United States: State AGs In The News - October 1st, 2015

Consumer Financial Protection Bureau

CFPB Double Teams With DOJ to Double Up on Fifth Third

  • The Consumer Financial Protection Bureau (CFPB) resolved two separate enforcement actions with Fifth Third Bancorp, the first claiming discriminatory auto loan pricing and the second claiming deceptive acts or practices in marketing credit card add-on products.
  • In the first action, the CFPB, working with the U.S. Department of Justice (DOJ), alleged that Fifth Third violated the Equal Credit Opportunity Act by giving auto dealers discretion to charge auto loan interest rates that were higher than those set by the bank, based on factors other than the consumer's creditworthiness. Although Fifth Third did not discriminate directly, the CFPB and DOJ alleged that its use of subjective and unguided pricing discretion as an indirect lender resulted in dealerships charging higher rates to qualified African-American and Hispanic borrowers.
  • In addition to paying a penalty of $18 million, Fifth Third agreed to limit dealer markup to 1.25 percent, for loans of 60 months or less, and 1 percent, for loans greater than 60 months.
  • In the second action, the CFPB alleged that Fifth Third (through the actions of its third-party service providers) violated the Consumer Financial Protection Act by deceptively enrolling consumers in a credit card add-on product without first providing adequate disclosure as to its terms and conditions. The CFPB also alleged that Fifth Third misled consumers through sales calls and other marketing efforts, where they indicated that the cardholder could sample the product "risk-free" when in fact the bank had already enrolled them for a monthly fee.
  • Fifth Third agreed to pay $3 million to affected consumers and a $500,000 penalty to the CFPB to resolve the allegations related to the add-on product. In addition, the bank agreed to create a Vendor Management Program and an internal audit process to monitor its service providers' compliance therewith.

Consumer Protection

FTC Sues Weight Loss Supplement Company for "Gagging" Consumers

  • The FTC filed a lawsuit in federal court against Roca Labs, Inc. and Roca Labs Nutraceutical USA, Inc. (together, "Roca") alleging that Roca's marketing and sales of its weight loss supplements—a powder that when mixed with water creates a gel-like substance purported to take up space in the stomach, and thus reduce the capacity for caloric intake—violated Sections 5 and 12 of the FTC Act.
  • In the complaint, the FTC alleged that Roca's marketing practices were deceptive because they stated or implied that consumers could lose substantial amounts of weight by taking Roca's products (e.g., as much as 21 pounds in one month, 90 percent success rate in achieving substantial weight loss) without adequate research to substantiate the claims. The FTC further alleged that Roca misrepresented that its products "create a natural gastric bypass effect in the stomach," and deceptively used search engine queries like "gastric bypass surgery" to direct consumers to its website.
  • The FTC also alleged that Roca unfairly used "gag clauses" in their sales contracts and terms and conditions of use, through which Roca threatened to sue purchasers if they complained to a third-party consumer reporting organization (e.g., Better Business Bureau), or posted negative comments about Roca and its products on Internet websites. Roca also failed to provide refunds: the initial three to four month supply cost $480. The lawsuit was filed in federal court for the Middle District of Florida, No. 8:15-cv-02231.

California AG Seeks Greater Transparency in Prop 65 Private Enforcement

  • California AG Kamala Harris has proposed amended regulations to govern the enforcement of Proposition 65, the state law requiring businesses with 10 or more employees to warn individuals through labeling when there is a risk of exposure to known carcinogens or other substances that may cause reproductive harm.
  • The amended regulations seek to address one particular area of scrutiny: Proposition 65 has been criticized over the years for too freely allowing private enforcement actions against unsuspecting businesses when the AG does not file a lawsuit after a notice period. These private enforcers are permitted to retain 25 percent of any penalty recovered—up to $2,500 per person exposed, per day. Because Proposition 65 claims can be combined with other state laws that allow disgorgement of profits (unfair practices) and attorneys' fees when a plaintiff acts in the public interest, Proposition 65 has been seen as creating lucrative opportunities for private litigants with little public benefit.
  • The amended regulations focus on increasing transparency and ensuring a public benefit when Proposition 65 is enforced through private lawsuits. The amended regulation requires private enforcers to provide greater disclosure to the AG's office during litigation, and would require a private plaintiff to demonstrate to a court approving a settlement, that any "Additional Settlement Payments" (i.e., payments in lieu of a civil penalty) are in the public interest, and would ensure that settlements are not structured so as to erode funding for the Office of Environmental Health Hazard Assessment.


Federal, State, and Local Regulators Clean Up Glass Producer

  • The U.S. Environmental Protection Agency (EPA), together with the states of Iowa and New York and the San Joaquin Valley Air Pollution Control District, settled claims with Guardian Industries Corp. for alleged violations of the U.S. Clean Air Act.
  • The regulators alleged that Guardian modified its furnaces at several glass manufacturing facilities across the nation without installing the proper pollution control technologies, and without obtaining the required permits under the Clean Air Act.
  • The Consent Decree, which is subject to court approval after a period of 30 days for public comment, requires Guardian to pay $312,000 in civil penalties to the EPA and the states. It also requires Guardian to install certain pollution control technologies estimated to reduce emissions of soot, nitrogen oxides, sulfur dioxide, and sulfuric acid by approximately 50 percent.

Wyoming AG Defends Laws Prohibiting Pictures

  • A coalition of conservation and animal rights groups has filed a lawsuit in U.S. District Court for the District of Wyoming challenging the constitutionality of two Wyoming statutes passed earlier this year that would restrict the ability of individuals to gather data on the condition of natural resources on private and public land.
  • The first law, Wyoming Statute § 6-3-414, criminalizes the collection of resource data on private land, where the data collector intends to submit the data to an agency of the state or federal government. It also states that data collected would not be admissible in any civil or administrative proceeding. The second law, § 40-26-101, prohibits gathering resource data on both private and public land if the person does not have specific authorization to gather the data. As commentators have noted, the Wyoming laws could apply to a broad range of activity, even tourist photos taken after hours in a National Park and posted on an internet forum.
  • The lawsuit seeks to declare the laws unconstitutional under the First Amendment, the Supremacy Clause, and the Equal Protection Clause. It also seeks to enjoin Wyoming AG Peter Michael and the state Department of Environmental Quality from enforcing them. The case is Western Watersheds Project v. Attorney General, Case No. 2:15-cv-00169.


Delaware and Massachusetts AGs Question Advisors' Use of Leveraged ETFs

  • Delaware AG Matt Denn and Massachusetts AG Maura Healy settled with LPL Financial, LLC, resolving the AGs' investigation into whether LPL violated state law through the use of leveraged exchange traded funds (ETFs) in consumer investment accounts.
  • The AGs' investigation centered on whether LPL's investment advisors properly disclosed the risks associated with leveraged ETFs, and whether such investments were even suitable for LPL's clients. Leveraged ETFs are investment funds that seek to achieve a multiple of the daily returns on an index like the Standard & Poor's 500. The AGs iterated, however, that returns from leveraged ETFs can be much more negatively affected during periods of market volatility, causing an investor to lose money when holding leveraged ETFs, even if the investor correctly guessed on the direction of the relevant index.
  •  Under the terms of the settlement, LPL will pay $1.6 million to compensate and educate investors, as well as $200,000 in civil penalties to both states

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