Each week, Crowell & Moring’s State Attorneys General team highlights significant actions that State AGs have taken. Here are this week’s updates.
Monday, April 5, 2021:
- The Consumer Financial Protection Bureau (“CFPB”) proposed a series of rule changes to help prevent avoidable foreclosures as the emergency protections expire. The rule changes would, for example, provide a pre-foreclosure review period to give borrowers additional time; allow servicers to offer loan modification options to those with COVID-19-related hardships based on an incomplete application; and modify the required servicer communications.
- Massachusetts Attorney General Healey announced that her office entered into an agreement with Shea Concrete Products, Inc., settling allegations that it violated the Clean Water Act by illegally discharging industrial stormwater into wetlands without a permit. Under the agreement, the company must pay $57,500, with the majority going towards water quality improvement projects.
- New York Attorney General James announced an agreement with air inflation services provider Service Station Vending Equipment, Inc. and its owner, resolving claims that they failed to pay sales tax on air inflation services and engaged in fraudulent tax avoidance by paying employees off the books and underreporting sales. The settlement includes a payment of $4.25 million in damages and penalties.
- Rhode Island Attorney General Neronha announced that he issued guidance reminding debt collectors, financial institutions, and creditors that stimulus payments from the American Rescue Plan Act are exempt from seizure or garnishment, and that the Attorney General’s Office is prepared to protect consumers from unlawful collection practices.
- On April 5, 2021, Washington, District of Columbia Attorney General Racine filed a complaint against financial technology lending platform Opportunity Financial for allegedly illegally providing predatory high-interest loans, such as loans with up to 198% interest rates. Additionally, it allegedly misleadingly made the loans seem more affordable than payday loans and as an opportunity to build credit history. The lawsuit seeks injunctive relief as well as civil penalties, restitution, and fees and costs.
- Massachusetts Attorney General Healey announced that Global FF&E and its owner pleaded guilty to failing to pay employer contributions to the Massachusetts unemployment insurance fund. The plea will include five years of probation and 200 hours of community service for the owner as well as a payment of $180,000 in restitution.
Tuesday, April 6, 2021:
- The Consumer Financial Protection Bureau (“CFPB”) issued a consent order against debt collector Yorba Capital Management and its former owner for allegedly violating the Consumer Financial Protection Act of 2010 and for Yorba’s violation of the Fair Debt Collection Practices Act by harassing consumers and falsely threatening them with legal action. The consent order bars Yorba and its former owner from the debt collection business as well as orders restitution and penalties. In connection with the consent order, Acting Director Uejio stated, “Debt collectors often run afoul of consumer law when they coerce consumers to pay them by exaggerating the consequences of not paying. Today’s action is a reminder that debt collectors must stick to the truth when communicating with consumers.”
- Kentucky Attorney General Cameron and Tennessee Attorney General Slatery III filed a lawsuit against the Biden Administration seeking to stop it from enforcing a mandate in the American Rescue Plan Act that prohibits states from lowering taxes for four years as a condition of receiving the COVID-19 aid.
- Pennsylvania Attorney General Shapiro announced that his office entered into an agreement with debt buyer Elevation Capital Partners, LLC. The agreement will result in the cancellation of about $2.6 million in private student loans held by students who attended schools operated by Education Corporation of America. It also provides for refunds of loan payments to Elevation Capital Partners. Additionally, Elevation Capital Partners is permanently barred from engaging in any collection efforts related to the students’ accounts and is prohibited from selling or transferring the accounts.
- Connecticut Attorney General Tong and Acting U.S. Attorney for the District of Connecticut Leonard Boyle announced a civil settlement agreement with healthcare organization Today’s Youth LLC and its owners. The agreement requires the company and its owners to pay $273,000 to resolve allegations that they caused overpayments by the Connecticut Medicaid Program for behavioral health services. The company allegedly submitted claims to Medicaid for behavioral health services that were performed by unlicensed providers.
- Washington Attorney General Ferguson announced a lawsuit against janitorial services company National Maintenance Contractors for allegedly taking advantage of immigrants with limited English proficiency with its franchise agreements. According to the press release, while the individuals were promised business ownership, they often were left paying excessive fees and earning less than minimum wage. Among other things, the lawsuit seeks injunctive relief, restitution, and civil penalties.
Wednesday, April 7, 2021:
- The Consumer Financial Protection Bureau (“CFPB”) issued a Notice of Proposed Rulemaking that would extend the effective date of two recent debt collection rules by 60 days to give parties more time to comply during the pandemic. The rules, which are focused on communications and disclosures related to debt collection, are scheduled to take effect on November 30, 2021, but the CFPB would extend them to January 29, 2022.
