United States: State AGs In The News - December 19th, 2013

State AGs in the News

Herring Wins Virginia Attorney General Race After Obenshain Concedes

• Republican Mark Obenshain conceded the very close 2013 race for Virginia Attorney General to Democrat Mark Herring after Herring's lead began to widen during a statewide recount this week.
• Obenshain's concession spares a three-judge panel in Richmond from having to decide on challenges to ballots by both sides by this Friday.
• During a news conference, Herring promised "mainstream leadership" that will focus on "good jobs," "better education for [Virginians'] children," and "a good transportation system that will serve [Virginia's] growing economy."

47 Attorneys General Ask Congress to Fund the Trafficking Victims Protection Reauthorization Act (TVPRA)

• The AGs of 47 States sent a letter to the House Appropriations Subcommittee on Homeland Security urging them to appropriate funding for programs authorized by the TVPRA.
• Citing human trafficking as among the world's largest and fastest growing criminal industries, the AGs commended TVPRA's progress in protecting domestic minor victims, encouraging further education and awareness, providing prosecutors with more effective tools for prosecuting offenders, and funding task forces across the country to battle trafficking.
• According to a study of U.S. Department of Justice human trafficking task force cases, 83 percent of sex trafficking victims identified in the United States were U.S. citizens, and the average age they were first used for commercial sex was between 12 to 14 years old.

Charities

New York Attorney General Reaches $7.7 Million Settlement with Charitable Education Foundation Over Alleged Misuse of Funds

• New York AG Eric Schneiderman announced a $7.7 million settlement between his office and Pearson Charitable Foundation resolving allegations that it misused charitable assets for the benefit of an affiliate for-profit education company.
• AG Schneiderman alleged that the Pearson Charitable Foundation, which states its mission is to recruit and retain high-quality teachers, had developed materials to meet the Common Core State Standards for elementary and high school education that its for-profit affiliate intended to sell commercially, and organized developing meetings of international educators for that purpose.
• Under the settlement, Pearson Charitable Foundation will pay a total of $7.7 million, $7.5 million of which AG Schneiderman said would go to recruit, train, and support teachers in New York and other states.

Consumer Finance Protection Bureau (CFPB)

CFPB and Attorneys General Sue Online Loan Servicer Over Allegedly Unfair, Deceptive, and Abusive Collection Practices

• The CFPB announced a lawsuit against online loan servicer CashCall Inc., as well as its owner, subsidiary, and affiliate, for allegedly unfair, deceptive, and abusive collection practices. A number of AGs announced their own parallel actions as well, including Colorado, North Carolina, and New Hampshire.
• The CFPB's complaint alleges that the company committed an "abusive practice by attempting to collect money that consumers did not actually owe and unlawfully debited consumer checking accounts over loans that had been declared void or limited.
• The company acted as a collection agent for Western Sky Financial, a Native American-owned online lender based on an Indian reservation in South Dakota that halted operations in September 2013 after several states alleged that its high-cost loans made over the Internet violated state lending laws. Although Western Sky no longer does business, CashCall allegedly continued to attempt to collect on its loans that were declared void or limited because they violated state law.

Consumer Protection

Colorado Attorney General Reaches Agreement Resolving Action Against Debt-Settlement Company Over Allegedly Abusive Practices

• Colorado AG John Suthers announced the resolution of a case brought by his office in February 2012 against debt-settlement firm CreditAnswers over its alleged failure to comply with the Colorado Uniform Debt-Management Services Act.
• The Colorado AG alleged that the company, which no longer operates, failed to provide required consumer disclosures and cancellation notices and did not comply with other requirements of Colorado law, allegedly harming 615 Coloradans.
• The company will pay $225,000 and it and its owner will be permanently enjoined from providing debt-management services to Colorado residents.

Florida Attorney General Settles Cramming Allegations with Telecommunications Companies

• Florida AG Pam Bondi announced a settlement with DADATA, Inc. and several related companies over allegations that the company charged Florida customers for voicemail, e-fax, and other services without the customers' consent.
• The settlement requires the companies to refund all charges billed since July 1, 2009, to consumers who did not consent to the service for which they were charged.
• AG Bondi estimates that more than 18,000 consumers are potentially eligible for refunds, which may total approximately $2.3 million, or an average of $134 per consumer.
• In addition to the settlement, DADATA has made or will be making other refunds to more than 53,000 telephone lines, for a total of more than $2.2 million in refunds to government lines, telephone accounts of seniors aged 80 to 99, and hundreds of customers who provided affidavits or assistance with the AG investigation.

Indiana Attorney General Sues Foreclosure Consultant Over Unlawful Practices

• Indiana AG Greg Zoeller announced a lawsuit against foreclosure consultant Liberty Credit Law alleging that it solicited upfront payments for assisting homeowners in obtaining loan modifications and committed other violations of Indiana law.
• Demanding upfront fees for mortgage modifications is a violation of Indiana consumer protection law, and AG Zoeller further alleged that such firms are not providing any services that the homeowners themselves could not do by contacting their mortgage servicer.
• In addition to suing the companies, AG Zoeller will distribute money from the Consumer Protection Assistance Fund, which is funded from recoveries in consumer protection actions, to provide restitution to homeowners impacted by the alleged misconduct.

