The State AG Report Weekly Update April 13, 2017

Consumer Protection

Colorado Attorney General Obtains Judgment Against Debt Collection Company

  • Colorado AG Cynthia Coffman obtained a judgment against debt collection company Peak Resolution LLC, its owner, and its manager (collectively “Peak Resolution”) for allegedly engaging in deceptive and abusive debt collection practices in violation of state law.
  • According to the AG’s office, Peak Resolution allegedly collected debts in the state without a required license and employed deceptive and abusive debt collection tactics, such as pressuring consumers with false criminal charges to coerce consumers to pay debts.
  • Under the terms of the judgement, Peak Resolution must pay nearly $500,000 in consumer restitution, penalties, and attorney fees, and must comply with applicable state laws.

Massachusetts Attorney General Settles with Mortgage Broker Over Allegedly Deceiving Consumers

  • Massachusetts AG Maura Healey reached a settlement with mortgage broker Direct Finance Corp. (“Direct Finance”), an employee of Direct Finance, and an insurance agent employed by John Hancock Life Insurance Company (U.S.A.) (“John Hancock”) for allegedly inducing consumers to enter into reverse mortgage agreements through Direct Finance in violation of state law.
  • According to the AG’s office, the John Hancock insurance agent allegedly developed an association with the Direct Finance employee in order to take advantage of elderly homeowners, induce them to take out reverse mortgages, and then invest the proceeds in unsuitable variable annuities.
  • As a part of the settlement, affected consumers will receive $130,000 in refunds distributed by the AG’s office. In September 2014, John Hancock resolved similar allegations with AG Healey’s office.

Washington Attorney General Reaches Agreement with Apartment Rental Company Over Alleged Illegal Lease Terms Targeting Service Members

  • Washington AG Bob Ferguson reached an agreement with property management company CTL Management, Inc. (“CTL”) over allegations that the company required service members to enter into illegal lease addendums in violation of the state’s Service Members’ Civil Relief Act and the federal Servicemembers’ Civil Relief Act.
  • According to the AG’s office, CTL allegedly required service members to sign “military addendums” to their leases, limiting service members’ rights to early lease terminations and forcing them to return rent concessions (e.g., rent damage deposits) if they terminated their leases early due to deployment or ordered change of station.
  • Under the terms of the agreement, CTL will refund $6,000 in rent concessions it recouped from service members, pay $10,000 in attorney costs and fees, and hold annual trainings on compliance with the laws.

Data Privacy

New York Attorney General Settles with Technology Compliance Company Over Allegations of Flawed Website Privacy Certifications

  • New York AG Eric Schneiderman reached a settlement with True Ultimate Standards Everywhere, Inc. (“TRUSTe”), a technology compliance and security standards company that monitors website security, over allegations that the company failed to report the illegal tracking of children’s online activity on popular children’s websites in violation of the Children’s Online Privacy Protection Act (“COPPA”).
  • According to the AG’s office, TRUSTe—an operator of the COPPA safe harbor program assigned to assess COPPA compliance—allegedly sidestepped discrepancies during compliance evaluations when it failed to adequately assess website operators’ compliance with COPPA by allegedly overlooking the use of third-party tracking technology on webpages targeting children consumers and by failing to report results from electronic security scans that detected these tracking technologies.
  • Under the terms of the settlement, TRUSTe will pay a penalty of $100,000 and implement a more rigorous privacy assessment process.

State v. Federal

District of Columbia Attorney General Leads Coalition Regarding Implementation of CFPB Prepaid Card Rule

  • District of Columbia AG Karl Racine led a coalition of 18 AGs and the Hawaii Office of Consumer Protection in sending a letter to Congressional leaders in support of a Consumer Financial Protection Bureau (“CFPB”) Final Rule that would provide protections for holders of prepaid debit cards.
  • Three resolutions currently before Congress would block implementation of the Final Rule, which is scheduled to go into effect on April 1, 2018, as well as bar any future enforcement.
  • In the letter, the coalition writes that the Final Rule should be implemented because it would protect prepaid card customers against fraud and unauthorized charges, help avoid hidden fees, provide free access to account transactions and balances, and require prepaid credit card companies to comply with existing credit card laws.