mind, the following are some legal writing pointers I have learned along the way that I hope will be beneficial in your consumer protection cases.
Federal Consumer Protection News
Consumer Financial Protection Bureau:
- The CFPB, working in partnership with multiple state regulators, launched the American Consumer Financial Innovation Network (ACFIN), a network to enhance coordination among federal and state regulators to facilitate financial innovation. The CFPB invited all state regulators to join ACFIN, and the initial members of ACFIN are the Attorneys General of: Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah.
- CFPB filed a complaint in federal court in the Central District of California against Certified Forensic Loan Auditors, LLC (CFLA), Andrew Lehman (Lehman), and Michael Carrigan. The complaint alleges that CFLA and Lehman have engaged in deceptive and abusive acts and practices and have charged unlawful advance fees in connection with the marketing and sale of financial advisory and mortgage assistance relief services to consumers.
- The CFPB issued three new policies to promote innovation and facilitate compliance: the No-Action Letter Policy, Trial Disclosure Program Policy, and Compliance Assistance Sandbox Policy. The CFPB proposed the policies in 2018 and received public comments on each from a diverse array of stakeholders. More information on each policy can be found here.
- The CFPB announced that it will continue the publication of consumer complaints, data fields and narrative descriptions through the CFPB's Consumer Complaint Database while making several enhancements to the information available to users of the database. The enhancements include: modified disclaimers to provide better context to the published data; integrating financial information and resources into the complaint process to help address questions and better inform consumers before they submit a complaint; and information to assist consumers who wish to contact the financial company to get answers to their specific questions. The CFPB will also work to provide enhanced features for the database that include dynamic visualization tools on recent complaint data.
- The CFPB filed a lawsuit in the federal district court in the District of Maryland against FCO Holding, Inc. and its subsidiaries, Fair Collections & Outsourcing, Inc., Fair Collections & Outsourcing of New England, Inc., and FCO Worldwide, Inc. The entities are Maryland-based debt collectors that operate collectively under the name Fair Collections & Outsourcing and FCO. Also named in the CFPB's lawsuit is Michael E. Sobota, the chief executive officer, president, director, and owner of FCO Holding, Inc. The CFPB's complaint alleges that FCO violated the Fair Credit Reporting Act.
Federal Trade Commission:
- Google LLC and its subsidiary YouTube, LLC will pay a record $170 million to settle allegations by the FTC and the New York Attorney General that the YouTube video sharing service illegally collected personal information from children without their parents' consent. The settlement requires Google and YouTube to pay $136 million to the FTC and $34 million to New York for allegedly violating the Children's Online Privacy Protection Act (COPPA) Rule. The $136 million penalty is by far the largest amount the FTC has ever obtained in a COPPA case since Congress enacted the law in 1998. The Commission voted 3-2 to authorize the complaint and stipulated final order to be filed. Commissioner Rhohit Chopra and Commissioner Rebecca Kelly Slaughter issued dissenting statements.
- AH Media Group, the operators of a deceptive negative option scheme, have agreed to a court-ordered preliminary injunction temporarily barring them from a wide range of conduct. The preliminary injunction stops the defendants from misleading consumers about supposedly "free trial" offers, enrolling them in unwanted continuity plans, billing them without their authorization, and making it nearly impossible for them to cancel or get their money back.
- Following a public comment period, the FTC approved a final order settling charges against an Iowa-based auto dealer software provider, LightYear Dealer Technologies, LLC, that allegedly failed to take reasonable steps to secure consumers' data, leading to a breach that exposed the personal information of millions of consumers.
- The FTC sent warning letters to three companies that sell oils, tinctures, capsules, "gummies," and creams containing cannabidiol, a chemical compound derived from the cannabis plant. The letters warn the companies, which the FTC is not identifying publicly, that it is illegal to advertise that a product can prevent, treat, or cure human disease without competent and reliable scientific evidence to support such claims.
- The FTC charged the operators of two similar student loan debt relief schemes, Manhattan Beach Ventures and Student Advocates Team, and a financing company, Equitable Acceptance Corporation, that assisted them, with bilking millions of dollars from consumers. The State of Minnesota is a co-plaintiff in the action against Manhattan Beach Ventures.
- Miami Beach-based retailer Truly Organic Inc. and its founder and CEO, Maxx Harley Appelman, will pay $1.76 million to settle a FTC complaint alleging that their nationally marketed bath and beauty products are neither "100% organic" nor "certified organic" by the U.S. Department of Agriculture.
