The State AG Report

Editors Lori Kalani and Jerry W. Kilgore

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The State AG Report Weekly Update January 7, 2016

Charities

Kansas Attorney General Settles with For-Profit Company for Alleged Charity Misrepresentations

  • Kansas AG Derek Schmidt reached a settlement with American Handicapped & Disadvantaged Workers, Inc., (“ADHW”) and its president and CEO for allegedly misrepresenting their company as a “charity” to encourage sales.
  • According to the consent judgment, ADHW allegedly called consumers to sell overpriced household goods and misled consumers through “exaggeration, falsehood, innuendo, and ambiguity” to believe ADHW was a charity or had a charitable purpose.
  • Under the terms of the consent judgment ADHW must pay $10,000 in penalties and fees, and must cease collection on monies owed by Kansas consumers, and provide refunds to consumers who request it.

Consumer Protection

Arkansas Attorney General Settles with Car Title Lender for Allegedly Charging Excessive Interest Rates

  • Arkansas AG Leslie Rutledge reached a settlement with Tri-State Pawn of Texarkana Inc. for allegedly charging interest rates above the allowable amount under state usury laws on its auto-title loans.
  • According to the complaint, filed in 2013 by former Arkansas AG Dustin McDaniel, Tri-State Pawn charged interest rates as high as 240 percent and, in at least one instance, seized a borrowers vehicle prior to the payment due date.
  • Under the terms of the settlement, Tri-State Pawn must pay the AG $8,697 to be distributed to harmed consumers, pay $108,000 to the AG’s office for consumer education, and the auto-title loans are voided and the company is prohibited from charging or collecting on those loans.

New York Attorney General Settles with Laboratories Over Alleged Direct Access Testing

  • New York AG Eric Schneiderman reached settlements with two laboratories, Direct Laboratories LLC (“DirectLabs”) and Laboratory Corporation of America (“LabCorp”), for direct access testing in violation of state law which requires testing be performed only at a licensed practitioner’s request.
  • According to the AG’s office, DirectLabs allegedly provided direct laboratory testing to consumers for over 250 medical tests, including testing for various cancer markers and specific diseases, without the involvement of the licensed chiropractor who was identified as the authorizing physician for those tests.  LabCorp, according to the AG’s office, facilitated DirectLabs’ direct testing service by providing technology services and processing specimens.
  • Under the terms of the settlements, DirectLabs is prohibited from operating in the state and must pay $24,500 in penalties, and LabCorp must pay $225,000 in penalties.

Data Privacy

FTC Settles with Software Provider for Alleged Deception About Software’s Data Encryption

  • The Federal Trade Commission (“FTC”) reached a settlement with Henry Schein Practice Solutions, Inc. (“Schein”), the provider of office management software for dental practices, over allegations it falsely advertised the encryption used by the software to protect patient data.
  • According to the complaint, Schein was aware that its Dentrix G5 software, marketed to dental practices as meeting industry-standard and federal regulation required encryption of sensitive patient information, actually used a less complex method of data encryption than the Advanced Encryption Standard which is recommended as the industry-standard by the National Institute of Standards and Technology.
  • Under the terms of the proposed consent order, Schein will pay $250,000 to the FTC and is required to notify all customers who purchased Dentrix G5 during the period that the alleged misleading statements were made.

Employment

Massachusetts Attorney General Settles with Grocer for Alleged Improper Employment Practices

  • Massachusetts AG Maura Healey reached a settlement with Truong-Thinh Market, Inc. (“Market”) and its president over alleged violations of state wage and hour laws.
  • According to the AG’s investigation, the Market allegedly failed to pay seven employees minimum wage or the proper overtime rate over an almost two-year period, and also failed to keep accurate payroll records.
  • Under the terms of the settlement, the Market must pay more than $84,000 in restitution to its employees and over $21,000 in penalties.

State v. Federal Government

California Attorney General Urges the CFPB to Adopt Strong Protections Against Harmful Payday Lending

  • California AG Kamala Harris sent a letter to the Consumer Financial Protection Bureau (“CFPB”) in response to the agency’s proposals for regulating payday and small-dollar lending, urging the CFPB to strengthen protections against harmful lending practices.
  • In the letter, AG Harris “strongly supports” several provisions in the CFPB’s proposal but urges the CFPB to require all payday and small-dollar loans to satisfy the “ability to repay” standard, provide an “off-ramp” option that allows consumers to extend the repayment period without incurring additional costs, include privacy protections over the data collected and reported by lenders, and permit states to adopt more restrictive laws governing payday and small-dollar loans.