United States: State AGs In The News - March 5th, 2015

Hot News

Received a State AG Subpoena? Determine if Your Insurer Must Pay

  • In a recent blog post, Dickstein Shapiro partners Maria Colsey Heard and Ann-Marie Luciano offer advice for companies facing AG investigations.

Consumer Protection

New York Attorney General Teams With FTC to Sue Debt Collectors

  • New York AG Eric Schneiderman together with the Federal Trade Commission (FTC) filed lawsuits against two groups of related entities: Vantage Point Services, LLC, and Four Star Resolution, LLC. The lawsuits alleged violations of the U.S. FTC Act and Fair Debt Collection Practices Act, as well as New York State laws against abusive debt-collection, and unfair and deceptive practices. Although located in Buffalo, defendants are alleged to have collected more than $45 million in supposed debts, nationwide.
  • In collection calls to consumers, the Vantage Point defendants allegedly held themselves out as government agencies—including the FBI—used abusive language, and threatened consumers with arrest if they did not pay.
  • The Four Star defendants allegedly claimed to be attorneys, investigators, process servers, court officials, government agents, and criminal law enforcers during collection calls, and "spoofed" real law enforcement phone numbers, and threatened consumers with criminal action, wage garnishment, and seizure of their property for failure to pay.
  • The lawsuits were filed in the Western District of New York. The court granted temporary restraining orders against defendants, enjoining their debt collection practices and freezing their assets.

FTC Settles With Company That Allegedly Paid Customers for Online Endorsements

  • The FTC entered into a consent order with Amerifreight, Inc., to resolve claims that the automobile shipment broker committed unfair and deceptive practices under the FTC Act. This administrative complaint marks the first time the FTC has charged a company for failing to disclose that it gave cash discounts to customers to post reviews.
  • The FTC alleged that Amerifreight deceived consumers by providing cash discounts and other incentives to customers who agreed to provide good reviews in online forums. The FTC also alleged that Amerifreight did not disclose that it compensated consumers to provide reviews, and represented its favorable reviews as a product of unbiased and unprompted customer reaction.
  • The consent order precludes Amerifreight from making future misrepresentations and requires it to disclose any material connection between an endorsing entity and Amerifreight. It also requires, among other things, that the company maintain, for five years, copies of advertisements or promotional materials containing representations covered by the consent order, as well as complaints or inquiries against the company concerning any endorsement of its services. Amerifreight did not admit to the claims made by the FTC, other than those facts necessary to establish jurisdiction.

Data Privacy

Connecticut Attorney General Probes Computer-Maker Over Software Vulnerability

  • Connecticut AG George Jepsen inquired into Lenovo Group Ltd., and software-maker Superfish, Inc., seeking information related to allegations that Lenovo computers were sold with built-in software that tracked users' internet browsing and made the computer more vulnerable to "man-in-the-middle" hacking, where a third party intercepts communications sent to and from the affected computer.
  • AG Jepsen sent letters to Lenovo and Superfish, requesting information on the companies' contractual and financial relationship. AG Jepsen also requested information on the number of affected computers sold, testing and quality control measures, and any current or future remedial measures. The AG indicated that such information is necessary to determine whether the companies had violated Connecticut's laws prohibiting unfair or deceptive trade practices.
  • Lenovo has promised to stop shipping products with Superfish installed and issued the following statement: "We have thoroughly investigated this technology, and do not find any evidence to substantiate security concerns."

President Obama Sparks Discussion With Draft Consumer Privacy Bill of Rights

  • President Obama released a "discussion draft" of a proposed bill for the creation of a Consumer Privacy Bill of Rights. The bill is designed to bolster transparency in how companies use consumer data, and to foster greater consumer control.
  • The response from interest groups, and the public, however, has been generally negative. In addition to finding the bill to be too lax, objectors note that the bill would preempt state data privacy laws that are already operating and that provide greater levels of protection to consumers.


