AGs Urge CARES Act Extension | iPhone Throttling Settlement | Consolidation in Web Listings Service Market

Cozen In The News

Cozen O’Connor Member Jerry Kilgore Recognized for Contributions to NAAG

  • Earlier this week, former Virginia Attorney General and Cozen O’Connor member, Jerry Kilgore, was recognized amongst his peers during the Society of Attorneys General Emeritus (“SAGE”) Business Meeting as this year’s Francis X. Bellotti Award recipient.
  • The Francis X. Bellotti Award is given each year to a former attorney general who has served SAGE and worked diligently to further the vision and mission of the National Association of Attorneys General (“NAAG”).
  • Jerry was selected as this year’s recipient for his work on the NAAG Executive Committee during his tenure as Virginia AG from 2002 to 2005. In addition, he has held leadership roles in a number of NAAG groups, including the Prescription Drug Abuse Task Force, the Violence Against Women Committee, the Executive Working Group with the Federal Trade Commission (“FTC”), and the Finance Committee.
  • More information about SAGE, the award, and past recipients can be found here.

COVID-19

NAAG Urges Congress to Extend CARES Act Funding Deadline

  • NAAG sent a letter signed by a bipartisan group of 49 AGs to congressional leaders urging them to extend the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act funding through the Coronavirus Relief Fund (“CRF”) until the end of 2021.
  • The letter notes that while one of the restrictions placed on the CRF is that moneys received from the Fund be used for expenses incurred before December 30, 2020, the economic crisis engendered by the COVID-19 pandemic is ongoing and will continue to challenge communities well into 2021.
  • The letter requests an amendment to allow spending of CRF funds for expenses incurred at least until December 31, 2021.

Boston Sports Clubs Sued for Charging Membership Fees During Pandemic Shutdown

  • Massachusetts AG Maura Healey sued Town Sports International, LLC (“TSI”), the parent company of Boston Sports Clubs, over allegations that it misled consumers about their rights to cancel or freeze their memberships in view of the clubs’ indefinite pandemic-related closure, thus violating the Massachusetts Health Club Statute and the Massachusetts Consumer Protection Act.
  • The complaint alleges that, in response to a demand letter from the AG’s office, TSI had agreed to freeze memberships at no additional cost, stop billing members while their gyms are closed, and allow members to cancel their contracts without paying a fee, yet TSI failed to honor cancellation requests, refused to process new cancellation requests without a cancellation fee, and started billing members without consent once its clubs resumed partial operations.
  • The complaint seeks injunctive relief, civil penalties, and attorneys’ fees and costs.
  • As previously reported, the AGs of New York, Pennsylvania, and the District of Columbia also secured commitments from TSI to freeze accounts and honor cancellation accounts for members in their respective jurisdictions in response to demand letters.

Antitrust

FTC Sues to Stop Acquisition of Online Listing Service by Competitor

  • The FTC filed an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition of internet listing services (“ILS”) provider RentPath Holdings, Inc. (“RentPath”) by competitor CoStar Group Inc. (“CoStar”) over allegations that the proposed $587.5 million acquisition would significantly reduce competition for ILSs for large apartment complexes in 49 metropolitan areas across the United States in violation of the FTC Act and the Clayton Act.
  • The complaint alleges that 70% of U.S. apartment complexes with 200 or more units and approximately 50% of apartment buildings with 100 to 199 units advertise on ILSs operated by either RentPath (including Rent.com and ApartmentGuide.com) or CoStar (including Apartments.com, ApartmentFinder.com, and ForRent.com), and that the proposed acquisition would eliminate price and quality competition that benefits both renters and management companies because RentPath and CoStar are each other’s fiercest competitors, often targeting each other with sales campaigns and discounts to win and retain customers.
  • According to the complaint, the FTC may order relief such as divestiture, reconstitution, or a ban on the combination of RentPath’s and CoStar’s businesses in specific markets, among other things. 

Consumer Financial Protection Bureau

CFPB Sues Debt-Settlement Company for Allegedly Fleecing Consumers Through Illegal Fees

  • The Consumer Financial Protection Bureau (“CFPB”) sued debt-settlement company DMB Financial LLC for allegedly engaging in abusive and deceptive practices that harmed the customers of its debt-settlement programs in violation of the Telemarketing Sales Rule and the Dodd–Frank Wall Street Reform and Consumer Protection Act.
  • The complaint alleges that, among other things, DMB Financial charged fees before it performed its debt-settlement services, collected post-settlement fees based on increased debt amounts rather than the amount of the debt at the time of enrollment in its program, and misrepresented to consumers that it would not charge a fee prior to debt settlement. The complaint further alleges that DMB Financial failed to disclose to consumers the details of when it would make a settlement offer or how much of their outstanding debt consumers had to accumulate in a DMB Financial-controlled bank account before it would make a settlement offer.
  • The complaint seeks injunctive relief, redress, disgorgement, civil money penalties, and attorneys’ costs.

Consumer Protection

Apple Agrees to $113 Million Multistate Settlement over Slower Phone Speeds

  • A bipartisan group of 34 AGs, led by Arizona AG Mark Brnovich, Arkansas AG Leslie Rutledge, and Indiana AG Curtis Hill, reached a settlement with Apple Inc. to resolve allegations that Apple throttled iPhone speeds to mask battery issues, thereby prompting users to purchase new devices in violation of state consumer protection laws.
  • The state complaints alleged that Apple discovered that aging batteries on certain iPhone models sent spikes to the phone’s processor that caused unexpected shutdowns of the device, and that instead of informing consumers about this flaw, Apple installed software on these iPhone models to reduce chip speed to reduce phone performance and made it difficult for consumers to replace the batteries.
  • Under the terms of the settlement, Apple will pay $113 million to the states; must provide truthful information to consumers about iPhone power management and battery health on its website, iPhone user interface, and update notes; and must educate staff on this information. 

Financial Industry

NY Modernizes Rules Relating to Securities Registration and Filing

  • New York AG Letitia James announced the adoption of two final rules related to securities registration and filing with the state Investor Protection Bureau (“IPB”) to better conform registration and filing processes with the federal securities regulatory regime.
  • The revisions to Part 10 of Chapter II, Title 13 of the Official Compilation of Codes, Rules and Regulations of the State of New York (“NYCRR”) amend regulations to require certain notice filings for federal “covered securities” being sold in New York and that such filings be made through the North American Association of Securities Administrators’ electronic filing depository system. These filings are mandatory effective December 2, 2020.
  • The revisions to Part 11 of Chapter II, Title 13 of the NYCRR will require the registration of investment adviser representatives (“IARs”) in New York through the Central Registration Depository/Investment Adviser Registration Depository. Unless qualified for a waiver, IARs will be required to pass an exam and register with the state. This rule goes into effect on February 1, 2021, but IARs that are currently engaged in business covered by the new regulations will have until December 2, 2021, to comply with these regulations. The revisions to this rule also require that IARs take reasonable steps to verify the “accredited investor” and “qualified client” status of clients so designated.
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