- The FTC and the CFPB will host a public workshop on December 10, 2019, to discuss issues affecting the accuracy of both traditional credit reports and employment and tenant background screening reports.
- The two principals of the Apex Capital Group Internet marketing operation and the 12 corporate defendants they controlled have agreed to court orders settling the FTC's allegations related to their alleged operation of a multi-national scheme to defraud consumers via deceptive "free trial" offers and negative option continuity plans.
- Under a proposed consent order, Belize's Atlantic International Bank Limited will pay $23 million, representing approximately all of its U.S.-based assets, to settle FTC charges that it assisted various related entities (the Sanctuary Belize Enterprise) in deceiving U.S. consumers as part of a scheme to sell property in Sanctuary Belize.
- The FTC sued online dating service Match Group, Inc., the owner of Match.com, Tinder, OKCupid, PlentyOfFish, and other dating sites, alleging that the company used fake love interest advertisements to trick hundreds of thousands of consumers into purchasing paid subscriptions on Match.com.
In other federal news:
- The FBI's Internet Crime Complaint Center (IC3) released a PSA titled "Business Email Compromise The $26 Billion Scam." IC3 also released a PSA titled "Perpetrators Use Various Methods to Deceive and Defraud Elderly Victims for Financial Gain."
- Federal authorities announced a significant coordinated effort to disrupt business email compromise schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation reWired, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, U.S. Postal Inspection Service, and the U.S. Department of State, was conducted over a four-month period, resulting in 281 arrests in the United States and overseas, including 167 in Nigeria, 18 in Turkey, and 15 in Ghana. Arrests were also made in France, Italy, Japan, Kenya, Malaysia, and the United Kingdom. The operation also resulted in the seizure of nearly $3.7 million.
- The U.S. Commodity Futures Trading Commission issued an order filing and simultaneously settling charges against Phillip Capital Inc. (PCI), a registered futures commission merchant, for allowing cyber criminals to breach PCI email systems, access customer information, and successfully withdraw $1 million in PCI customer funds. The order also finds that PCI failed to disclose the cyber breach to its customers in a timely manner. Finally, the order finds that PCI failed to supervise its employees with respect to cybersecurity policy and procedures, a written information systems security program, and customer disbursements.
- The SEC instituted a settled order against three Raymond James entities for improperly charging advisory fees on inactive retail client accounts and charging excess commissions for brokerage customer investments in certain unit investment trusts.
Attorney General Consumer Protection News and Other Items of Interest
Twenty-seven attorneys general signed onto the preliminary framework of a settlement with Purdue Pharma to protect their interests before Purdue Pharma filed for bankruptcy. The framework will allow the attorneys general to continue discussions with Purdue Pharma about how an agreement might be reached over the company's role in advancing the nation's opioid crisis.
Twenty-seven attorneys general urged the CFPB to revise its proposed debt collection rule to protect consumers from debt collection misconduct.
Delaware Attorney General Kathy Jennings sued seven members of the Sackler family for their role in creating and sustaining the opioid crisis in Delaware. The complaint alleges that, through their controlling stake in Purdue and their intricate involvement in company operations, the Sackler defendants managed, controlled, and directed a decades-long pattern of aggressive sales tactics, misleading literature, and false claims.
Florida Attorney General Ashley Moody launched a new website seeking to educate Floridians about the dangers of misusing prescription painkillers and other opioids such as heroin and fentanyl. The website, called Dose of Reality, provides a one-stop shop of information about opioid addiction and resources to use for businesses, caregivers, educators, medical professionals, parents, seniors, servicemembers, students, veterans, and others.
Illinois Attorney General Kwame Raoul filed a lawsuit against Johnson & Johnson; Janssen Pharmaceuticals, Inc.; Ortho-McNeil-Janssen Pharmaceuticals, Inc.; Janssen Pharmaceutica, Inc.; Endo Health Solutions Inc.; Endo Pharmaceuticals Inc.; Teva Pharmaceutical Industries Limited; Teva Pharmaceuticals USA, Inc.; Cephalon, Inc.; Allergan Finance, LLC; Actavis Pharma, Inc.; Actavis LLC; Watson Laboratories, Inc.; McKesson Corporation; Cardinal Health, Inc.; and AmerisourceBergen Drug Corporation for their roles in the opioid epidemic. According to the lawsuit, the opioid manufacturers allegedly carried out unfair and deceptive marketing campaigns that prioritized profits over public health and resulted in unprecedented levels of opioid prescribing, while the distributors irresponsibly flooded Illinois with opioids, failing in their role as gatekeepers in preventing the diversion of opioids.