Louisiana and Maine Attorneys General Sue Vacation Club for Alleged Unfair and Deceptive Practices

• Louisiana AG Buddy Caldwell and Maine AG Janet T. Mills independently announced lawsuits against Festiva Hospitality Group for unfair and deceptive practices related to its point-based vacation club.
• According to the announcements, Festiva allegedly sold consumers "points" for membership in the vacation club at high-pressure sales presentations that promised to provide consumers with access to resorts around the country.
• The lawsuits allege that instead of providing benefits, club members often were unable to book any vacations that fit their schedule and location preferences, were charged increasingly higher maintenance fees, and were told that they signed a 40-year contract after trying to cancel membership.

New Jersey Attorney General Sues Bank for Misrepresenting Risk for Securities Backed by Home Loans

• New Jersey Acting AG John J. Hoffman sued Credit Suisse Group AG over claims the bank mislead investors about defects in mortgage-backed securities issued in 2006 and 2007.
• AG Hoffman alleges that the securities were based on pools of mortgages not backed by Fannie Mae or Freddie Mac and led to Credit Suisse making tens of millions of dollars in reimbursements tied to these allegedly defective loans.
• Credit Suisse faces a similar lawsuit from New York AG Eric Schneiderman, as well as an investigation from the U.S. Justice Department.

Vermont Attorney General Sues Bank for Alleged Foreclosure Actions

• Vermont AG Bill Sorrell brought action against Bank of America (BOA) for allegedly violating Vermont's foreclosure mediation statute and Consumer Protection Act in foreclosure actions against local homeowners.
• The complaint alleges that BOA (1) failed or refused to comply with mediation settlements to which it previously agreed; (2) billed homeowners for more money that mediation settlements provided; and (3) sent mailing to homeowners containing misrepresentations.
• AG Sorrell seeks an injunction prohibiting future violations, appropriate monetary relief to affected homeowners, $10,000 in civil penalties for each violation of law, fees and costs, and other appropriate relief.

West Virginia Attorney General Warns Consumers About Phone Scammers

• West Virginia AG Patrick Morrisey cautioned citizens about a phone scam in which a caller pretends to work for the Internal Revenue Service and threatens residents with arrest or other punishment if they do not pay a certain sum.
• According to the IRS, the callers often use common names and provide fake IRS badge numbers; know the last four digits of the victim's Social Security number; make it appear as if the IRS is really calling; send fake IRS emails to support their scam; and call a second time claiming to be the police or DMV to support their claim.
• AG Morrisey reminded consumers that "the IRS will never make threats of violence or ask you to pay via pre-paid cards or wire transfer."

Environment

New Jersey Attorney General Announces $165 Million Settlement Over Alleged River Contamination

• New Jersey Acting AG John J. Hoffman and the Department of Environmental Protection (DEP) Commissioner Bob Martin announced that a New Jersey judge has approved two settlements in litigation related to the Passaic River that will provide the state with $165.4 million and will permit the DEP to proceed with legal claims against Occidental Chemical Corp. for allegedly dumping dioxin and other chemical waste into river over a period of decades.
• As part of the settlement, six companies agreed to pay $130 million, and 261 other third-party defendants, including municipalities and public entities, agreed to pay the remaining $35 million.
• Acting AG Hoffman praised the two settlements as a vital step "to ensure that those responsible for the contamination are held accountable."
• The state now intends to pursue claims with non-settling principal defendant, Occidental Chemical Corporation, for future clean-up and removal costs.

Wisconsin Attorney General Fines Sand Mining Company for Pollution

• Wisconsin AG J.B. Van Hollen announced a $200,000 judgment against Preferred Sands of Wisconsin, LLC for alleged storm water violations at its 350-acre sand mining operation.
• The complaint alleges that heavy rain in 2012 caused a 2,100 foot plume of sediment to cascade down a hill, through neighboring properties, and ultimately dumping up to six inches of sediment into a stream and wetland.
• AG Van Hollen warned operators of all sand mines to be "vigilant in their adherence to Wisconsin's environmental protection regulations."

Intellectual Property

43 Attorneys General Support FTC Scrutiny of Patent Trolls

• The AGs of 43 states, led by Nebraska AG Jon Bruning and Vermont AG Bill Sorrell and acting through the National Associations of Attorneys General, sent a joint letter to the FTC supporting the Commission's proposed information request to Patent Assertion Entities, some of which have been labeled as so-called "patent trolls."
• Citing their role as their states' chief consumer protection advocates, the AGs' letter expresses concern over the impact of frivolous and baseless assertions of intellectual property rights against businesses, consumers, and non-profits in the states; lauds federal attention on the issue; and encourages the FTC to also look into the role that law firms play in assisting alleged patent trolls carry out their activities.
• We previously have provided in-depth coverage and analysis of AG attention to this issue, which has garnered bi-partisan support and led to AGs bringing their own enforcement actions against alleged patent trolls.

Pharmaceuticals

42 Attorneys General Sends Letter to FDA Calling for Tamper-Resistant Versions of Generic Painkillers

• 42 state and territorial attorneys general signed letter requesting that the U.S. Food and Drug Administration (FDA) require tamper-resistant versions of generic prescription pain relievers (opioids) to deter abuse.
• The letter thanks the FDA for its recent efforts to ensure that branded opioid drugs have abuse-deterrent formulations, but also requests that the FDA implement the "common sense improvement" of "[e]nsuring that generic opioids, like their branded counterparts, have abuse-deterrent properties."

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