The State AG Report Weekly Update October 1, 2015

Campaign Finance

Washington Attorney General Sues Employee Union and PAC for Alleged Campaign Finance Violations

  • Washington AG Bob Ferguson filed a lawsuit against the Service Employees International Healthcare 775NW (“SEIU 775”) and political action committee SEIU 775 Quality Care Committee (“PAC”) for allegedly violating state campaign finance laws for failing to timely and properly report in-kind and monetary contributions.
  • According to the complaint, the SEIU 775 allegedly failed to report monetary contributions totaling $1.39 million, as well as in-kind contributions, made to the PAC from 2010 to 2015, and the PAC allegedly failed to properly file reports of any in-kind contributions received from the SEIU 775.
  • The investigation began in response to a Citizen Action Complaint to the AG’s office by the Freedom Foundation.

Consumer Financial Protection Bureau

CFPB and DOJ Settle with Bank for Alleged Discriminatory Mortgage Lending Practices

  • The Consumer Financial Protection Bureau (“CFPB”) and the U.S. Department of Justice (“DOJ”) reached a joint settlement with Hudson City Savings Bank, F.S.B. for allegedly violating the Equal Credit Opportunity Act (“ECOA”) and the Fair Housing Act (“FHA”), which both prohibit financial institutions from discriminating on the basis of race, color, or national origin in their mortgage lending practices.
  • According to the complaint, from at least 2009 to 2013, Hudson City allegedly “redlined” predominately Black and Hispanic neighborhoods in its residential mortgage lending practices by intentionally excluding these neighborhood from its marketing strategy and credit assessment areas, and not locating banks or loan officers there.
  • Under the terms of the proposed consent order, Hudson City will, among other things, pay a $5.5 million penalty, pay $25 million in a loan subsidy fund to increase the amount of credit the bank extends to predominately Black and Hispanic neighborhoods across its market areas, invest $2.25 million in advertising, outreach, financial education, and community partnership efforts, and open two full-service branches in these neighborhoods.

CFPB and DOJ Settle with Indirect Auto Lender for Alleged Discriminatory Lending Practices

  • The CFPB  and the DOJ reached a joint settlement with Fifth Third Bank for allegedly allowing discriminatory auto loan pricing in violation of the Equal Credit Opportunity Act.
  • The complaints allege that Fifth Third’s practice of allowing dealers the discretion to charge higher interest rates, known as “dealer markup,” to consumers regardless of their creditworthiness resulted in minority borrowers paying higher interest rates than non-Hispanic white borrowers.
  • Under the settlement, Fifth Third must reduce or eliminate dealer discretion and pay $18 million in damages, with up to a $6 million credit for remediation the lender has already provided, to harmed consumers.
  • The CFPB also reached a separate settlement with Fifth Third, which requires them to pay $3 million in restitution and $500,000 in penalties, for allegedly engaging in unfair and deceptive practices in the marketing and sale of its “Debt Protection” credit card add-on products.

Consumer Protection

Multi-State Attorney General Investigation Opened Against Automobile Manufacturer

  • At least 32 AGs have announced a multistate investigation of Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. (“Volkswagen”) to determine whether the company violated consumer protection laws by allegedly using software that manipulated data produced during emissions standards testing.
  • According to the Environmental Protection Agency (“EPA”), which is also investigating and has issued a notice of violation to the company for alleged violations of the Clean Air Act, Volkswagen allegedly used a “defeat device,” as defined by the Clean Air Act, in diesel cars sold in the U.S. that turns on full emissions controls during emission control testing, which are otherwise reduced during normal driving conditions..

FTC Amends Rules for Packaging and Labeling Consumer Products

  • The Federal Trade Commission (“FTC”) finalized rules amending prior regulations issued under the Fair Packaging and Labeling Act, which governs the information provided on packaging and labels for certain consumer products.
  • The amendments, among other things, revise the place of business requirement to allow businesses to omit a mailing address by incorporating online resources, eliminate rules governing the use of the terms “cents off,” “introductory offer” and “economy size,” and alert businesses that state weights-and-measurement laws may apply to certain products.

FTC Sues Marketers Who Allegedly Used “Gag Clauses” to Stop Negative Consumer Reviews

  • The FTC filed a lawsuit against Roca Labs, Inc., Roca Labs Nutraceutical USA, Inc., and their officers, (“Roca”) for allegedly violating federal consumer protection laws in their advertising and sales of weight-loss products.
  • According to the complaint, Roca allegedly made false and unsubstantiated weight-loss claims, misled consumers where it used success stories without disclosing that the reviewers were compensated by the company, and unfairly used non-disparagement, or “gag” clauses, in their sales contracts to prevent customers from complaining to the Better Business Bureau or posting negative comments online.

State v. Federal

NAAG Urges Congress to Pass Legislation to Help States Address Opioid Abuse

  • 38 AGs partnered to send a letter, through the National Association of Attorneys General (“NAAG”), to the Chair and Ranking Members of the U.S. House and Senate Committee’s on the Judiciary, urging passage of the Comprehensive Addiction and Recovery Act of 2015 (“CARA”).
  • In the letter, the AGs note that the CARA would provide the “necessary tools” to more effectively confront opioid abuse in their states. Specifically, they note that the legislation would, among other things, expand prevention and educational efforts, expand the availability of naloxone to help reverse overdoses, and strengthen prescription drug monitoring programs.

33 Attorneys General Urge FDA to Require Child-Resistant Packaging and Warning Labels on Liquid Nicotine Products

  • 33 AGs, led by the AGs from New York, Illinois, and Indiana, filed comments with the U.S. Food and Drug Administration (“FDA”) urging the agency to regulate warning labels and packaging for all nicotine products.
  • In their comment letter, the AGs recommend, among other things, that the FDA require nicotine exposure warnings on all nicotine products, including liquid nicotine products, nicotine-containing e-liquids, and novel tobacco products, such as dissolvables, lotions, gels, and drinks, without preventing company or state efforts to provide additional warnings on the products, and child-resistant packaging specific to liquid nicotine.