United States: State AGs In The News - September 24th, 2015

Practice Insights

Its Only "Natural"

  • In a recent post, Dickstein Shapiro Counsel Doreen Manchester discusses issues surrounding the use of the term "natural" in connection with consumer products.


California Gives AG Greater Oversight of Charities

  • California Governor Jerry Brown signed into law a bill that seeks to increase transparency and accountability in charitable fundraising.
  • The new law, which goes into effect in January 2016, will bring some significant changes, particularly for those companies that raise money for charities. For-profit companies acting as fundraisers will be required to disclose to potential donors that a portion of their contributions will be retained by the company. In addition, fundraising counsel will be precluded from compensation that is based on a percentage of donations received.
  • The law will also expand AG enforcement authority, by: including for-profit fundraising firms and other third parties in the 10-year statute of limitations applicable to charitable enforcement cases; and allowing the AG to bring enforcement cases against fundraising firms and other third parties who aid and abet a violation of the laws on charities.

Consumer Protection

FTC Looks Closely at Vision Improvement App

  • The Federal Trade Commission (FTC) settled with software developer Carrot Neurotechnology, Inc. and owners Adam Goldberg and Aaron Seitz (together, "respondents"), resolving claims that respondents falsely represented that their Ultimeyes app, which it sold for between $5.99 and $9.99, would restore and improve users' vision.
  • The FTC alleged that Carrot made deceptive efficacy claims (e.g., "improves vision on average by 31%") and false establishment claims (e.g., "scientifically shown to improve vision "). The FTC indicated that respondents did not have proper scientific evidence to support these claims and failed to disclose that the research it cited in support of its claims came from an affiliated source.
  • The proposed consent order requires the respondents to pay $150,000 to the FTC for a consumer redress fund, and to provide customer information to the FTC so it can efficiently satisfy claims. It also calls for respondents to conduct adequate human clinical testing before making health benefit or performance-based representations on future products. The proposed order will be open for comments for 30 days before the FTC decides whether to make it final.

Missouri AG Conducts Price Check on Walgreens

  • Missouri AG Chris Koster is headed back to court with Walgreens over allegations that the drugstore chain has failed to implement a 2013 consent judgment that required the drugstore chain to prevent consumer deception resulting from expired or inaccurate price tags. The 2013 order requires, among other things, that Walgreens replace expired sale tags within 12 hours after the price has changed.
  • AG Koster's investigation found that during a five-week period this summer, 49 of 50 Walgreens stores had expired or otherwise incorrect price tags. It also revealed that many consumers were overcharged at the register as a result of expired tags.
  • AG Koster filed a motion to hold Walgreens in contempt, and is seeking to fine the company up to $5,000 for every violation discovered, as well as additional fines for every day that an expired tag is found.


Investigative Engines Rev in Response to Findings on Volkswagen "Clean" Diesels

  • The U.S. Environmental Protection Agency (EPA) issued a Notice of Violation of the Clean Air Act to Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. (Volkswagen) effectively recalling nearly 500,000 cars equipped with "clean diesel" engines.
  • The EPA and the California Air Resources Board (CARB) concluded that Volkswagen rigged its software so that its U.S. emissions test results would show that its vehicles had a cleaner exhaust profile than they actually did. Testing conducted by the EPA and CARB indicated that the affected vehicles emit up to 40 times more pollution than emission standards allow. The results from this joint investigation triggered governments in Europe and elsewhere to look deeper into Volkswagen's emissions compliance.
  • In the U.S. the issue is far from resolved. Members of Congress are calling for the FTC to investigate whether Volkswagen's advertising of clean diesel violates the FTC Act's prohibition on deceptive practices. In addition, New York AG Schneiderman is undertaking an investigation that could be joined by other State AGs, into whether Volkswagen's actions violated state unfair and deceptive practices and environmental protection laws. Volkswagen has set aside $7.3 billion to address the approximately 11 million vehicles affected worldwide, but warned that future costs remain undetermined.

