Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
Monday, March 29, 2021:
- Consumer Financial Protection Bureau Acting Director Uejio and Federal Trade Commission Acting Chairwoman Slaughter issued a joint statement about their agencies’ work to help stop illegal evictions during the pandemic, after the Centers for Disease Control and Prevention extended the federal eviction moratorium for three additional months. The statement provides, “Staff at both agencies will be monitoring and investigating eviction practices, particularly by major multistate landlords, eviction management services, and private equity firms, to ensure that they are complying with the law. Evicting tenants in violation of the CDC, state, or local moratoria, or evicting or threatening to evict them without apprising them of their legal rights under such moratoria, may violate prohibitions against deceptive and unfair practices, including under the Fair Debt Collection Practices Act and the Federal Trade Commission Act.”
- Along with four other federal financial regulatory agencies, the Consumer Financial Protection Bureau (“CFPB”) announced that it is seeking information from the public on financial institutions’ use of artificial intelligence in their operations. According to the press release, the CFPB is hoping to better understand the use of artificial intelligence and its associated risk management, challenges, and governance.
- Missouri Attorney General Schmitt filed a lawsuit against the United States Department of the Treasury and Secretary Yellen over the broad interpretation of a provision in the American Rescue Plan Act that would allegedly compel states to choose between accepting COVID-19 relief funding or exercising sovereignty over state tax policy. The lawsuit asks the Missouri federal court to either ensure a narrow interpretation is applied or declare that the broad interpretation is unconstitutional.
- New Mexico Attorney General Balderas announced a lawsuit against the United States Nuclear Regulatory Commission (“NRC”) seeking to stop the NRC from indefinitely storing high level radioactive waste in New Mexico. The complaint argues that the NRC is going beyond the scope of its authority and that the storage facility will, among other things, harm water resources and agricultural interests in New Mexico.
- Maryland Attorney General Frosh announced a settlement with Home Free Lead Inspections, LLC and two of its inspectors, resolving allegations that they failed to properly perform lead-based paint inspections, issued certificates for properties that were not thoroughly inspected, failed to provide pre-inspection notice, and failed to submit timely inspection certificates. Home Free and its inspectors have agreed to a $495,000 judgment.
Tuesday, March 30, 2021:
- New York Attorney General James announced an agreement with Life Alert Emergency Response, Inc., which resolves an investigation into the company’s failure to include mandatory cancellation provisions in personal emergency response service contracts. The agreement allows over 5,500 consumers to cancel their contracts and requires Life Alert to provide refunds to those who previously tried to exercise cancellation rights.
- North Carolina Attorney General Stein announced the sentencing of the sole officer of Skeen Services, Inc. for submitting false claims to Medicaid in 2013 and 2014. The claims falsely represented that almost 200 individuals received behavioral health services that they did not in fact receive. The officer was sentenced to 37 months in federal prison and ordered to pay $213,927.55 in restitution.
- On March 30, 2021, U.S. District Judge Alison J. Nathan of the Southern District of New York entered a penalty of over $53 million against Hutton Ventures LLC, which was accused of executing a student debt relief scam and violating the New York usury cap, for failing to respond to the New York Attorney General’s lawsuit against it. The order made the full amount of the penalty due immediately and also included injunctive relief.
- A 12-state coalition of attorneys general has moved to intervene in a lawsuit brought by attorneys general who are challenging a U.S. Department of Labor rule which clarifies the scope and application of religious exemptions as they apply to federal contractors. The 12-state coalition is seeking to defend the rule as protective of religious freedom.
State AG Office News
- New York Attorney General James issued a statement about New York’s passage of marijuana legalization. The statement provides, “The legalization of marijuana is a racial and criminal justice imperative, and today’s vote is a critical step towards a fairer and more just system. For too long, people of color have been disproportionately impacted by an outdated and shortsighted marijuana prohibition, and it’s past time we right this wrong. We must also engineer an economy that will provide a much-needed boost to communities devastated by the war on drugs and COVID-19, and I am hopeful this will help to achieve that for New Yorkers.”
Wednesday, March 31, 2021:
- The Consumer Financial Protection Bureau (“CFPB”) announced that it is rescinding seven 2020 policy statements, effective April 1, 2021, that gave temporary flexibilities to financial institutions in consumer financial markets such as credit reporting, credit cards and prepaid cards, and mortgages. The press release states that the CFPB wishes to convey that it intends to exercise its full authority under the Dodd-Frank Act. In connection with the rescissions, Acting Director Uejio stated, “Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm.”
- The Consumer Financial Protection Bureau (“CFPB”) announced that the 2020 Home Mortgage Disclosure Act Modified Loan Application Register data was published on the Federal Financial Institutions Examination Council’s HMDA Platform. According to the press release, this data can help identify discriminatory lending patterns and disparities in lending outcomes. It can also help determine if financial institutions are serving communities’ housing needs, and can help drive public-sector and private investment.
- A coalition of 23 attorneys general sent a letter to U.S. Secretary of Education Dr. Miguel Cardona asking him to create reforms to protect student loan borrowers and ease the student loan repayment process. Some of the suggested reforms include continuing to suspend student loan payments and waive interest, continuing to suspend involuntary collections activities, and shielding borrowers from for-profit programs that do not prepare students for careers.
