Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
- Many attorneys general, as well as the National Association of Attorneys General, announced the celebration of National Consumer Protection Week occurring March 5-11, 2023. The goal of National Consumer Protection Week is to highlight consumer rights and best practices to avoid the most common types of fraudulent schemes.
- A bipartisan coalition of forty-seven attorneys general filed an amicus brief asking a state court to order social media company TikTok, Inc. to preserve and produce company communications critical to a multistate investigation of TikTok’s potential unlawful and dangerous activities. The state attorneys general seek internal communications to determine whether TikTok engaged in deceptive and unfair conduct that harmed the mental health of TikTok users, particularly children. The brief argues that TikTok repeatedly and knowingly failed to preserve relevant information or provide information in a useful format.
- A coalition of three attorneys general and the U.S. Department of Justice filed a complaint in federal district court in Boston seeking to halt JetBlue Airways Corporation’s acquisition of Spirit Airlines. The complaint asserts that the acquisition removes a major source of competition for other airlines and would harm consumers seeking affordable air travel because Spirit Airlines is the largest low-cost carrier in the United States.
- A bipartisan coalition of eight attorneys general obtained judgments against Rising Eagle Capital Group LLC and JSquared Telecom LLC shutting down a robocall operation that made billions of illegal robocalls. The coalition sued the defendants in mid-2020 alleging violations of the federal Telephone Consumer Protection Act and the federal Telemarketing Sales Rule, as well as other state consumer protection laws. The complaint alleged the defendants flooded consumers with calls regarding a variety of scams involving car warranties and health care services.
- A coalition of twenty-two attorneys general, led by Massachusetts Attorney General Campbell, submitted a letter to the Centers for Disease Control and Prevention and National Center for Health Statistics advocating for a new diagnostic code for Pre-exposure Prophylaxis (PrEP), a HIV prevention drug, in the International Classification of Diseases – Tenth Revision. The new diagnostic code would reduce coding ambiguity and ensure that patients are not improperly charged copays for preventative services.
- A coalition of nineteen attorneys general, led by Missouri Attorney General Bailey, submitted letters to five major pharmacies warning them that distribution of abortion pills in the mail violates federal and state law. These letters follow a prior set of letters sent to CVS and Walgreens in February, but now address Rite Aid, Albertsons, Costco, Kroger and Walmart. These letters follow the Biden administration’s endorsement of utilizing the mail service to distribute abortion pills.
- Arkansas Attorney General Tim Griffin announced two separate lawsuits against solar panel companies, Sun Valley Renewables, LLC and Cavalry Solar Solutions d/b/a Apollo Energy, for allegedly violating the state’s Deceptive Trade Practices Act. According to the complaints, the defendants have failed to perform contracted services or provide purchased goods. Consumer complaints filed against both companies amount to almost $3,000,000.
- Arizona Attorney General Kris Mayes announced a settlement with two real estate companies, Deed and Note Traders, LLC, 881Home, LLC, and their manager, David Kinas, resolving allegations that the defendants had a pattern and practice of hiding or misrepresenting underlying mortgages for the homes they were selling, e.g., oppressing material facts about the existence of the underlying mortgage and mispresenting the feasibility of the consumers refinancing their seller carryback mortgages. The settlement requires defendants to pay $350,000 in consumer restitution and $25,000 in civil penalties.
- California Attorney General Rob Bonta issued a statement in response to a call from the Biden Administration and the Consumer Financial Protection Bureau for the states to better address the nationwide concern of hidden fees, as referred to as “junk fees”. In line with that, Attorney General Bonta urged the California Legislature to approve Senate Bill 478 (SB 478), which intends to prevent platforms from tacking mandatory hidden surcharges like service and order processing fees onto purchases.
- California Attorney General Rob Bonta issued a consumer alert on the heels of Governor Newsom’s declaration of a state of emergency. Attorney General Bonta urged Californians to take precautions amidst the ongoing series of storms and reminded companies that price gouging during a state of emergency is illegal under Penal Code Section 396.
