Digest 2.7.2019 The State AG Report Weekly Update


Vermont Attorney General Supports Bill Legalizing Cannabis Production and Sales

  • Vermont AG TJ Donovan testified before the state Senate Judiciary Committee in support of a bill that would legalize cannabis production and sales in the state.
  • The bill, S.54, would establish a regulatory system for the production and sales of cannabis and cannabis products, create a Cannabis Control Board to regulate the commercial cannabis market, and establish a tax rate for cannabis sales, among other things.
  • The bill remains pending before the state Senate Judiciary Committee.

Consumer Financial Protection Bureau

CFPB Settles with Payday Retail Lender Over Allegedly Unauthorized Charges and Overpayments and Deceptive Marketing and Collection Practices

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with payday retail lender CMM, LLC d/b/a Cash Tyme, and its subsidiaries (collectively, “Cash Tyme”) to resolve allegations that it failed to prevent unauthorized charges and overpayments and engaged in deceptive marketing and collection practices in violation of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, Truth in Lending Act, and Gramm-Leach-Bliley Act.
  • According to the consent order, Cash Tyme allegedly lacked adequate processes to prevent consumers’ accounts from being debited for loans that were already paid and employed an inadequate manual process to identify overpayments by consumers, resulting in overdraft and insufficient funds fees; harassed consumers’ references after telling consumers that references were for verification purposes only; advertised check cashing and other services that were not actually offered in its stores; failed to provide consumers with initial privacy notices; and understated the annual percentage rate of its loan contracts.
  • Under the terms of the consent order, Cash Tyme must refund certain consumers the amount of overcharges or overpayments, pay $100,000 in penalties to the CFPB, and create a compliance plan, among other things.

CFPB Settles with International Payday Lenders Over Allegedly Deceptive Marketing and Collection Practices

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with Canadian payday lenders NDG Financial Corp., E-Care Contact Centers, Ltd., Blizzard Interactive Corp, New World Consolidated Lending Corp., New World Lenders Corp., Payroll Loans First Lenders Corp., New World RRSP Lenders Corp., and related individuals, and Maltese payday lenders Northway Financial Corp., Ltd. and Northway Broker, Ltd. (collectively, “payday lenders”) to resolve allegations that they engaged in deceptive marketing and collection practices in violation of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act and Credit Practices Rule.
  • According to the consent order, the payday lenders allegedly marketed and offered loans to U.S. consumers without required licenses, advertised and collected on loans in states where the loans exceeded state usury limits or violated the terms of their licenses, and represented to consumers that their loans were not subject to U.S. federal or state law, among other things.
  • Under the terms of the consent order, the payday lenders are enjoined from lending to or collecting debt from U.S. consumers, and prohibited from using consumers’ information, among other things.

Consumer Protection

Massachusetts Attorney General Obtains Judgment Against Insurance Broker for Allegedly Overcharging Consumers

  • Massachusetts AG Maura Healey obtained a judgment against Kilgore Insurance Agency, its agent, and its owners (collectively, “Kilgore Insurance”) over allegations that it overcharged customers for insurance products in violation of the Massachusetts Consumer Protection law and state common law.
  • According to the complaint, Kilgore Insurance allegedly increased insurance premiums with undisclosed “agency fees”—compensation for insurance agents selling insurance policies—that were, on average, almost five times above the standard agency fee, and hid these fees from consumers by altering consumers’ insurance policy documents and withholding certain parts of insurance premium finance agreements from consumers.
  • According to the judgment, which followed a 22-day trial and subsequent appeals, Kilgore Insurance must pay $5.2 million in restitution to affected consumers.

New York Attorney General Settles with Social Media Marketing Company Over Alleged Fraud and False Advertising

  • New York AG Letitia James reached a settlement with social media marketing company Devumi LLC and related companies including DisruptX Inc., Social Bull Inc., and Bytion Inc. (collectively, “Devumi”) to resolve allegations that it sold fake followers, “likes,” and views on social media platforms in violation of state laws against fraud and false advertising.
  • According to the AG’s office, Devumi allegedly used computer-operated bot accounts and “sock puppet accounts”—accounts run by one individual pretending to be many other people—to pretend to express opinions of real people when, in fact, the views reflected false, paid activity. The fake accounts also allegedly used the social media profiles of real individuals without their consent and failed to disclose that the endorsements it sold from social media influencers were paid.
  • According to the AG’s office, under the terms of the settlement, Devumi is enjoined from selling fake social media engagement. This settlement, according to the AG’s office, marks the first determination by a law enforcement agency that sales of fake social media engagement and the use of false identities to engage in online activity is illegal.


