COVID-19

Attorneys General Step Up Enforcement Efforts Against Price Gouging

• AGs across the country are taking steps to protect the public from price gouging by sellers capitalizing on the COVID-19 pandemic.
• California AG Xavier Becerra sent letters to multiple online commerce platforms, including Alibaba Group, Shopify, eBay, Inc., and Overstock expressing concern about third-party sellers engaging in price gouging on these platforms and urging heightened vigilance.
• Florida AG Ashley Moody issued more than 40 subpoenas to third-party sellers on Amazon.com, Inc. (“Amazon”) in her investigation of unlawful price increases on essential goods, including face masks and sanitizers. At the same time, AG Moody also sent a letter to Amazon commending the company’s cooperation in working to combat price gouging.
• Massachusetts AG Maura Healey issued an emergency regulation to prohibit price gouging of essential goods and services necessary for public health and safety during a declared statewide or national emergency.
• Missouri AG Eric Schmitt warned potential bad actors that his office will take legal action on reports and complaints of price gouging related to the medical supply chain.
• Texas AG Ken Paxton warned retail suppliers, including grocery stores and pharmacies, that state law prohibits price gouging after a disaster declaration. Under the Texas Deceptive Trade Practices Act, the AG may seek reimbursement and civil penalties, including a penalty of up to $250,000 if the affected consumers are elderly.

New York Attorney General Battles COVID-19 Related Snake Oil Marketing

• NY AG Letitia James sent a letter to TV host Wayne Allen Root ordering him to immediately cease and desist marketing products as cures, treatments, or preventative measures for coronavirus, which he has been doing on his television show and through www.MyDoctorSuggests.com.
• AG James also sent letters to domain name registrars GoDaddy, Inc., Dynadot, Name.com, Inc., Namecheap, Inc., Register.com, Inc., and Endurance International Group, Inc., apprising them that the AG’s office is investigating allegations of deceptive advertising, phishing schemes and malware dissemination through the registration and use of coronavirus-related domains in violation of New York’s consumer protection laws and the Computer Fraud and Abuse Act. The letters request information about the steps that the registrars are taking to protect consumers.
• In addition, AG James sent a letter to the attorneys for CraigsList.com apprising them that the AG’s office is investigating allegations of fraudulent and misleading advertisements of products and services relating to the detection and treatment of COVID-19 in violation of consumer protection laws. The letter also cites a post that offers sanitizer for sale at an exorbitant price in violation of New York’s price gouging law. The letter asks CraigsList to remove the cited posts and to provide the AG’s office with a description of the efforts CraigsList is making to detect and remove similar posts.

Cruise Line in Hot Water over Allegations of Misleading Marketing

• Florida AG Ashley Moody launched an investigation of Norwegian Cruise Lines Holdings Ltd. (“NCL”) over allegations of misleading sales pitches for its cruises in violation of Florida’s Consumer Protection Law.
• According to the AG’s office, NCL allegedly provided its sales force with scripted responses to customer concerns about COVID-19, which downplayed the infectiousness of the coronavirus and the severity of the disease.
• According to the AG’s office, NCL is fully cooperating in the investigation.

Antitrust

FTC and DOJ Expedite Antitrust Review for COVID-19-Related Collaborations

• The Federal Trade Commission (“FTC”) and the U.S. Department of Justice (“DOJ”) Antitrust Division issued a joint statement detailing an expedited antitrust review procedure for collaborations between businesses working on health and safety matters relating to the COVID-19 pandemic.
• According to the statement, the expedited procedures are designed to assist health care facilities that may need to cooperate in providing resources and services to communities affected by COVID-19 or to businesses that may need to temporarily combine production, distribution, or service networks to supply COVID-19-related materials.
• Under the expedited procedure, the FTC and the DOJ will advise on whether the agencies would challenge the proposed collaborations under the antitrust laws within seven calendar days of receiving all the necessary information.

Consumer Protection

The FTC Reminds Consumers that There Is No Such Thing as a Panacea

• The FTC reached a settlement with marketing company Health Center, Inc. and its owner (collectively “HCI”) to resolve allegations that HCI used deceptive advertising claims about “cure-all” health and wellness products in violation of the FTC Act.
• The FTC’s complaint alleged that HCI used misleading marketing, including fake consumer testimonials, to sell three products online and through telemarketing calls with claims that the products could treat or cure a wide variety of diseases and conditions, including cancer, diabetes, Alzheimer’s disease, and arthritis, without any scientific evidence to back up these claims. The complaint also alleges that one of the products was advertised as containing human growth hormone when in reality it contained pig growth hormone.
• Under the terms of the proposed stipulated order, HCI is enjoined from engaging in deceptive marketing practices and is subject to an $8.62 million judgment, which will be partially suspended upon payment of $5,000. Because the suspension is expressly premised on the accuracy of HCI’s proffered financial statements, if HCI is later found to have misrepresented its financial condition, the full judgment will immediately become due.

For-Profit Colleges

California Sues Department of Education over Gainful Employment Rule Repeal

• California AG Xavier Becerra sued the U.S. Department of Education (“ED”) over its repeal of the Gainful Employment Rule, which requires certain vocational school, community college, and for-profit college programs to meet federal standards that show that their graduates can earn enough to pay back the debt incurred from attending the program in order to be able to offer federal student aid, alleging that the rollback violates the Administrative Procedure Act (“APA”).
• According to the complaint, ED statistics show that more than 98% of schools not meeting Gainful Employment Standards are for-profit colleges that use predatory marketing to target students. The complaint argues that granting these for-profit schools access to federal student aid would result in many more students choosing these programs, leading to higher student loan defaults, leaving California to expend millions of dollars to support defaulting students. The complaint also alleges that rolling back the Rule violates the APA because it is arbitrary, capricious, or otherwise not in accordance with the law.
• The complaint seeks declaratory and injunctive relief.