The State AG Report Weekly Update October 19, 2017

AG Elections

Republican Frank White Announces Bid for Florida Attorney General

  • Republican state Representative Frank White announced his candidacy in the open 2018 race for Florida AG. He is also the general counsel and chief financial officer for a group of auto dealerships.
  • White joins two fellow Republicans—Ashley Moody and state Representative Jay Fant—seeking the Republican nomination for AG. Ryan Torrens is the sole Democrat to announce his candidacy to date.
  • Incumbent Florida AG Pam Bondi is term-limited and unable to seek re-election in 2018.

Consumer Protection

Florida Attorney General Sues Real Estate Companies for Allegedly Targeting Vulnerable Homeowners

  • Florida AG Pam Bondi filed a lawsuit against real estate and development company HOA Problem Solutions, Inc. and its associates (collectively “HOAPS”) for allegedly violating the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).
  • According to the complaint, HOAPS, among other things, allegedly convinced homeowners facing foreclosure to sell their property for a fraction of the fair market value and then purported to take over the mortgage, yet it neglected to properly execute the sale, leaving the seller responsible for the mortgage and without ownership of the property.
  • The lawsuit seeks to permanently enjoin HOAPS from buying, selling, or renting residential real estate, impose civil penalties of $10,000 to $15,000 for each FDUTPA violation, and provide restitution to affected consumers.

New Jersey Attorney General Settles with Retailer Over Alleged Failure to Disclose Prices and Policies

  • New Jersey AG Christopher Porrino and the New Jersey Division of Consumer Affairs reached a settlement with cell phone and accessories retailer Spring Communications for allegedly violating the state’s Merchandise Pricing Statute and the Refund Policy Disclosure Act.
  • According to the AG’s Office, Spring Communications misled consumers by failing to post selling prices on more than 1,000 items in 24 stores and by neglecting to post its refund policies in eight stores throughout New Jersey.
  • Under the terms of the consent judgment, Spring Communications must pay $60,000, refrain from engaging in any unfair or deceptive practices, comply with specific pricing display terms, and visibly post its refund policy in specified locations in all of its stores.

Data Privacy

Vermont Attorney General Reaches Settlement with Business Technology Support Company Over Alleged Data Breach

  • Vermont AG TJ Donovan reached a settlement with technology and business-support services company SAManage USA, Inc. (“SAManage”) for allegedly violating the state’s Consumer Protection Act and Security Breach Notice Act.
  • According to the AG’s office, SAManage allegedly did not notify its business associate WEX Health Inc. about a security breach of consumers’ personally identifiable information (i.e., social security numbers) after its technical support ticketing system allowed a spreadsheet containing 660 social security numbers to be viewed online without authentication.
  • Under the terms of the settlement, SAManage must implement a comprehensive information security program within 60 days, take special measures to secure network connections while transmitting personally identifiable information, enter a Legal Compliance Program to ensure it is complying with state law, and pay a civil penalty of $264,000.

Education

FTC, 12 AGs Announce Nationwide Crackdown on Student Loan Debt Relief Scams

  • 12 AGs and the Federal Trade Commission (“FTC”) announced the launch of “Operation Game of Loans,” a coordinated initiative among federal and state authorities to target deceptive student loan debt relief scams.
  • According to the FTC, the initiative seeks to prevent scammers from engaging in unlawful conduct by charging consumers upfront fees, falsely promising to help reduce or forgive student loan debt burdens, or pretending to be affiliated with government or loan servicers.
  • To date, “Operation Game of Loans” includes seven FTC actions and 29 separate state AG actions.

For-Profit Colleges

New York Attorney General Announces Settlement with For-Profit Career College for Allegedly Operating Without a License, Misrepresenting Employment Prospects

  • New York AG Eric Schneiderman settled with New York City-based Flatiron Computer Coding School (“Flatiron”), a for-profit career school that offers web applications and computer coding classes, for alleged consumer protection and state licensing law violations.
  • According to the AG’s office, Flatiron failed to properly obtain a license from the New York State Education Department—which requires non-degree granting career schools to use an approved curriculum, employ licensed directors and teachers, and demonstrate financial viability—and allegedly deceived prospective students by overstating post-graduation employment successes and salary potential on its website.
  • The settlement requires Flatiron to pay $375,000 in restitution to students, comply with licensing laws going forward, and take steps to better disclose post-graduate employment and salary statistics in marketing materials.

State AGs in the News

President Trump Nominates NAAG Executive Director James McPherson to be General Counsel of the Army

  • President Trump has nominated James E. McPherson to be General Counsel of the Army, the chief legal officer to the U.S. Department of the Army.
  • McPherson is currently the Executive Director of the National Association of Attorneys General (“NAAG”).
  • McPherson is a retired two-star Rear Admiral in the U.S. Navy, whose distinguished military career included appointment and confirmation as the U.S. Navy’s 39th Judge Advocate General. Prior to joining NAAG, McPherson served as the general counsel for the Department of Defense Counterintelligence Field Activity.

Attorneys General Divide Along Party Lines in Opposition, Support for Congressional Proposal to Curb Rulemaking Authority of Federal Agencies

  • Last week 13 Republican AGs, led by West Virginia AG Patrick Morrisey, sent a letter to Senate Majority Leader Mitch McConnell urging Congress to support the Regulatory Accountability Act (“RAA”), a federal bill amending procedural requirements for executive agency action under the Administrative Procedure Act.
  • According to the letter, the RAA would create structural checks on executive agencies by, among other things, requiring formal rulemaking hearings in certain circumstances, clarifying existing law that requires agencies to consider cost-effectiveness when rulemaking, and reducing agency reliance on informal guidance documents.
  • In June, 12 Democratic AGs, led by New York AG Schneiderman, sent a letter to U.S. Senate leadership urging them to reject the RAA, which they assert “adds needless, unworkable, and costly steps to an already extensive regulatory process, and opens up multiple new doors to endless litigation.”

State v. Federal

19 Democratic AGs Sue Trump Administration to Protect Affordable Care Act Payments to Insurers

  • 19 Democratic AGs filed a lawsuit against the Trump Administration following its announcement that federal cost-sharing reduction (“CSR”) subsidies mandated by the Affordable Care Act (“ACA”) would be discontinued immediately.
  • CSR payments are subsidies paid to insurance companies by the federal government in order to reduce out-of-pocket costs for consumers. The ACA requires the Secretary of the Department of Health and Human Services and Secretary of the Department of Treasury to make monthly CSR payments to insurance companies through a permanent appropriation.
  • The complaint alleges that the Administration’s discontinuation of CSR payments “directly subverts the ACA,” and injures the plaintiff states, their residents, and the national health care system. The AGs seek declaratory and injunctive relief to compel the Trump Administration to resume making CSR reimbursement payments.
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