The State AG Report Weekly Update May 28, 2015

Consumer Protection

22 Attorneys General Settle With Social Networking Site and Online Florist for Allegedly Engaging in Unfair and Deceptive Practices.

  • 22 Attorneys General, led by Kansas AG Derek Schmidt and Maryland AG Brian Frosh, reached a settlement with social networking site Classmates, Inc., and floral delivery company, Florists’ Transworld Delivery, Inc. and Inc., to resolve allegations that the companies engaged in misleading advertising and billing practices in violation of state consumer protection laws.
  • The companies allegedly shared consumer credit card information with third-party marketers and allowed third-party marketers to charge online consumers for memberships if the consumers did not expressly opt-out of an offer or cancel an agreement.  Additionally, Classmates allegedly failed to adequately notify consumers that subscriptions would automatically renew and made it difficult for consumers to cancel their subscriptions.
  • The settlement requires the companies to pay $8 million to states and $3 million in restitution to eligible consumers who were improperly billed. Further, the companies agreed to change their business practices, including, among other things, no longer using the terms “free” or “risk-free” when advertising offers that will convert to a paid subscription.

Minnesota Attorney General Sues Thrift Store Chain for Misleading the Public About Donations and Violating State Charities Laws

  • Minnesota AG Lori Swanson filed a lawsuit against the nation’s largest thrift store chain, TVI, Inc., d/b/a Savers, Inc., and its subsidiary Apogee Retail, LLC, for allegedly misleading the public about its contributions to charities from donated goods and violating state charities laws.
  • According to the complaint, Savers allegedly misled the public and violated state charities laws by, among other things, not paying charities for donations of household products, selling goods for much more than is given to charity, encouraging the public to make donations to benefit one charity when the donations are actually made to another, and failing to comply with state registration and financial reporting laws.
  • The lawsuit follows a November 2014 Compliance Report by AG Swanson that criticized Savers’ business practices.

West Virginia Attorney General Sues Debt Collector for Allegedly Collecting on Unverified Debts

  • West Virginia AG Patrick Morrisey filed a lawsuit alleging that Simple Recovery Solutions, LLC (“SRS”), a Florida based debt collection company, and its owners violated state consumer protection laws by repeatedly contacting consumers to collect on debt that the consumers did not, in fact, owe.
  • According to the complaint, SRS allegedly attempted to collect debts from at least 125 West Virginia residents that was not owed and could not be verified by the company as legitimate. The complaint also alleges that SRS sought to collect debts from deceased consumers and their surviving relatives, as well as consumers whose debts were discharged through bankruptcy.
  • The complaint seeks civil penalties, and also seeks to enjoin and restrain SRS, its officers, and employees from engaging in unfair or deceptive acts or practices in their collection services.

Data Privacy

Vermont Attorney General Settles Wth Out-of-State Hotel and University for Allegedly Failing to Timely Notify Consumers of Data Breaches.

  • Vermont AG William Sorrell filed settlements with Embassy Suites South San Francisco located in San Francisco, California, and Auburn University to resolve allegations that the companies failed to timely notify Vermont consumers after they became aware of data breaches.
  • Under Vermont law, the Attorney General must be notified within 14 days and consumers must be notified “in the most expedient time possible and without unreasonable delay,” but no later than 45 days after a data breach has been discovered.  According to the settlements, both the Embassy Suites and Auburn University did not notify consumers and the Attorney General until several months after discovering security breaches to its credit card system and a faculty computer file, respectively.
  • Under the settlements, Auburn University and Embassy Suites have agreed to comply with Vermont’s notification law in the future and will implement policies and procedures to ensure future compliance with the law.


State and Federal Officials Investigate Santa Barbara Oil Spill

  • California AG Kamala Harris announced that her office is working with the local district attorney’s office and state and federal agencies to investigate and “hold responsible parties accountable” for the oil spill near Santa Barbara, California.
  • On May 19, 2015, a pipeline, owned by Plains All American Pipeline, L.P. (“Plains Pipeline”), ruptured, spilling more than 100,000 gallons of crude oil, with an estimated 21,000 gallons leaking into the Pacific Ocean near Santa Barbara, California.
  • The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration issued a Corrective Action Order on May 21 seeking Plains Pipeline to suspend operations and to repair and inspect the entire affected pipeline.

Labor & Employment

Washington Attorney General Files Amicus Brief in Support of Seattle’s Minimum Wage Law.

  • Washington AG Bob Ferguson submitted an amicus brief to the Ninth Circuit Court of Appeals in support of Seattle’s $15 minimum wage law, which is currently being challenged by the International Franchise Association (“IFA”) as violating federal and state constitutions in International Franchise Association v. City of Seattle, NO. 14-CV-00848.
  • In his amicus brief, AG Ferguson addresses IFA’s claims under the dormant Commerce Clause and the privileges and immunities clause of the Washington Constitution, asserting that the “issues [are] particularly within the State’s expertise and concern.”  In particular, AG Ferguson argues that IFA has failed to demonstrate that the law violates the dormant Commerce Clause, and that IFA misapplies the privileges and immunity clause under the state constitution to suggest that operating a business is a privilege.
  • In its lawsuit, IFA challenges the delayed implementation of the wage increase allowed to certain businesses, including non-franchise business owners, as discriminating against small franchise business owners that, they claim, are similarly situated to small non-franchise business owners. The IFA is appealing the district court’s denial of its motion for a preliminary injunction.

State v. Federal

Fourteen States Join Letter to Congress in Support of the Federal Water Quality Protection Act

  • Fourteen states, led by West Virginia AG Patrick Morrisey, wrote a letter to Congress supporting the Federal Water Quality Protection Act, which reverses a now-final rule by the Environmental Protection Agency (“EPA”) that defines “waters of the United States” as including tributaries and adjacent waters, and thus makes them subject to the federal Clean Water Act.
  • Specifically, the state officials claim that the rule places a large amount of intrastate waters and sometime-wet lands under the supervision of the federal government, which they assert would impose duplicative regulations on farmers, developers, and homeowners.
  • In the letter, the state officials ask the committee to “move quickly and pass” the Federal Water Quality Protection Act, which will halt the EPA’s rule that “fails to respect the States’ primacy in intrastate water and land use management.”
  • In contrast, a coalition of eight AGs, led by New York AG Eric Schneiderman, have voiced their support for the rule stating, in a letter to the EPA, that the rule would provide clarity for what waters are subject to the Clean Water Act to allow states to efficiently administer their water protection programs.