New York Attorney General Letitia James announced a $615,000 settlement with LCX, Lead ID, and Ifficient, lead generator companies that submitted millions of comments to the Federal Communications Commission (FCC) in connection with a 2017 proceeding to repeal net neutrality rules. The Attorney General alleged that the companies were retained to generate public support for the campaign, but instead fraudulently utilized the identities of millions of consumers to submit fake comments without their knowledge or consent. The Attorney General’s investigation also found that the companies generated more than 1 million fake comments for other rulemaking proceedings and more than 3.5 million fake digital signatures for letters and petitions to legislators and government officials nationwide.
Pennsylvania Attorney General Michelle Henry, in a joint action with the FTC, announced a settlement with debt collection company International Credit Recovery, Inc., its officer Richard Diorio, Jr., and manager Cynthia Power. The Attorney General and FTC alleged that the defendants specifically targeted small businesses, non-profits, and first responders in a scheme involving (i) the use of false bills for subscription products to collect debts that were not owed and (ii) making unlawful threats to intimidate consumers into payment. Under the settlement agreement, the defendants agreed to the entry of an order permanently banning them from the debt collection industry.
A multistate coalition submitted comments supporting the Federal Trade Commission’s (“FTC”) proposed rule to eliminate non-compete clauses in employment contracts in most circumstances.
In January 2023, the FTC proposed a Non-Compete Clause Rule, which would bar employers from preventing workers from working for or starting a competing business after leaving a job. The proposed rule concludes that non-competes are an unfair method of competition that can depress worker wages, reduce racial and gender equality in workplaces, create legal hurdles for employees looking to grow their careers, and deter workers from challenging harmful business practices. The proposed rule would also promote gender and racial equity.
In a letter sent to the FTC Chair, 18 attorneys general expressed support for a federal rule limiting non-competes. The attorneys general represented in the letter are California, Colorado, the District of Columbia, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, and Washington.
Learn more here: 2023.04.19 FTC Comment FINAL
Florida Attorney General Ashley Moody announced the arrest of the owner of Divinely Chosen Services, a company that provides home health care and nursing services. The Attorney General alleged that the owner forged referrals to bill for nearly $400,000 in unnecessary services over a three-year period. The Attorney General has charged the owner with Medicaid provider fraud, a first-degree felony, but did not announce any charges against the corporation.
Ohio Attorney General Dave Yost filed a lawsuit in federal court seeking to hold Norfolk Southern financially responsible for a train derailment in East Palestine that allegedly caused the release of over one million gallons of hazardous chemicals. The Complaint alleges numerous violations of the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Ohio’s environmental protection laws, as well as common law causes of action for negligence, public nuisance and trespass. According to the Complaint, the alleged violations resulted in a volume of hazardous pollutants being released into the air, water and ground, posing substantial, long-term threats to human health and the environment.
The suit cites the company’s accident rate, which allegedly has risen 80% in the past 10 years. AG Yost asks the court to require Norfolk Southern to conduct future monitoring of soil and groundwater at the derailment location, the surrounding areas and beyond and to submit a closure plan to the Ohio EPA.
Connecticut Attorney General William Tong filed a lawsuit against solar company Vision Solar for unfair and abusive conduct under Connecticut’s Unfair Trade Practices Act. The Attorney General alleges that Vision Solar engaged in unlawful conduct including (i) pressuring elderly and disabled consumers into signing contracts they were not able to read or understand, (ii) altering the scope of work without consent from the consumer, (iii) placing solar panels in unauthorized places, (iv) misrepresenting the efficiency of energy generation and tax benefits that owners would receive, and (v) falsifying credentials when applying for construction permits or conducting work without first obtaining necessary permits. Through the lawsuit, the Attorney General seeks restitution for consumers, civil penalties, and injunctive relief blocking Vision Solar from engaging in further unlawful conduct.
Missouri Attorney General Shuts Down Robocallers
Missouri Attorney General Bailey joined a coalition of seven states in shutting down a massive robocaller operation, involving John Caldwell Spiller II and his business partner Jakob Mears, the owners of Texas-based Rising Eagle Capital Group LLC and JSquared Telecom LLC, as well as Rising Eagle Capital Group-Cayman. The Attorneys General sued the defendants in June 2020 alleging violations of the federal Telephone Consumer Protection Act and the federal Telemarketing Sales Rule, as well as various state consumer protection laws. Mears and Spiller are now permanently banned from initiating or facilitating any robocalls, working in or with companies that make robocalls, and engaging in any telemarketing.
Learn more here: Attorney General Bailey Shuts Down Texas Robocallers (mo.gov)
New York Attorney General Letitia James filed a lawsuit against cryptocurrency platform KuCoin for offering exchange services in New York without registering under New York or federal law. The Attorney General alleges that many popular cryptocurrencies, including ETH, LUNA, and TerraUSD (UST) are both securities and commodities, and these cryptocurrencies are speculative assets because they rely on the efforts of third-party developers to provide profit to the holders. Through the lawsuit, the Attorney General is seeking a court order to stop KuCoin from operating in New York, to require the implementation of geo-fencing technology to prevent access to KuCoin services from within New York, and to bar KuCoin from representing that it is an exchange.
