Vacationers Beware: Timeshare Exit Companies May Be Scammers, not Saviors

Consumer Protection

Vacationers Beware: Timeshare Exit Companies May Be Scammers, not Saviors

  • Two AGs took aim at timeshare exit companies recently over allegations of deceptive business practices relating to purported offers to assist consumers with ending their timeshare contracts. Missouri AG Eric Schmitt sued Martin Management Group LLC and a related individual (collectively “Martin Management”) for alleged violations of Missouri’s Merchandising Practices Act, and Washington AG Bob Ferguson sued Reed Hein & Associates, LLC, d/b/a Timeshare Exit Team, and related entities (collectively “Reed Hein”) for alleged violations of Washington’s Consumer Protection Act and Credit Services Organization Act.
  • In both the complaint against Martin Management and the complaint against Reed Hein, the AGs alleged that, among other things, defendants solicited large fees from consumers, including repeatedly requesting additional fees for purported costs, while never delivering promised services; advised owners to stop paying mortgages and property fees, resulting in substantial financial harm and additional debt for consumers; and did not honor their promises to refund consumers’ money if the companies were unsuccessful in helping the consumers obtain a release from their timeshare contracts.
  • The complaint against Martin Management seeks injunctive relief, restitution, civil penalties, and the costs associated with the investigation and prosecution of the case. The complaint against Reed Hein seeks preliminary and permanent injunctive relief, civil penalties, restitution, and costs.

Alternative Retail Energy Provider Loses Spark: Sued for Allegedly Defrauding Illinois Consumers Out of $77 Million

  • Illinois AG Kwame Raoul sued alternative retail energy supplier Liberty Power Holdings LLC (“Liberty”) for allegedly defrauding consumers in connection with its alternative energy plans in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Telephone Solicitations Act.
  • The complaint alleges that Liberty’s salespeople promised significant savings and protection from future increases in electricity rates to entice customers into lengthy contracts that locked customers into much higher rates, among other things.
  • The complaint seeks preliminary and permanent injunctive relief, restitution of more than $77 million, revocation of Liberty’s Certificate of Authority to operate as an alternative energy provider in Illinois, civil penalties, and investigation and litigation costs.

Bankruptcy

Bipartisan Group of 42 AGs Supports Congress’ Effort to Stop Companies from Forum-Shopping When Filing for Bankruptcy

  • A bipartisan coalition of 42 AGs led by Maryland AG Brian Frosh, Ohio AG David Yost, Texas AG Ken Paxton, and Washington AG Bob Ferguson, sent a letter to Congress in support of the Bankruptcy Venue Reform Act of 2019, H.R. 4421.
  • R. 4421 is a bipartisan bill that proponents assert would prevent corporations from “forum-shopping” in bankruptcy proceedings by requiring businesses to file bankruptcy only in jurisdictions in which either their principal assets or principal place of business are located, among other things.
  • In the letter, the AGs argue that the bill would strengthen the integrity and fairness of the bankruptcy system, reduce undue burdens on consumers participating in bankruptcy proceedings, and level the playing field for AGs to assert their states’ interests and enforce consumer protection laws. Because of the number of signatories, the letter articulates an official position adopted by the National Association of Attorneys General (“NAAG”) and was sent on NAAG letterhead.

Pharmaceuticals

Opioid Giant Mallinckrodt Reportedly Agrees to $1.6 Billion Global Settlement Framework

  • 47 AGs and thousands of municipalities reportedly reached a global settlement framework with opioid manufacturer Mallinckrodt PLC and related entities (collectively, “Mallinckrodt”) to resolve allegations that Mallinckrodt engaged in deceptive business and marketing practices, misrepresented the risks and marketed off-label uses of prescription opioids, and paid illegal kickbacks.
  • According to California AG Xavier Becerra’s office, under the terms of the settlement, Mallinckrodt will be enjoined from marketing its opioid products and will be required to create systems that would prevent the diversion of opioids from proper supply channels. Mallinckrodt will also pay $1.6 billion to cover the costs of opioid addiction treatment and related efforts, with the potential for additional payments in the future, among other things.
  • The proposed settlement will reportedly also award plaintiffs with warrants for 20 percent of the company’s outstanding shares, and Mallinckrodt’s Ireland-based parent company will not file for bankruptcy.

Data Privacy & Security

Free Gifts, but Strings Attached: Google Allegedly Collects Information about Minor Users of Chromebooks Donated to School Districts

  • New Mexico AG Hector Balderas sued Google, LLC for allegedly collecting the personal information of minors in violation of the federal Children’s Online Privacy Protection Act (“COPPA”) and New Mexico’s Unfair Practices Act.
  • According to the complaint, Google allegedly collects the personal information of minors—including geolocation, websites visited, search terms used, and contact lists—without their parents’ consent when minors use Google’s G Suite, which Google provides on the Chromebooks supplied to New Mexico school districts at no cost.
  • The complaint seeks injunctive relief, restitution, civil penalties, and attorneys’ fees and costs.
  • The New Mexico action follows a separate, $170 million COPPA settlement, which we reported on in September 2019, between Google and the New York AG and FTC over allegations that YouTube had specifically tracked and served targeted advertisements to users watching videos directed to children under the age of 13.
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