Consumer Financial Protection Bureau

CFPB Files Lawsuit Against Debt Relief Law Firms for Allegedly Misleading Customers into Paying Illegal Fees

• The Consumer Financial Protection Bureau (“CFPB”) filed a lawsuit against debt relief law firms Howard Law, P.C., The Williamson Law Firm, LLC, Williamson & Howard, LLP, and individuals Vincent Howard and Lawrence W. Williamson (collectively “Defendants”) for allegedly violating the Telemarketing Sales Rule (“TSR”) by misleading customers into paying illegal upfront fees.
• According to the complaint, the Defendants allegedly deceived customers into paying unlawful upfront fees for debt relief services by disguising the fees as bankruptcy-related services, among other practices.
• The lawsuit seeks, among other things, to have the Defendants provide full relief to all impacted consumers, civil penalties, legal costs, and to permanently enjoin the Defendants from future violations of the TSR.

CFPB Files Consent Orders Against Mortgage Company, Real Estate Brokers, and Mortgage Servicer for Alleged Illegal Kickback Scheme

• The CFPB entered into separate consent orders with mortgage company Prospect Mortgage, LLC (“Prospect”), real estate brokers RGC Services, Inc. (“RGC”) (d/b/a Re/Max Gold Coast Realtors) and Willamette Legacy, LLC (“Willamette Legacy”) (d/b/a Keller Williams Mid-Willamette), and mortgage servicer Planet Home Lending, LLC (“Planet Home Lending”) for allegedly paying and receiving illegal kickbacks in violation of the Real Estate Settlement Procedures Act (the “Act”) and the Fair Credit Reporting Act
• According to the CFPB, Prospect allegedly entered into various sham agreements with more than 100 real estate brokers, including RGC and Willamette Legacy, that allowed Prospect to pay illegal kickbacks for mortgage business referrals, and allegedly paid illegal fees to Planet Home Lending for referring customers who needed to refinance their homes.
• Under the terms of the consent orders, Prospect must pay a $3.5 million civil penalty, and RGC, Willamette Legacy, and Planet Home Lending must pay a combined $495,000 in consumer restitution, disgorgement, and penalties.

CFPB Issues Order Against Prepaid Card Company, Payment Processor for Allegedly Preventing Consumers from Accessing Account Funds

• The CFPB entered into a consent order with UniRush LLC (“UniRush”) and its payment processor, Mastercard International Incorporated (“Mastercard”) resolving allegations that they violated the Consumer Financial Protection Act of 2010 by preventing account holders from accessing the funds in their accounts.
• According to the CFPB, in time period before, during, and after UniRush switched its payment processing platforms to Mastercard, UniRush allegedly failed to properly transfer all accounts to Mastercard, delayed processing direct deposits for some consumers, provided consumers with inaccurate account information, and neglected to provide adequate customer service to consumers affected by these service issues.
• Under the terms of the consent order, UniRush and Mastercard must pay approximately $10 million in restitution, a $3 million civil penalty to the CFPB’s Civil Penalty Fund, and develop and implement a plan to prevent future service breakdowns.

Consumer Protection

New York Attorney General Sues Company for Allegedly Deceiving Consumers into Paying Unnecessary Fees

• New York AG Eric Schneiderman filed a lawsuit against STAR Exemption Advisor, YCA Corporation, and its owner Arie Gal (collectively “Defendants”) for allegedly deceiving thousands of new homeowners into paying unnecessary fees to enroll in the partial property tax exemption provided by the New York State School Tax Relief Program (“STAR Program”).
• According to AG Schneiderman, the Defendants allegedly sent mailers that misled consumers to believe they were sent by a government entity and convinced homeowners to pay unnecessary application fees to apply for the STAR Program.
• The lawsuit seeks full restitution to all impacted consumers, costs, damages, and to permanently enjoin the Defendants from marketing any STAR Program services within the state.

New York Attorney General Files Lawsuit Against Internet Service Provider for Allegedly Misleading Subscribers Regarding Internet Performance

• New York AG Schneiderman filed a lawsuit against Charter Communications Inc. and its subsidiary Spectrum Management Holdings LLC, (f/k/a Time Warner Cable, Inc.) (collectively “Spectrum-TWC”) for allegedly violating the state’s Executive and General Business Laws by misleading Internet subscribers regarding its internet speeds and performance.
• According to the lawsuit, Spectrum-TWC allegedly made false and misleading claims regarding the Internet speeds and wireless connectivity it provided to consumers and regarding the reliability of consumer access to online content.
• The lawsuit seeks, among other things, restitution for consumers, civil penalties, and to permanently enjoin the company from engaging in the allegedly illegal conduct.

