Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AG’s have taken. Here are this week’s updates.

Monday, December 7, 2020:

• A coalition of 51 attorneys general, state mortgage regulators, and the Consumer Financial Protection Bureau reached an $86.3 million settlement with mortgage servicer Mr. Cooper, formerly known as Nationstar Mortgage Holding, Inc., which provides $79.2 million in restitution for those who took out 55,814 loans across the U.S. between January 1, 2011 and December 31, 2017. The settlement resolves allegations of consumer protection violations, such as that the company did not properly oversee or implement transferred mortgage loans or properly identify loans with pending loan modification applications, and that it failed to adequately review borrower complaints.
• Washington Attorney General Ferguson issued a press release with guidance for third-party restaurant delivery services in response to consumer complaints. The guidance highlights conduct that is likely to violate the Washington Consumer Protection Act, such as charging consumers fees without clearly and conspicuously disclosing them, listing restaurants without their permission, misrepresenting the source of food or safety precautions, or listing fake contact information for restaurants. It is also a violation to charge more than 18% of the order price in fees, up to 15% of which may be delivery fees, after a November emergency proclamation.
• New York Attorney General James announced that her office secured $4.7 million from supermarket chain Food World for an alleged tax avoidance scheme where the company underreported cash sales, issued fake merchandise returns, and paid its employees off the books.
• A bipartisan coalition of 30 attorneys general wrote an amicus brief in AMG Capital Management v. FTC before the Supreme Court, arguing in support of the FTC’s ability to recover money from defendants for victims and saying this restitution collecting authority is essential to deter illegal conduct and help states protect consumers. The brief is available here.

Tuesday, December 8, 2020

• Washington Attorney General Ferguson announced that Washington’s top magazine subscription company Synapse Group must return the money it charged over 2,000 consumers for deceptive auto-renewals after they bought magazine subscriptions at a $2 promotional rate. Synapse must refund the consumers around $125,000 and also pay $750,000 to the Attorney General’s Office.
• New Jersey Attorney General Grewal announced a lawsuit against Yellowstone Capital LLC, its parent company Fundry.US LLC, and six associated merchant cash advance providers, alleging these companies targeted small businesses with predatory lending and abusive collection practices that caused financial harm. These alleged practices included, among other things, aggressive collection calls, unauthorized withdrawals, excessive interest rates, failing to disclose all fees, and advertising “No Personal Guarantee” when one was actually required. The complaint seeks injunctive relief, restitution, disgorgement, and civil penalties.
• Massachusetts Attorney General Healey announced a lawsuit against HealthMarkets, Inc. and its subsidiaries The Chesapeake Life Insurance Company and Insphere Insurance Solutions, Inc. alleging that the companies misled consumers into purchasing supplemental health insurance products they did not want, cheating over 15,000 residents out of over $43.5 million since 2011. The complaint seeks injunctive relief, restitution, civil penalties, and attorneys’ fees and costs.
• Indiana Attorney General Hill announced a settlement with Blue Lake Inc., the former owner of a mobile home park, for 2019 conduct that forced residents out of their homes when the park closed with no way to legally move since they were never given titles. The settlement includes a $29,000 suspended judgment and injunctive relief.
• Missouri Attorney General Schmitt announced a default judgment against Hammond Floors and Construction, which allegedly violated the Missouri Merchandising Practices Act by receiving upfront payments for real estate, construction services, and residential appliances and failing to provide the promised items and services. The judgment includes injunctive relief as well as an award of $43,280.77, including $24,800 in restitution and $19,020.77 in costs, fees, and penalties.
• Kentucky Attorney General Cameron led a 12-state bipartisan coalition of attorneys general in an amicus brief asking a California District Court to reject a request for $87.73 million in attorneys’ fees for class counsel in the Apple throttling settlement. The coalition is joining Apple in arguing that the amount is excessive and will reduce the recovery available to class members.