Massachusetts Attorney General Maura Healey announced that she has sued the Boston Language Institute and its owner for misleading customers and violating the state's consumer protection law.
Following the abrupt closure of MyPayrollHR that left workers in Michigan and other states without paychecks and overdrafted accounts, Michigan Attorney General Dana Nessel issued a consumer alert outlining the steps employees and employers should take to protect themselves.
Minnesota Attorney General Keith Ellison launched his new podcast, entitled "Affording Your Life with Keith Ellison." The podcast will cover a variety of topics related to fairness, justice, and consumer information to help people afford their lives.
Missouri Attorney General Eric Schmitt issued a consumer alert to warn Missouri citizens about a potential scam targeting elderly and vulnerable citizens.
Nevada Attorney General Aaron D. Ford and his Bureau of Consumer Protection reminded Nevadans of their right to obtain a prescription for either glasses or contact lenses following an eye examination.
New Hampshire Attorney General Gordon MacDonald sued four members of the Sackler family who own drug manufacturer Purdue Pharma. The lawsuit accuses the Sacklers of a deceptive marketing scheme around the drugs manufactured by their company that fueled New Hampshire's drug crisis.
New Jersey Attorney General Gurbir S. Grewal announced that the New Jersey Division of Consumer Affairs is seeking information from 15 e-cigarette businesses about their marketing and sales of vaping products in New Jersey.
New Mexico Attorney General Hector Balderas brought an action against the Sackler family for allegedly masterminding illegal and deceptive practices which caused millions of opioids pills to come flooding into New Mexico.
New York Attorney General Letitia James announced that she directed MeToo Kits Company and Preserve Group to 'cease and desist' selling at home sexual assault evidence kits. These kits have raised widespread concern due to their marketing as an alternative to seeking professional medical care and because of the companies' implied representation that the evidence collected by these kits would be admissible in court. In other New York news, General James announced a lawsuit against Dunkin' Brands, Inc. - franchisor of Dunkin' Donuts - for failing to protect thousands of customers targeted in a series of cyberattacks.
North Caroline Attorney General Josh Stein warned North Carolinians to avoid "MeToo Kits," a privately sold and tested sexual assault kit for at-home use.
Ohio Attorney General Dave Yost is seeking refunds of $50,000 from a Dayton gravestone business accused of ripping off customers.
Oklahoma Attorney General Mike Hunter issued a consumer alert and sent cease and desist letters to The Preserve Group, LLC. and the MeToo Kits Company to inform the companies they are in violation of Oklahoma's consumer protection laws for using misleading statements when attempting to market sexual assault evidence kits for at-home use in the state.
Pennsylvania Attorney General Josh Shapiro filed a lawsuit against the founders and owners of Purdue Pharma, the creator of the prescription painkiller OxyContin. Attorney General Shapiro filed a separate lawsuit against Purdue Pharma in May 2019, accusing the company of a multi-faceted, illegal effort to market OxyContin in Pennsylvania. The new lawsuit alleges that certain members of the Sackler family are personally liable for the devastation of the opioid crisis because they directed, controlled, and participated in this deadly campaign of deception.
South Dakota Attorney General Jason Ravnsborg is urging South Dakota residents to be vigilant of transient contractor scams following the severe weather seen in Sioux Falls.
Texas Attorney General Ken Paxton announced that his office filed a civil Medicaid fraud lawsuit against pharmaceutical manufacturer Johnson & Johnson, and its subsidiary Janssen Pharmaceuticals, Inc., for misrepresentations made to the Texas Medicaid program about their dangerous opioid drug, Duragesic. Texas alleges the companies directed their sales representatives to deliver false and misleading messages about their fentanyl opioid drug to doctors in Texas, including Medicaid doctors. Attorney General Paxton also warned residents of southeast Texas that state law prohibits price gouging in the wake of Tropical Storm Imelda.
