The State AG Report Weekly Update July 14, 2016

Breaking News

Arkansas and Florida Attorneys General Scheduled to Speak at Republican Convention

  • Jeff Larson, CEO of the 2016 Republican National Convention, has announced that Arkansas AG Leslie Rutledge and Florida AG Pam Bondi are scheduled to speak at this year’s convention. The convention will be held between July 18 and July 21 in Cleveland, Ohio. The convention will focus on the expected acceptance of the Republican nomination by presumptive Republican Presidential Nominee Donald J. Trump.

Senior Research Analyst Joins Cozen O’Connor’s State Attorneys General Practice

  • We are pleased to announce that Kristina Howard has joined the nation’s premier State Attorneys General Practice at Cozen O’Connor as a Senior Research Analyst. In her new role, Ms. Howard will draw on her state government and policy expertise to identify risks and opportunities for clients with State Attorney General and other state issues. She will report directly to Bernie Nash and Lori Kalani, Co-Chairs of the practice.
  • Ms. Howard most recently was a Legislative Strategist at Orrick, Herrington & Sutcliffe, where she managed multi-state legislative campaigns for the leading companies in the satellite broadcasting and fantasy sports industries. Prior to Orrick, Ms. Howard oversaw grassroots advocacy at the National Federation of Independent Business (NFIB).
  • Ms. Howard earned her MA from American University in Political Science in 2007 and her BA from Northeastern University in 2004.

Consumer Protection

Florida Attorney General and FTC Sue Tech Support Company Over Consumer Protection Violations

  • Florida AG Pam Bondi and the Federal Trade Commission (“FTC”) filed a complaint and obtained a temporary restraining order (“TRO”) against Big Dog Solutions LLC, PC Help Desk US LLC, other related companies, and their owners (the “Help Desk companies”) over alleged violations of the FTC Act, the Telemarketing Sales Rule (“TSR”), and the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).
  • According to the complaint, the Help Desk companies allegedly used pop-up messages to mislead consumers into believing their computers were compromised by hackers or malware, and claimed to be certified to repair machines by Microsoft and Apple. The complaint alleges that consumers paid for repairs and antivirus software because of the Help Desk companies’ use of deceptive online advertising and high-pressure sales tactics.
  • AG Bondi and the FTC are seeking civil penalties, investigative fees, restitution for consumers, and a permanent injunction to prevent future violations of the FTC Act, the TSR and FDUTPA by the Help Desk companies. This suit is one in a series of suits the FTC has asserted against tech support companies.

FTC Settles with Entertainment Company for Allegedly Deceptive Advertisements

  • The FTC reached a settlement with Warner Bros. Home Entertainment Inc. (“Warner Bros.”) over allegations that the company violated the FTC Act by sponsoring content without clearly disclosing this information to viewers.
  • According to the FTC, Warner Bros. paid online “influencers” to record and share videos of themselves playing a video game in order to promote its release, but did not disclose that these videos were sponsored. These online influencers were asked to promote the game positively and not to disclose any bugs or glitches found while playing.
  • Under the terms of the proposed stipulated order, Warner Bros., among other things, is prohibited from using influencers to misrepresent products and must educate influencers about necessary public disclosures.

Idaho Attorney General Settles with Credit Card Terminal Leaser Over Consumer Fraud Allegations

  • Idaho AG Lawrence Wasden reached a settlement with Private Client Payment Corporation (“PCPC”), a company that sold lease agreements for credit card processing terminals to small business owners, for alleged violations of Iowa’s Consumer Protection Act.
  • According to the AG’s office, PCPC allegedly misrepresented the costs of the lease agreements, falsely advertised that the lease agreements could be cancelled, and failed to provide copies of the signed lease agreements. Additionally, PCPC allegedly failed to inform consumers that the lease agreements were actually with MBF Leasing, a separate company.
  • Under the terms of the settlement, PCPC must, among other things, pay restitution to six business owners, reimburse costs to the Attorney General, and educate credit card terminal sales representatives about consumer protection laws.

