Consumer Financial Protection Bureau

CFPB Takes Action Against Title Lenders Over Alleged Failure to Disclose Terms and Costs

• The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with TitleMax, Inc., and its parent company TMX Finance LLC (collectively “TitleMax”) to resolve allegations that the auto title lender violated the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) by misleading consumers about loan terms and costs.
• According to the CFPB, TitleMax allegedly misled consumers about its loan terms by asking consumers how much they would like to pay each month and how long they preferred to take to pay the 30-day loan without clearly disclosing fees, failed to disclose that repeated loan renewal would result in more costs to the consumer, and used unfair collection practices by visiting consumers’ homes and places of employment to collect debts.
• Under the terms of the consent order, TitleMax must, among other things, pay $9 million to the CFPB’s Civil Penalty Fund.
• Last week, the CFPB filed separate administrative lawsuits against Auto Cash Leasing, LLC; Interstate Lending, LLC; Oasis Title Loans, LLC; Phoenix Title Loans, LLC; and Presto Auto Loans, Inc., for allegedly violating the Truth in Lending Act (“TILA”) by advertising periodic loan interest rates online without advertising the corresponding annual percentage rate.

CFPB Settles with Online Lending Company Over Alleged Service Misrepresentations

• The CFPB reached a settlement with Flurish, Inc., d/b/a LendUp, to resolve allegations that the online payday lender violated the Dodd-Frank Act, the TILA, and related consumer protection regulations.
• According to the CFPB, Flurish allegedly misled consumers outside California about the possibility of obtaining loans with better terms that were only available to California consumers, failed to report credit information to the credit bureaus that would have improved credit scores, and failed to disclose the annual percentage rate for loans advertised in online banner advertisements.
• Under the terms of the consent order, Flurish must pay approximately $3.63 million, which includes $1.83 million in restitution for affected consumers and a $1.8 million civil penalty.

Consumer Protection

FTC Obtains Judgment Against Dietary Supplement Seller Over Alleged Misrepresentations

• The Federal Trade Commission (“FTC”) obtained a judgment from the U.S. District Court for the District of Wyoming against COORGA Nutraceuticals Corporation and its owner over allegations that the company violated the Federal Trade Commission Act (“FTC Act”) by misrepresenting “Grey Defence,” a dietary supplement that the company marketed and sold in the U.S.
• According to the summary judgment order, the court found that COORGA’s claim that Grey Defence could prevent or reverse grey hair violated the FTC Act because the company lacked a reasonable basis or scientific evidence to support this claim.
• Under the terms of the final judgment and order, COORGA must update its marketing claims and pay $391,335 to the FTC, which will potentially be used to refund consumers.

Vermont Attorney General Sues Company and Owners for Allegedly Misleading Crowdfunding Campaign

• Vermont AG Bill Sorrell filed a lawsuit against Capture the Dream, LLC, and its owners over allegations that the company violated Vermont’s Consumer Protection Act by misrepresenting its crowdfunding and fundraising efforts on behalf of the Company’s drive-in movie theater located in Vermont.
• According to the complaint, Capture the Dream allegedly initiated an online crowdfunding campaign to solicit donations for a digital movie projector to keep its drive-in movie theater open beyond the 2014 season, despite knowing that its lease would end in 2014. The company allegedly used half of what it raised to pay for the projector, and at the end of its lease, relocated it to a new property in New York.
• The lawsuit seeks to obtain restitution for consumers who donated money to Capture the Dream through crowdfunding or other solicitations, civil penalties up to $10,000 per violation, and among other things, disgorgement of all profits resulting from violations of Vermont’s Consumer Protection Act.

Data Privacy

New York Attorney General Settles with Hotel Chain Over Data Breaches

• New York AG Eric Schneiderman reached a settlement with Trump International Hotels Management LLC, d/b/a Trump Hotel Collection (“THC”), over allegations that the hotel chain violated New York’s General Business Law by failing to quickly act on the knowledge that consumers’ credit card numbers and other personal data were exposed by malware.
• According to the AG’s office, THC allegedly failed to provide timely notice to consumers about a data breach of its payment processing system, notifying consumers more than three months after discovering through a preliminary forensic investigation that multiple hotels had been infiltrated with malware designed to steal credit card numbers. THC also discovered a second data breach in March 2016, which the AG’s office alleges could have been avoided if THC implemented and maintained reasonable security policies and procedures following the first breach.
• Under the terms of the settlement, THC must pay $50,000 in penalties and improve its data privacy practices.

False Claims Act

New York Attorney General Settles with Transportation Provider Over False Billing Allegations

• New York AG Eric Schneiderman reached a settlement with First Call, Inc., to resolve allegations that the transportation provider violated New York’s False Claims Act by collecting improper Medicaid payments.
• According to the AG’s office, First Call allegedly submitted Medicaid claims for transportation services that were provided by drivers not qualified under state law to operate buses and failed to maintain appropriate records necessary to support the Medicaid payments.
• Under the terms of the settlement, First Call must pay the state $173,650.83 in restitution and damages.

Pharmaceuticals

36 Attorneys General Sue Pharmaceutical Company Over Alleged Attempt to Maintain Monopoly

• 36 AGs filed a lawsuit against Indivior Inc., f/k/a Reckitt Benckiser Pharmaceuticals, Inc., MonoSol Rx, LLC, and related entities for allegedly violating the federal Sherman Act and state antitrust and consumer protection laws.
• According to the complaint, Indivior, the makers of prescription opiate addiction treatment drug Suboxone, allegedly collaborated with MonoSol Rx to illegally “product hop” by converting Suboxone from tablet form to a dissolvable, edible film in order to extend its patent exclusivity protection and delay generic alternatives from entering the market, resulting in inflated costs for consumers and purchasers beginning in 2009.
• The complaint seeks an injunction to end the companies’ engagement in anticompetitive behavior, as well as civil penalties, disgorgement to the states and consumers, and costs and fees.