The State AG Report Weekly Update October 29, 2015

Consumer Protection

FTC Settles with Mobile Service Provider for Alleged Fair Credit Reporting Act Violations

  • The Federal Trade Commission (“FTC”) reached a settlement with Sprint Corporation to resolve allegations it violated the Fair Credit Reporting Act (“FCRA”) and its Risk-Based Pricing Rule, which requires creditors to notify consumers if they are getting worse contract terms because of information on their credit reports.
  • In the complaint, the FTC alleges that Sprint placed consumers with lower credit scores in an Account Spending Limit (“ASL”) program, which requires consumers to pay an additional monthly fee of $7.99 on top of charges for cell phone and data services, without disclosing the program to consumers or delaying disclosure until after the customer was locked in to the contract. The FTC asserts that because Sprint bills consumers for services after they are used, the company is subject to the FCRA and the Risk-Based Pricing Rule.
  • As part of the proposed settlement, Sprint will pay $2.95 million in civil penalties.

New York Investigates Internet Service Providers Over Concerns About Internet Speed Advertising 

  • New York AG Eric Schneiderman sent letters to three major Internet service providers seeking information from the companies to determine whether their advertisements regarding Internet speeds violate state consumer protection laws.
  • In the letters, AG Schneiderman expresses concerns that the companies may advertise and charge for higher speeds than consumers experience due, in large part, to interconnection arrangements, which are contracts between the providers for the mutual exchange of data.
  • The letters request, among other things, copies of disclosures the companies have made to customers concerning Internet speeds and substantiation for the Internet speed claims made.

Washington Attorney General Settles with Retailer for Alleged Unlawful Debt Collection Tactics

  • Washington AG Bob Ferguson reached a settlement with Freedom Stores Inc., d/b/a Freedom Furniture & Electronics; Military Credit Services, LLC; and Freedom Acceptance Corporation, (“Freedom Stores”) to resolve allegations that the retailer’s debt collection and credit advertising practices violated the Washington Consumer Protection Act.
  • According to the AG’s office, Freedom Stores allegedly promoted “credit options available for everyone” but would require a 50 percent down payment or more, filed lawsuits against Washington service members in Virginia without their knowledge, leading to default judgments, and contacted commanding officers with details of a service member’s debt.
  • Under the terms of the settlement, Freedom Stores agreed to $25,000 in suspended civil penalties and to pay $38,000 in costs and fees. Colorado AG Cynthia Coffman filed a lawsuit earlier this year against the company over similar allegations about its debt collection practices.

False Claims Act

14 States, 2 Cities, and the District of Columbia Settle with Shipping Company for Alleged Overbilling of Government Entities

  • 14 States, Washington, D.C., Chicago, and the City of New York, led by New York AG Eric Schneiderman, reached a settlement with United Parcel Service (“UPS”) to resolve allegations that certain company employees violated state false claims acts by overbilling state and local government entities.
  • According to reports, from 2004 to 2014 certain UPS employees recorded inaccurate delivery times on packages priced for next-day delivery but delivered late and applied inapplicable or false “exception codes,” such as “adverse weather,” to avoid providing refunds for late deliveries on packages sent by government customers.
  • Under the terms of the settlement, UPS will pay $4 million and has instituted remedial training, monitoring, and reporting compliance programs to address any potential delivery failures or policy violations. UPS reached separate settlements in May with the U.S. Department of Justice and New Jersey Acting AG John Hoffman over similar allegations about late deliveries of Next Day Air packages.

State AGs in the News

Louisiana Attorney General to Face Republican Challenger in Runoff Election

  • Louisiana AG Buddy Caldwell (R) will face Republican Jeff Landry in a runoff election on November 21, 2015 after neither candidate received more than 50 percent of the vote in the election for AG held Saturday, October 24.
  • Louisiana has an “open primary” system, where all candidates for an office, irrespective of party affiliation, run in one election. If one candidate wins more than 50 percent of the vote, then that candidate wins the election. If no candidate wins more than 50 percent of the vote, the top two candidates have a runoff election.
  • AG Caldwell and Jeff Landry defeated Democrat Geri Broussard Baloney, Democrat Ike Jackson, and Republican Marty Maley, by a margin of 35.4 percent and 32.7 percent to 17.6 percent, 10.8 percent, and 3.6 percent.

State v. Federal

24 States Sue the EPA to Block Carbon Emissions Output Limitations on Power Plants

  • 24 states, led by West Virginia AG Patrick Morrisey, filed a Petition for Review and a Motion to Stay against the U.S. Environmental Protection Agency (“EPA”), seeking to overturn and immediately stop the EPA’s Clean Power Plan, a new rule requiring a 32% cut in power-plant carbon emissions by 2030.
  • According to the Motion, the rule unlawfully expands the federal government’s regulatory power by directing states to shift electricity generation from fossil fuels to other sources like wind and solar power.
  • A coalition of 16 AGs, and the City of New York, are planning to intervene in the lawsuit to support the EPA. Ten AGs from the coalition and the City of New York wrote a letter to the EPA in August expressing their support and intent to help defend the rule against a challenge.

14 Attorneys General Urge the Federal Government to Withdraw Proposed Regulation on Coal-Mining

  • 14 AGs, led by Ohio AG Mike DeWine and West Virginia AG Patrick Morrisey, sent a comment letter to the Office of Surface Mining Reclamation and Enforcement within the U.S. Department of the Interior, opposing the agency’s proposed Stream Protection Rule, which would regulate coal-mining activities near streams.
  • In the letter, the AGs criticize the rule for infringing on state authority to develop and enforce federally approved mining programs and exceeding the agency’s authority by prohibiting all mining-related activity within 100 feet of various streams.
  • The AGs request that the agency withdrawal the proposed rule, actively consult with state officials, and develop an alternative that preserves “strong federalism policies.”