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.