The State AG Report - Volume 7, Issue 37

Cozen O'Connor

Cozen O'Connor

Vermont Attorney General Sues Fossil Fuel Companies over Alleged Deceptive Marketing Tactics

  • Vermont AG T.J. Donovan filed a lawsuit against fossil fuel companies Exxon Mobil Corporation, Shell Oil Company, Sunoco LP, CITGO Petroleum Corporation, and related companies over allegations that they used deceptive and unfair practices in marketing fossil fuels in violation of Vermont’s Consumer Protection Act.
  • The complaint alleges, among other things, that the companies knew about the potential climate change effects of fossil fuel use since the 1960s, but continued to promote their products and downplay their climate effects, and that the companies engaged in deceptive “greenwashing” campaigns by falsely portraying themselves as helping the environment.
  • The complaint, which seeks injunctive relief, disgorgement, civil penalties, and attorneys’ fees and costs, is the latest such consumer protection suit against the fossil fuel industry filed by an AG, including ones brought by the AGs of Minnesota and Delaware, among other states.

Pool of Republican Candidates in Arizona’s 2022 Attorney General Race Expands

  • Dawn Grove, VP and corporate counsel at Karsten Manufacturing Company (parent company of golf club company PING), has announced her candidacy for the Republican nomination in the 2022 election for Arizona AG.
  • As previously reported, the 2022 field of Republican candidates for the open AG seat is crowded and includes former prosecutor and Border Patrol section chief for the U.S. Attorney’s Office Lacy Cooper, farmer and private-practice attorney Tiffany Shedd, and former Arizona Supreme Court Justice Andrew Gould.
  • Incumbent Republican AG Mark Brnovich is term-limited from seeking reelection and is running for the U.S. Senate against Democrat Mark Kelly.
  • To read more election news and insights, visit our Meet the State AGs

StubHub Agrees to Honor Money-Back Guarantee for COVID-19-Related Event Cancellations

  • A bipartisan group of 11 AGs, led by Maryland AG Brian Frosh, reached a settlement with online ticket reseller StubHub, Inc. to resolve allegations that StubHub violated state consumer protection laws by refusing to issue refunds to ticketholders for events cancelled due to the COVID-19 pandemic.
  • According to the AGs, StubHub’s advertised guarantee offered consumers full refunds of the ticket purchase price and fees if their events were cancelled, but after the mass cancellation of events in March 2020 due to COVID-19, StubHub allegedly stopped honoring its refund guarantee and offered to credit customers’ accounts instead. In May 2021, after the commencement of the AGs’ investigation, StubHub reversed its policy and offered to issue the guaranteed refunds to affected customers.
  • Under the terms of the Maryland consent order, which is substantially similar to the settlements with other investigating states, StubHub will pay $424,250 in civil penalties unless it issues full refunds to affected consumers; must honor its refund policies and not change refund policies for already-purchased tickets unless the purchaser consents to the change; and must submit a compliance report detailing its refunding efforts and compliance with the consent order, among other things.

FTC Unveils New Compulsory Processes in Eight Key Enforcement Areas

  • The Federal Trade Commission (“FTC”) issued resolutions to increase the efficiency of FTC investigations into competition or consumer protection violations under the FTC Act in eight priority enforcement areas.
  • The resolutions direct the use of all available compulsory processes—such as civil investigative demands and subpoenas—to investigate potential FTC Act violations in the following enforcement areas: (1) acts or practices affecting U.S. Armed Forces service members and veterans; (2) acts or practices affecting children; (3) bias in algorithms and biometrics; (4) deceptive and manipulative conduct on the internet; (5) repair restrictions; (6) abuse of intellectual property; (7) common directors and officers and common ownership; and (8) monopolization offenses.
  • The Acting Directors of the Bureau of Competition and the Bureau of Consumer Protection stated their intention to use these resolutions aggressively to combat harmful practices, particularly those targeting children, veterans, and marginalized communities.
  • Following an earlier announcement on other priority enforcement areas in July 2021, this is the second time since Lina Khan has become Chairwoman of the FTC that the agency has announced several such resolutions at once.

CFPB: Income Share Agreements Are Student Loans and Must Follow Student Loan Rules

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with private student loan company Better Future Forward Inc. and related companies (collectively, “Better Future”) over allegedly deceptive practices in originating and servicing private student loans in the form of income share agreements (“ISAs”) in violation of the Dodd-Frank Consumer Financial Protection Act, the Truth in Lending Act (“TILA”), and TILA-implementing Regulation Z.
  • According to the CFPB, Better Future allegedly misrepresented its ISAs by claiming that ISAs were not loans and did not create debt, failed to provide the required student loan disclosures, and subjected borrowers to illegal fees and penalties for early repayment or prepayment of their loans, among other things.
  • Under the terms of the consent order, Better Future agreed to stop misrepresenting its ISAs, provide all legally-required disclosures to potential borrowers, eliminate early payment or prepayment penalties and fees, and stop objecting to the discharge of borrowers’ ISAs in bankruptcy. Better Future also agreed to submit a compliance plan to the CFPB that would show how Better Future intends to comply with all applicable federal consumer financial protection laws and regulations, among other things.

New York Attorney General Ramps Up Securities Enforcement of Cryptocurrency Companies

  • New York AG Letitia James reached a settlement with Chinese-language news and social media company GTV Media Group and its parent company Saraca Media Group, Inc. (collectively, “GTV”) to resolve allegations that GTV sold stock and cryptocurrencies without registering as securities dealers and/or commodities broker-dealers in violation of the state’s Martin Act.
  • According to the AG’s office, GTV allegedly conducted an offer and sale of its stock, raising hundreds of millions of dollars from over 1,200 investors, and pre-sold more than $30 million in two digital instruments that were promoted as cryptocurrencies, without registering as securities dealers and/or commodities broker-dealers in New York state.
  • Under the assurance of discontinuance, GTV will pay nearly $480 million to New York, but its monetary obligation will be deemed satisfied upon payment of that amount into a special fund in accordance with GTV’s contemporaneous $539 million settlement with the U.S. Securities and Exchange Commission related to its alleged unregistered offering of GTV common stock.
  • AG James also obtained a judgment against cryptocurrency trading platform Coinseed, Inc. and related individuals (collectively “Coinseed”), permanently stopping its unauthorized activities as an unregistered commodity broker-dealer, and appointing a receiver to safeguard investors’ funds, among other things.
  • As previously reported, AG James sued Coinseed in February 2021 over allegations that it violated the Martin Act by raising funds in an unregistered securities offering, and that it defrauded and deceived investors with false claims about its staff’s expertise and experience.sharethis sharing button

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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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