COVID-19

Attorney General to Congress: Let States Help Battle COVID-19-Related Medicaid Scams

• Citing the growing number of COVID-19-related scams, Kansas AG Derek Schmidt urged Congress to expand the authority of states to investigate and prosecute fraud and abuse perpetrated against Medicaid beneficiaries.
• In his testimony before the Senate Committee on Commerce, Science and Transportation Subcommittee on Manufacturing, Trade and Consumer Protection, AG Schmidt argued for the passage of the Medicaid Patient Abuse Prevention Act (S. 2379) which would repeal a statute restricting state Medicaid Fraud Control Units (“MFCUs”) from handling cases involving Medicaid beneficiaries not residing in institutions, and thereby would allow MFCUs to share the burden of the high volume of COVID-19-related scams and abuse cases with federal law enforcement.
• The House of Representatives passed its version of the bill, H.R.233, in 2019.

Consumer Protection

Empty Promises: Group Allegedly Conned Customers Out of Thousands in Fees by Promising Help with High Credit Card Interest Rates

• Florida AG Ashley Moody and the Federal Trade Commission (“FTC”) sued credit card “advisor” companies GDP Network LLC, G & G Success LLC, and G & N Squared LLC, and related individuals (collectively “GDP Network”) for allegedly offering consumers a sham credit card interest rate reduction program in violation of the FTC Act, the Telemarketing Sales Rule, and the Florida Deceptive and Unfair Trade Practices Act.
• According to the complaint, among other things, GDP Network targeted consumers with telemarketing cold calls that made it seem like it was affiliated with the consumer’s credit card company and falsely promised to permanently and substantially reduce the consumer’s credit card interest rates in exchange for thousands of dollars in upfront fees.
• The complaint seeks permanent injunctive relief, reformation of contracts, rescission, restitution, refunds, disgorgement, civil penalties and costs. The U.S. District Court for the District of Middle District of Florida issued a temporary restraining order halting GDP Network’s operations, freezing its accounts, and appointing a temporary receiver.

A Miracle Cure? Not This Stem Cell Therapy

• Iowa AG Tom Miller and Nebraska AG Doug Peterson sued stem cell therapy providers Stem Cell Centers, LLC, Regenerative Medicine and Anti-Aging Institutes of Omaha, LLC, and Stem Cells, LLC, and related individuals (collectively “Stem Cells Centers”) for allegedly using false and misleading statements to market stem cell therapy in violation of Iowa’s Consumer Fraud Act and Older Iowans Law and Nebraska’s Consumer Protection Act and Uniform Deceptive Trade Practices Act.
• According to the Iowa and Nebraska complaints, among other things, Stem Cell Centers falsely claimed that its stem cell therapy can treat a variety of diseases and health conditions, including joint pain, osteoarthritis, and neuropathy; claimed without scientific evidence that the therapy is safe and that larger doses of stem cells are more effective; and endangered the safety of consumers because its staff did not have proper training..
• The Iowa complaint seeks preliminary and permanent injunctive relief, restitution, disgorgement, civil penalties, and attorneys’ fees and costs. The Nebraska complaint seeks permanent injunctive relief, civil penalties, restitution, and attorneys’ fees and costs.

Williams-Sonoma Agrees to Pay $1 Million to Settle Allegations that Its “Made in the USA” Products…Weren’t

• The FTC finalized a settlement with home products and kitchenware company Williams-Sonoma, Inc. to resolve allegations that it made false and misleading marketing claims about its products’ U.S.-origin in violation of the FTC Act.
• The complaint alleged that Williams-Sonoma deceived consumers by falsely claiming that certain categories of its products were all or virtually all made in the United States while, in fact, these products were either wholly imported or contained significant imported components and materials.
• Under the terms of the final order, Williams-Sonoma will pay $1 million to the FTC, will be barred from making U.S.-origin claims for any product unless it can substantiate such claims, and will be required to include clear and conspicuous disclosures about the foreign parts, components, or processing of any product that qualifies as U.S.-made.

E-Cigarettes

Attorneys General Continue Enforcement Against Vaping Companies

• Massachusetts AG Maura Healey sued disposable e-cigarette manufacturer Puff Bar and its distributor Cool Clouds Distribution, Inc. for allegedly illegally selling flavored tobacco products to Massachusetts consumers and failing to protect against delivery of these products to minors in violation of An Act Modernizing Tobacco Regulations, the Massachusetts Consumer Protection Act, and the AG’s e-cigarette regulations. The complaint seeks injunctive relief, restitution, civil penalties, and attorneys’ fees and costs.
• New York AG Letitia James separately sent letters to online e-cigarette retailers Cloud X Vapes, HQD Tech USA, and PodVapes ordering them to cease and desist illegally selling vaping products to New York consumers, including selling flavored vaping products to minors. Under recently enacted New York laws, it is illegal to sell flavored nicotine products as well as to sell vaping products online and through mail order to New York consumers.

For-Profit Colleges

Democratic Attorneys General Sue to Restore Obama-era Rule Regarding Student Debt Relief

• A group of 23 Democratic AGs, led by California AG Xavier Becerra and Massachusetts AG Maura Healey, sued Secretary of Education Betsy DeVos and the U.S. Department of Education (collectively “ED”) over ED’s repeal and replacement of the Obama-era Borrower Defense Rule.
• The complaint alleges that ED’s new rule is in violation of the Administrative Procedure Act because it is contrary to the mandate of the Higher Education Act, which requires the creation of a process to allow students misled or deceived by predatory for-profit colleges to obtain relief from their federal student loans. According to the complaint, the new regulations make obtaining student debt relief virtually impossible. The complaint also alleges that the new regulations roll back oversight over for-profit colleges, thereby encouraging predatory behavior.
• The complaint seeks declaratory relief and asks the court to vacate the new rule in its entirety.