15 Democratic Attorneys General Petition EPA to Issue New Asbestos Reporting Rule

  • 15 Democratic AGs, led by California AG Xavier Becerra and Massachusetts AG Maura Healey, petitioned the U.S. Environmental Protection Agency (“EPA”) to issue a rule requiring more robust reporting by those who import asbestos or use it domestically.
  • According to the AGs’ petition, the EPA must require adequate asbestos reporting in order to comply with its mandate under the Toxic Substances Control Act to evaluate and address the risks posed by asbestos.
  • The AGs urge the EPA to issue a new asbestos reporting rule eliminating certain exemptions, requiring asbestos processors and manufacturers to adhere to reporting requirements, and requiring reporting of imports that contain asbestos.


New Jersey and Pennsylvania Attorneys General Pen Letter to U.S. Department of Justice Opposing Opinion that Wire Act’s Prohibitions Apply to Online Non-Sports Gambling

  • New Jersey AG Gurbir Grewal and Pennsylvania AG Josh Shapiro sent a letter to the U.S. Department of Justice (“DOJ”) opposing the DOJ’s January 2019 opinion concluding that the Wire Act’s prohibitions apply to online non-sports gambling.
  • In the letter, the AGs argue that the DOJ’s opinion is contrary to the plain language of the Wire Act and that the DOJ did not provide the states with any information regarding its change in its interpretation of the Wire Act, upon which states had been relying in their development of online gambling industries.
  • The AGs urge the DOJ to withdraw its opinion or assure them that it will not bring enforcement actions against entities in their states that engage in online gambling.

Health Care

California Attorney General Settles with Health Insurance Provider Over Alleged Unauthorized Disclosure of Policy Holders’ Personal Health Information

  • California AG Xavier Becerra reached a settlement with health insurance company Aetna Inc. to resolve allegations that it improperly disclosed policy holders’ personal health information (“PHI”) in consumer mailings in violation of state health privacy and unfair competition laws and the state constitution.
  • According to the complaint, in July 2017 Aetna allegedly sent mail to policy holders with visible labels affixed that disclosed certain policy holders’ Human Immunodeficiency Virus (“HIV”) statuses.
  • Under the terms of the proposed final judgment, Aetna will pay $935,000 to the AG’s office, modify its mailing procedures, implement training reforms, and conduct an audit to ensure compliance.
  • As previously reported, former New York AG Eric Schneiderman settled with Aetna in January 2018 over similar allegations related to its July 2017 mailing.

New York Attorney General Continues to Settle with Health Care Systems Over Billing Practices for Sexual Assault Exams

  • New York AG Letitia James reached a settlement with BronxCare Health System (“BronxCare”) to resolve allegations that it improperly billed sexual assault survivors for forensic examinations in violation of state laws requiring cost-free services for survivors.
  • According to the AG’s office, BronxCare and its emergency room physicians allegedly billed patients and their insurers for forensic examinations for sexual assault, sent unpaid examination bills to third-party collection agencies, and failed to advise these patients of their billing options.
  • According to the AG’s office, under the terms of the settlement, BronxCare will pay costs to the state and restitution to survivors who were improperly billed, and implement a written policy to ensure that survivors are not billed for their examinations.
  • This is reportedly the ninth settlement the state has reached with health care facilities during its statewide investigation of improper billing for sexual assault forensic examinations.


Utah Attorney General Dismisses Lawsuit, Files Administrative Citation Against Manufacturers Over Opioid Marketing

  • Utah AG Sean Reyes filed an administrative citation against opioid manufacturers Purdue Pharma L.P., Purdue Pharma Inc., The Purdue Frederick Company, and certain owners of the companies (collectively, “Purdue Pharma”) for allegedly misleading consumers about the risks of its prescription opioid products in violation of the state Consumer Sales Practices Act.
  • According to the administrative citation, Purdue Pharma allegedly deceptively marketed its prescription opioid products to doctors and patients by understating risks of addiction and overstating benefits of its products, and it also misrepresented that it was taking steps to curb the opioid epidemic when, in fact, it contributed to creating it.
  • Under Utah law, administrative citations are reviewed by a presiding officer—an Administrative Law Judge—designated by the Director of the Division of Consumer Protection, who may, following a hearing, levy fines and/or issue a cease and desist order.
  • As previously reported, AG Reyes filed a lawsuit against Purdue Pharma in May 2018 over similar allegations. Upon filing this administrative citation, AG Reyes dismissed the prior lawsuit without prejudice.