False Claims Act

DOJ Piles on For-Profit College

  • ITT Educational Services, Inc. disclosed that it is under investigation by the U.S. Department of Justice (DOJ) to determine whether it violated the False Claims Act.
  • In a recently filed 8-K, ITT indicated that the DOJ had issued a Civil Investigative Demand asking for documents and answers to interrogatories regarding whether ITT "knowingly submitted false statements in violation of the Department of Education's Program Participation Agreement regulations." ITT indicated that it believes its practices were in compliance, and that it is cooperating with the DOJ.
  • ITT is currently defending two other government lawsuits. The Consumer Financial Protection Bureau filed suit last fall, alleging that ITT engaged in predatory lending practices, and the Securities and Exchange Commission filed suit in May 2015, alleging that ITT committed fraud in concealing the size of nonperforming student loan portfolios from investors.

Financial Industry

Regulators Grab for Bitcoins—New York DFS Issues First-of-Kind "BitLicense"

  • The New York Department of Financial Services (DFS) issued the first "BitLicense" to Circle Internet Financial Ltd., allowing the mobile payments firm to transfer and exchange virtual currencies, including bitcoin.
  • DFS finalized its rules for virtual currencies in June, and gave existing virtual currency firms until August 10 to apply for a license. DFS reported receiving 25 applications. At that point, former DFS superintendent Benjamin Lawsky provided a variety of clarifications regarding how DFS will exercise its new authority:

    • Only firms that are financial intermediaries (i.e., those that hold customer funds) will be required to apply for a BitLicense.
    • Companies will need prior DFS approval for material changes to their products or business models, such as offering exchange services.
    • DFS will not require duplication of compliance efforts—companies that already report to federal regulators, such as Treasury's Financial Crimes Enforcement Network (FinCEN), can forgo duplicative DFS requirements.
    • Large investors (>10 percent) must demonstrate that they will not be a control person.
  • At the same time, the U.S. Commodity Futures Trading Commission (CFTC) is asserting authority over virtual currencies. The CFTC recently accepted an Offer of Settlement from Coinflip, Inc., resolving allegations that it violated the Commodity Exchange Act by operating as a clearing platform for bitcoin futures and options trading. According to the Order, the CFTC declared that virtual currencies are commodities.

Another California City Sues Bank for Housing Discrimination

  • The City of Oakland, California filed a lawsuit against Wells Fargo Bank, N.A., alleging predatory lending and discrimination in violation of the U.S. Fair Housing Act and the California Fair Employment and Housing Act.
  • Oakland's complaint centers on the claim that Wells Fargo gave more expensive and higher-risk loans to Oakland's black and Hispanic residents, despite the City's claim that many qualified for favorable loan terms like those given to white borrowers. The lawsuit mirrors similar claims from the City of Los Angeles, and from Cook County, Illinois. Those suits were dismissed in July.
  • Wells Fargo replied that "[Oakland's] accusations against Wells Fargo do not reflect how we operate in the communities where we do business." The bank emphasized that it will vigorously defend its record as a fair and responsible lender.


SEC Wields Cybersecurity Authority

  • The Securities and Exchange Commission (SEC) settled with R.T. Jones Capital Equities Management, Inc., resolving claims that the investment advisor failed to implement cybersecurity protections required by Rule 30(a) of Regulation S-P ("Safeguards Rule"). The SEC censured R.T. Jones, and ordered it to pay a civil penalty of $75,000.
  • The Safeguards Rule, adopted by the SEC in 2000, requires registered investment advisers to implement policies and procedures reasonably designed, a) to insure the security of customer records and information, b) to protect against anticipated threats, and c) to protect against unauthorized access to customer information.
  • This action was initiated following a data breach in which a hacker gained access rights to unencrypted data stored on a third-party web server, including dates of birth and social security numbers, for more than 100,000 individuals. Although there has not been evidence of any clients being harmed by the breach, the SEC found multiple deficiencies in R.T Jones' cybersecurity policies, the SEC has indicated that it will emphasize cybersecurity in light of the increasing number of cyberattacks on financial firms.

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
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
Check to state you have read and
agree to our Terms and Conditions

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.


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.


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 by clicking here .

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.


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.


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.


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.


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.