Virginia Attorney General Mark R. Herring has filed suit against members of the Sackler Family, owners of Purdue Pharma, for their alleged role in creating and perpetuating the opioid crisis, and for allegedly fraudulently taking billions of dollars from Purdue Pharma in an attempt to put money beyond the reach of the Commonwealth of Virginia and other parties who may be entitled to damages. The complaint includes a new claim of an individual violation of the Virginia Consumer Protection Act by Richard Sackler, who served Purdue in various capacities from 1990 to 2018, including on its board of directors, as its board co-chair, as its president, and as its head of research and development. The complaint states that "Richard Sackler acted willfully in directing, controlling, approving, or participating in" the allegedly unlawful acts committed by the company, including violations of the Virginia Consumer Protection Act.
Washington Attorney General Bob Ferguson filed a lawsuit against Vancouver, Wash.-based air duct cleaning companies for allegedly unlawfully contacting more than a million Washington consumers with more than 13 million robocalls and sending tens of millions of deceptive mailers to Washingtonians for at least two years, in violation of the Consumer Protection Act. The court granted Attorney General Ferguson's request for a temporary restraining order.
West Virginia Attorney General Patrick Morrisey filed a lawsuit seeking to shut down a concrete contractor for alleged violations of the state's consumer protection law. The lawsuit alleges Concrete Technology Incorporated of North Central West Virginia, LLC and its owners, Scott and Belynda Kirby, performed incomplete or substandard home contracting work in return for the money consumers paid.
The Better Business Bureau released a report on business email compromise scams.
Hundreds of millions of phone numbers linked to Facebook accounts have been found online on an exposed server.
President Donald Trump moves to ban flavored e-cigarettes. New York banned the sale of certain flavors of e-cigarettes after a number of vaping related deaths. In related news, the U.S. Food and Drug Administration and the U.S. Centers for Disease Control and Prevention are investigating the recent incidents of severe respiratory illness associated with use of vaping products.
Arizona Attorney General Mark Brnovich warned of Hurricane Dorian charity scams.
California Attorney General Xavier Becerra announced three final decisions that upheld cease and desist orders issued against Catholic Medical Mission Board, Inc., Food for the Poor, Inc., and MAP International for their deceptive solicitation tactics. These charitable organizations solicited donations by deceptively implying to donors that up to 99 percent of their cash donations went to charitable programs, when in reality up to 40 percent of cash donations were used for administrative and fundraising costs. In other California news, the U.S. Supreme Court will hear a case involving whether California's charitable donor information law violates the Constitution.
Florida Attorney General Ashley Moody issued a Consumer Alert warning Floridians about potential charity scams exploiting Bahamian-recovery efforts.
2019 NAAG/NASCO Conference
October 16-18, 2019, Nashville, Tennessee
This year's NAAG/NASCO Conference will be held in Nashville, Tennessee at the William R. Snodgrass Tower, located at 312 Rosa L Parks Ave., Nashville, TN 37219, starting the morning of October 16 and ending early afternoon on October 18, 2019. Hotel information can be found here. This conference is the only annual event at which state charity regulators and nonprofit organizations and their attorneys and accountants have the opportunity to meet, hear about, and discuss issues of interest to the charities community. From approximately noon on Thursday and until the end of the conference on Friday, sessions are open to the public and provide an opportunity for representatives of the nonprofit sector to meet and participate in discussions with state regulators. The public sessions aim to address pressing and relevant issues regarding the nonprofit sector. Wednesday and Thursday morning's sessions are for regulators only, providing significant opportunity for charity regulators to discuss the latest topics and learn from each other. The public day agenda can be found here.
We hope you will be there! Click here for more information.
2019 Fall Consumer Protection Conference
November 5-7, 2019, Omaha, Nebraska
This year's NAAG Consumer Protection Fall Conference will be held in Omaha, Nebraska at the Omaha Marriott Downtown at the Capitol District from Nov. 5-7, 2019. The agenda aims to address pressing and relevant issues specific to your role in consumer protection. On Tuesday, November 5 from approximately noon until 7:30 pm, the private, nonprofit, and government sectors are invited to attend the public portion of the conference, which also includes lunch and an evening reception.
Sessions during the public portion of the conference include an attorney general welcome and comments, as well as sessions on CBD/Hemp Products, Data Security Issues Relating to Lawyers and Law Firms, and Payment Apps. There will also be an open-mic discussion of private sector issues. The agenda at a glance can be found here. Please note that it is subject to change as we prepare for the conference, and we plan to keep the website updated with current information.
We hope to see you there! Click here for more information.
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 firstname.lastname@example.org or call (202) 326-6263.