- Colorado Attorney General Weiser announced the Department of Law is establishing a new consumer complaint referral program that will seek to resolve disputes between consumers and businesses through informal negotiations overseen by the department. The program builds off a one-year pilot program and was created to address the thousands of complaints received by the department.
- Connecticut Attorney General Tong sued four out-of-state firearm dealers for selling and advertising illegal, untraceable ghost gun parts in Connecticut. Connecticut banned the sale and receipt of unfinished frame and receiver gun components lacking serial numbers or unique identification in 2019. Despite this ban, defendants Indie Guns of Florida, Steel Fox Firearms of Florida, Hell Fire Armory of North Carolina and AR Industries of Utah each sold and shipped these ghost gun parts to an undercover investigator. The defendants ship ghost gun parts directly to consumers without confirming whether the consumers are licensed to possess a firearm.
- Louisiana Attorney General Jeff Landry announced a lawsuit against a number of drug manufacturers and pharmacy benefit managers (PBMs) including, Sanfoi-Aventis U.S., and Novo Nordisk, Inc. According to the complaint, the defendants have allegedly colluded to or been complicit in raising the prices of insulin. The lawsuit seeks restitution, disgorgement, civil penalties and reimbursement for costs and expenses incurred in the investigation and prosecution of the case.
- Minnesota Attorney General Keith Ellison announced a settlement with Housing Hub, LLC, a property management company, resolving allegations that the company illegally withheld tenants’ security deposits. Pursuant to the settlement, Housing Hub, LLC will pay $63,000 in restitution.
- Minnesota Attorney General Ellison announced a civil investigation into Kia and Hyundai’s sale of vehicles that allegedly lack industry-standard, anti-theft technology. Civil investigative demands were served on Kia and Hyundai requiring each company to produce documents and answer questions under oath. The purpose of the investigation is to gather information to determine whether Kia and Hyundai violated Minnesota’s consumer protection and public nuisance laws.
- Massachusetts Attorney General Campbell secured a preliminary injunction in an ongoing lawsuit against MV Realty, which is allegedly deceptively presenting itself as a real estate brokerage. The preliminary injunction restricts MV Realty from engaging in unfair and deceptive marketing practices or obtaining additional mortgages during the pendency of the litigation as well as release any existing mortgages.
- New York Attorney General James proposed new price gouging rules to protect consumers during emergencies. New York’s price gouging law was updated in 2020 to grant the Office of the Attorney General rulemaking authority. The proposed rule streamlines investigations to combat price gouging by setting clear guardrails against price increases during emergencies. The proposed rules are open to a 60-day comment period.
- New York Attorney General Letitia James announced an agreement with Servis One, Inc. d/b/a BSI Financial Services, a mortgage servicer, resolving allegations that the company failed to offer state and federally mandated mortgage relief to homeowners during the COVID-19 pandemic. As a result of an investigation by the Office of the Attorney General (OAG), the OAG learned the extent of BSI Financial Service’s illicit practices. In one instance, a BSI employee instructed a homeowner who had lost their job to use their employment benefits or reduced income to make partial mortgage payments, despite the fact that the homeowner qualified for mortgage relief. Pursuant to the agreement, BSI Financial Services will pay $350,000 in penalties and restitution.
- Washington Attorney General Ferguson announced a King County judge found Federal Way Discount Guns and its owner in contempt of court in an ongoing lawsuit over the retailer’s unlawful sales of high-capacity gun magazines. The enforcement action was filed against Federal Way Discount Guns in December of 2022. The court determined that Federal Way Discount Guns intentionally violated the court’s preliminary injunction.
- Washington Attorney General Ferguson announced Senate Bill 5078, The Firearm Industry Responsibility & Gun Violence Victims’ Access to Justice Act, passed in the state Senate. The bill ensures that gun manufacturers and dealers must take reasonable steps to prevent product distribution to dangerous individuals by making these individuals liable if they fail to establish, implement, and enforce reasonable controls on the manufacture, sale, distribution, and marketing. The bill was jointly requested by Attorney General Ferguson and Governor Inslee. A companion bill is in the House.