University of Phoenix’s Wings Clipped with $191 Million Settlement over Allegedly Deceptive Marketing

For-Profit Colleges

University of Phoenix’s Wings Clipped with $191 Million Settlement Over Allegedly Deceptive Marketing

  • The Federal Trade Commission (“FTC”) reached a settlement with the University of Phoenix and its parent company, Apollo Education Group (collectively, “Phoenix”), to resolve allegations of deceptive advertising in violation of the FTC Act.
  • The FTC’s complaint alleged, among other things, that Phoenix attracted students with misleading advertisements that created the false impression that Phoenix worked with leading companies such as Microsoft, The American Red Cross, and AT&T to tailor its curriculum for job opportunities at these companies. The complaint also alleged that Phoenix’s deceptive marketing targeted active duty servicemembers, veterans, and military spouses, contributing to it becoming the largest recipient of Post-9/11 GI Bill funds since the program’s inception.
  • Under the terms of the settlement, Phoenix is enjoined from making misrepresentations about its relationships and job opportunities for graduates with any company, must cancel approximately $141 million in student debts owed, and pay $50 million to the FTC for consumer redress.

Consumer Protection

Washington Attorney General First “Honest Fees Initiative” Case Nets $6.1 Million Settlement With CenturyLink for Allegedly Inaccurate Disclosure of Fees 

  • Washington AG Bob Ferguson reached a settlement with multinational technology company CenturyLink, Inc. and related companies (collectively, “CenturyLink”), resolving allegations of hidden fees and other misleading marketing practices in violation of Washington’s Consumer Protection Act.
  • The complaint alleged that, among other things, CenturyLink failed to provide discounts promised by its sales agents to consumers and used advertising that did not disclose all of the fees a customer would actually pay.
  • Under the terms of the consent decree, CenturyLink is required to disclose the actual price of its services, including all charges and fees, in its advertising and sales materials; provide an order confirmation with a complete bill summary within three days after a consumer places an order; and honor any and all incentives and discounts promised to consumers, among other things. In addition, CenturyLink will pay $6.1 million, including $5.2 million to the state and $900,000 in direct refunds to Washington consumers.

Oregon Attorney General Stands Up for Women’s Health, Sues J&J over Allegedly Unsafe Surgical Mesh Medical Devices

  • Oregon AG Ellen Rosenblum sued Johnson & Johnson and its Ethicon subsidiaries (collectively “J&J”) for allegedly deceptive marketing of surgical mesh medical devices in violation of Oregon’s Unlawful Trade Practices Act.
  • The complaint alleges that J&J knowingly misled both healthcare providers and consumers by misrepresenting the risks and benefits of using its transvaginal surgical mesh products, and by failing to disclose the potential for permanent, debilitating complications associated with their use.
  • The complaint seeks, among other things, injunctive relief, restitution, civil penalties and attorney’s fees and costs.

 2020 AG Elections

Candidate Activity in Indiana and Washington Is Picking Up Ahead of Next Year’s Elections; Kentucky Attorney-General Elect to Take Office Early

  • Former mayor of Evansville, Indiana, Jonathan Weinzapfel, declared his candidacy for the Democratic nomination for Indiana AG in 2020. As previously reported, State Senator Karen Tallian is also seeking the Democratic nomination.
  • Former Pierce County Deputy Prosecutor, Matt Larkin, declared his candidacy for the Republican nomination for Washington AG in 2020, a position currently held by Democrat Bob Ferguson.
  • Democratic Kentucky AG and Governor-elect Andy Beshear announced that he will appoint Republican AG-elect Daniel Cameron to assume the role of AG on December 17, 2019, the date on which AG Beshear will assume the governorship. AG-elect Cameron’s full term will start on January 6, 2020.

Data Privacy & Security

FTC Raps Defunct Cambridge Analytica Over Its Deceptive Data Collection Practices

  • The FTC issued an opinion and order that the data analytics company Cambridge Analytica, LLC used deceptive practices to harvest personal information and that it falsely claimed that it participated in the EU-U.S. Privacy Shield, a stringent data privacy framework in violation of the FTC Act.
  • The FTC’s July 2019 administrative complaint alleged, among other things, that Cambridge Analytica’s app, GSR App, collected data from over 250,000 Facebook users and 50 to 65 million of their Facebook friends while users were falsely told that GSR App would not collect their names or other identifiable information.
  • The opinion, noting that Cambridge Analytica had failed to respond to the complaint, found the facts to be as stated in the complaint. The accompanying final order requires Cambridge Analytica to destroy or delete harvested consumer information and enjoins it from using or benefitting from this harvested information or misrepresenting its privacy and data practices—including its participation in the EU-U.S. Privacy Shield—among other things.

Climate Change

Exxon Prevails in New York Suit Testing Novel Theory of Climate Change-Related Liability

  • Exxon Mobil Corporation (“Exxon”) prevailed in a suit brought by New York AG Letitia James over allegations that Exxon violated the Martin Act by misleading investors about the risks associated with fossil fuel-related climate change.
  • Justice Barry Ostrager of the Supreme Court of the State of New York, New York County, found that the AG’s office failed to show that Exxon made any material omissions or misrepresentations that misled reasonable investors, noting that the AG’s office did not present any testimony to show that any shareholder had been misled. Justice Ostrager stressed, however, that his opinion was not “intended to absolve Exxon Mobil from responsibility for contributing to climate change in the production of its fossil fuel products,” and that this was a securities fraud case, not a climate change case.
  • AG James issued a statement that, “[f]or the first time in history, ExxonMobil was compelled to answer publicly for their internal decisions that misled investors. . . . Despite this decision, we will continue to fight to ensure companies are held responsible for actions that undermine and jeopardize the financial health and safety of Americans across our country, and we will continue to fight to end climate change.”
  • As previously reported, Bernie Nash, Co-Chair of Cozen O’Connor’s State Attorneys General practice, recently weighed in on this case in a Wall Street Journal article (paywall), in which he observed that “[p]hilosophically, no statute is limitless and you don’t know when you’ve exceeded it until the court says so.”

Antitrust

California Settles Another Auto Parts Price-Fixing Suit, Bringing the Total to 52

  • California AG Xavier Becerra reached a settlement with auto parts manufacturer DENSO Corporation and related companies (collectively, “DENSO”), resolving a lawsuit alleging illegal bid rigging in violation of the Clayton Act, the Sherman Act, and California’s unfair competition law.
  • The complaint alleged that DENSO was part of a large group of auto parts manufacturers that conspired to fix prices on a wide variety of automotive parts sold to domestic and foreign automobile manufacturer, and further conspired to suppress competition by rigging bids for auto parts, and that these actions resulted in increased prices for consumers.
  • Under the terms of the settlement, among other things, DENSO agreed to pay $4.25 million and to cooperate with the California AG’s office in its investigations against other auto part manufacturers relating to the auto parts covered by the DENSO settlement.
  • According to the AG’s office, this settlement is the 52nd settlement it has reached with auto parts manufacturers over allegations of bid rigging.
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