The New York Attorney General (NYAG) has brought a lawsuit against cryptocurrency platform CoinEx for allegedly failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. CoinEx is a Hong Kong-based virtual currency exchange platform that allows users to buy and sell virtual currencies, crypto options, and other crypto services and products, including staking services.
The NYAG’s lawsuit includes claims under the Martin Act, New York’s so-called blue sky anti-fraud law, Article 23-A of the General Business Law, as well as Section 63(12) of the Executive Law, which prohibits repeated and persistent fraud or illegality in the conduct of a business. As we have previously noted, New York courts have held that virtual currencies fall within the scope of the Martin Act’s definition of a “commodity.”
The NYAG alleged that CoinEx violated these laws by acting as an unregistered securities and/or commodities broker-dealer, and also unlawfully misrepresented itself as a cryptocurrency exchange, despite not being registered as an exchange with the SEC, CFTC, or otherwise authorized to operate an exchange under New York law. The NYAG stated that its investigation included (i) the creation of a CoinEx account and buying and selling cryptocurrencies with a New York based IP address, for which CoinEx charged fees, and (ii) ongoing tracking of whether CoinEx continued to offer services to New York based IP addresses.
The NYAG further noted that CoinEx failed to respond to a subpoena seeking testimony about its digital asset trading activities. Under Section 353 of the General Business Law, the failure to respond to a Martin Act subpoena is “prima facie proof” that the respondent is engaged in fraudulent practices and may serve as the basis for the entry of a permanent injunction. Accordingly, the NYAG is seeking permanent injunctive relief to prohibit CoinEx from offering its services to New Yorkers, as well as an accounting, disgorgement, and restitution with respect to all of the revenues obtained from allegedly illegal conduct in New York.
This action serves as a reminder that cryptocurrency remains an enforcement priority for the NYAG. Persons operating in this sector should carefully consider federal securities and commodities registration laws, as well.
On December 29, 2022, Indiana Attorney General Todd Rokita announced a settlement agreement with Google to resolve allegations that Google misrepresented how it collected and processed user location information. The settlement requires Google to update its location information practices to provide users more information and better allow users to make informed decisions about how they interact with Google’s location technologies, including by limiting or ending collection and retention.
The following day, then-DC Attorney General Karl Racine announced a similar settl ement agreement. In the two settlements, Google agreed to pay Indiana and the District of Columbia $29.5 million, collectively ($20 million and $9.5 million, respectively). These settlements follow similar settlements last year with 40 US state attorneys general and with Australian regulators.
The settlements highlight government expectations that companies obtain proper consents, including robust disclosures of data practices, for sensitive personal information such as location information.
Regulatory and litigation history
Google provides several apps and platforms that collect user location information, particularly from mobile devices, such as through Google Search and Google Maps. Google has used this information to support its business operations in several ways, including by disclosing user location information to other businesses, e.g., to learn how digital advertising can encourage people to visit brick-and-mortar stores. Following news reports in 2018, state attorneys general, including Attorneys General Rokita and Racine, alleged that Google collected location information from users without their consent, including by misleading users to falsely believe that certain settings limited location data collection.
These allegations included:
- Deceiving consumers regarding their ability to protect their privacy through Google Account Settings
- Misrepresenting and omitting material facts regarding the Location History and Web & App Activity Settings
- Misrepresenting and/or omitting material facts regarding consumers’ ability to control their privacy through Google Account Settings
- Misrepresenting and omitting material facts regarding the Google Ad Personalization Setting
- Deceiving consumers regarding their ability to protect their privacy through device settings and
- Deploying deceptive practices that undermine consumers’ ability to make informed choices about their data, including dark patterns.
Pursuant to the settlements, in addition to the payments, the company must make prominent disclosures about its data practices prior to obtaining consent to collect location information, provide users with additional account controls, and introduce limits to its data use and retention practices. Certain aspects of the settlements deserve particular attention:
- The settlement requires Google to implement more specific language in a few places:
- Settings webpage, about location information: “Location info is saved and used based on your settings. Learn more.”
- Location technologies webpage, about ads: That users cannot prevent the use of location information in personalized ads across services and devices, based on user activity on Google services, including Google Search, YouTube, and websites and apps that partner with Google to show ads.
- Google may only share a user’s precise location information with a third-party advertiser with that user’s express affirmative consent for use and sharing by that third party.
- Google must conduct internal privacy impact assessments before implementing any material changes of how certain settings pages impact precise location information or how Google shares users’ precise location information related to such settings.
While there are many notable aspects to these settlements, it is also notable that this occurred as many states are beginning to implement new privacy laws and regulations, which include increased business obligations for the collection, use, and disclosure of sensitive personal information, such as location information.