Creepy Apps: FTC Shuts Down Stalkerware Company

• The Federal Trade Commission (“FTC”) reached a settlement with stalkerware app company Support King, LLC d/b/a SpyFone.com and its CEO (collectively “SpyFone”) to resolve allegations that it secretly harvested and shared smartphone owners’ physical location data and information about their phone use and other online activities, and that it exposed smartphones to hacker attacks in violation of the FTC Act.
• The complaint alleged that SpyFone’s apps provided real-time access to the data of smartphone owners through a hidden device hack that allowed others, including stalkers and domestic abusers, to track the smartphones on which the apps were installed. In addition, SpyFone’s lax security measures, including storing sensitive information without encryption, exposed consumers to hackers and other cyber threats, including through a 2018 breach of SpyFone’s servers in which the personal information of 2,200 consumers was accessed and stolen.
• Under the terms of the proposed consent order, SpyFone will disable its stalkerware apps and destroy all personal information collected through these apps. SpyFone will also post conspicuous notices on its websites informing consumers of the FTC’s allegations against SpyFone and will send on-screen notifications to smartphones on which its apps were activated to apprise the owner of the smartphone that it may have been monitored. SpyFone will also implement an information security program documented in writing and subject to a third-party independent assessor. The agreement further bars SpyFone from offering monitoring products or services or being involved in businesses that offer such products or services.

Debt Collection Company Settles Allegations of Aggressive Collection Tactics for Old Debts

• Massachusetts AG Maura Healey reached a settlement with national debt collection company Transworld Systems, Inc. (“Transworld”) to resolve allegations that it used unfair and deceptive debt collection practices in servicing a variety of debts, including student loans, in violation of Massachusetts consumer protection laws and the Massachusetts AG’s Debt Collection Regulations.
• According to the assurance of discontinuance, Transworld, which is the primary debt collector for private student loans on behalf of the National Collegiate Student Loan Trusts, allegedly attempted routinely to collect on old, time-barred debts by using false and misleading affidavits against student borrowers and did not provide the required notices of borrowers’ rights. In addition, Transworld allegedly contacted consumers at home and at their place of employment more frequently than the Debt Collection Regulations allow.
• Under theassurance of discontinuance, Transworld agreed to pay $2.25 million to the Commonwealth and the money may be used for consumer restitution. Transworld also agreed to stop excessive attempts to contact consumers, and to stop improper collection procedures on time-barred debts, including not producing false or misleading affidavits and providing consumers with the requisite disclosures, among other things.

California Attorney General Launches Annual Labor Day Report

• California AG Rob Bonta issued an inaugural Labor Day Report highlighting ten key worker protections available in California and the California Department of Justice’s (“DOJ”) efforts to combat illegal employment practices.
• The protected rights discussed in the report include the right to organize and join a union; the right to be properly classified as an employee even if the job title is “contractor”; wage-and-hour rights such as minimum wage, overtime, and paid time off; freedom from sexual harassment; and freedom from employer retaliation for asserting a worker’s rights.
• In addition to discussing worker protections, the report describes various actions taken by the DOJ to protect workers over the past year, including recovery of stolen wages and unpaid employment taxes, among other things.

Capital One CEO Allegedly Failed to Report Windfall Transaction to Antitrust Enforcement Agencies

• The Federal Trade Commission (“FTC”) reached a settlement with Richard Fairbank, CEO of Capital One Financial Corp. (“Capital One”), to resolve allegations that he failed to report a windfall generated by his acquisition of Capital One stock to federal antitrust enforcement agencies in violation of the Hart-Scott-Rodino (“HSR”) Act.
• The complaint alleged that Fairbank’s did not report his compensation package, which included over 100,000 Capital One shares, to the FTC and the Department of Justice (“DOJ”) as required by the HSR Act in order to allow these agencies to investigate the antitrust aspects of the transaction. The complaint also alleges that the transaction was subject to a 30-day waiting period prior to closing, which Fairbank did not observe. The complaint further alleges that the Fairbank transaction violated the HSR Act even though Fairbank pledged to implement a system that would ensure adherence to HSR Act requirements after he failed to report similar transactions twice before.
• Under the terms of the proposed final judgment, Fairbank will pay a civil penalty of almost $638,000. The proposed settlement will be published in the Federal Register and will be subject to a 60-day comment period, at the end of which the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

Subprime Auto Lender Settles Allegations of Unfair and Deceptive Practices for $27.2 Million

• Massachusetts AG Maura Healey reached a settlement with national subprime auto lender Credit Acceptance Corporation (“CAC”) to resolve allegations that CAC engaged in unfair and deceptive practices in originating, collecting, and securitizing subprime auto loans in violation of the Massachusetts Consumer Protection Act.
• As previously reported, the complaint alleged, among other things, that CAC made subprime loans it knew borrowers could not repay and thereby caused many borrowers credit harm and the loss of their vehicles or down payments, charged hidden finance fees which resulted in CAC loans exceeding the state law usury ceiling of 21%, and failed to inform investors that its packaged pools of loans included loans with higher risk than was described in its disclosures.
• Under the terms of the assurance of discontinuance, CAC agreed to pay $27.2 million into an independent trust to be used for restitution for thousands of eligible customers as well as for payment of settlement implementation costs and of the AG office’s investigation costs. CAC also agreed to abide by Massachusetts laws and regulations with respect to loan initiation and servicing practices, including providing borrowers with proper disclosures and notices, and it agreed to, upon the AG’s request, contact credit bureaus to request the deletion of certain negative credit information about its customers, among other things.

Federal Appeals Court Urged to Keep Minnesota’s Climate-Change Suit in State Court

• A group of 17 Democratic AGs, led by Washington AG Bob Ferguson, filed an amicus brief in the U.S. Court of Appeals for the Eighth Circuit in support of Minnesota’s position in Minnesota v. American Petroleum Institute et al. that Minnesota’s suit against fossil fuel companies properly belongs in state court.
• In 2020, Minnesota AG Keith Ellison sued several major fossil fuel companies as well as industry think-tank American Petroleum Institute over allegations they knowingly misled consumers about the harms and risks of fossil-fuel use. The case was originally filed in state court but the defendants later removed it to federal district court. The district court ordered the case remanded back to state court and the defendants appealed.
• The amicus brief argues, among other things, that the case should be adjudicated in state court because Minnesota’s claims arose under state law and raise no federal issue. The brief also argues that states have sovereign authority to bring state-law suites to remedy the harms of climate change within their borders and that adjudicating consumer protection claims in federal court would disrupt federal-state balance because these claims are traditionally entrusted to the states.