- Oregon Attorney General Rosenblum announced settlements with four car dealerships who allegedly sent misleading mailers and scratch-off tickets to consumers, making them think they won a prize when they actually had not. The dealerships must pay $148,517 in restitution and $493,774 in costs and penalties, suspended in part if they fully comply with the settlements. The investigation also revealed the dealerships committed other violations, such as selling vehicles above the advertised price and failing to provide the guaranteed minimum trade-in value that dealerships advertised as part of the promotion.
- Iowa Attorney General Miller announced that Compliance Processing Group, LLC has agreed to refund money to Iowa truck drivers who paid it $149 to submit biennial reports to the Federal Motor Carrier Safety Administration that they are able to file for free. The company allegedly sent the drivers past-due notices about the reports that deceptively implied they were sent by a government agency and that failure to respond could result in civil penalties. The settlement also includes injunctive relief.
- On April 7, 2021, U.S. District Judge Kevin McNulty of the District of New Jersey allowed a putative class action lawsuit to continue against collection agency Advanced Call Center Technologies LLC for allegedly violating the Fair Debt Collection Practices Act by sending collection letters that did not clearly identify the creditor. However, District Judge McNulty dismissed the claim that the collection agency failed to clearly state the amount of the debt due by including both a total account balance and an amount due now, reasoning that credit card owners are used to seeing such representations.
- New York Attorney General James and Illinois Attorney General Raoul led a coalition of 10 attorneys general asking the U.S. Senate to pass H.R. 1280, the George Floyd Justice in Policing Act of 2021. The bill would reform law enforcement agencies across the United States as well as provide attorneys general with clear statutory power to investigate unconstitutional policing and to acquire data about the use of excessive force.
Thursday, April 8, 2021:
- Wisconsin Attorney General Kaul announced proposed legislation which would provide the Wisconsin Attorney General with the ability to investigate and bring civil causes of action when civil rights violations have occurred. Under the law, the Wisconsin Attorney General would be able to bring a civil action when there is reasonable cause to believe that either an individual has engaged in a pattern of conduct that violates a state or federal constitutional right or a legal right, or that a person has been denied one of these rights “and that denial raises an issue of general public importance.”
- Kansas Attorney General Schmidt and Nebraska Attorney General Peterson sent a letter to U.S. Interior Secretary Deb Haaland seeking an assurance that President Biden’s directive that plans to have at least 30% of the U.S.’s land and water in conservation by 2030 is being construed to protect private property rights and to maintain local and state authority over conservation efforts.
- Florida Attorney General Moody sued the Biden administration and the U.S. Centers for Disease Control and Prevention (“CDC”) over the U.S. shutdown of the cruise industry, arguing that the CDC does not have the authority to issue the lockdown and that its actions are arbitrary and capricious, violating the Administrative Procedure Act.
- Virginia Attorney General Herring announced that an amendment to his bill protecting the initial round of stimulus payments from debt collection activity will ensure that the entirety of the most recent stimulus payments are also protected from garnishment by creditors and debt collectors.
- Pennsylvania Attorney General Shapiro announced that contractor Glenn O. Hawbaker, Inc. of State College has been charged with four counts of theft for violations of the federal Davis-Bacon Act and the Pennsylvania Prevailing Wage Act for allegedly stealing employees’ retirement, health, and welfare money. According to the press release, this case is the largest criminal prevailing wage case on the record.
- A coalition of 22 attorneys general filed a brief in Fifth Circuit case U.S. Department of Labor v. Data Marketing Partnership asking the Fifth Circuit to protect states’ power to regulate fraud and abuse in the insurance industry. The coalition is supporting the Department of Labor’s determination that a process through which users obtain health insurance in exchange for sharing data over the internet did not qualify as an “employee benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”).
- A coalition of 14 attorneys general led by South Carolina Attorney General Wilson sent a letter to the U.S. Senate in opposition to the “Protecting the Right to Organize Act of 2021,” or “PRO Act” bill, which they are arguing would effectively require workers to join unions in violation of state Right-to-Work laws.
Friday, April 9, 2021:
- New Jersey Attorney General Grewal announced new rule proposals geared towards establishing permanent standards for those who practice telemedicine. The rule proposals apply to those licensed by the State Board of Dentistry, the New Jersey State Board of Respiratory Care, the Alcohol and Drug Counselor Committee, and the Occupational Therapy Advisory Council. They were published on March 15, 2021, and will remain in effect after the end of the public health emergency.
- Pennsylvania Attorney General Shapiro announced that his office reached agreements with the former CEO of Think Finance and debt collector National Credit Adjusters (“NCA”), ending an alleged $133 million payday lending scheme. The settlements include injunctive relief, such as requiring NCA to cancel all of the balances on the Think Finance debts owed, as well as monetary relief including a $3 million payment by the Think Finance CEO.
- New Jersey Attorney General Grewal announced a settlement with order-fulfillment company Bergen Logistics for allegedly discriminating against a pregnant employee by refusing to grant her accommodations and requiring her to take unpaid family leave after she filed a complaint. Under the settlement, the company must pay $25,000 to the employee and implement policy reforms