Menu

News

The State AG Report Weekly Update November 19, 2015

Antitrust

Seven Attorneys General and the Federal Government Approve Merger of Two Financial Services Companies

  • After previously raising concerns over the impact on competition, seven AGs and the U.S. Department of Justice (“DOJ”) approved the acquisition of OneMain Financial Holdings, LLC, by Springleaf Holdings Inc., with conditions, paving the way for the merger of the two largest providers of personal installment loans to subprime borrowers.
  • According to the complaint, the loss of competition between Springleaf and OneMain would allegedly result in a reduction of consumer choice that may drive financially struggling borrowers to more expensive forms of credit or leave them with no reasonable alternative.
  • Under the agreement, subject to approval by the court, Springleaf must, among other things, divest 127 branches and waive non-competition agreements for the employees at those branches.

Consumer Protection

FCC and FTC Partner to Police Consumer Protection Issues in Telecommunications 

  • The Federal Trade Commission (“FTC”) and the Federal Communications Commission (“FCC”) signed a Memorandum of Understanding (“MOU”) to “formalize” their coordination and cooperation in overseeing telecommunications carriers and providers of Voice over Internet Protocol services.
  • The MOU outlines the agencies’ methods for coordinating and sharing information to complement their respective authorities over the practices of common carriers as they relate to consumer protection issues.
  • The agencies liken the MOU to a similar agreement they made in 2003 to address telemarketing enforcement issues.

Connecticut and Pennsylvania Attorneys General and FTC Sue Tech Support Companies

  • Connecticut AG George Jepsen, Pennsylvania AG Kathleen Kane, and the Federal Trade Commission (“FTC”) filed a joint complaint and obtained a preliminary injunction against technology support companies, Click4Support LLC and Innovazion Inc., and their owners, for allegedly violating state and federal consumer protection laws and the Telemarketing Sales Rule.
  • According to the complaint, the companies allegedly misled consumers about being agents or technology support for major technology companies, allegedly convinced consumers that their computers were infected with viruses or malware, and allegedly pressured them into paying for support plans and repair services that were costly and unnecessary.
  • The lawsuit seeks permanent injunctions, restitution, and penalties.

Delaware Attorney General Sues Owner of Manufactured Housing Communities for Unlawful Rental Agreements

  • Delaware AG Matt Denn filed a complaint against Hometown America Communities, Inc., an owner of manufactured housing communities, for alleged violations of Delaware manufactured housing laws.
  • According to the complaint, Hometown America allegedly issued rent increase notices to tenants that required homeowners to waive their right to arbitrate the proposed rent hikes in exchange for a “discount” on rent.
  • The AG Office’s lawsuit seeks, among other things, restitution for harmed consumers and civil penalties.

Data Privacy

Nine AGs Urge Credit Card Issuers to Expedite Implementation of Chip and PIN Technology

  • Nine AGs, led by Connecticut AG George Jepsen, sent a joint letter to eight major credit card issuers urging them to expedite the nationwide transition to full chip and PIN technology on credit cards due to the rising number of breaches involving credit and debit cards.
  • The AGs, in the letter, call on the companies to act as “good corporate citizens” and voluntarily expedite implementation to chip enabled, or EMV, cards that rely on a four-digit PIN code, rather than a signature, which the AGs call a “less secure method of verification.”
  • According to reports, Georgia AG Sam Olens, an original co-sponsor of the proposed letter, took the rare step of withdrawing his name from the letter. Critics of the letter, including Hawaii AG Douglas Chin, say the letter is misguided in its focus solely on chip and PIN technology, rather than other security methods such as biometrics.

For-Profit Colleges

40 Attorneys General and the Federal Government Settle with For-Profit College for Alleged Unlawful Recruitment and Enrollment Practices

  • 40 AGs, led by Iowa AG Tom Miller, and the U.S Department of Justice reached a settlement with Education Management Corporation (“EDMC”) for alleged violations of state consumer protection laws in its recruitment and enrollment practices and alleged violations of the federal False Claims Act (“FCA”) for allegedly certifying compliance with the Higher Education Act’s incentive compensation ban.
  • According to the settlements, EDMC allegedly, among other things, paid recruiters based solely on the number of students they enrolled and misled prospective students about program costs and their post-degree earnings potential.
  • Under the terms of the settlements, EDMC will forgive $103 million in outstanding student loan debt and must provide a risk-free trial period for new students and disclosures prior to enrollment.  EDMC will also pay $95.5 million to resolve the alleged FCA violations.