The State AG Report Weekly Update September 3, 2015


New York Attorney General Settles with Charity Trustees for Allegedly Misusing Funds

  • New York AG Eric Schneiderman reached a settlement with the former trustees of Homeland Foundation, Inc., a general charitable organization that maintains and operates a museum and gardens for the general public, over allegations they misused charitable funds in violation of state charities laws.
  • According to the AG’s office, Homeland’s trustees, including the organization’s former president, allegedly issued grants above the amount allowed by the organization’s charter to organizations directly connected to the former president, who also allegedly used funds for personal benefit.
  • Under the terms of the assurance of discontinuance, the trustees will reimburse the Homeland trust $4,378,828 and make reforms, which include prohibiting grants to organizations where trustees have business ties or interests and improving the diversity of the board of trustees.

Consumer Protection

Three Attorneys General Settle with Online Company for Alleged Use of Negative Option Marketing

  • Attorneys General from Pennsylvania, New York, and Washington entered into proposed settlement agreements with Internet Order LLC d/b/a, and its CEO, for alleged violations of the federal Restore Online Shoppers’ Confidence Act (ROSCA) and state consumer protection laws relating to the alleged use of “negative option” marketing tactics in the online sale of language instruction courses.
  • According to Washington AG Bob Ferguson’s complaint filed against the company last year, consumers who purchased the company’s introductory course were automatically enrolled in a “negative option purchase plan,” which obligated them to receive four advanced-level courses for a total cost of $1,024, that could only be avoided by shipping the advanced-level course materials back to the company at the consumers’ expense.  The company allegedly hid the obligation for the advanced-level courses in its advertising, misled consumers by telling them they had only ordered the introductory course, and made it unreasonably difficult for consumers to cancel their enrollments or return items.
  • Under the settlements, subject to court approval, the company must pay $1,002,000 in restitution to affected consumers, must change their marketing practices to, among other things, clearly disclose the terms of any negative option sale, and will pay additional damages based on the company’s future sales over a three year period, beginning in July 2016.

Pennsylvania Attorney General Settles with Security System Provider Over Allegations of Deceptive Sales

  • Pennsylvania AG Kathleen Kane reached a settlement with Vision Security, LLC, a security system provider, for allegedly violating state consumer protection laws in their door-to-door sales presentations.
  • According to the AG’s office, the company allegedly misled consumers to believe that their current home security providers were either closing or were acquired by Vision Security, which led consumers to switch to Vision Security.
  • Under the terms of the settlement agreement, the company will pay $35,000 in penalties and costs and must allow certain consumers to cancel their contracts at no additional cost.


Massachusetts Attorney General Reaches Agreement with Pharmaceutical Company After Raising Concerns About Generic Drug Price Increase

  • Massachusetts AG Maura Healey reached an agreement with Amphastar Pharmaceuticals, Inc. to resolve concerns over price increases of Naloxone, a generic of Narcan, a drug used to reverse the effects of a heroin or opioid overdose.
  • According to a letter sent by the AG’s office to the company earlier this year, Amphastar allegedly increased the wholesale price of Naloxone by more than 50 percent shortly after Massachusetts changed its rules to allow all first responders to carry and use the drug.
  • Under the agreement, the company will pay $325,000 to the Commonwealth’s Municipal Naloxone Bulk Purchase Trust Fund to help offset the costs of the drug.