United States: State AGs In The News - May 14th, 2015

Antitrust

Kentucky Attorney General Sues Oil Company for Anticompetitive Pricing

  • Kentucky AG Jack Conway filed a lawsuit alleging that Marathon Petroleum Co. is using anticompetitive practices to charge higher gasoline prices in Kentucky in violation of the Kentucky Consumer Protection Law, the Sherman Act, and the Clayton Act.
  • According to the Complaint, gasoline prices in Louisville and Northern Kentucky, in particular, are significantly higher than comparable markets. The lawsuit alleges that Marathon has a dominant position through ownership of refineries that provide 90 to 95 percent of gasoline to the affected markets.
  • AG Conway alleges that Marathon is abusing its dominant position by engaging in certain practices, including:
    • entering supply agreements which require independent gas retailers to buy all of their fuel from Marathon;
    • demanding other refiners sign "exchange agreements" allegedly designed to keep out competing gasoline products; and
    • using deed restrictions to prohibit independent gasoline retailers from using their property as a gas station for 25 years unless it sold only Marathon gas.
  • Marathon responded that it "disputes the allegations" and "will defend this judicial action vigorously in court." Marathon also indicated that "the FTC has looked at [the issue] before and reviewed it in a couple of different requests."

Consumer Financial Protection Bureau

CFPB Files Lawsuit Against Mortgage Payment Company

  • The Consumer Financial Protection Bureau (CFPB) filed a lawsuit alleging that Nationwide Biweekly Administration, Inc., its subsidiary Loan Payment Administration LLC, and its owner and president Daniel Lipsky (Nationwide), violated the Consumer Financial Protection Act and the Telemarketing and Consumer Fraud and Abuse Act in attempts to market mortgage payment services.
  • Nationwide offers a biweekly mortgage payment program called the "Interest Minimizer." This program purportedly allows customers to make mortgage payments to Nationwide every two weeks, which Nationwide forwards on to the mortgage servicer, resulting in customers making one additional monthly payment per year. However, Nationwide allegedly keeps the first extra biweekly payment (up to $995) as a set-up fee, and charges consumers between $84 and $101 in processing fees each year, without expressly disclosing as much.
  • In the Complaint, the CFPB alleged that the defendants misrepresented the savings consumers would achieve, deceived consumers about the cost of switching to the Interest Minimizer, and falsely claimed to be affiliated with mortgage lenders and servicers.

Consumer Protection

Fifty States and the Federal Government Settle Cramming Charges With Sprint and Verizon

  • Fifty states (led in part by Vermont AG William Sorrell), the District of Columbia, the CFPB, and the FCC settled claims against Sprint Corporation and Cellco Partnership d/b/a Verizon Wireless regarding unauthorized charges for third-party messaging services ("cramming"). The lawsuits alleged cramming to be a violation of the Consumer Financial Protection Act, Section 201 of the Communications Act of 1934, and various state Unfair and Deceptive Practices Acts.
  • According to the Complaint, the cramming charges were typically associated with "premium" text message subscription services—such as horoscopes, trivia, flirting tips, and sports scores—offered by third parties. These services charged a monthly fee through the carrier's billing statement, typically $9.99 per month, with the carrier receiving a percentage. However, in many cases, there was no evidence that consumers had requested the services, and consumers were often unaware that they were being charged.
  • Under the terms of the consent orders, Sprint will pay $68 million and Verizon will pay $90 million, of which $50 and $70 million respectively will be used to repay affected consumers through programs overseen by the CFPB. Sprint will pay penalties of $12 million to the states and $6 million to the FCC; Verizon will pay $16 million to the states and $4 million to the FCC.
  • In addition, Sprint and Verizon will be required to implement procedures to obtain customers' express consent prior to charging for third-party services, provide a complete refund when customers are billed for unauthorized charges, inform new customers that they can block third-party charges, and create a special section in customers' bills where third-party charges are clearly distinguished.

FTC Seeks to Shed Ill-Gotten Monies From Company Alleged to Deceptively Market Weight Loss Products

  • The Federal Trade Commission (FTC) issued a complaint alleging that Lunada Biomedical, Inc., and its officers and owners, violated the FTC Act through the marketing and sale of dietary supplement Amberen.
  • The Complaint alleges that Lunada deceptively labeled, advertised, marketed, and sold Amberen through a combination of unsubstantiated efficacy claims, false proofs, false claims regarding customer satisfaction, false "risk-free" trial offers, and that they failed to disclose material connections with endorsers. Defendants allegedly also hired a marketing company to create and maintain a blog, in which the president of the marketing company described personal experiences with menopause, and endorsed Amberen, without disclosing that Lunada was paying for, and consulting on blog topics.
  • The commissioners voted 5-0 in favor of the complaint, which seeks permanent injunctive relief, along with restitution for injured consumers, refund of monies paid, and disgorgement of ill-gotten monies. The lawsuit is pending in federal court for the Central District of California.

Data Privacy

Hedge Fund Acquires RadioShack Consumer Data, Agrees to Mediate With Attorneys General

  • Standard General LP, a hedge fund that purchased hundreds of RadioShack's store leases in a prior sale, has won the auction to purchase RadioShack Corp.'s brand name and other intellectual property, as well as a vast cache of customer data, for $26.2 million.
  • Thirty-seven State AGs, led by Texas AG Ken Paxton, have objected to RadioShack's attempt to sell the data, which is reported to consist of 85 million email addresses and 67 million customer names and physical address files. AG Paxton has called the sale "not only a direct violation of the terms of [RadioShack's] own privacy policies, but also a clear violation of Texas law."
  • RadioShack agreed to mediate the issue with the objecting AGs to resolve their concerns, which include what type of information is included and how it will be used. The sale of these assets must ultimately be approved by the U.S. Bankruptcy Court for the District of Delaware, which is overseeing the bankruptcy.

For-Profit Colleges

SEC Charges For-Profit College With Multiple Violations of Securities Laws

  • The Securities and Exchange Commission (SEC) brought charges against ITT Educational Services Inc., along with ITT's chief executive officer Kevin Modany, and chief financial officer Daniel Fitzpatrick, for allegedly defrauding investors in violation of multiple sections of the Securities Act, the Exchange Act, and multiple SEC Rules.
  • The Complaint identifies numerous situations where ITT allegedly mislead investors, analysts, and auditors, including claims that ITT failed to disclose material facts, filed materially false and misleading reports, and made false certifications regarding ITT's performance from 2009 to 2012, and the potential impact of increasing defaults in the private student loan programs that ITT guaranteed.
  • The SEC is seeking injunctive relief, disgorgement, and civil penalties from ITT. It is also asking that Modany and Fitzpatrick be ordered to return all bonuses, incentive-based and equity-based compensation, as well as profits realized from the sale of ITT stock.

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.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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