The State AG Report

Editor-in-Chief: Christopher Allen
Contributing Editors: Hannah Land, Keturah Taylor, Emily Yu

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Election News

Election News

The State AG Report Weekly Update August 4, 2016

2016 AG Elections

Missouri and Washington Hold Their Primaries

  • Missouri and Washington held their primary elections for Attorney General on Tuesday, August 2.
  • In Missouri’s Republican AG primary, law professor and former U.S. Supreme Court clerk Josh Hawley defeated State Senator Kurt Schaefer. On the Democratic side, former Cass County Prosecutor Teresa Hensley defeated St. Louis County Assessor and former State Representative Jake Zimmerman. In addition, incumbent Democratic AG Chris Koster secured the Democratic nomination for Governor against four other candidates. AG Koster will face former U.S. Navy SEAL and Republican candidate Eric Greitens in the general election.
  • In Washington, incumbent AG Democrat Bob Ferguson and Libertarian Joshua Trumbull received their respective party’s nomination without opposition. There is no Republican AG candidate.
  • The next AG primary will be Vermont on August 9. To find additional updates about State AG Elections, please click here.

Breaking News

New Jersey Senate Confirms New Attorney General

  • On Monday, August 1, the New Jersey Senate voted 37-0 to confirm Governor Chris Christie’s nomination for Attorney General, Christopher Porrino. Governor Christie appointed Porrino as acting Attorney General on June 21, 2016 following the departure of Robert Lougy, who was nominated for a judgeship with the Superior Court in Essex County.
  • AG Porrino is the first New Jersey Attorney General nominee to be confirmed by the state Senate since 2013.

Charities

Pennsylvania Attorney General Settles with Charity Over Alleged Misuse of Charitable Assets

  • Pennsylvania AG Kathleen Kane reached a settlement with the Hershey Trust Company and the Milton Hershey School to resolve allegations the charity misused charitable assets.
  • The Pennsylvania AG’s office began its investigation of Hershey Trust Company following allegations that multiple board members had conflicts of interests and were overcompensated. The AG’s office reached two prior reform agreements with the two entities in 2003 and 2013.
  • Under the terms of the settlement, the Hershey Trust Company must, among other things, limit compensation for its director and board members, notify and provide résumés to the AG’s office of any new managers or directors, and notify the AG’s office of any real estate transactions over $250,000.

Consumer Financial Protection Bureau

CFPB Proposes Debt Collection Market Changes

  • The Consumer Financial Protection Bureau (“CFPB”) announced its proposal to reexamine the debt collection market, which is estimated to include more than 6,000 firms in the United States, and protect consumers from abusive third-party debt collectors.
  • The proposal aims to increase accuracy in the third-party debt collection market by, among other things, requiring third-party collectors to confirm they have the proper debt information prior to contacting consumers, limiting the number of times a collector may contact consumers to six attempts per week, and simplifying the debt dispute process by requiring collectors to include a “tear-off” form as part of collection notices.
  • As the next step in the process, a CFPB Small Business Review Panel will convene and gather feedback from smaller members of the industry, the public, consumer groups, and other stakeholders.

CFPB Proposes Updates to “Know Before You Owe” Mortgage Disclosure

  • The CFPB proposed updates to federal mortgage disclosure requirements under the Real Estate Procedures Act and the Truth in Lending Act, referred to as the “Know Before You Owe” mortgage disclosure rule, which aids consumers in understanding loan and mortgage options to avoid unknown costs during home purchase closings.
  • The proposed amendments will, among other things, formalize guidance issued by the CFPB, including creating parallel tolerance provisions in relation to the total amount of money paid over the life of a mortgage, increasing the number of housing assistance loans qualifying for a partial exemption from disclosure requirements, clarifying that creditors should provide separate mortgage disclosure forms to consumers and sellers, and extending the rule’s coverage to include all cooperative units.
  • The CFPB will accept public and stakeholder comments until October 18, 2016, before issuing final regulations.

