The State AG Report Weekly Update March 16, 2017

Breaking News

Former Virginia Attorney General Joins Cozen O'Connor's State Attorneys General Practice

  • Jerry Kilgore, former Attorney General of Virginia (2002-2005), has joined Cozen O'Connor's nationally recognized State Attorney General Practice, which represents clients with AG issues in all 50 states. Kilgore previously served as the Virginia Secretary of Public Safety from 1994 to 1998.
  • Prior to joining Cozen, Kilgore was a partner at a Virginia law firm where he maintained a highly successful State AG practice.
  • Kilgore currently serves as finance chairman of the Republican Party of Virginia and has been honored with numerous accolades, including being named among The Best Lawyers in America.


Michigan Attorney General Sends Cease and Desist Order Over Allegations of Deceiving Donors

  • Michigan AG Bill Schuette issued a Notice of Intended Action and a Cease and Desist Order against veteran charity organization VietNow National Headquarters, Inc. (“VietNow”) and a Notice of Intent to revoke its charitable solicitations registration for allegedly violating the state’s Charitable Organizations and Solicitations Act by engaging in deceptive solicitations and improper spending.
  • According to the AG’s office, VietNow allegedly employed misleading telemarketing scripts that exaggerated the percentage of funding it provided for veterans’ medical facilities and treatment when soliciting donations.
  • Under the terms of the Notice of Intended Action and Cease and Desist Order, VietNow must cease its allegedly unlawful solicitations and confirm its compliance with the Order within 21 days or face further legal action.

Consumer Financial Protection Bureau

CFPB Fines Mortgage Loan Provider for Allegedly Flawed Mortgage Transaction Reporting

  • The Consumer Financial Protection Bureau (“CFPB”) filed a Consent Order against mortgage loan provider Nationstar Mortgage LLC (“Nationstar”) for allegedly failing to accurately report mortgage transactions in violation of the Home Mortgage Disclosure Act (“HMDA”).
  • According to the CFPB, Nationstar allegedly failed to comply with HMDA loan reporting requirements, which require mortgage lenders to report lending data to federal agencies, and used a compliance system that generated mortgage lending data with significant errors.
  • Under the terms of the Consent Order, Nationstar must pay $1.75 million to the CFPB’s Civil Penalty Fund, create an effective HMDA compliance management system, and correct prior HMDA reporting errors.

Consumer Protection

North Carolina Attorney General Announces Settlement with Debt Relief Company for Allegedly Scamming Consumers 

  • A North Carolina Superior Court ruled in favor of North Carolina AG Josh Stein by finding that Orion Processing, LLC, Swift Rock Financial, Inc., World Law South, Inc., Bradley Haskins, and Derin Scott (collectively, “World Law”) violated the state’s Debt Adjusting Act and other state laws by requesting advance payment of fees for debt relief services that it rarely delivered.
  • According to the amended complaint, World Law allegedly collected fees for debt relief services without resolving consumers’ debts and falsely claimed that it was a law firm and local attorneys would assist consumers with settling their credit card debts.
  • The Court’s ruling prohibits World Law from advertising or performing debt relief or legal services in North Carolina and imposes final monetary judgements against Orion Processing, Swift Rock Financial, World Law South, and Haskins in the amount of $3.1 million and civil penalties of $6 million against each of them. Scott, the remaining defendant, agreed to a suspended judgement of $2.5 million, which will become due if he violates the Court’s order. In an earlier proceeding, World Law agreed to refund consumers $3.5 million.

Virginia Attorney General Settles with Retail Craft Store Over Alleged Price-Advertising Violations

  • Virginia AG Mark Herring reached a settlement with arts and craft retailer Hobby Lobby to resolve allegations that the company engaged in misleading advertising in violation of the state’s Comparison Price Advertising Act and the Virginia Consumer Protection Act.
  • According to the AG’s office, Hobby Lobby allegedly advertised discounts compared to “other sellers” but did not disclose at what price point or to which seller the discount price was being compared, as required by law.
  • Under the terms of the settlement, Hobby Lobby will pay an $8,000 civil penalty, related expenses and attorneys’ fees, and comply with a permanent injunction barring the company from engaging in the allegedly illegal conduct.


Illinois Attorney General Files Lawsuit Against Third-Party Utility Company for Allegedly Misleading Consumers

  • Illinois AG Lisa Madigan filed a lawsuit against third-party utility company PALMco Power IL LLC (“Palmco”) for allegedly misleading consumers regarding the actual costs of switching to Palmco for their electricity supply in violation of the state’s Consumer Fraud and Deceptive Business Practices Act.
  • According to the complaint, Palmco allegedly promised consumers that their energy bills would be lower than if they stayed with their current utility provider, but after an introductory rate period elapsed, consumers’ bills actually increased by as much as 300%. Palmco also allegedly deceived consumers into believing they were affiliated with the consumers’ utility company.
  • The lawsuit seeks civil penalties of $50,000 per violation, restitution for all impacted consumers, and a permanent injunction that would bar Palmco from misrepresenting its rates or using deceptive tactics to make consumers switch their utility provider.

Labor and Employment

New York Attorney General Settles with Pizza Delivery Chain Franchisees for Alleged Underpayment of Wages

  • New York AG Eric Schneiderman reached a settlement with three Domino’s Pizza franchisees and their owners (collectively, the “franchisees”) across ten different locations, stemming from a lawsuit filed against the franchisees and their franchisor Domino’s Pizza, Inc., Domino’s Pizza LLC, and Domino’s Pizza Franchising LLC (collectively, “Dominos”) over allegations that they violated state labor laws by underpaying pizza workers.
  • As previously reported, the three franchisees allegedly underpaid workers by failing to pay the legal minimum wage and overtime rates, and failing to adequately reimburse workers for their delivery expenses. According to the AG’s office, the underpayments were primarily due to a computer system that Domino’s allegedly urged franchisees to utilize for payroll, which under-calculated gross wages.
  • Under the terms of the settlement, the franchisees will pay $480,000 in restitution to workers at the ten different franchise locations and will be dismissed from the lawsuit.
  • The lawsuit will proceed against Dominos, who did not reach a settlement with the New York AG, and is alleged to be responsible for the underpaid wages as a joint employer of these franchises.