Consumer Financial Protection Bureau

CFPB Issues Order Against Payday Lender for Allegedly Deceptive Online Advertisements

  • The Consumer Financial Protection Bureau (“CFPB”) issued an order against Moneytree, Inc. for allegedly violating the Dodd-Frank Wall Street Reform and Consumer Protection Act by misleading consumers with deceptive advertisements and collection letters.
  • According to the CFPB, Moneytree allegedly advertised that consumers could cash their tax refund checks for “1.99” without specifying that the fee was 1.99% of the cashed check and not $1.99, sent collection letters that misled consumers to believe their vehicles could be repossessed if they failed to make past-due payments on installment loans, and failed to obtain preauthorization prior to withdrawing funds from consumers’ bank accounts.
  • Under the terms of the order, Moneytree must pay $255,000 in refunds to consumers and a civil penalty of $250,000.

CFPB Issues Order to Credit Company for Alleged Failure to Disclose Contract Terms

  • The CFPB issued an order against Military Credit Services, LLC, a company that extends credit to consumers through retailers, for allegedly violating the Electronic Fund Transfer Act, the Truth in Lending Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act by failing to disclose contract terms to consumers.
  • According to the CFPB, Military Credit Services allegedly failed to disclose the terms of the preauthorized transfers and interest rates on its loans as required by law.
  • Under the terms of the consent order, Military Credit Services must hire an independent consultant to review the company’s issuance and servicing of credit and pay a $200,000 civil penalty.

CFPB Sues Pawnbrokers for Allegedly Deceiving Consumers About Loan Costs

  • The CFPB filed lawsuits against pawnbrokers Spotsylvania Gold & Pawn, Inc., Fredericksburg Pawn, Inc., Pawn U.S.A., Inc., and A to Z Pawn, Inc. for allegedly violating the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act by misleading consumers about the cost of its loans.
  • According to the CFPB, the four companies allegedly misled consumers about the costs of their loans by advertising a low annual percentage rate that did not reflect all of the fees associated with the loans.
  • The lawsuits seek monetary relief, injunctive relief, and penalties.

Data Privacy

14 Attorneys General and FTC Settle with Online Dating Service for Alleged Security Misrepresentations

  • 14 AGs and the Federal Trade Commission (“FTC”) reached a settlement with the owners and operators of the Ashley Madison website, ruby Corp., ruby Life, Inc., and ADL Media, Inc. (collectively, “Ashley Madison”) to resolve allegations that the company violated the Federal Trade Commission Act (“FTC Act”) and state consumer protection laws by misrepresenting data security on their website.
  • According to the AGs and the FTC, Ashley Madison allegedly misrepresented the strength of its security, created thousands of fake user profiles, and sold a “Full Delete” option which was not carried out in some cases. This led to the leak of former members’ personal information when the website was breached by hackers.
  • The AGs’ consent judgments and the FTC’s stipulated order impose a combined $17.5 million judgment against Ashley Madison, which will be partially suspended upon payment of $828,500 to the states and $828,500 to the Commission.

Environment

22 Attorneys General and Two State Agencies Pen Letter to Vice President-Elect Urging Withdrawal of Clean Power Plan

  • 22 AGs, along with the Mississippi and North Carolina Departments of Environmental Quality, sent a letter on December 14, 2016 to Vice President-elect Mike Pence, Senate Majority Leader Mitch McConnell, and House Speaker Paul Ryan urging them to withdraw the Environmental Protection Agency (“EPA”) rule entitled “Carbon Pollution Emissions Guidelines for Existing Stationary Sources: Electric Utility Generating Units” (commonly known as the “Clean Power Plan”) and to take action to prevent similar measures in the future.
  • According to the AGs and state environmental agencies, the Clean Power Plan would impose emission reduction requirements focused on eliminating operations at fossil-fueled power plants and replacing these facilities with new renewable energy facilities, rather than focusing on pollution controls, among other things.
  • In their letter, the AGs and state environmental agencies urge the Administration and Congress to issue an executive order rescinding President Obama’s Presidential Memorandum directing the EPA to issue the rule and to undertake formal administrative action to withdraw the rule and related actions in court.