Consumer Protection

Washington Attorney General Files Suit Against Cable Company Over Misleading Claims

  • Washington AG Bob Ferguson filed a lawsuit against Comcast Corporation (“Comcast”) over allegations that the company violated the Washington Consumer Protection Act by misleading consumers.
  • According to the AG’s complaint, Comcast allegedly, among other things, offered a Service Protection Plan with limited uses and applications, charged service fees when the company guaranteed service visits would be free of charge, and carried out credit checks after customers had paid a deposit to avoid a credit check.
  • The complaint seeks a total settlement of more than $100 million, including a restitution payment of $73 million, civil penalties in the amount of $2,000 per violation of the Consumer Protection Act, and the removal of improper credit checks on consumers’ credit reports.

New York Attorney General Reaches Agreement with Membership-Based Rental Car Company Over Alleged Improper Damage Fees

  • New York AG Eric Schneiderman reached a settlement with Zipcar, Inc., to resolve allegations that fees charged by the membership-based rental car company violated state consumer protection laws.
  • According to the AG’s office, Zipcar allegedly charged consumers damage fees for rental vehicles without providing consumers an opportunity to dispute the fees and refused to refund consumers who disputed damage fees on their credit cards.
  • Under the terms of the settlement, Zipcar must, among other things, refund consumers who disputed damage fees and pay $35,000 in fees and cost to AG Schneiderman’s office.

Data Privacy

FTC Issues Opinion and Final Order Against Medical Testing Company Over Alleged Failure to Protect Consumer Medical and Personal Information

  • The Federal Trade Commission (“FTC”) issued an Opinion and Final Order against a medical testing laboratory LabMD, Inc., finding that the company violated the Federal Trade Commission Act (“FTC Act”) by failing to take steps to reasonably protect the consumers’ medical and personal data.
  • According to the complaint, LabMD allegedly failed to protect consumers medical and personal information by neglecting to use intrusion detection systems or monitor file integrity, as well as by failing to provide employee training on data security practices.
  • Under the terms of the Opinion and Final Order, LabMD must, among other things, notify individuals affected by the data breach and establish a comprehensive data privacy and security program. LabMD has 60 days to file a petition with a U.S. Court of Appeals for review of the Order.

Financial Industry

Massachusetts Attorney General, SEC, DOJ, and DOL Settle with Bank Over Allegedly Misleading Consumers

  • Massachusetts AG Maura Healey, the U.S. Securities and Exchange Commission (“SEC”), the U.S. Department of Justice (“DOJ”), and the U.S. Department of Labor (“DOL”) announced a settlement with custody bank State Street Bank and Trust Company (“State Street”) to resolve allegations the company misled consumers who utilized their indirect foreign currency exchange services. State Street recently settled an undisclosed number of class action lawsuits arising from similar allegations.
  • According to the AG’s office, State Street allegedly led clients to believe they were receiving competitive rates with foreign exchange transactions when in fact they were being charged higher rates purportedly to maximize State Street profits.
  • Under the terms of the settlement, State Street must pay a total of $382.4 million, including $500,000 to Massachusetts, $75 million in disgorgement to the SEC, and $155 million in civil penalties to DOJ.

For-Profit Colleges

18 Attorneys General Submit Comments Regarding Student Loan Debt Relief

  • 18 AGs filed comments with the U.S. Department of Education (“DoEd”), urging the agency to expand its proposed borrower defense-to-repayment rules for students harmed by for-profit colleges in violation of state law.
  • The AGs expressed support for some of the proposed rules addressing concerns surrounding individual eligibility and the ways defense-to-repayment rules should be applied, but urged DoEd that the proposed rules fail to address other concerns, including a lack of misconduct categories that qualify as a defense-to-repayment.
  • The AGs requested that DoEd’s final rulemaking create a formal process for AGs to initiate the defense-to-repayment process and remove the requirement that students separately show they are entitled to loan forgiveness following the establishment of a school’s law violations, among other things.