 Wednesday, December 9, 2020

• Iowa Attorney General Miller is warning consumers to be on alert for scams related to their Amazon accounts. For example, Attorney General Miller is advising consumers not to respond to calls asking them to confirm Amazon purchases, not to call the customer service number given in an unsolicited email or call, and not to respond to messages asking if they have an Amazon account or asking them to pay in Amazon gift cards.

December 10, 2020

• Virginia Attorney General Herring intervened in lawsuit Grano v. Rappahannock Electric Cooperative, defending Virginia’s new policies which make it easier to expand broadband into rural areas using “easements for the location and use of electric and communications facilities.”
• Virginia Attorney General Herring spoke about the importance of legal cannabis use in Virginia as part of summit “Legalize It: The Path to Cannabis Equity in Virginia,” discussing his office’s unique role in helping with the cannabis legalization process. He stated that his office “has been charged with protecting consumers and the knowledge that role brings can be leveraged to make sure that the industry is safe through proper regulations, make sure that products are being advertised accurately, and make sure that Virginians know what they are getting” as well as noted that his “role as counsel to state agencies will also benefit and guide any new agencies that are created to handle the cannabis industry.”
• The Consumer Financial Protection Bureau (“CFPB”) issued final rules related to qualified mortgage (“QM”) loans. To issue QM loans, lenders must determine that consumers are able to repay them. The two CFPB rules related to QM loans (1) replace the current requirement that the consumer’s debt-to-income ratio does not exceed 43%, limited based on the loan’s pricing, and (2) create a new category for QMs, Seasoned QMs, for which a loan “must be a first-lien, fixed-rate loan with no balloon payments and must meet certain other product restrictions.” These two rules will take effect 60 days after their publication in the Federal Register.

Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AG’s have taken. Here are this week’s updates.

Tuesday, December 1, 2020

• Washington DC Attorney General Racine announced a settlement with waste disposal company Bates Trucking Co. Inc., requiring the company to pay $78,702 for illegally collecting garbage in residential neighborhoods. The company allegedly collected trash before 7:00 a.m., violating DC noise regulations, operated without a valid license, ignored enforcement notices from the Department of Consumer and Regulatory Affairs, and refused to pay fines.
• New York Attorney General James announced the adoption of final rules that modernize securities registration and filing with her Office’s Investor Protection Bureau. The press release states that these rules, which will be implemented in 2021, will “streamline and enhance the oversight of the securities industry in New York by moving filings and payments to standardized federal and multi-state systems” and that they “will better conform to the federal securities registration regime, cure industry confusion when it comes to certain registration requirements, and better track exam requirement compliance and disciplinary disclosures for thousands of investment advisers who provide investment advice to New Yorkers.”
• Several attorneys general released advisory press releases about charitable giving for Giving Tuesday, warning consumers against deceptive solicitations. California Attorney General Becerra’s, which tells consumers to take steps such as checking organizations’ registration status, being cautious of fraudulent websites, and being wary of fundraising on social network websites, is here. Texas attorney General Paxton’s, which tells consumers to research organizations, be careful when actually making the donations, and being cautious of scammers’ tricks, is here.
• A coalition of 23 attorneys general filed a comment letter asking the Department of Education to reject the Accrediting Council for Independent Colleges and Schools’ (“ACICS”) request to regain its federal recognition. The coalition is arguing that ACICS’s institutional failures and its lack of compliance with federal regulations have enabled predatory schools, like ITT Tech, to impose crushing student loan debt on students across the U.S.
• The Consumer Financial Protection Bureau (“CFPB”) filed a lawsuit against DMB Financial, LLC, a debt-settlement and debt-relief company, for allegedly violating the Telemarketing Sales Rule and the Consumer Financial Protection Act of 2010 in connection with its services. Among other things, DMB allegedly requested and received fees before it performed its services and before consumers started payments under debt settlements, as well as collected fees based on increased debt amounts after enrollment rather than the amount of debt at the time of enrollment. The CFPB’s complaint seeks injunctive relief, restitution, disgorgement, and civil penalties.

