Digest 02.06.2020: Bank in CFPB Crosshairs for Allegedly Failing to Properly Manage and Respond to Customer Credit Card Disputes

Cozen in the News

Cozen O’Connor’s State Attorneys General Practice Discusses Current Trends in AG Enforcement Priorities and Activism

  • Christopher Allen, Ann-Marie Luciano, and Bryan Mosca of Cozen O’Connor’s State Attorneys General Practice published an article in Bloomberg Law in which they discussed trends in AG enforcement priorities, activism, and the expanding public and political profile that AGs continue to command.
  • The article identifies antitrust, data privacy and security, public nuisance law, and disruptive technologies as areas of continuing AG interest. It also examines the impact of rising AG political activism on enforcement priorities and on collaboration between AGs.

Consumer Financial Protection Bureau

Bank in CFPB Crosshairs for Allegedly Failing to Properly Manage and Respond to Customer Credit Card Disputes

  • The Consumer Financial Protection Bureau (“CFPB”) sued Citizens Bank, N.A. (“Citizens Bank”) for allegedly failing to properly manage and respond to credit card disputes and billing errors in violation of the Truth in Lending Act, the Fair Credit Billing Act, the Credit Card Accountability Responsibility and Disclosure Act, and the Consumer Financial Protection Act (“CFPA”).
  • The complaint alleges that, among other things, Citizens Bank automatically denied customers’ claims of unauthorized use of their credit cards and of billing errors. Citizens Bank also allegedly failed to apprise customers of the status of their claims and to refund finance charges and fees when it resolved unauthorized use and billing error notices in customers’ favor. In addition, Citizens Bank allegedly failed to have policies and procedures to provide credit counseling referrals to its customers.
  • The complaint seeks injunctive relief, damages and restitution, disgorgement, civil penalties, and costs.

Consumer Protection

J&J Faces $344 million in Penalties Over Its Pelvic Mesh Products

  • California AG Xavier Becerra obtained a judgment against Johnson & Johnson, Ethicon, Inc., and related defendants (collectively “J&J”) over allegations that J&J falsely and deceptively marketed its surgical pelvic mesh in violation of California’s Unfair Competition Law and False Advertising Law.
  • As previously reported, California’s complaint alleged that J&J misrepresented the safety and efficacy of the pelvic mesh and neglected to inform consumers and physicians of the full spectrum of risks associated with pelvic mesh in its product instructions as well as in educational and marketing materials. The AG’s office alleged that the mesh caused complications such as urinary dysfunction, loss of sexual function, chronic inflammation and pain, and risk of chronic infection.
  • Following a 9-week trial, the court found that J&J knew about the risk of complications associated with the implantation of its pelvic mesh products but touted the mesh’s benefits while omitting, minimizing, or concealing information about its risks. The court awarded $343.99 million in civil penalties and requested supplemental briefing on the issue of injunctive relief.

FTC to VoIP Service Providers: Willful Blindness Is Not a Defense When It Comes to Facilitating Illegal Telemarketing Practices

  • The Federal Trade Commission (“FTC”) warned 19 Voice over Internet Protocol service providers (“VoIP Providers”) that assisting and facilitating illegal telemarketing or robocalling is a violation of the FTC Act and the FTC’s Telemarketing Sales Rule (“TSR”).
  • In letters sent to the VoIP Providers, the FTC warned that it may take legal action against a VoIP Provider if it assists a seller or telemarketer in violating the TSR, either knowingly or by turning a blind eye to the illegal conduct.
  • The letters identify several types of conduct that may violate the TSR, including making false statements to induce a consumer to pay for goods or services or to contribute to charity, misrepresenting a seller’s affiliation with a government agency, and initiating telemarketing calls to numbers listed on the National Do Not Call Registry, among other things.

Relief in Focus: Photographer Ordered to Pay Nearly $200,000 for Not Delivering Paid-For Photographs

  • Arkansas AG Leslie Rutledge obtained a default judgment against photographer Jonathan Funk, his company Jonathan Funk Photography, LLC, and related defendants (collectively “Funk”) over allegations that Funk accepted payment for but failed to deliver photography packages in violation of the Arkansas Deceptive Trade Practices Act.
  • The complaint alleged that Funk convinced customers to pay in full for photo packages, sometimes immediately after a photoshoot, then failed to provide the photos or issue refunds.
  • The Circuit Court of Pulaski County entered a default judgment against Funk, including injunctive relief and revocation of Funk’s business licenses and permits. According to the AG’s office, the court also ordered Funk to pay nearly $99,000 in restitution, $100,000 in civil penalties, and filing fees and service costs, and to transfer images to consumers.

Bipartisan Coalition of 23 Attorneys General Files an Amicus Brief in Support of FTC’s Ability to Seek Restitution for Victims of Deceptive Trade Practices

  • A bipartisan coalition of 23 AGs, led by Illinois AG Kwame Raoul, filed an amicus brief in the U.S. Supreme Court in support of the FTC’s position in Federal Trade Commission v. Credit Bureau Center, LLC, 19-825, where the FTC argued that it should be allowed to seek restitution for consumers in its enforcement actions under the FTC Act.
  • In the brief, the AGs asked the Supreme Court to grant the FTC’s petition for certiorari, where the FTC sought reversal of a 7th Circuit Court of Appeals decision holding that the FTC does not have the authority to seek restitution for victims of fraud or deceptive business practices.
  • The AGs argue that, among other things, without the ability to seek restitution, the FTC’s ability to protect consumers would be significantly weakened and victims of fraud and deception may not obtain relief. The AGs further argue that removing the FTC’s ability to seek restitution would encourage fraud and deceptive business practices while impeding federal-state collaborations and negatively impacting states and their residents.


Cleanup in Michigan: Attorney General Announces Proposed Settlement for Remediation of Drinking Water Contaminated by Alleged Activity of Footwear Manufacturer

  • Michigan AG Dana Nessel announced a proposed settlement with footwear manufacturer Wolverine Worldwide Inc. (“Wolverine”) to resolve allegations that Wolverine contaminated residential drinking water with “forever” chemicals in violation of the federal Resource Conservation and Recovery Act and the Michigan Natural Resources and Environmental Protection Act.
  • The complaint alleged that Wolverine was responsible for the release of per- and polyfluoroalkyl substances (“PFAS”) into residential drinking water wells and the environment at levels that are dangerous to human health.
  • Under the terms of the proposed consent decree, Wolverine will pay $69.5 million to extend municipal water to more than 1,000 residences and will continue to monitor and filter residential drinking water in an area where PFAS concentration exceed certain levels, among other things.
  • The AG’s office will accept comments on the proposed consent decree through February 13, 2020.