The State AG Report Weekly Update April 2019 #2

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Consumer Protection

21 Democratic Attorneys General Urge U.S. Department of Education to Continue Sharing Student Loan Information

  • 21 Democratic AGs, led by Colorado AG Phil Weiser, New Jersey AG Gurbir Grewal, and Washington AG Bob Ferguson, sent a letter to the U.S. Department of Education (“ED”) regarding its June 13, 2018 decision to discontinue disclosure of student loan information to state law enforcement agencies, including AGs.
  • The AGs’ letter argues that the decision impedes and shields student lenders from state enforcement efforts and harms student loan borrowers, and it further expresses concern that ED has declined to share student loan information with states without explaining its reasoning or consulting with the affected state agencies, among other things.
  • The AGs renew their request first submitted in a July 13, 2018 letter that ED reverse its decision, as previously reported.

Colorado Attorney General Supports Bill Amending Consumer Protection Act

  • Colorado AG Phil Weiser testified before the Colorado House Judiciary Committee in support of a bill that would amend the Colorado Consumer Protection Act (“CCPA”) to further deter unfair business practices.
  • The bill, HB 19-1298, would amend the CCPA’s existing requirement to demonstrate that a defendant had specific intent to commit a deceptive business practice to only require that the defendant’s act recklessly harmed consumers, add a “catch-all” provision to capture practices beyond the specific practices defined as fraudulent under the current Act, increase civil penalties, and remove the court-imposed requirement that a business practice have a “significant public impact” for the AG to bring an action under the CCPA.
  • AG Weiser testified that the CCPA is among the weakest consumer protection laws in the country, and that the bill would bring the state in line with consumer protections afforded to 97% of American citizens.
  • The bill is currently pending in the state House Judiciary Committee.

Delaware Attorney General Settles with Automobile Finance Company Over Allegedly Financing Subprime Automobile Loans

  • Delaware AG Kathy Jennings reached a settlement with auto finance company Exeter Finance LLC (“Exeter”) to resolve allegations that it financed subprime automobile loans in violation of state laws prohibiting unfair and deceptive trade practices.
  • According to the AG’s office, Exeter allegedly facilitated the origination of subprime automobile loans made by car dealerships to consumers with poor credit, and Exeter knew or should have known that originating such subprime loans was in violation of state consumer protection laws.
  • Under the terms of the cease and desist agreement, Exeter must pay $550,000 in consumer relief and costs, pay $50,000 to the state, waive consumers’ deficiencies—unpaid amounts due to inability to make further payments—on certain subprime loans, and ask major credit bureaus to erase all records of activity related to the subprime loans on consumer credit reports.
  • As previously reported, former Delaware AG Matt Denn and Massachusetts AG Maura Healey settled with automobile finance company Santander Consumer USA Holdings, Inc. in March 2017 over its role in allegedly financing subprime automobile loans in violation of state law.

Indiana Attorney General Sues Promotions Company Over Allegedly Deceptive Advertisements

  • Indiana AG Curtis Hill filed a lawsuit against Texas-based promotions company Hopkins and Raines Inc. (“H&R”) over allegations that it deceptively advertised on behalf of motor vehicle dealerships in violation of the state’s Deceptive Consumer Sales Act and Promotional Gifts and Contests Act.
  • According to the complaint, H&R allegedly sent promotional mailings to over 2.1 million Indiana residents on behalf of motor vehicle dealerships that failed to identify the promoter behind the mailings and misrepresented the odds of promotional contests and retail values of prizes sent to consumers, among other things.
  • The complaint seeks injunctive relief, restitution, costs, and penalties, among other things.

Washington Attorney General Settles with National Motel Chain for Allegedly Voluntarily Providing Guest Lists to U.S. Immigration and Customs Enforcement

  • Washington AG Bob Ferguson reached a settlement with Motel 6 Operating L.P. and G6 Hospitality LLC (collectively, “Motel 6”) to resolve allegations that it voluntarily provided guests’ personal information to U.S. Immigration and Customs Enforcement (“ICE”) in violation of the state’s Consumer Protection Act and Law Against Discrimination.
  • According to the complaint, Motel 6 allegedly unlawfully disclosed its private guest registry information to ICE agents who did not have warrants despite knowing that ICE was requesting the information for the purpose of investigating guests on the basis of national origin, trained its employees to disclose the information, did not inform guests that their presence at its motels and their information would be provided to ICE, and misrepresented its privacy policy on its website by stating that it would only disclose guest information to comply with applicable laws, among other things.
  • Under the terms of the consent decree, Motel 6 must pay $12 million in restitution, damages, and attorney’s fees, implement a nationwide policy of withholding guest information from law enforcement unless presented with warrants or subpoenas, require employees to contact the company’s legal department if presented with warrants or subpoenas, establish a 24-hour hotline to assist its employees with law enforcement requests for guest information, create a mechanism for guests to report instances of perceived disclosure of personal information, and train employees on its new policies.
  • As previously reported, AG Ferguson originally filed a complaint against Motel 6 over these allegations in January 2018.

Mortgages/Foreclosures

Massachusetts Attorney General Settles with National Mortgage Servicer Over Alleged Unfair Loan Modifications

  • Massachusetts AG Maura Healey reached a settlement with national mortgage servicer Caliber Homes Loans Inc. (“Caliber”) to resolve allegations that it made loan modifications in violation of the state’s Act Preventing Unlawful and Unnecessary Foreclosures (“Act”).
  • According to the AG’s office, Caliber allegedly failed to help borrowers avoid foreclosure by giving them short-term, interest-only loan modifications with monthly payments they could not afford, instead of more affordable, permanent modifications, in violation of the Act, which requires creditors to make good faith efforts to avoid foreclosure for borrowers whose mortgage loans have unfair subprime terms, among other things.
  • According to the AG’s office, under the terms of the assurance of discontinuance, Caliber will pay $2 million in restitution, undertake affordable loan modifications for affected homeowners, and amend its business practices to comply with state law.

Pharmaceuticals

Illinois Attorney General Sues Opioid Manufacturer for Allegedly Misrepresenting Risks of Prescription Opioids

  • Illinois AG Kwame Raoul filed a lawsuit against opioid manufacturers Purdue Pharma L.P. and Purdue Pharma Inc. (collectively, “Purdue Pharma”) over allegations that they engaged in deceptive marketing and misrepresented the risks of prescription opioid use in violation of the state’s Consumer Fraud and Deceptive Business Practices Act and the common law.
  • According to the complaint, Purdue Pharma allegedly deceptively marketed prescription opioid products to doctors by understating risks of addiction and targeted doctors with addicted patients and patients who were diverting its opioid products for unlawful use to increase prescriptions of opioid products.
  • The complaint seeks declaratory and injunctive relief, penalties, disgorgement, restitution, costs, and abatement, 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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