Government Enforcement Actions

January 9, 2015

New York Attorney General Eric T. Schneiderman announced a settlement with Encore Capital Group, Inc., a major debt buyer, for bringing improper debt collection actions against thousands of New York consumers. According the state, Encore sued New York consumers and obtained uncontested default judgments against consumers who failed to respond to the lawsuits, even though the underlying claims were untimely under New York law. Under the settlement, Encore will seek to vacate more than 4,500 improperly obtained judgments totaling nearly $18 million. Encore will also reform its debt collection practices and pay civil penalties and costs in the amount of $675,000. NY

January 7, 2015

Florida Attorney General Pam Bondi announced that Florida, along with California, Colorado, Kentucky, and Ohio and the federal government, entered a $22 million national settlement with DaVita Healthcare Partners, Inc., one of the leading providers of dialysis services in the US. The settlement resolves allegations originating in a whistleblower lawsuit that DaVita paid illegal kickbacks to induce the referral of patients to its dialysis clinics, causing false claims to be submitted to the Medicaid program. DaVita will pay Florida $5.6 million in restitution and other recoveries. FL

January 7, 2015

Florida Attorney General Pam Bondi, along with eight other attorneys general, announced a settlement with Nevada-based online retailer Zappos.com, Inc. to resolve allegations that Zappos placed consumers’ personal data at risk by allegedly failing to protect financial information during a data breach that occurred in 2012. Zappos has agreed to pay $106,000 to the states and must take certain actions intended to better protect consumers’ information. FL

January 6, 2015

The FTC has approved a final amendment to its Cooling-Off Rule that increases the exclusionary limit for certain “door-to-door” sales. The Cooling-Off Rule previously provided that it is unfair and deceptive for sellers engaged in “door-to-door” sales valued at more than $25 to fail to provide consumers with disclosures regarding their right to cancel the sales contract within three business days of the transaction. Under the final rule, the revised definition of “door-to-door sales” distinguishes between sales at a buyer’s residence and those at other locations. The revised definition retains coverage for sales made at a buyer’s residence that have a purchase price of $25 or more, and it increases the purchase price to $130 or more for all other covered sales at temporary locations. FTC

January 6, 2015

Massachusetts Attorney General Martha Coakley announced Massachusetts retail electricity supplier Just Energy Group Inc. agreed to pay $4 million to settle allegations of deceptive marketing and sales that promised savings but charged significantly higher rates, entered consumers into agreements without their consent, and charged costly termination fees. MA

December 31, 2014

The FTC has approved a final order settling charges that Snapchat deceived consumers with promises about the disappearing nature of messages sent through the service. According to the FTC’s complaint, Snapchat also deceived consumers over the amount of personal data it collected and the security measures taken to protect that data from misuse and unauthorized disclosure. The settlement prohibits Snapchat from misrepresenting the extent to which it maintains the privacy, security, or confidentiality of users’ information. In addition, the company will be required to implement a comprehensive privacy program that will be monitored by an independent privacy professional for the next 20 years. FTC

December 30, 2014

Judge Martin Reidinger of the U.S. District Court for the Western District of North Carolina entered an Order of Default Judgment against Edwin A. Vasquez of Arden, North Carolina, and his company Vasquez Global Investments, LLCfor defrauding participants in a commodity pool commonly known as the Vasquez pool. CFTC

December 30, 2014

Massachusetts Attorney General Martha Coakley announced Verizon New England Inc. paid more than $1.3 million to resolve allegations it overcharged the Commonwealth for telecommunications services under a statewide procurement contract. The settlement also requires Verizon to make additional payment offers to Commonwealth towns and cities and other related entities impacted by the alleged overbilling. The settlement resulted from a whistleblower lawsuit filed under the state’s False Claims Act. MA

December 24, 2014

MF Global Holdings Ltd. must pay $1.212 billion in restitution (or such amount as necessary to ensure that claims of customers of its subsidiary, MF Global Inc. are paid in full). The CFTC previously filed and settled charges against MFGI for misuse of customer funds and related supervisory failures in violation of the Commodity Exchange Act and CFTC Regulations. CFTC

December 23, 2014

The FTC charges data broker LeapLab with selling the sensitive personal information of hundreds of thousands of consumers – including Social Security and bank account numbers – to scammers who allegedly debited millions from their accounts. According to the FTC’s complaint, the company bought payday loan applications of financially strapped consumers, and then sold that information to marketers whom it knew had no legitimate need for it. At least one of those marketers, Ideal Financial Solutions – a defendant in another FTC case – allegedly used the information to withdraw millions of dollars from consumers’ accounts without their authorization. FTC