The State AG Report Weekly Update July 7, 2016


California Attorney General Issues Subpoenas to Oil Refiners Over Pricing Investigation

  • California AG Kamala Harris issued subpoenas to multiple oil refineries to investigate the oil refiners’ practices to set gasoline prices within California, which have been reported to be higher than the rest of the nation since last summer by as much as $1.50 per gallon.
  • According to news reports, the subpoenas seek information regarding each company’s gasoline supplies (imports and exports), pricing, and maintenance work since 2014. It is reported that the investigation is focused on refinery shutdowns which can temporarily create shortages and cause a spike in gasoline prices.

Consumer Protection

New York Attorney General Settles with Academic Enrichment Program for Alleged False Advertising

  • New York AG Eric Schneiderman reached a settlement with a summer academic enrichment program Global Network Xpeed Learning Academy (“Xpeed”) and its owner for allegedly targeting immigrant communities to enroll their children in the program through deceptive marketing.
  • According to the AG’s office, Xpeed allegedly made unsubstantiated claims regarding the effectiveness of its academic program, including its ability to create “child prodigies,” failed to provide individualized tutoring services and its advertised “special learning methodology,” and refused to provide refunds.
  • According to the terms of the settlement, Xpeed and its owner must pay $60,000 in restitution to families, cease its false advertisements, and revise its refund policy.

Data Privacy

New York Attorney General Supports FCC Privacy Rules for Broadband Internet Service Providers

  • New York AG Eric Schneiderman submitted comments to the Federal Communications Commission (“FCC”) in support of the FCC’s proposed rulemaking that would regulate how Broadband Internet Access Service (“BIAS”) providers can use and share customer data. The FCC filed a notice for a proposed rulemaking on April 20, 2016.
  • In the comments, AG Schneiderman expressed general support of the FCC’s proposed rulemaking, and urged the FCC to, among other things, require BIAS providers to utilize concise privacy policies that are easy to understand, to provide customers with privacy notices and updates, and to deliver timely notifications of data breaches.
  • As previously reported, the FTC filed comments regarding the proposed rulemaking on May 27, 2016.


Ohio Attorney General Issues Formal Opinion on City’s Authority to Set a Minimum Wage

  • Ohio AG Mike DeWine issued a formal opinion concluding that the Ohio Constitution does not permit a city to enforce a minimum wage that is higher or lower than the state’s hourly minimum wage. AG DeWine issued the opinion in response to a request from Hamilton County Prosecuting Attorney Joseph T. Deters.
  • The request stems from the Cincinnati City Council’s recent vote to increase the minimum wage for city workers to $15 an hour. The Council is also considering a proposal that would apply to all employees within Cincinnati.

For-Profit Colleges

Iowa Attorney General Settles with Cosmetology School Over Consumer Fraud Allegations

  • Iowa AG Tom Miller reached a settlement with cosmetology school La’ James International College, its parent company Lyndi, Ltd., and its owners over alleged violations of Iowa’s Consumer Fraud Act.
  • According to the AG’s office, La’ James International College allegedly made false and deceptive claims regarding its marketing, enrollment, and instruction practices, did not hire accredited teaching professionals, and required students to recruit customers to receive required practical training credits.
  • Under the terms of the consent judgment, the school must, among other things, forgive $2.1 million in student debts, pay $550,000 to the state, and reform its business practices around tuition transparency.


Texas Attorney General Sues Tobacco Shop Over Alleged Synthetic Marijuana Sales

  • Texas AG Ken Paxton filed a complaint and obtained a temporary restraining order (“TRO”) against Kassi Business, Inc. and its owners, who operate two Tobacco Junction Stores in Corpus Christi, Texas, for alleged violations of the state consumer protection law.
  • According to the AG’s office, the stores allegedly sold synthetic marijuana in packages that did not contain ingredients or warning labels indicating potential risks of using the drug.
  • The complaint seeks $20,000 per violation of the Texas Deceptive Trade Practices-Consumer Protection Act and a permanent injunction stopping all sales of synthetic marijuana. The owners will also potentially face criminal charges.

State v. Federal

12 Attorneys General File Suit in D.C. Circuit Court Challenging FCC Order

  • A bipartisan group of 12 Attorneys General filed a lawsuit in the D.C. Circuit Court of Appeals challenging the Federal Communication Commission’s (“FCC”) “Lifeline Reform Order” (“Order”), alleging that the Order violates the Communications Act and the Administrative Procedure Act.
  • The Order extends the Lifeline program, which provides communications services to low-income consumers at discounted rates, to include broadband internet services and gives the FCC authority to determine the companies eligible to participate in the expanded program.
  • According to the complaint, the FCC’s decision, among other things, exceeds the FCC’s jurisdiction by preempting states from designating eligible broadband internet service providers. The AGs also argue that their state commissions are more familiar with the broadband internet service providers within their state, allowing them to more easily root out waste and fraud.
  • The FCC claims to have revised the process in order to entice service providers with an expedited process for joining the expanded program.


New Jersey Attorney General Settles with Third-Party Utility Company for Alleged Deceptive Marketing and Sales

  • Acting New Jersey AG Christopher Porrino reached a settlement with third-party utility company Palmco Power NJ, LLC and Palmco Energy NJ, LLC (collectively, “Palmco”) to resolve allegations that the company violated state energy and consumer fraud laws.
  • According to the original complaint, Palmco allegedly falsely promoted its services as an affordable energy alternative, when in fact customers allegedly received higher utility bills than the bills they would have received from their previous provider.
  • Under the terms of the consent judgment, Palmco will, among other things, pay $4.5 million in consumer restitution and $786,000 to the state and adjust its advertising materials and sales practices. The AG’s office settled with Keil & Sons, Inc., d/b/a Systrum Energy in August 2015 and with HIKO Energy, LLC in January 2015 over similar allegations.