The State AG Report – 1.20.2022

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Student Loan Servicer Agrees to Cancel $1.7 Billion of Subprime Student Debt, Pay $95 Million in Restitution

  • A bipartisan group of 40 AGs, led by California, Illinois, Massachusetts, Pennsylvania, and Washington, reached a settlement with student loan servicer Navient Corporation and related entities (collectively, “Navient”) to resolve allegations that it used unfair, deceptive, and abusive practices to originate and service student loans.
  • The complaints alleged, among other things, that Navient encouraged distressed borrowers to postpone payments through forbearance instead of enrolling them in low-cost repayment plans, thereby pushing borrowers further into debt as interest kept accruing on their loans during the forbearance period. Navient also allegedly originated predatory subprime private loans for students attending for-profit schools with low graduation rates despite knowing that many such borrowers will not be able to repay the loans.
  • Under the terms of the settlement, Navient will pay $95 million in direct restitution—approximately $260 to each of nearly 350,000 borrowers–and will cancel nearly $1.7 billion of subprime loans. Navient will also change its practices to ensure that borrowers are counseled on the benefits and payment estimates of income-driven repayment plans before placing borrowers into optional forbearances, and will train specialists to help distressed borrowers understand alternative repayment options and counsel public service workers concerning Public Service Loan Forgiveness programs, among other things.

2022 Attorneys General Races Take Shape with New and Withdrawing Candidates

  • Private practice attorney Steve Kim announced his candidacy for the Republican nomination in the 2022 Illinois AG race. If successful, he will face incumbent Democratic AG Kwame Raoul, who is seeking a second term.
  • Massachusetts AG Maura Healey announced she is seeking the 2022 Democratic nomination for Governor. AG Healey was first elected AG in 2014, and is not term limited.
  • Democratic candidate for Georgia AG Charlie Bailey announced he is leaving the 2022 AG race and running for Lieutenant Governor instead. As previously reported, Democratic Georgia State Senator Jen Jordan remains in the contest for the AG’s office, held since 2016 by Republican AG Chris Carr, who is seeking his third term.
  • To “meet” the state AGs across the nation and read more AG election news and insights, visit The State AG Report.

Attorneys General Bend FDA’s Ear on Proposed Rule for Over-the-Counter Hearing Aids

  • The National Association of Attorneys General sent a comment letter to the FDA, signed by a bipartisan group of 42 AGs, urging it to ensure that states’ authority to protect consumers is not preempted in its proposed rule regarding the sale of over-the-counter hearing aids.
  • The letter notes that all 50 states currently require hearing professionals to be licensed and many states have specific consumer protections for individuals buying hearing aids, including mandatory disclosures, warranties, and returns; and further argues that the language of the proposed rule—while providing more affordable and accessible hearing aids—may unintentionally undermine states’ ability to protect consumers.
  • The letter asks the FDA to make explicit that its new rule will not preempt state consumer protections, as well as to strengthen age verification processes to protect minors and to clarify that OTC hearing aides are only appropriate for mild to moderate hearing loss.

Payment Processor Banned From Industry for Allegedly Helping Telemarketers Defraud Consumers

  • The CFPB reached a settlement with payment processor BrightSpeed Solutions Inc. and its founder (collectively, “BrightSpeed”) to resolve allegations that it knowingly assisted companies in defrauding consumers by knowingly processing customer payments obtained through fraud.
  • The complaint alleged that BrightSpeed processed payments for companies that used illegal telemarketing schemes to offer and sell technical support services and antivirus software for up to $2,000, even though the software and services were available for free. The complaint further alleges that BrightSpeed continued to process the companies’ payments despite hundreds of consumer complaints, several police inquiries, and banks raising concerns, among other things.
  • Under the terms of the proposed stipulated judgment and order, BrightSpeed will pay a civil money penalty of $500,000 and will be permanently barred from offering payment processing, consumer lending, deposit-taking, and financial-advisory services

FTC and DOJ Seek Public Input on Modernizing Merger Guidelines to Improve Enforcement

  • The FTC and the U.S. DOJ’s Antitrust Division launched a joint public inquiry aimed at strengthening enforcement against illegal mergers that threaten competition and consumer choice.
  • The request for information seeks public input from a broad range of market participants on updating federal merger guidelines to reflect modern markets and better detect and prevent unlawful deals. The agencies are interested in feedback, evidence, and ideas, including on the following specific topics: purpose and scope of merger review; presumptions that certain transactions are anticompetitive; market definition; threats to potential and nascent competition; impact of monopsony power, including in labor markets; and the unique characteristics of digital markets.
  • Comments must be received no later than March 21, 2022.

Dun & Bradstreet Agrees to Refund Consumers and Reform Its Marketing and Credit Report Correction Practices

  • The FTC reached a settlement with business credit reports provider Dun & Bradstreet, Inc. to resolve allegations that D&B used deceptive and unfair practices to sell its products to small and mid-sized businesses.
  • The complaint, filed concurrently with the proposed consent order, alleges that D&B failed to provide a clear and reliable process to fix errors in business credit reports, and that D&B marketed a product called CreditBuilder as helping businesses to improve their D&B reports by allowing them to add payment histories but, in reality, did not accept many payment history submissions and businesses’ credit reports did not improve. The complaint further alleges that D&B failed to notify customers of automatic renewal of the annual CreditBuilder subscription, among other things.
  • Under the terms of the consent order, D&B must refund CreditBuilder purchasers; allow current customers to cancel their subscriptions and obtain refunds; and create processes and procedures to promptly investigate and correct disputed credit report information, notify businesses of the results of its investigation, and provide free access to the revised information. Additionally, D&B will clearly disclose the likelihood of accepting payment history information in its CreditBuilder marketing, among other things.

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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