The State AG Report Weekly Update January 14, 2016


New York Attorney General Settles with Insurance Group for Allegedly Restraining Competition

  • New York AG Eric Schneiderman reached a settlement with UnitedHealth Group, Inc., to resolve allegations that the company unlawfully restrained competition in the New York market for certain elder and long-term care insurance products.
  • According to the settlement, UnitedHealth eliminated competition from other providers of institutional special needs plan (“I-SNPs”), a kind of health insurance plan that provides targeted care to individuals with chronic health conditions, by allegedly requiring certain nursing facilities that participate in UnitedHealth’s insurance network to also participate in UnitedHealth’s I-SNP.
  • Under the terms of the settlement, UnitedHealth will pay the state $100,000 and is prohibited both from requiring nursing facilities to enroll in its I-SNP plan as a condition for participating in other UnitedHealth plans or from penalizing, through lower reimbursement rates, those facilities that decline to participate.

Consumer Protection

FTC Releases Guidance on Online “Native” Advertisements

  • The Federal Trade Commission (“FTC”) issued an Enforcement Policy Statement on Deceptively Formatted Advertisements and a guide for businesses to address the rise in online “native advertising” and that such advertisements may mislead consumers about the commercial nature of the content.
  • “Native” advertisements are advertising content that is designed to appear as an article, product review, editorial, or other regular content feature by matching the style and layout of the non-advertising content.
  • According to the FTC, the policy guidance is meant to ensure that such advertisements comply with the FTC’s prohibition on deceptive or unfair practice, and to reinforce that the FTC will apply traditional truth-in-advertising principles to evaluate whether the format of an advertisement is deceptive.

Florida Attorney General and FTC Sue Payment Processing Operation for Allegedly Assisting with Telemarketing Scam

  • Florida AG Pam Bondi and the Federal Trade Commission (“FTC”) amended their complaint, originally filed on June 16, 2015, to include CardReady, LLC, and its executives for their alleged assistance in a nationwide credit-card-interest-rate-reduction telemarketing scam in violation of state and federal consumer protection laws.
  • According to the amended complaint, CardReady and its executives allegedly facilitated the processing of nearly $20 million in illegal upfront fees collected from consumers through a telemarketing scam and continued to process charges even after learning about numerous chargebacks and consumer complaints.

Idaho Attorney General Settles with Liquid Energy Shot Companies for Alleged Misrepresentations

  • Idaho AG Lawrence Wasden reached a settlement with Living Essentials, LLC, and Innovation Ventures, LLC, to resolve alleged violations of Idaho’s Consumer Protection Act and corresponding regulations.
  • According to AG Wasden, the companies allegedly misrepresented the effects and recommendation by doctors of their liquid energy shot product, 5-hour ENERGY.
  • Under terms of the settlement, the companies must revise their marketing practices and collectively pay the state $9,000 for fees and costs of the investigation and litigation.

North Carolina Attorney General Settles with Travel Club for Alleged Unlawful Marketing

  • North Carolina AG Roy Cooper reached a settlement with Festiva Development Group, Inc., a company that sells memberships in vacation and travel clubs, resolving alleged violations of state consumer protection laws.
  • According to the settlement, Festiva used aggressive marketing tactics and misrepresented the costs and benefits of travel club membership where rooms were not available, difficult to reserve through the companies online platform, or only available when an additional fee was paid.
  • Under the terms of the settlement, Festiva will pay $286,144 in fees and consumer restitution, allow certain consumers to cancel their contracts, make changes to its marketing practices, and refrain from in-person marketing in the state for three years.

Ohio Attorney General Sues Liquid Propane Company for Alleged Consumer Protection Violations

  • Ohio AG Mike DeWine filed a lawsuit against Thrifty Propane, Inc., Thrifty Propane Northern Ohio Inc., and Thrifty Propane Columbus Ohio Inc. (collectively, “Thrifty Propane”), a liquid petroleum gas (i.e. propane) supplier, for alleged violations of state consumer protection laws.
  • According to the complaint, Thrifty Propane allegedly failed to timely fill propane requests, including those who are enrolled in the businesses’ pre-pay program, causing consumers to run out of fuel or seek propane at higher prices elsewhere.
  • The AG seeks fines of $25,000 for each separate violation and restitution for harmed consumers.

Data Privacy

New York Attorney General Settles with Rideshare Company Over Privacy Concerns

  • New York AG Eric Schneiderman reached a settlement with Uber to resolve two separate investigations by his office into allegedly inappropriate access to riders’ personal information and alleged failures by Uber to timely notify the state of a data breach.
  • According to AG Scheiderman, Uber allegedly allowed employees to view personal information through an aerial view of the real-time movement of cars on the Uber platform, and separately failed to timely notify the state of a breach to driver names and license numbers that was discovered in September 2014, but not reported until February 2015.
  • Under the terms of the agreement, Uber will pay $20,000 for not providing timely notice of the data breach and will take actions to improve the security of rider personal information, including use of password-protected platforms, encryption of certain information, and additional access limitations. During the investigation, Uber eliminated all personal information from the aerial view.


West Virginia Attorney General Sues Prescription Drug Distributor for Alleged Unlawful Distributions

  • West Virginia AG Patrick Morrisey filed a lawsuit against McKesson Corporation for allegedly violating the West Virginia Controlled Substances Act, which requires companies to provide effective controls and procedures to protect against the diversion of controlled substances for illegal purposes, as well as allegedly violating state consumer protection laws.
  • According to the complaint, McKesson distributed high quantities of hydrocodone and oxycodone to pharmacies and drug stores in the state, including to counties and communities where the orders far exceeded the population, without stopping or investigating them as suspicious even though the company knew or should have known that West Virginia was suffering from a drug epidemic.
  • This lawsuit comes after McKesson reached a $150 million settlement with federal authorities last year over similar allegations.


Washington Attorney General Urges Maximum Fine Against Telecommunication Company for 911 outages

  • Washington AG Bob Ferguson’s Public Counsel Unit, which represents customers of state-regulated utilities, filed testimony with the state’s Utilities and Transportation Commission (“UTC”) opposing the UTC’s proposed settlement with CenturyLink following the company’s alleged violations of state laws and UTC rules as a result of a 911 service outage affecting state residents.
  • According to AG Ferguson, the proposed settlement, which in part imposes a $2.85 million penalty on CenturyLink, is a “woefully inadequate” remedy for the company’s failure to prevent and timely communicate to the public and emergency centers regarding a six-hour 911 service outage the resulted in a “severe impact” on public safety.  According to AG Ferguson, CenturyLink should be liable for the maximum regulatory penalty of $11.5 million.