The State AG Report Weekly Update April 6, 2017

Consumer Protection

Delaware and Massachusetts Attorneys General Settle with Auto Lender Over Subprime Loans

  • Delaware AG Matt Denn and Massachusetts AG Maura Healey reached separate settlements with finance and auto loan company Santander Consumer USA Holdings, Inc. (“Santander”) for allegedly facilitating and purchasing subprime loans from auto dealers in violation of each state’s respective consumer protections laws.
  • According to the AGs’ offices, Santander allegedly funded auto loans for consumers that could not afford the loans and predicted that a large portion of the loans would default based on allegedly incorrect and inflated applications. Santander allegedly continued to purchase these subprime loans from dealers, package them, and sell the debt to third parties.
  • Under the terms of the settlements with AG Denn and AG Healey, Santander will pay $2.875 million and $16 million, respectively, in relief to impacted consumers. Santander will also pay over $1 million to the Delaware Consumer Protection Fund and $6 million to the state of Massachusetts.
  • In November 2015, AG Healey reached a settlement with Santander for allegedly charging interest rates on its subprime auto loans above the allowable amount under state usury laws.

Data Privacy

Virginia Legislature Adds Employer Payroll Incident Provision to Data Breach Law

  • The Virginia General Assembly recently expanded data breach notification laws to require employers and payroll service providers to notify the Virginia AG if employee tax information is breached.
  • According to the amendment, employers are required to alert the AG if unencrypted data is breached, exposing employees’ taxpayer identification numbers and income tax withholding, information commonly found on W2s. Current provisions already trigger data breach notification obligations if first and last names in combination with social security, driver’s license, and financial account numbers are exposed.
  • According to media reports, this requirement is the first of its kind and will be enforced starting July 1, 2017.

Environment

10 States Settle with Car Manufacturer Over Alleged Emissions Scandal

  • Connecticut, Delaware, Maine, Massachusetts, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington AGs reached a settlement with car manufacturers Volkswagen AG, Audi AG, Porsche AG, and its related entities (collectively, “the VW Group”) for allegedly manipulating vehicle emission measurements and violating state auto emission laws.
  • According to the AGs, the VW Group allegedly sold diesel vehicles equipped with “defeat device” software intended to circumvent applicable emissions standards for certain air pollutants, actively concealed the existence of the defeat device from regulators and the public, and misrepresented their vehicles as environmentally-friendly and compliant with federal and state emissions standards.
  • Under the terms of the settlements, the VW Group will pay $157 million in penalties across 10 states, using these funds to offset the pollution caused by the alleged defeat device software and subsequent emissions.
  • This settlement marks the first time these states have secured environmental penalties from a car manufacturer under their own state auto emissions laws.

Wisconsin Attorney General Settles with Manufacturing Conglomerate Over Pollution Allegations

  • Wisconsin AG Brad Schimel reached a settlement with manufacturing conglomerate 3M over pollution allegations in connection with the maintenance of two plants in Wausau, Wisconsin.
  • According to news reports, 3M allegedly violated federal air pollution regulations in 2014 and 2015 at two facilities in Wausau when it allegedly failed to repair the facilities’ ‘bag houses’—air pollution devices that act as a filter before pollutants are released into the air.
  • Under the terms of the agreement, 3M will be required to spend an estimated $655,000 by August 2018 on improvements to control air pollution in addition to repairs, maintenance, and upgrades already made.

For-Profit Colleges

Court Approves New York Attorney General’s Settlement with For-Profit College Over Alleged Misrepresentations

  • Federal Judge Gonzalo Curiel approved New York AG Eric Schneiderman’s settlement with The Trump Entrepreneur Institute, f/k/a Trump University LLC, its president, and its owner (collectively “Trump University”) to resolve allegations that they violated the New York State Education Law and federal and state consumer protection laws.
  • According to AG Schneiderman’s complaint, which was filed in 2013, Trump University allegedly claimed in major newspaper advertisements and direct mail solicitations that consumers who enrolled would learn “from Donald Trump’s handpicked instructors a systematic method for investing in real estate that anyone can use” when Trump did not actually pick any instructors or plan any curricula for these courses. Trump University also, among other things, allegedly lacked the charter required to legally call itself a University and failed to change its name until 2010 after being notified of its violation in 2005.
  • Under the terms of the settlement, Trump University must pay a total of $25 million, including $1 million in penalties to the state, to settle AG Schneiderman’s lawsuit and two class action lawsuits.

Health Care

Massachusetts Attorney General Settles with Digital Advertising Company Over Health Privacy Concerns

  • Massachusetts AG Healey reached a settlement with digital advertising company Copley Advertising, LLC (“Copley”) and its owner over allegations that it uses geofencing to target ads at “abortion-minded women” sitting in waiting rooms at health clinics, a violation of state consumer protection laws.
  • According to the AG’s office, Copley used geofencing—a practice that allows companies to direct advertisements based on a user’s location—to send targeted ads on abortion alternatives or pregnancy support specialists to individuals at or near reproductive health centers and methadone clinics in Columbus, New York City, Pittsburgh, Richmond, and St. Louis. Such practice in Massachusetts, according to AG Healey, would violate consumer protection laws by tracking a consumer’s location and targeting without the consumer’s consent.
  • Under the terms of the Assurance of Discontinuance, Copley will not use geofencing to infer the health status, medical condition, or medical treatment of any individual in Massachusetts.

Massachusetts Attorney General Settles with Health Insurance Company over Alleged Deceptive and Unlawful Sales Practices

  • Massachusetts AG Healey reached a settlement with health insurance provider United Life Insurance Company (“ULIC”) over allegations it violated state law by selling unauthorized health insurance and deceiving consumers regarding coverage.
  • According to the AG’s office, ULIC allegedly sold insurance without authorization by filing with the state, claimed its insurance included services it did not and, among other things, excluded coverage based on health status or preexisting conditions in violation of state law.
  • Under the terms of the consent judgement, ULIC must pay $2.35 million in consumer relief and $450,000 in civil penalties.

State AGs in the News

Gordon MacDonald Confirmed as New Hampshire Attorney General

  • The State of New Hampshire Executive Council confirmed Gordon MacDonald as Attorney General on April 5, 2017.
  • Republican Governor Chris Sununu nominated AG MacDonald last month to replace Joseph Foster who resigned after four years of service under Democratic Governor Maggie Hassan.
  • Prior to his appointment, AG MacDonald was a partner at Nixon Peabody LLP’s Manchester office, where he was a member of the Commercial Litigation Practice Group. Before entering private practice, AG MacDonald worked for former U.S. Senator Gordon Humphrey as chief of staff, legislative director, and press secretary. After graduating from Cornell Law School, AG MacDonald was a law clerk to Judge Norman H. Stahl of the United States Court of Appeals for the First Circuit.
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