Digest 06.11.2020: Stronger Price Gouging Law in New York | Suit over Billions of Robocalls | Settlement with Children's App Developer


New York Strengthens Protections Against Price Gouging

  • New York Governor Andrew Cuomo signed 8189 and A.10270 into law, which strengthen New York state’s ability to combat price gouging on essential goods and services, including products and equipment critically needed during the COVID-19 pandemic, such as medical supplies.
  • According to New York AG Letitia James’s office, among other things, the law expands protections to include any product or service that is vital or necessary to the health, safety, and welfare of consumers or the general public. The law also extends protection to include not only to consumers but also small businesses, health care providers, and the state as well.

2020 AG Elections

West Virginia Holds Primary Elections

  • West Virginia held primaries in its AG races on June 9, 2020.
  • As of this writing, the contest for the Democratic nomination between labor lawyer Sam Petsonk and state Delegate Isaac Sponaugle remains too close to call, and the outcome awaits the counting of additional mail-in and other ballots. When decided, the nominee will face incumbent Republican AG Patrick Morrisey, who ran unopposed, in the general election this coming November.
  • For more AG election news, insights, and polls, visit Cozen O’Connor’s State AG Election Tracker.

Consumer Protection

Bipartisan Group of AGs Sues Texas Companies over Billions of Illegal Robocalls

  • A group of seven AGs, including Texas AG Ken Paxton, sued Texas-based robocall companies Eagle Capital Group LLC and JSquared Telecom LLC and their owners (collectively “Eagle Capital”) over allegations that Eagle Capital engaged in unlawful and abusive robocall campaigns in violation of the federal Telephone Consumer Protection Act and each participating state’s respective telemarketing laws.
  • The complaint alleges that Eagle Capital initiated billions of robocalls to both residential and mobile phone lines, including to numbers that were on state or federal do-not-call registries, to market healthcare products or extended car warranties, and that it spoofed caller ID information to make call recipients believe the calls were coming from their local area.
  • The AGs seek a variety of relief, including declaratory and injunctive relief, actual or statutory damages, civil penalties, and attorneys’ fees and costs.
  • In related news, the National Association of Attorneys General sent a letter to the Federal Communications Commission (“FCC”), signed by 52 AGs, to encourage the FCC to continue to facilitate collaboration with state AGs and telecommunications companies to coordinate efforts to trace back the origin of suspected unlawful robocalls.

Third Party Payment Processor Banned for Allegedly Helping Telemarketing Scammers Reach into Consumers’ Bank Accounts

  • Ohio AG Dave Yost and the Federal Trade Commission (“FTC”) reached a settlement with payment processor Madera Merchant Services, LLC, a related entity, and related individuals (collectively “Madera”) to resolve allegations brought by the state of Ohio and the FTC that Madera processed payments for multiple scams in violation of the FTC Act and Telemarketing Sales Rule and Ohio’s Consumer Sales Practices Act.
  • The complaint alleged that Madera used remotely created payment orders and checks (“RCPOs”) to draw money from consumers’ bank accounts, including processing millions of dollars for telemarketing scams involving promises of student debt reduction and credit card interest reduction, even though the Telemarketing Sales Rule prohibits the use of RCPOs for telemarketing sales.
  • Under the terms of the stipulated order, Madera is subject to a judgment of more than $8.6 million, which is partially suspended because of Madera’s inability to pay, on the condition that Madera forfeit the contents of several bank accounts, along with personal assets of the related individuals. Madera is also permanently banned from any payment processing activities.

Data Privacy & Security

Not So Cute: Popular Children’s Apps Allegedly Collected Young Kids’ Data Without Parental Consent

  • The FTC reached a settlement with app developer HyperBeard, Inc. and related individuals (collectively “HyperBeard”) to resolve allegations that it illegally collected personal information from children under the age of 13 in violation of the FTC Act and the Children’s Online Privacy Protection Act (“COPPA”) Rule.
  • The complaint, filed by the Department of Justice on behalf of the FTC, alleged that HyperBeard, a developer of popular children’s apps like Axolochi, Clawbert, and NomNoms, allowed third-party ad networks to collect persistent identifiers to track app users and target advertising to children without obtaining parental consent or even notifying parents of the information collection.
  • Under the terms of the proposed stipulated order, HyperBeard is subject to a civil penalty of $4 million that will be partially suspended upon payment of $150,000, is required to delete the personal information it collected from children under the age of 13 in violation of COPPA, and must notify and obtain verifiable consent from parents for any app that collects personal information from children under the age of 13.