Virginia Attorney General Settles with Online Lender for Allegedly Charging Consumers Illegal Interest Rates

• Virginia AG Mark Herring reached a settlement with CashCall, Inc. and its owner J. Paul Reddam (collectively “CashCall”) for allegedly violating the Virginia Consumer Protection Act by collecting illegal interest rates on online loans.
• According to the AG’s office, CashCall allegedly engaged in a "rent-a-tribe" scheme by using a South Dakota company with a purported Native American tribe affiliation as a façade for marketing and issuing its high-cost installment loans, which deceived consumers into paying interest rates on online loans that were as high as 230% annually, above the state’s usury law cap of 12% annually.
• Under the terms of the Stipulated Final Judgment and Order, CashCall will correct credit reporting for affected consumers, and will pay $9.4 million in restitution to consumers who were charged interest rates above the cap, $5.9 million in debt relief, and $100,000 in attorneys' fees and civil penalties.
• As previously reported, this settlement is the latest in a string of enforcement actions taken against CashCall by AGs.

Global Money Services Company Reaches Multistate Agreement to Strengthen Anti-Fraud Programs

• 51 AGs reached an agreement with the Western Union Company to resolve a multistate investigation that the company allowed third parties to use its service to defraud consumers.
• According to the AGs, third parties used Western Union to defraud consumers into sending money for fraudulent prize winnings, family emergency calls, advance-fee loans, online dating, and other scams.
• Under the terms of the multistate settlement, Western Union agreed to institute a comprehensive anti-fraud program to detect and prevent fraudulent uses of its money services and pay $5 million to the states for investigation costs and fees.
• As previously reported, 50 AGs reached a similar settlement with Moneygram Payment Systems in February 2016. Last month, Western Union reached a $586 million settlement with the Federal Trade Commission to resolve consumer fraud and money laundering allegations, which includes monies to refund victims of fraud-induced wire transfers.

Data Privacy

New York Attorney General Reaches Settlement with Computer Manufacturer for Alleged Data Breach

• New York AG Schneiderman reached a settlement with computer manufacturer Acer Service Corporation (“Acer”) for allegedly failing to properly safeguard consumers’ personal and credit card information.
• According to AG Schneiderman, Acer’s website contained numerous vulnerabilities that resulted in a data breach which exposed more than 35,000 consumers’ personal and credit card information for a full calendar year.
• Under the terms of the settlement, Acer agreed to, among other things, pay $115,000 in penalties, improve its data security practices, and maintain data security standards required by the credit card industry.

For-Profit Colleges

New York Attorney General Settles with For-Profit College Over Allegedly Misleading Advertisements Regarding Post-Graduation Outcomes

• New York AG Schneiderman reached a settlement with DeVry Education Group Inc. and related entities (collectively, “DeVry”) to resolve allegations that the for-profit education company violated state consumer protection laws by misleading students regarding outcomes after graduation from the company’s programs.
• According to AG Schneiderman, DeVry allegedly misled consumers by claiming that ninety percent of its graduates actively seeking employment were able to find jobs in their field within six months of graduation and that its bachelor’s degree program graduates earned fifteen percent higher incomes one year after graduation than graduates from other colleges or universities, when the actual statistics were much lower.
• Under the terms of the settlement, DeVry University must, among other things, pay $2.25 million in consumer restitution, $500,000 in penalties, fees and costs, and correct its representations regarding employment and salary outcomes.
• As previously reported, DeVry reached a settlement with the FTC in late 2016 regarding allegedly misleading advertisements concerning employment and job prospects.

State v. Federal Government

Washington AG Files Lawsuit, 4 AGs Intervene in Pending Actions to Oppose President Trump’s Immigration Executive Order

• Washington AG Bob Ferguson filed a lawsuit against the Trump Administration alleging that President Trump’s Executive Order on immigration titled “Protecting the Nation From Foreign Terrorist Entry Into the United States” (the “Order”) is unconstitutional. Minnesota AG Lori Swanson filed a motion to join AG Ferguson’s lawsuit, and Massachusetts AG Maura Healey, New York AG Schneiderman, and Virginia AG Herring filed motions to intervene in other pending cases challenging the Order.
• According to AG Ferguson’s complaint, the Order, which indefinitely bars Syrian refugees from entering the U.S., suspends all refugee admissions for 120 days, and blocks citizens and refugees of seven Muslim-majority countries from entering the U.S. for 90 days, is unconstitutional because it violates the Equal Protection, Establishment, and Due Process clauses of the U.S. Constitution and contravenes the Immigration and Nationality Act.
• In related news, 16 Democratic AGs issued a joint statement opposing the Order.