The State AG Report Weekly Update July 9, 2015


Seventeen Attorneys General and the FTC Approve Merger of Discount Retailers

  • Seventeen AGs and the Federal Trade Commission (“FTC”) approved the $9.2 billion acquisition of Family Dollar Stores, Inc. by Dollar Tree, Inc. after initially raising concerns that the merger of the two discount retailers would be anticompetitive.
  • The AGs and the FTC alleged that the acquisition would likely result in increased prices of merchandise and negatively affect quality, selection, and services in certain neighborhoods.
  • As part of the companies’ resolution with the FTC and AGs, Dollar Tree has agreed to sell 330 Family Dollar stores in 35 states to a private equity firm.  Dollar Tree must also notify the AGs of future acquisitions, store relocations, and closings.

Consumer Protection

Minnesota Attorney General Sues Debt Relief Company for Allegedly Misleading Students About Student Loan Forgiveness

  • Minnesota AG Lori Swanson filed a lawsuit against Student Aid Center, Inc., a Florida company that allegedly violated state consumer protection laws by charging consumers up-front fees for student loan services that consumers could otherwise obtain for free.
  • According to AG Swanson, Student Aid Center allegedly charged up-front fees of as much as $1,500 to enroll consumers in repayment plans or consolidate their loans, both of which are free for federal student loan borrowers through the U.S. Department of Education. AG Swanson further alleges that the company misled borrowers into thinking that their loans would be forgiven or lowered and used misrepresentations to obtain payment information, among other things.
  • The complaint, according to AG Swanson, seeks restitution for harmed consumers and injunctive relief.

New York Attorney General Settles with Energy Service Company for Allegedly Billing Higher Rates Than Promised

  • New York AG Eric Schneiderman reached a settlement with HIKO Energy, LLC, an energy services company, for allegedly violating state consumer protection laws.
  • AG Schneiderman alleges that, among other things, HIKO enrolled consumers without their consent and failed to meet its promises made in door-to-door and telephone salesto consumers that they would save 10 to 15 percent on energy bills
  • Under the terms of the settlement, HIKO must pay $1.25 million and make adjustments to their marketing and business practices.


Attorneys General from Gulf Coast States Reach Multibillion Dollar Settlement for Deepwater Horizon Oil Spill

  • The U.S. Government and AGs from the five Gulf Coast states of Florida, Alabama, Mississippi, Louisiana, and Texas reached a multibillion dollar agreement in principle with BP for economic and natural resource damages, as well as to resolve alleged Clean Water Act violations, as a result of the 2010 Deepwater Horizon oil spill.
  • Under the agreement, $4.9 billion will be paid to the Gulf Coast states for economic losses, with Florida receiving the most at $2 billion, Louisiana and Alabama each receiving $1 billion, and Mississippi and Texas receiving $750 million and $150 million, respectively. Additionally, the company will pay $8.1 billion for natural resource damages, $5.5 billion to resolve Clean Water Act (“CWA”) civil penalties, and $232 million to address any unknown natural resource damages.
  • The CWA penalties flow in part to the states under the Resources and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of Gulf Coast States Act, which dedicates 80 percent of CWA penalties paid by parties responsible for the 2010 oil spill to go toward Gulf Coast restoration.


Texas Attorney General Settles with Insurance Company Over Alleged Overcharges

  • Texas AG Ken Paxton reached a settlement with Farmers Insurance Group for allegedly violating the Texas Deceptive Practices Act and state insurance code.
  • AG Paxton alleges that, among other things, Farmers charged excessive premiums on its homeowner’s insurance policies, inadequately informed consumers about the impact of credit report information on the premiums and policies available, and engaged in unfair and deceptive practices to determine fees, discounts, and policy offerings for certain consumers.
  • Under the terms of the settlement, Farmers has agreed to pay $84 million in refunds to affected customers.

West Virginia Attorney General Settles with Insurance Company Over Withheld Discounts

  • West Virginia AG Patrick Morrisey reached a $5.75 million settlement with Nationwide Mutual Insurance Co. to resolve a lawsuit, originally filed by AG Morrisey’s predecessor, which alleged that Nationwide’s Farm Bureau Discount program violated, inter alia, the state’s consumer protection and unclaimed properties laws.
  • AG Morrisey alleged, in part, that Nationwide did not provide sufficient discounts to eligible insureds, misled consumers about the discount, and improperly retained funds that should have been distributed to insureds.
  • As part of the settlement, Nationwide will pay $3.6 million to the AG’s office and $2.15 million for restitution to affected customers and legal fees.
  • Nationwide maintains in the settlement that AG Morrisey lacks standing to bring his lawsuit due to Nationwide’s prior settlement of a multi-state class action lawsuit, which included policy holders from West Virginia, regarding the Farm Bureau Discount.

State v. Federal Government

47 Attorneys General Caution Congress Against Preempting State Data Breach Laws

  • The National Association of Attorneys General (“NAAG”) sent a letter signed by 47 AGs to Congressional leadership urging Congress not to pass national data breach and notification standards that would preempt state laws and eliminate the authority of AGs to receive notice of a breach and investigate.
  • In their letter, the AGs request “complimentary enforcement authority” and claim that federal legislation that preempts state efforts will harm consumers because states can respond more quickly, can more easily adapt to changing technologies, and can have an impact when a data breach is small nationally but significant locally.
  • A similar letter was sent to Congress by 44 AGs in 2005 expressing concerns over legislative initiatives that would also have preempted state data breach laws.