NRA Denied Bankruptcy | CBD False Advertising | Republican AGs Press for Energy Infrastructure

Cozen O'Connor

FTC Continues Crackdown on Fake Claims About CBD

  • The Federal Trade Commission (“FTC”) reached a settlement with cannabidiol (“CBD”) products retailer Kushly Industries LLC and its sole officer (collectively, “Kushly”) to resolve allegations that Kushly made unsubstantiated marketing claims and falsely claimed that scientific evidence supported the efficacy of its products in violation of the FTC Act.
  • The complaint alleged that Kushly falsely advertised a range of CBD-containing products such as gummies and topical ointments as effective in treating or curing a number of medical conditions, including cancer and multiple sclerosis, and that it falsely claimed that there is scientific evidence that CBD can treat serious conditions like Parkinson’s disease, Alzheimer’s disease, and hypertension.
  • Under the terms of the proposed consent order, Kushly must pay over $30,000 to the FTC for consumer redress, is prohibited from making any misleading and unsubstantiated health claims about its products, including misrepresenting any product as being clinically proven to be medically effective against a number of conditions such as chronic pain, cancer, multiple sclerosis, acne, psoriasis, and eczema, among others.
  • As reported previously, Cozen O’Connor State AG Group Members Meghan Stoppel and Mira Baylson recently penned a timely article for Cannabis Business Executive on the real threat of regulatory scrutiny and the importance of a carefully crafted marketing campaign for companies manufacturing and selling CBD.

Two Democratic Candidates Enter Race for New Mexico Attorney General Open Sea

  • Bernalillo County District Attorney Raúl Torrez and State Auditor Brian Colón announced their candidacies for the 2022 Democratic nomination for the New Mexico AG’s office.
  • Two-term incumbent Democratic AG Hector Balderas is term-limited and cannot seek a third term.
  • For an overview of state AGs across the nation and to read more AG election news and insights, visit the State AG Report’s “Meet the State AGs” page.

Water Filtration Retailer Settles Allegations Stemming from 2019 Data Breach

  • New York AG Letitia James reached a settlement with online water filtration retailer Filters Fast LLC to resolve allegations that it failed to protect customers’ payment card information in a 2019 data breach in violation of New York’s consumer protection laws.
  • According to the assurance of discontinuance, the AG’s office found that hackers exploited a known vulnerability in Filter Fast’s checkout process—for which a patch was available for years before the breach—to collect consumer payment information, and that the breach was not found and patched for more than a year after the original hack despite Filters Fast being warned of the breach by a payment system management company. The incident affected 324,000 customers, including approximately 16,500 New Yorkers.
  • Under the terms of the assurance of discontinuance, Filter Fast will pay $200,000 to the state—of which $100,000 is suspended due to Filter Fast’s financial condition—and improve its data security measures, including creating a comprehensive information security program and an incident response and data breach notification system, adopting personal information safeguards such as encryption, segmentation, and patch management, and obtaining third-party security assessments of its networks for the next five years, among other things.

Republican AGs Press Biden Administration on Expanding Energy Infrastructure

  • A group of 19 Republican AGs, led by Montana AG Austin Knudsen, wrote a letter to President Joe Biden urging him to support additional energy infrastructure in the wake of the Colonial pipeline shutdown.
  • The letter argues that the Colonial incident demonstrates the need for additional energy infrastructure, including the controversial Keystone XL pipeline, which is critical for avoiding energy supply disruptions, maintaining the nation’s status as a net energy exporter, and supporting national security.
  • As previously reported, a group of 21 Republican AGs, led by AG Knudsen and Texas AG Ken Paxton, recently sued the Biden administration over its revocation of a cross-border permit for the Keystone XL oil pipeline, alleging that the revocation of the permit is an unconstitutional encroachment on the power of Congress to regulate international and interstate commerce and violates the Administrative Procedure Act.

Recent AG Moves: New AG Takes Office in Alaska; New Leader Elected by RAGA

NRA Fails in Bid to Avoid New York Regulatory Regime by Filing for Bankruptcy and Reorganizing in Texas

  • New York AG Letitia James obtained a ruling from the U.S. Bankruptcy Court, Northern District of Texas, denying the National Rifle Association’s (“NRA”) bankruptcy petition.
  • The court opinion stated that in seeking to reorganize in Texas, the NRA, which was originally registered in New York, did not file its bankruptcy petition in good faith. The court concluded that by filing its petition, the NRA sought to gain an unfair litigation advantage and to avoid New York’s regulatory scheme.
  • As previously reported, AG James sued the NRA and its executives over allegations that the NRA leadership mismanaged and diverted organization funds for the personal gain of its executives and their associates in violation of New York’s Estates, Powers & Trusts Laws; Not-for-Profit Corporation Law; Prudent Management of Institutional Funds Act; and Executive Law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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