Exxon Settles With New Jersey, Lawmakers and Interest Groups Object

  • Exxon Mobil Corporation has agreed to settle with New Jersey for $225 million (the New York Times had previously reported $250 million) over the company's liability for alleged environmental damage resulting from oil refining and petrochemical production at two sites dating back to the 1870s.
  • The court was rumored to be close to issuing a decision on damages, but Acting AG John Hoffman asked Judge Michael Hogan to defer his decision as the parties had agreed on the general parameters of a settlement. AG Hoffman called it an "important settlement" that "holds the company financially accountable through payment of a historic Natural Resource Damages settlement on top of Exxon's obligation to clean up the sites."
  • Although the settlement would end an eleven-year litigation, numerous interest groups have criticized the settlement as being too small in relation to the State's original claims of $8.9 billion, and in light of the fact that Exxon had essentially conceded liability.
  • The public will have a chance to comment on the agreement next month and it will be submitted to the court for approval in May. State Senators Steve Sweeney and Raymond Lesniak have indicated that they will challenge the proposed settlement, beginning with filing a motion to oppose the settlement with the court. Lesniak indicated the agreement can be overturned if it is fraudulent, arbitrary or capricious and that this settlement "certainly appears to be arbitrary and capricious, to say the least."

Attorneys General Testify Before Congress on EPA Proposed Rule

  • Arkansas AG Leslie Rutledge and Montana AG Tim Fox appeared before the U.S. House of Representatives Oversight Subcommittee on the Interior to testify regarding the scope and potential effects of three rules proposed by the Environmental Protection Agency (EPA) that are scheduled to go into effect later this year.
  • The hearing focused on how certain state interests and small businesses will be affected by the implementation of the Clean Power Plan, the National Ambient Air Quality Standards for Ozone, and the Waters of the United States rule.
  • State AGs have been increasingly active, on both sides, of EPA rule-making. Currently, a group of 20 AGs is challenging an EPA rule under the Clean Air Act at the U.S. Supreme Court, (with 17 AGs as co-respondents). AGs have also sued the EPA in other contexts, have joined in multiple amici briefs in support of, and opposition to EPA rules, and have submitted numerous comments to proposed rules.

Financial Industry

New York Attorney General Pushes Bill to Protect and Reward Whistleblowers

  • New York AG Eric Schneiderman has indicated that he will propose legislation to protect and reward insiders who report information about illegal activity in the financial services industries.
  • The Martin Act, a New York securities law that predates the U.S. Securities and Exchange Commission, gives the AG broad powers to investigate suspected fraud in the offer, sale or purchase of securities. However, it does not currently provide direct monetary incentives for industry insiders to come forward and aid in investigations.
  • The bill would create incentives for insiders to report fraud: it provides monetary rewards—10 to 30 percent of the final settlement or penalty—to individuals who voluntarily provide original and useful information, not previously known to the AG; keeps the identity of the whistleblower confidential; and it would prohibit employers from discharging, demoting, suspending, or otherwise retaliating against employees who report suspicious or fraudulent activity.
  • AG Schneiderman stated, "New York has a unique opportunity to set the gold standard for states seeking to expose and hold individuals accountable for financial crimes. This law will be the strongest, most comprehensive in the nation, and is long overdue for a state with the world's most important financial markets."

States vs Federal Government

Supreme Court Holds Tax Injunction Act Does Not Block Challenge of Tax Notification Requirements

  • The U.S. Supreme Court ruled unanimously in favor of Petitioner Direct Marketing Association (DMA), holding that the U.S. Tax Injunction Act (TIA)—which purports to restrict federal district courts from restraining the assessment, levy or collection of any tax under State law—does not preclude tax payers from challenging other aspects of state tax laws in federal court.
  • At the core of this dispute is a Colorado law that requires online retailers to report information for sales made to Colorado residents to the State Department of Revenue, to aid the state in collecting "use" taxes on those purchases. Petitioner, not wanting to litigate Colorado tax policy in state courts, filed a lawsuit in federal court claiming that the notification requirement burdened out-of-state retailers disproportionately as compared to in-state retailers. The State asserted that the TIA precluded the Petitioner from bringing a lawsuit to challenge the state tax law in federal court. Twenty-five AGs filed an amici brief in support of Colorado's position.
  • Writing for the Court, Justice Thomas indicated that the TIA did not apply to "notice and reporting requirements" that were tangential to the collection of state taxes. Thus, the TIA did not preclude DMA from challenging the law in federal court. However, the Court left it to the Tenth Circuit Court of Appeals to decide whether the doctrine of comity could be applied to achieve a similar result.
  • In a separate opinion, Justice Kennedy observed, "[t]here is a powerful case to be made that a retailer doing extensive business within a state has a sufficiently substantial nexus to justify imposing some minor tax-collection duty, even if that business is done through mail or Internet." Kennedy's observation may indicate a willingness to break with previous decisions banning states from requiring retailers who lack a physical presence to collect and submit taxes to the state for sales made to residents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions