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

2015 Elections

Kentucky and Mississippi Select AGs and Governors, Louisiana Waits for Runoff

Consumer Financial Protection Bureau

CFPB Finds Background Checking Companies Lacking

  • The Consumer Financial Protection Bureau (CFPB) reached an agreement with General Information Services and its affiliate, e-Background-checks.com, (together, "Defendants") to resolve an investigation into whether the background screening service providers violated the Fair Credit Reporting Act through generating inaccurate pre-employment reports.
  • The CFPB alleged that Defendants failed to take reasonable measures to assure accuracy between the information reported and the consumer for which it was requested. Such alleged missteps included attaching criminal records to the wrong consumers, reporting dismissed and expunged records, and reporting misdemeanors as felony convictions. The CFPB also claimed that Defendants reported information on civil suits and judgments older than seven years.
  • The consent order requires Defendants to pay $10.5 million in relief to harmed consumers and $2.5 million in civil penalties. It also requires that Defendants significantly revise their procedures to assure accuracy by: retaining an independent consultant to assess the company's procedures, conducting frequent audits, and implementing algorithmic safeguards that cross reference other consumer data when the requested report involves a person with a common name.

Consumer Protection

FTC and State AGs Unite to Avenge Unfair Debt Collection

  • The Federal Trade Commission (FTC) announced that it will partner with other federal, state, and local law enforcement agencies, including 48 State AGs, to target abusive debt collection practices in a nationwide enforcement effort dubbed "Operation Collection Protection."
  • As indicated by Delaware AG Matt Denn, one of the major benefits to participating in this operation is that it will allow AGs and the FTC "to share information about investigation targets with other members, as well as share best practices for investigating and bringing actions against illegal debt collectors."
  • In announcing the initiative, the FTC highlighted cases in which it has already worked successfully with State AGs—touting 115 of them. It also indicated the types of actions that it will pursue through this alliance, including: knowingly collecting on phony or "phantom" debts (i.e., debts that no longer exist, are beyond statute of limitations, or have already been settled), failure to provide legally required disclosures and notices, and failure to follow state and local licensing requirements.

NHTSA Issues Largest Ever Civil Penalty

  • The National Highway Traffic Safety Administration (NHTSA) ordered TK Holdings Inc. (better known as "Takata") to pay civil penalties connected to the airbag maker's alleged violations of the Motor Vehicle Safety Act.
  • NHTSA's claims against Takata center on whether the airbag maker provided, in a timely manner, complete information as to the potential defect—first after it initially discovered the potential for consumer safety issues, and second in response to NHTSA's special orders issued as it sought to investigate the problem.
  • Under the terms of the consent order, Takata must pay $200 million in civil penalties—the most ever ordered by the agency—but with $130 million being deferred and held in abeyance pending Takata's adherence to the settlement terms and avoidance of any further violations of federal law. Notably, the consent order indicates that the NHTSA investigation will remain open, and payment of civil penalties does not preclude the potential for further claims based on safety issues with similar parts. The consent order also requires Takata to change internal quality control and risk assessment processes, and to retain an independent monitor to ensure compliance.

AGs Form Multistate Investigation Into Volkswagen

  • U.S. and European regulators have expanded their respective investigations into Volkswagen's alleged use of "defeat device" software in its diesel engines to get around emissions laws; the new list of vehicles under investigation now includes Porsches and an increased number of Audi models.
  • State AGs are also investigating. According to reports, AGs from at least 45 states and the District of Columbia have joined in a multistate investigation, and have already begun forming an executive committee. Three State AGs, from California, Texas, and West Virginia, have filed lawsuits alleging violations of state consumer protection laws and state clean air standards.
  • Unlike the federal investigation, which will focus on the environmental and competition issues involved and have possible criminal implications, State AGs will likely focus on the claims made by the carmaker in its advertisements, including print and digital media, describing clean diesel cars as being good for the environment. State deceptive practices laws typically cover misleading advertisements and can carry fines of $5000 for each violation.

Massachusetts AG Pulls the Plug on Internet Lenders

  • Massachusetts AG Maura Healey, along with the state bank regulator, reached a settlement agreement with Western Sky Financial, LLC; WS Funding, LLC; CashCall, Inc.; Delbert Services Corporation; Martin Webb; and J. Paul Reddam (together, "Lenders") resolving a number of issues arising out of the Lenders' efforts to provide consumer loans over the internet.
  • The complaint alleged that the Lenders solicited consumer loans over the internet with annualized interest rates (APRs) ranging from 89 to 355 percent. In Massachusetts, the legal amount of interest on a consumer loan of less than $6000 is 12 percent. In addition, as addressed by the Division of Banks (DOB) in three separate Cease Orders in 2013, the Lenders were operating from outside the state and did not have the proper licenses or registrations to conduct business in Massachusetts. The Lenders sought judicial review of the DOB Orders, and those actions were consolidated with the AG's consumer protection action filed on October 6, 2015.
  • The final judgment by consent requires the Lenders to provide refunds to the extent that a consumer's total payments exceeded the principal plus the statutory maximum 12 percent rate of interest, and debt forgiveness for any remaining debt. The DOB estimates the consumer refunds and debt relief could approach $17 million. The Lenders must also pay $388,231 in civil penalties, half of which will be suspended after full compliance with the consent judgment. The companies also agreed to pay attorneys' fees of $65,000.

False Claims

States and Feds Move Forward With Settlement Over Reverse False Claim

  • A group of AGs from 49 States and the District of Columbia finalized a settlement with AstraZeneca LP and Cephalon, Inc. ending a joint state-federal investigation into charges that the drug makers violated state and federal false claims acts.
  • The complaint alleged that AstraZeneca and Cephalon had submitted "reverse" false claims by underpaying the rebates due to the states under the Medicaid Drug Rebate Program. The amount of the rebate that the drug makers owe depends in large part on the average price that drug wholesalers pay them for the drugs: the lower the average price, the lower the rebate that must be paid. In this case, the drug makers allegedly utilized an accounting practice through which they classified service fees paid to wholesalers as "discounts" in the price of the drug. The result being that the drug makers could report an artificially deflated average price and thus pay less to the states as rebates.
  • The U.S. Department of Justice (DOJ) intervened in July, after reaching a settlement in principle under which AstraZeneca will pay $46.5 million and Cephalon $7.5 million. Although the states did not participate, they will receive shares based on a variety of factors, including state false claims acts, sales, etc. The lawsuit was initiated by a whistleblower in the Eastern District of Pennsylvania and is ongoing with numerous other drug makers remaining as defendants.

Financial Industry

Settlement Requires Bank to Kill Off "Zombie" Debt and Pay $100 Million

  • California AG Kamala Harris has entered into a stipulated judgment with JPMorgan Chase & Co.; Chase Bank USA, N.A.; and Chase BankCard Services, Inc. ("Chase") putting to rest the state's claims that Chase violated California Business and Professions laws through consumer debt sales and enforcement actions.
  • The complaint, which was filed in 2013, alleged that Chase engaged in a variety of illegal consumer debt collection practices, including: selling "zombie" or "phantom" debts (debts that were inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectable) to third-party debt collectors; filing more than 125,000 collection lawsuits based on "robo-signed" documents; making illegal threats of litigation; and obtaining default judgments against military servicemembers on active duty.
  • As part of the stipulated judgment, Chase agreed to pay $50 million to consumers nationwide ($10 million estimated for California consumers), $45 million to the California AG's consumer protection enforcement efforts, and $5 million as a civil penalty. Chase also agreed to make significant changes to its practices, including internal controls for providing proper documentation to consumers both before and after debt sales, as well as restrictions on third-party debt buyers post purchase recovery actions.

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.