Thursday, December 3, 2020

• Arizona Attorney General Brnovich announced his office filed a lawsuit against auction companies Auction Nation, LLC and Auction Yard, LLC and their principals for allegedly deceiving online bidders by bidding in their own auctions, deceptively driving up prices when the terms and conditions assured participants that the business was not involved in the auctions. The lawsuit “seeks consumer restitution, up to $10,000 in civil penalties for each violation of the Arizona Consumer Fraud Act, injunctive relief, and attorney’s fees and costs.”
• Pennsylvania Attorney General Shapiro announced an Allegheny County Common Pleas Court order directing Vision Property Management tenants to stop paying rent and other amounts payable under their contracts because the company failed to place a portion of consumer rent money into escrow as a prior injunctive order required. The injunctive order came from allegations that Vision Properties was luring consumers into “rent to own” agreements on poorly maintained and foreclosed homes, failing to tell consumers that the agreements provided no ownership rights unless consumers exercised an overpriced option, illegally forcing consumers to make repairs to make their homes habitable, and immediately ejecting those who fell behind on payments.
• Washington DC Attorney General Racine became the 2021 President of the National Association of Attorneys General (“NAAG”) and announced his initiative to counter hate across the U.S. According to the press release, the initiative “aims to work with Attorneys General to raise awareness of hate and bias, prevent hate from taking root in our communities, support residents who have experienced hate, and develop and share best practices on improving hate crime data.”

Friday, December 4, 2020

• The FTC and the California, Illinois, North Carolina, and Ohio Attorneys General settled with Dish Network in a $210 million settlement, ending an 11-year legal dispute over the company’s alleged violation of telemarketing laws through unwanted telemarketing and robocalls, including calls to those registered on the Do Not Call registry. The settlement is here.
• New Hampshire Attorney General MacDonald announced that Camps for Grownups, LTD, a company that manages and markets adult activity camps, was indicted by the New Hampshire Multicounty Grand Jury on a felony count of violating the New Hampshire Consumer Protection Act. The company allegedly deceptively marketed a Jazz Camp as though it would occur as scheduled though the company lacked sufficient funds or a reasonable anticipated source of funding to hold the camp. If found guilty, the company could face an up to $100,000 fine.
• New Jersey Attorney General Grewal announced that New Jersey’s Bureau of Securities within the Division of Consumer Affairs issued a cease and desist order against an online investment scheme targeting LinkedIn users. The scheme, which was led by online companies VertexTrade Options, Zolarex Ltd., and IBPC Corp., allegedly violated New Jersey securities law by using fake social media profiles in order to obtain investments in fraudulent financial products. The press release also warns New Jersey residents against “investment opportunity” scams offered on social networking and dating websites.
• New York Attorney General James led a coalition of 13 attorney generals in a letter urging Congress to allocate funding and codify coverage protections so that it is guaranteed all people in the U.S. are able to obtain a COVID-19 vaccine for free.
• The Consumer Financial Protection Bureau (“CFPB”) sued online lender LendUp Loans, LLC for allegedly violating the Military Lending Act with its extensions of credit. LendUp allegedly overcharged borrowers covered by the Military Lending Act, which caps total costs at 36%, as well as failed to make the loan disclosures the Military Lending Act requires and illegally required borrowers to submit to arbitration agreements. The CFPB’s complaint, which alleges that LendUp made over 4,000 loans in violation of the Military Lending Act since 2016, seeks injunctive relief, damages, restitution, disgorgement, and civil penalties.

Sunday, December 6, 2020

• President-elect Biden has selected California Attorney General Becerra to serve as Secretary of Health and Human Services in Biden’s administration. If Becerra is confirmed, California Governor Newsom will choose a new Attorney General to fill his position until the next election.