Digest 08.27.2020: COVID-19 Price Gouging | Alaska AG Resigns | Honda’s $85 Million Multistate Settlement


Attorneys General Are Vigilant About Pandemic-Related Price Gouging and Illegal Balance Billing

  • Pennsylvania AG Josh Shapiro sued online seller M & B Multi Services Inc. and its owner (collectively “M&B”) for allegedly gouging the price of hand sanitizer in violation of the 20% price increase cap set by Pennsylvania’s Price Gouging Act. The complaint alleges, among other things, that M&B sold 8-ounce Purell hand sanitizer for as much as $75.80 each. The complaint seeks injunctive relief, restitution, disgorgement, civil penalties, and attorneys’ costs.
  • Connecticut AG William Tong sent a letter to several healthcare provider associations and licensing boards to warn their members that charging additional fees for personal protective equipment used in providing services to patients may constitute illegal balance billing when the charges are billed in connection with the provision of in-network services. According to the AG’s office, the additional charges may violate the Connecticut Unfair Trade Practices Act’s prohibition against unfair billing practices.

State AGs in the News

Alaska Attorney General Resigns

  • Alaska Governor Mike Dunleavy announced that Alaska AG Kevin Clarkson resigned in the wake of allegations that he exchanged potentially inappropriate communications with a staffer.
  • Former Deputy AG Clyde “Ed” Sniffen, Jr. was appointed by the Governor to serve as the Acting Attorney General until the Governor nominates a permanent replacement and the replacement is confirmed by the legislature.

Consumer Financial Protection Bureau

TD Bank Agrees to $122 Million Settlement over Its “Free” Overdraft Protection

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with TD Bank, N.A. to resolve allegations that TD Bank’s marketing and enrollment practices relating to its Debit Card Advance (“DCA”), an overdraft protection offering, violated the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Fair Credit Reporting Act.
  • According to the consent order, the CFPB alleged, among other things, that TD Bank charged customers overdraft fees for ATM and one-time debit card transactions without obtaining affirmative consent from customers who opened new TD Bank checking accounts, and that TD Bank misled consumers by presenting the DCA as a free feature that was part of a package with the new checking account even though TD Bank charged $35 for each DCA overdraft transaction and the DCA was an optional feature that consumers could decline.
  • The CFPB further alleged that TD Bank engaged in abusive practices that interfered with consumers’ ability to review and understand the DCA’s terms and conditions.
  • Under the terms of the consent order, TD Bank will be required to provide an estimated $97 million in restitution to affected customers. TD Bank will also pay $25 million in civil penalties to the CFPB, and it will correct its DCA enrollment practices to comply with consumer financial laws, among other things.

Loan Broker Allegedly Misled Servicemembers and Veterans about Mortgage Offers

  • The CFPB reached a settlement with mortgage broker and lender Go Direct Lenders, Inc. (“Go Direct”) to resolve allegations that it deceptively marketed mortgages guaranteed by the United States Department of Veterans Affairs (“VA”) in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Mortgage Acts and Practices – Advertising Rule (“MAP Rule”) and Regulation Z.
  • According to the consent order, the CFPB alleged, among other things, that Go Direct’s advertising misrepresented and failed to properly disclose the credit terms of the advertised VA-guaranteed mortgage loans, including advertising a lower annual percentage rate than it actually offered, misrepresenting the fees associated with the loans, and misleadingly described variable-rate loans as fixed. The CFPB also alleged that Go Direct misleadingly implied that it was associated with the U.S. government.
  • Under the terms of the consent order, Go Direct will pay a civil penalty of $150,000 and will create a compliance program and designate an advertising compliance official responsible for reviewing Go Direct’s mortgage advertising, among other things.

Consumer Protection

Honda Settles Multistate Airbag Suit, Agrees to Pay $85 Million

  • A group of 48 AGs, led by an Executive Committee including Oregon AG Ellen Rosenblum and New Jersey AG Gurbir Grewal, reached a settlement with American Honda Motor Co. and Honda of America Mfg., Inc. (collectively “Honda”) to resolve allegations that Honda concealed the risk posed by defective frontal airbags installed in its vehicles in violation of consumer protections laws.
  • The Oregon complaint, which was substantially similar to the complaints filed by other states and territories, alleged that Honda failed to inform regulators and consumers that the frontal airbags had a significant risk of rupture that could cause metal debris to fly into the passenger compartment, resulting in injuries and death, even though Honda’s engineers identified significant safety deficiencies with the airbags’ inflators.
  • Honda contemporaneously entered into settlement agreements with the participating states and territories, including a final consent judgment with New Jersey. Under the terms of settlement agreements, Honda will pay over $84.15 million to participating states and $1 million to the National Association of Attorneys General (“NAAG”) to be placed in the NAAG Training and Research Institute Endowment Fund. Honda also agreed to include enhanced safety measures in future airbag designs, change its airbag procurement process, implement recurrence prevention procedures to minimize the chance of future injuries, refrain from misleading advertising regarding the safety of its cars, and improve its risk management, quality control, and other critical business functions, among other things.

Electric Shock: Competitive Electricity Supplier Agrees to Pay Millions in Restitution over Allegations of Misleading Energy Consumers

  • Massachusetts AG Maura Healey reached a settlement with competitive electricity supplier Starion Energy, Inc. and related individuals (collectively “Starion”) to resolve allegations that Starion used deceptive and unsolicited telemarketing calls and robocalls to sell its services in violation of the Massachusetts Consumer Protection Act and Telemarketing Solicitation Act.
  • The complaint alleged that Starion and certain telemarketing companies falsely promised prospective customers lower electricity rates then signed them to variable rate electricity contracts through which customers collectively paid millions of dollars more than they would have paid had they stayed with their original utility company.
  • According to the AG’s office, under the terms of the consent judgment, Starion will pay up to $10 million including $7.25 million in restitution to affected customers and $250,000 in penalties to the state. Of the remaining $2.5 million, $2 million will be forgiven if Starion complies with the terms of the settlement which include not enrolling any new Massachusetts residents in a variable rate contract for a three-year period and hiring a monitor to implement a compliance program to ensure that Starion complies with state consumer protection laws, among other things. The portion of the $2.5 million amount that is not forgiven will fund energy assistance programs.