Elder fraud and abuse
- Washington Attorney General Ferguson announced that a King County Superior Court judge ruled that CLA Estate Services, Inc. and CLA USA, Inc. must pay over $6.1 million plus 12% annual interest to senior citizens in Washington for misleading them about estate planning as well as engaging in other deceptive activity. They must also pay $6.5 million in civil penalties and over $1.8 million in attorneys’ fees and costs. The $14.5 million ruling, which also includes injunctive relief, “represents the highest ever trial award in a Washington state consumer protection case brought by the Attorney General’s Office.”
- Arkansas Attorney General Rutledge announced the introduction of the SAFER AR Act: Safeguarding Against Financial Exploitation of Retirees for Arkansans, which will strengthen the protection of senior citizens from predatory practices. The bill requires Adult Protective Services to refer cases of suspected exploitation, including financial exploitation, to the Attorney General’s Office within 48 hours.
- On March 29, 2021, U.S. District Judge Hannah Lauck of the Eastern District of Virginia affirmed a class action settlement for $50 million against entities involved in predatory tribal loan schemes that went against the Racketeer Influenced and Corrupt Organizations Act. The order also included cancelling about $383 million in outstanding debt from lending institutions Plain Green, Great Plains, and MobiLoans.
- Washington Attorney General Ferguson announced that air cargo handler Matheson Flight Extenders must pay $168,500 for illegally discriminating against pregnant and disabled employees, as well as end its discriminatory practices. An Attorney General investigation uncovered that the company refused to accommodate disabilities if they occurred outside of work.
State AG Office News
- Virginia Attorney General Herring applauded the passage of the Virginia Voting Rights Act, which increases voter protections in the state and empowers the attorney general to enforce these protections.
Thursday, April 1, 2021:
- The Consumer Financial Protection Bureau (“CFPB”) warned mortgage servicers to take all steps necessary to prevent avoidable foreclosures in fall 2021, as homeowners in forbearance will need help from servicers after the emergency mortgage protections expire. According to the press release, “The CFPB will closely monitor how servicers engage with borrowers, respond to borrower requests, and process applications for loss mitigation. The CFPB will consider a servicer’s overall effectiveness in helping consumers when using its discretion to address compliance issues that arise.”
- A bipartisan coalition of 25 attorneys general submitted an application to the U.S. Department of Education to cancel federal student loan debt for those students defrauded by ITT Technical Institute between 2007 and 2010. The cancellation would include money students already paid towards the loans.
- New York Attorney General James announced that New York has suspended, for the 13th time, the collection of student and medical debt owed to the state that has been referred to the Office of the Attorney General for collection. The suspension, which has limited exceptions, will remain in effect until April 30, 2021.
- Illinois Attorney General Raoul announced settlements with a temporary staffing agency and three companies that use temporary staffing labor, resolving allegations that they segregated workplaces and discriminated against workers based on their sex in hiring decisions. The settlement agreements include injunctive relief as well as a total of $280,000 in civil penalties.
- New York Attorney General James announced an agreement with Hillandale Farms Corporation which resolves a 2020 lawsuit over the price gouging of eggs. Under the agreement, Hillandale will refrain from charging excessive prices for eggs as well as donate 1.2 million eggs to homeless shelters, food pantries, and soup kitchens in New York.
Friday, April 2, 2021:
- On April 2, 2021, U.S. District Judge Kenneth Marra of the Southern District of Florida denied the Consumer Financial Protection Bureau’s (“CFPB”) motion to dismiss claims in its lawsuit against Ocwen Financial Corp. after a summary judgment decision limited the claims in the case. The CFPB had hoped to appeal the summary judgment order, but the judge reasoned that Rule 41 does not allow a plaintiff only to dismiss particular claims, and the CFPB must instead refile its complaint.
Elder fraud and abuse
- Minnesota Attorney General Ellison announced that his office entered an assurance of discontinuance with assisted-living facility Continental Gardens Senior Living, LLC, resolving allegations that the facility advertised wellness visits that it did not provide. The agreement includes injunctive relief as well as $10,000 in settlement funds.
- A coalition of attorneys general filed an amicus brief in U.S. Supreme Court case HollyFrontier Cheyenne Refining, LLC v. Renewable Fuels Association, supporting a challenge to the Environmental Protection Agency’s award of small-refinery exemptions to the Renewable Fuel Standard and arguing that the language allowing for the exemptions should be interpreted narrowly.
- The California Department of Justice filed comments with the U.S. Army Corps of Engineers about Sunset Exploration’s proposal to drill for natural gas in the Suisun Marsh. The comments ask the Army Corps to consider the potential environmental impacts to nearby environmental justice communities and to endangered and threatened species in the wetland as well as the increased greenhouse gas emissions from the project.
- On April 1, 2021, the Fifth Circuit affirmed the dismissal of a $2.5 million jury award in favor of debt collectors CBE Group Inc. and RGS Financial Inc. after a federal judge found that they did not provide enough evidence of material misrepresentation in favor of their claims of fraud and fraud by nondisclosure against credit repair companies Lexington Law Firm and Progrexion Inc. The debt collectors had argued that the credit repair companies perpetrated a fraud when they failed to disclose they were sending letters to the debt collectors in their clients’ names.