Digest 04.30.2020: COVID-19-Related Fraud Continues | Wind Turbine Scam | AG Shuts Down Illegal Robocallers


Attorneys General and FTC Continue to Protect the Public from COVID-19-Related Fraud

  • Florida AG Ashley Moody sued advertising company Traffic Jam Events, LLC and its owner for allegedly mailing deceptive used car advertisements disguised as COVID-19 stimulus checks in violation of Florida’s Deceptive and Unfair Trade Practices Act. The complaint seeks injunctive relief, restitution, disgorgement, civil penalties and attorneys’ fees and costs. The AG’s office also announced that it reached a settlement with MK Automotive, Inc., which supplied cars for Traffic Jam Events, under which MK Automotive must, among other things, pay $10,000 in restitution and a $1,000 civil fine.
  • Texas AG Ken Paxton sued marketing company LeadGen Sales and Marketing LLC and its owner for allegedly sending deceptive robocalls that fraudulently marketed health insurance for COVID-19 testing and treatment as “Trump Care health plans” in violation of Texas’s Telephone Consumer Protection, Telemarketing Disclosure and Privacy, and Deceptive Trade Practices Acts. The complaint seeks injunctive relief, civil penalties, and attorneys’ fees and costs.
  • The Federal Trade Commission (“FTC”) sent letters to 21 marketers warning them to stop misleading consumers by using unsubstantiated claims that their products and services can treat or prevent COVID-19. As previously reported, the FTC sent two sets of similar letters to other marketers in recent weeks.
  • The FTC sent warning letters to ten multi-level marketing companies requiring them to remove misleading claims about their products’ ability to treat or prevent COVID-19 or about the earnings that recently-unemployed people can make by selling the companies’ products, or both.
  • The FTC reached a settlement with supplement marketer Marc Ching, doing business as Whole Leaf Organics, to resolve allegations that he marketed a product under the name of “Thrive” as effective against COVID-19. Under the stipulated preliminary injunction order, Ching agreed to stop making these false claims.

Bipartisan Group of 35 Attorneys General Seek Help for COVID-19-Impacted Homeowners

  • A bipartisan coalition of 35 AGs, led by Iowa AG Tom Miller, sent letters to the Federal Housing Finance Administration (“FHFA”) and the U.S. Department of Housing and Urban Development (“HUD”) praising federal efforts to provide relief to homeowners impacted by the COVID-19 pandemic and seeking additional steps to assist hard-hit homeowners.
  • In their letters to FHFA and HUD, the AGs applauded federal efforts to suspend evictions and foreclosures, and to implement the additional forbearance relief provided by the Coronavirus Aid, Relief, and Economic Security Act.
  • The AGs recommended that FHFA and HUD issue guidance to revise their forbearance programs so that forborne payments are automatically added to the end of a mortgage term rather than due as soon as the forbearance period is over, expand eligibility for loss mitigation programs, and clarify that the moratorium on foreclosures and evictions applies to all steps in the respective processes, including issuance of pre-foreclosure or eviction notices.

Sports Clubs Freeze Memberships, Offer Credits Under Pressure from Attorneys General

  • New York AG Letitia James, District of Columbia AG Karl Racine, and Pennsylvania AG Josh Shapiro secured commitments from Town Sports International, LLC, the parent company of New York Sports Club, Washington Sports Club, and Philadelphia Sports Club, and Lucille Roberts (collectively “the Clubs”), to automatically freeze memberships at no additional cost while COVID-19 shutdown orders are pending, issue credits to members for dues and fees charged since each jurisdiction’s shutdown order took effect, and resolve all complaints filed with the AGs’ offices.
  • According to the AGs’ offices, the Clubs will also offer free membership cancellations through April 30, 2020.
  • As previously reported, the AGs had sent a letter demanding that the Clubs follow consumer protection laws in dealing with their members’ accounts and cancellation requests.

Consumer Protection

Virginia Attorney General Recovers $300,000 from Robocallers

  • Virginia AG Mark Herring reached a settlement with two telemarketing companies, Adventis, Inc. and Skyline Metrics, LLC, and a related individual (collectively “Adventis”), to resolve allegations that they engaged in illegal robocalling and deceptive marketing practices in violation of federal and state laws relating to robocalling and telephone marketing and sales.
  • According to the complaint, Adventis allegedly placed hundreds of thousands of calls, including thousands of calls to numbers on the federal Do Not Call Registry, to deceptively pitch that its car sales services had a money-back guarantee.
  • Under the terms of the consent judgment, among other things, Adventis is permanently enjoined from robocalling and will pay $300,000 in restitution to affected consumers.

Late Delivery: Online Fashion Store Can’t Keep Customers’ Money when It Fails to Promptly Ship Goods

  • The FTC reached a settlement with online fashion retailer Fashion Nova, Inc. to resolve allegations that it did not provide consumers with a chance to cancel their orders and obtain a refund when it failed to ship merchandise in a timely manner in violation of the FTC Act and the Trade Regulation Rule Concerning the Sale of Mail, Internet, or Telephone Order Merchandise (“Mail Order Rule”).
  • The FTC’s complaint alleged that Fashion Nova regularly failed to meet its shipping promises to consumers and failed to notify consumers of shipping delays. Fashion Nova also did not give consumers an opportunity to cancel their late orders and sent a gift card instead of a refund.
  • Under the terms of the proposed stipulated order, Fashion Nova will pay $9.3 million in refunds to harmed consumers, is enjoined from violating the Mail Order Rule, and required to ship ordered merchandise within one day from the date of purchase if the company does not specify a shipping date.


Blowing in the Wind: Alleged Fraudster Promises Innovative Wind Turbine Development to Bilk Investors

  • New York AG Letitia James sued and obtained a temporary restraining order against green energy company Kean Wind Turbines, Inc. and its founder Kean Stimm (collectively “Kean Wind”), for allegedly committing fraud by falsely marketing unregistered securities in violation of New York’s Martin Act and Executive Law 63(12).
  • The complaint alleges that Kean Wind raised more than $3.5 million from environmentally-conscious investors by falsely promising to use the funds to develop and produce a revolutionary wind turbine. In reality, Kean Wind allegedly did not develop any wind turbines and instead diverted investor money to fund Stimm’s lifestyle, including payments for an apartment, a personal aide, and a cruise. The complaint seeks injunctive relief, damages, disgorgement, restitution, and rescission, among other things.
  • According to the AG’s office, the temporary restraining order bars Kean Wind from selling or marketing securities and from dissipating investor assets.