Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
Monday, June 28, 2021
- The Consumer Financial Protection Bureau (“CFPB”) issued amendments to the federal mortgage servicing regulations to reinforce economic recovery as foreclosure moratoria expire. The rules, which become effective on August 31, 2021, will create temporary safeguards to ensure that borrowers may explore options prior to foreclosure, as well as create flexibility for mortgage servicers.
- California Attorney General Bonta announced a proposed settlement against Voyageurs International, Ltd., resolving allegations that the travel company only offered partial refunds for a cancelled high school European trip and kept the remaining fees. The settlement requires the company to provide full refunds, totaling about $247,000 in restitution, as well as to comply with the Seller of Travel Act and cease charging consumers cancellation fees when it is unable or unwilling to provide the purchased services.
Deceptive Debt Relief
- A complaint filed on June 27, 2021 in the Southern District of Florida is accusing law firm GM Law and associated entities of conducting a student loan debt elimination telemarketing scam to debtors. The lawsuit seeks declaratory relief and damages.
- Connecticut Attorney General Tong led a coalition of attorneys general in calling on the Federal Energy Regulatory Commission to reject incentive payments to transmission developers to join regional organizations, which they generally have to join regardless. The coalition is arguing that the incentives, which will add to ratepayer costs, are unnecessary and unfair.
Federal Trade Commission
- A bipartisan coalition of 28 attorneys general co-led by New York Attorney General James and Colorado Attorney General Weiser sent a letter to Congress expressing support for the Consumer Protection and Recovery Act (H.R. 2668), which would give the Federal Trade Commission (“FTC”) the power to obtain restitution. The coalition is arguing that if the FTC is not able to obtain restitution attorneys general must divert resources to perform duties that the FTC previously performed.
- North Carolina Attorney General Stein filed a lawsuit against companies Home Relief Services, Amstar Services, and Consumer Proponents & Associates Corporation and their principals for allegedly engaging in illegal debt adjusting, collecting unlawful advance fees, and falsely promising to reduce mortgage loan payments, obtain loan forbearance, and prevent foreclosures. The lawsuit seeks injunctive relief, cancellation of the associated contracts, civil penalties, restitution, and fees.
- North Carolina Attorney General Stein announced that the former CEO of Extended Reach Day Treatment for Children and Adolescents, a Medicaid provider that provided day treatment and other behavioral health services, was sentenced for health care fraud. The settlement includes 24 months in prison and a $337,615 restitution payment. The defendant added extra treatment services that were not provided on claim submissions along with services actually given, as well as billed for psychotherapy services not provided by a doctor.
Tuesday, June 29, 2021
- The Consumer Financial Protection Bureau (“CFPB”) issued a report outlining legal violations and prior supervisory findings leading to public enforcement in 2020. For example, the CFPB found that consumer reporting companies accepted consumer data from furnishers that were unreliable, violating the Fair Credit Reporting Act. The CFPB also found redlining, several violations of the Regulation X mortgage servicing rules, and misleading actions by student loan servicers.
- Washington D.C. Attorney General Racine announced that before-and-after-school daycare program KCE Champions LLC is required to change its business practices and pay $250,000. An investigation found that the company unfairly deceived parents by failing to adequately disclose late fees, automatically withdrew payments without clear authorization, excessively called parents to collect fees, and dis-enrolled children if payments were not made for two weeks.
- Vermont Attorney General Donovan announced a settlement with Health Care & Rehabilitation Services of Southeastern Vermont, resolving allegations that it violated the Vermont False Claims Act by submitting Medicaid claims for services provided by an employee on the exclusion list. The settlement requires the company to pay about $170,000 and adopt remedial measures.
State AG Office News
- New Jersey Attorney General Grewal will be leading the enforcement division of the U.S. Securities and Exchange Commission beginning on July 26, 2021. He will name an interim attorney general this week to finish his term, which ends in January.
Unfair Debt Practices
- Georgia Attorney General Carr and the Consumer Financial Protection Bureau announced that they entered into a consent order with Burlington Financial Group, LLC and its owners and executives resolving allegations that they violated the Telemarketing Sales Rule, the Fair Business Practices Act, and the Debt Adjustment Act with their advertising and sale of debt relief and credit repair services. The company allegedly misled financially vulnerable consumers, many elderly, into paying advance fees for services it falsely promised would eliminate credit card debt and improve credit scores, which ultimately left these consumers in a worse financial position. The consent judgment requires the company to stop doing business in Georgia and pay $150,000 in civil penalties.