California Attorney General, DOJ, and EPA Reach Partial Settlement with Car Manufacturer Over Alleged Environmental Violations

  • California AG Kamala Harris, the California Air Resources Board, the U.S. Department of Justice (“DOJ”), and the EPA reached a partial settlement with Volkswagen AG, Volkswagen Group of America, Inc., Audi AG, Audi AG of America, LLC, Porsche AG, Porsche Cars of North America, Inc., and related entities (collectively the “VW Group”) to resolve allegations they violated California’s environmental laws with respect to 83,000 3.0 liter diesel vehicles.
  • According to the DOJ, the VW Group allegedly sold diesel vehicles equipped with “defeat device” software intended to circumvent applicable emissions standards for certain air pollutants, actively concealed the existence of the defeat device from regulators and the public, and misrepresented their vehicles as environmentally-friendly and compliant with federal and state emissions standards.
  • Under the terms of the settlement, the VW Group must buy back or offer lease cancellations to owners and lessees of older “Generation One” engine vehicles, and must recall and repair its newer “Generation Two” engines. The settlement, which is estimated to be worth $1 billion, requires the VW Group to pay $225 million into an environmental mitigation trust.

For-Profit Colleges

FTC Settles with For-Profit College Over Allegedly Misleading Advertisements About Education Outcomes

  • The FTC reached a settlement with DeVry Education Group Inc. and its related entities (collectively, “DeVry University”) to resolve a lawsuit alleging the for-profit college violated the FTC Act by misleading students with inaccurate claims in its advertisements.
  • According to the FTC’s complaint, DeVry University allegedly misled consumers by claiming that ninety percent of graduates actively seeking employment were able to find jobs in their field within six months of graduation, and also falsely claimed that its bachelor’s degree program graduates earned fifteen percent higher incomes one year after graduation than graduates from other colleges or universities.
  • Under the terms of the stipulated order, DeVry University must, among other things, pay $49,400 in restitution to students affected by DeVry’s deception, forgive $30.35 million in student loans, and forgive $20.25 million in student debts for items including tuition, books, and lab fees.

Labor & Employment

Nine Attorneys General Reach Agreements with Retailers to End Mandatory On-Call Shift Scheduling

  • Nine AGs reached an agreement with retail stores Aeropostale, Inc., Carter’s, Inc., David’s Tea Inc., The Walt Disney Company, Pacific Sunwear of California, Inc., and Zumiez Inc. to end the practice of mandatory on-call shift scheduling, which requires employees to call their employer several hours before a shift to determine if they will be assigned and paid for work that day.
  • The agreement stemmed from an April 2016 letter the AGs sent to fifteen retailers requesting that the use of on-call shift scheduling be stopped because workers subject to such schedules have difficulty making reliable childcare and eldercare arrangements and continuing educational pursuits, among other things.
  • The remaining companies who received letters either do not use on-call shifts or recently stopped using this work schedule.

Securities

New York Attorney General and SEC Settle with Bank for Allegedly Misleading Investors

  • New York AG Eric Schneiderman and the U.S. Securities and Exchange Commission (“SEC”) reached a settlement with Deutsche Bank Securities Inc. to resolve allegations that the financial institution violated New York State and federal securities laws by misleading investors regarding its private exchanges for trading securities (commonly known as “dark pools”).
  • According to AG Schneiderman, Deutsche Bank Securities allegedly misled consumers about its “Dark Pool Ranking Model” (“DPRM”), a tool meant to periodically review and re-rank the pools based on the venues’ execution quality and liquidity, by failing to disclose to consumers that a coding error caused the model to update just once between 2012 and 2014, leading to the use of stale rankings. The bank also allegedly manually overrode the DPRM rankings to “force rank” its own dark pool into its highest routing tier.
  • Under the terms of the bank’s settlement agreement with AG Schneiderman and the SEC’s order, the bank must pay each regulator $18.5 million in penalties. As we previously reported, AG Schneiderman and the SEC reached a settlement in February 2016 with two investment banks over related allegations.

State v. Federal

California Attorney General Sues DOI to Challenge Environmental Assessment Findings

  • California AG Kamala Harris and the California Coastal Commission filed a lawsuit in the U.S. District Court for the Central District of California against the U.S. Department of Interior (“DOI”) for allegedly violating the National Environmental Policy Act, the Coastal Zone Management Act, and the Outer Continental Shelf Lands Act in DOI’s May 2016 final environmental assessment on fracking, in which it found fracking posed “no significant impact” to the environment.
  • According to AG Harris, the assessment, which would allow fracking, acidizing, and other treatments on the Pacific Outer Continental Shelf off the California coast, runs contrary to substantial evidence in the record that these practices pose a significant impact to air quality, aesthetics, and biological resources, among other things.
  • The lawsuit seeks to declare that DOI acted unlawfully and set aside approvals based on its final programmatic environmental assessment and finding of no significant impact.