New York Attorney General Sues Employment Agency Over Alleged Consumer Protection Violations

  • New York AG Eric Schneiderman filed a lawsuit and obtained a temporary restraining order (“TRO”) against employment agency Delta Services, Inc. (“Delta”), its predecessor Ultimate Security Force, Inc. a/k/a U.S.F. (“U.S.F.”), and its owner for alleged violations of consumer protection laws related to its representations to potential customers.
  • According to the AG’s office, the companies allegedly posted false job listings and promised employment to consumers if they paid for security guard training courses. In addition, the companies allegedly were not licensed by the New York Department of Consumer Affairs and violated state law by charging an upfront fee for services.
  • According to the suit, the AG is seeking restitution for consumers. Under the TRO, Delta, U.S.F., and its owner cannot use assets tied to the business. This case is one in a series of cases that the AG’s office has asserted against security guard schools and companies.


Indiana Attorney General Issues Statement on E-Liquids Cases

  • Indiana AG Greg Zoeller issued a statement regarding a recent U.S. District Court ruling regarding the constitutionality of an Indiana statute placing requirements on the manufacturers of liquids used in electronic smoking devices sold in Indiana. The Court ruled against the petitioners, denying their motion for summary judgment and their request for a preliminary injunction.
  • In his statement, AG Zoeller stated: “The Legislature in its policymaking authority took public health and business concerns into account in deciding where to draw the line for companies that manufacture chemicals for vaping devices; and the State contends those ultimately are state-level decisions for the Legislature and that the ATC [Alcohol and Tobacco Commission] should be able to enforce state statute.”
  • In a related suit against the Commission, GoodCat LLC et al. v. Cook et al., a U.S. District Court recently granted the petitioner’s request for a TRO that temporarily blocked Indiana’s enforcement of the statute against the petitioner.

False Claims Act

California Attorney General Settles with For-Profit Online K-12 School Over Allegations of False Advertising

  • California AG Kamala Harris reached a settlement with K12 Inc. and its affiliated schools, known as the California Virtual Academies (“CAVA Schools”), over allegations that the school violated the state’s False Advertising Law and Unfair Competition Law.
  • In the complaint, AG Harris alleges that the CAVA Schools used misleading statements about student academic progress and parent satisfaction rates to induce additional students to enroll in their educational programs and inflated student enrollment numbers, counting one minute or more of student account activity as a full day of attendance, in order to receive additional state funds.
  • Under the terms of the final judgment, the CAVA Schools must pay $6 million to the AG’s office and reform its educational services and advertising.

Massachusetts Attorney General Settles with Transportation Service Provider Over Medicaid Fraud Allegations

  • Massachusetts AG Maura Healey settled with transportation service provider REM Transportation Services, LLC (“REM”) to resolve allegations that it submitted false Medicaid claims between 2010 and 2014 for services allegedly performed for members of the state’s Medicaid program, MassHealth.
  • According to the AG’s office, REM allegedly provided rides to patients who were ambulatory and did not require wheelchairs or assistance in violation of MassHealth regulations. AG Healey alleges that REM claimed providing rides to over 40,000 members who reside in community-based settings that did not qualify for the service.
  • Under the terms of the settlement, REM must pay $717,798.48 to the state.

Missouri Attorney General Sues Real Estate Program Over Deceptive Marketing

  • Missouri AG Chris Koster filed a complaint and obtained a temporary restraining order (“TRO”) against Tri-State Holdings-32, LLC and its representatives over allegations that the company used deceptive marketing tactics to entice consumers to make down payments and monthly payments on real estate.
  • According to the AG’s office, Tri-State Holdings-32 allegedly misled consumers into making upfront payments on frequently uninhabitable real estate with the promise that they would receive a deed and make major repairs on the home. AG Koster alleges that Tri-State Holdings-32 did not deliver on these promises, failing to provide consumers with the deed and leaving homes in their original state.
  • Under the preliminary injunction, consumers can stay in their homes during case proceedings, and Tri-State Holdings-32 must refrain from advertising or offering services related to real estate property.


West Virginia Attorney General Issues Formal Opinion on Legality of Fantasy Sports Games

  • West Virginia AG Patrick Morrisey issued a formal opinion concluding that the participation in or offering of fantasy sports games, as defined in West Virginia Senate Bill (“SB”) 529, is not prohibited by current West Virginia law because fantasy sports games are not determined fully or predominantly by chance.
  • AG Morrisey issued his opinion in response to a request from State Senate President and Republican gubernatorial candidate William Cole, who sought to determine whether West Virginia prohibits or criminally sanctions the offering of or participation in fantasy sports games, as defined in SB 529.