The State AG Report Weekly Update June 9, 2016


Minnesota Attorney General Sues Companies Over Charitable Donation Solicitation Practices

  • Minnesota AG Lori Swanson filed a complaint against Associated Community Services, Inc. and one of its affiliates, Central Processing Services, LLC, (collectively “ACS”) for allegedly violating state charities and consumer protection laws through its practice of soliciting donations for Foundation for American Veterans, a Michigan-based charity.
  • According to AG Swanson’s office, ACS allegedly misled consumers by, among other things, making fundraising calls to prospective donors and then sending "pledge reminders" that falsely indicated that people had pledged to donate.

Consumer Financial Protection Bureau

CFPB Sues Payment Processor for Alleged Violations of Consumer Financial Laws

  • The Consumer Financial Protection Bureau (“CFPB”) filed a complaint against payment processing company Intercept Corporation, d/b/a InterceptEFT, its president Bryan Smith, and its CEO Craig Dresser (collectively “Intercept”) for allegedly violating the Dodd-Frank Wall Street Reform and Consumer Protection Act with respect to its services provided to consumer financial companies.
  • According to the complaint, Intercept allegedly allowed its clients, which included payday lenders, auto-title dealers, debt collectors and sales financing companies, to conduct unauthorized and illegal withdrawals from consumer accounts, and allegedly inadequately investigated, monitored, and responded to warning signs of potential fraud and deception by its clients.
  • The CFPB seeks monetary and injunctive relief, as well as penalties.

Consumer Protection

Arizona Attorney General Settles with Grant Funding Training Company for Alleged False Advertising

  • Arizona AG Mark Brnovich reached a settlement with grant funding training company Advanced Social Media LLC (“ASM”) for alleged violations of the state’s Consumer Fraud Act.
  • According to the AG’s office, ASM allegedly made false and deceptive claims regarding the effectiveness of its marketing and advertising campaigns, as well as about the amount of grant funding available to consumers, and the company’s expertise with obtaining grant funding.
  • Under the terms of the Assurance of Discontinuance, ASM must, among other things, cease operations and dissolve the company.

New York Attorney General Settles With Manhattan Developer for Concealing Prohibited Rent-Controlled Tenant Buyouts

  • NY AG Eric Schneiderman reached a settlement with 165 West 91st Street Holdings, LLC (“165 West 91st Street”), a Manhattan developer, for allegedly buying out rent-controlled tenants of a residential building that the developer was converting into a condominium in violation of the Martin Act, which gives such tenants an exclusive right to purchase their units and, in most cases, prohibits eviction.
  • According to the AG’s office, 165 West 91st Street allegedly failed to disclose that the buyout agreements were completed before the tenants had the opportunity to exercise their right to purchase their apartments. The developer also allegedly attempted to conceal the buyouts by imposing non-payment proceedings against the tenants.
  • According to the terms of the settlement, 165 West 91st Street will pay a $540,000 penalty, $490,000 of which will go to the New York City Affordable Housing Fund, as well as $50,000 to the AG’s office in costs.

West Virginia Attorney General Settles with Online Lender Over “Bank Partnership” Lending

  • West Virginia AG Patrick Morrisey reached a settlement with Avant, Inc. to resolve allegations that the online lending platform for unsecured installment loans violated the state’s Consumer Credit and Protection Act.
  • According to the settlement, Avant was allegedly a de facto lender and subject to state lending and consumer protection laws for loans it purchased and serviced through a “bank partnership” business model, whereby it marketed, promoted, and enabled unsecured consumer loans with a “partner” bank and then immediately purchased those loans from the bank and serviced them.
  • Under the terms of the settlement, Avant must refund and cease to collect at least $111,843 in interest and fees associated with the loans, and must pay a penalty of $225,000.

Data Privacy

15 Attorneys General Press the FCC for Increased Privacy Protections for Unlocked Cable Boxes

  • 15 AGs filed comments with the Federal Communications Commission (“FCC”) regarding the FCC’s proposed rulemaking to expand the commercial availability of cable and satellite programming through equipment other than a set-top box. The FCC filed a notice for a proposed rulemaking on February 18, 2016.
  • In the comments, the AGs urge the FCC to modify the proposed rule to facilitate state enforcement actions against third-party set-top box manufacturers that fail to comply with state consumer protection laws. The AGs note that the proposed rule would require cable and satellite providers to provide access only to third-party set-top box makers that certify to the providers that their products comply with the privacy protections required of the providers themselves. The AGs recommend that access be limited instead to only those third-party set-top box manufacturers that make “consumer-facing” statements regarding their compliance with the consumer protection laws.

For-Profit Colleges

Massachusetts Attorney General Obtains Admissions of Wrongdoing from For-Profit School

  • Massachusetts AG Maura Healey reached a settlement with the now closed for-profit school, Advanced Career Technologies, Inc., The Career Institute, LLC, and ABC Training Center of Maryland, Inc., (collectively “ACI”), and its owners, for violations of the Massachusetts Consumer Protection Act.
  • According to the amended complaint, ACI allegedly falsified records, forged documents with student signatures, misrepresented graduation and job placement rates, and unlawfully enrolled and collected tuition from students unable to qualify for federal student loans.
  • Under the terms of the consent judgment, ACI admits to a number of the allegations, and ACI and its owners must pay $365,000 to the AG. The remaining penalties, fees, and restitution sought are suspended due to ACI’s insolvency. According to the AG’s office, $2 million in private student loan debt owed to ACI will also be discharged as the result of a parallel action.

State v. Federal

Supreme Court Rules That Clean Water Act Jurisdictional Determinations Are Final and Appealable Agency Actions

  • The U.S. Supreme Court unanimously affirmed a U.S. Court of Appeals for the Eighth Circuit decision finding that a jurisdictional determination (“JD”) by the Army Corps of Engineers (“Corps”) that certain property owned by mining company Hawkes Co., Inc. (“Hawkes”) had areas protected by the Clean Water Act constitutes a final agency action that is judicially reviewable under the Administrative Procedure Act.
  • In its decision, United States Army Corps of Engineers v. Hawkes Co., Inc., the Supreme Court held that a JD is a final agency action subject to judicial review because a JD has direct and appreciable legal consequences to property owners, who otherwise do not have adequate alternatives to judicial review. The Court’s decision allows Hawkes to challenge the Corps’ claim that its property sits on federal wetlands.
  • 23 AGs filed an amicus curiae brief urging the Supreme Court to allow private property owners to challenge decisions by the Corps that subject their property to regulation under the Clean Water Act.


3 Attorneys General, State Agencies Settle with Utility Over Improper Charges to Consumers

  • Massachusetts AG Maura Healey, along with the AGs of Connecticut and Rhode Island, as well as other state agencies, reached a settlement with utility company New Hampshire Transmission to resolve allegations that the company improperly charged consumers millions of dollars for costs associated with a development project.
  • According to AG Healey’s office, New Hampshire Transmission allegedly charged and collected millions of dollars from consumers for development of a transmission project that was not actually built. AG Healey filed a complaint regarding the charges with the Federal Energy Regulatory Commission in April of 2015.
  • Under the terms of the settlement, New Hampshire Transmission will, among other things, refund a total of $6.5 million that it already billed to consumers, and will forgo $305,000 in billing.