Consumer Financial Protection Bureau

CFPB Settles with Auto Lender for Allegedly Misrepresenting Finance Charges

The Consumer Finance Protection Bureau reached a settlement with Y King S Corp., d/b/a Herbies Auto Sales (“Herbies”), a used car dealer and originator of auto loans, regarding alleged violations of the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act.

According to the consent order, Herbies allegedly misrepresented finance charges and annual percentage rates (“APRs”) in marketing materials and Truth-in-Lending-Act disclosures where it did not include as finance charges required add-ons and higher car prices incurred only by credit customers, and allegedly took advantage of customers by, among other things, only telling the consumer the price of the vehicle until after the “bundled car-and-credit transaction” was complete.

Under the terms of the consent order, Herbies will pay $700,000 in restitution to harmed consumers and a civil penalty of $100,000, if they fail to pay restitution

Consumer Protection

California Attorney General Settles with Food Manufacturer for Alleged Label Omissions

California AG Kamala Harris reached a settlement with Mondelēz International, Inc., formerly Kraft Foods, for selling ginger snap cookies allegedly containing lead in excess of California limits without the warning required by California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (known as “Proposition 65”), which mandates that businesses notify Californians about significant amounts of certain chemicals in the products they purchase.

According to AG Harris, testing conducted by a nonprofit third-party allegedly revealed that a serving of Nabisco brand ginger snaps contained lead levels up to 9 times the level that requires a warning under Proposition 65, and Mondelēz was allegedly not providing any warnings to its customers.

Under the settlement, pending court approval, Mondelēz must, among other things, improve product sourcing and testing protocols to limit lead and pay approximately $750,000 in civil penalties, costs and attorneys’ fees.

Florida Attorney General Sues Travel Companies for Alleged Deceptive Practices

Florida AG Pam Bondi obtained a temporary injunction and filed a complaint against a number of travel companies and their officers for alleged violations of the Florida Deceptive and Unfair Trade Practices Act.  The companies were: Map Destinations, LLC, Marcipe, Inc., Travel Resource Solutions, Inc. d/b/a Reservation Services International, Reservation Services Group, LLC, RSI Affinity, LLC d/b/a RSI Vacations, RSI Holdings, LLC, Florida Beaches Destination Club, LLC d/b/a Suite Journeys, and Diamond Vacations International.

According to the complaint, these travel companies allegedly promised free gifts or cruises that were either restrictive or not actually free in order to persuade potential customers to attend sales presentations, and they further allegedly misrepresented the costs and benefits of club memberships when consumers purportedly could obtain the same or better pricing from free publicly available travel booking websites.

Missouri Attorney General Sues Charter School for Alleged False Records

Missouri AG Chris Koster, the State Board of Education, and the Missouri Department of Elementary and Secondary Education (“DESE”) filed a complaint against a now-closed charter school, Hope Academy, for allegedly keeping and improperly obtaining state education funds.

According to AG Koster’s office, Hope Academy and its former employees allegedly failed to return state education funds after closing its doors in 2014 even though the school still had money left in its bank account, and further allegedly submitted inaccurate attendance records to DESE that resulted in an overpayment of $4.3 million in state education funds.

The complaint seeks $3.7 million to reimburse the DESE for the remaining balance on outstanding payments made.

False Claims Act

New York Attorney General and Federal Government Settle with Healthcare Facility for Improper Billing

Attorney General Eric Schneiderman and the U.S. Department of Justice reached settlements with CenterLight Healthcare and CenterLight Health System over alleged violations of state and federal False Claims Acts.

According to AG Schneiderman, CenterLight Healthcare admitted that it enrolled and sought reimbursement for Medicaid beneficiaries who were referred by social adult day care centers even though the beneficiaries were not eligible to receive managed long-term care under Centerlight’s Select Medicaid Managed Long Term Care Plan, and further provided services that did not qualify for reimbursement from Medicaid.

Under the terms of the settlement, CenterLight must pay over $28 million in reimbursement to New York and approximately $19 million to the United States.

Virginia Attorney General Settles with Banks Over Mortgage-Backed Securities

Virginia AG Mark Herring reached settlements with eleven banks for alleged violations of the Virginia Fraud Against Taxpayers Act, which is Virginia’s False Claims statute.

According to AG Herring, the banks each allegedly harmed the Virginia Retirement System (“VRS”), the taxpayers, and the pensioners of the Commonwealth through their alleged misrepresentation of the quality of residential mortgage backed securities sold to VRS.

Under the settlements, the banks will collectively pay $63 million.

State v. Federal

25 AGs Petition the Supreme Court to Halt the EPA’s Clean Power Plan

A bipartisan coalition of 25 AGs and four state agencies from 29 states, led by Texas AG Ken Paxton and West Virginia AG Patrick Morrisey, petitioned the U.S. Supreme Court to obtain an immediate stay pending judicial review of the Environmental Protection Agency’s (“EPA”) new regulations limiting carbon emissions, known as the “Clean Power Plan,” after the D.C. Circuit Court rejected the states’ Motion for a Stay that was filed in October 2015.

According to the states’ Petition, the Clean Power Plan 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.  The states assert that, without an immediate stay of the rule, they will face “irreversible changes and harms” while they await judicial review by the D.C. Circuit, which will likely take until 2017 even under expedited consideration.

11 Attorneys General Urge Congress to Preserve State Authority to Regulate Toxic Chemicals

11 Democratic AGs wrote a letter to the Chair and Ranking Members of the U.S. Senate Committee on Environment and Public Works and U.S. House of Representatives Committee on Energy and Commerce urging the Congress to refrain from preempting state and local regulations when Congress enacts long-awaited reforms to the Toxic Substances Control Act (“TSCA”).

In the letter, the AGs support the goal of reforming TSCA to allow the Environmental Protection Agency a more robust role in protecting the public and the environment from toxic chemicals, but caution that preemption of state and local regulations of public health and safety, and environmental effects, unless limited to specific circumstances, would be counterproductive to reducing the risks to people and the environment from toxic chemicals.

Montana Attorney General Asks Bureau of Land Management to Drop Proposed Land Withdrawal

Montana AG Tim Fox wrote a letter to the Bureau of Land Management (“BLM”) urging it to cancel its proposal to withdraw nearly one million acres of public land in the state from potential mineral exploration and mining.

In the letter, AG Fox claims withdrawal is unnecessary because the lands at issue have low mineral development potential, current federal and state regulations are sufficient to protect sage grouse habitat and address other environmental concerns, and recent court cases have found BLM lacks the legal authority to make the proposed withdrawal.