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State authorities increasingly embrace role as consumer watchdogs

A version of this post was published in Corporate Compliance Insights on April 5, 2023. © Copyright 2023, Corporate Compliance Insights. Reprinted here with permission.

State attorneys general are increasingly taking offensive positions, bringing lawsuits against companies and executives they accuse of bad conduct. A team of attorneys from Troutman Pepper, led by Clayton Friedman and Trey Smith, explore recent cases and how executives can strengthen the corporate veil.

New York Attorney General Letitia James recently reached a $400,000 settlement with Affordable Senior Care of New York LLC (Affordable) for engaging in anticompetitive conduct in the homecare industry. New York-based Affordable acts as a “fiscal intermediary” registered with New York’s Medicaid program’s Consumer Directed Personal Assistance Program. Fiscal intermediaries like Affordable handle “timesheet processing, payments to a patient’s caregivers, and other administrative jobs on behalf of patients.” Patients can choose the caregiver of their choice, including a family member or a friend, and naturally, tend to pick the fiscal intermediary that pays a higher hourly wage.

Colorado Attorney General Phil Weiser recently released a press release, supporting new Senate Bill 23-093 called “Increase Consumer Protections Medical Transactions.” Specifically, the bill would reduce medical debt for Colorado residents and make health care more affordable and accessible, protecting Coloradans from “high interest rates for medical debt and confusing debt collection practices that lead to long-lasting debt and financial instability.”

New York Attorney General Letitia James recently proposed the first-ever rules to strengthen enforcement of the state’s price gouging law, which prohibits companies from exploiting market disruptions to increase their profits on essential goods and services. In response to the influx of pandemic-related price gouging complaints, the 2020-amended law gives the AG rulemaking authority, among other changes.

Indiana Attorney General Todd Rokita and the Indiana Department of Financial Institutions announced a settlement in excess of $250,000 with Integrity Acceptance Corp., affiliated companies, and their owners to resolve allegations that they originated personal loans without the required license, contracted for charges in excess of the maximum allowable rate, misrepresented finance charges, and failed to disclose prepaid finance charges in violation of the Indiana Uniform Consumer Credit Code and Indiana Deceptive Consumer Sales Act. As part of the settlement, the entities will forgive $223,685 in loans, pay $33,991 in restitution, and pay $33,000 in civil penalties and costs to the state. The entities and their owners are also enjoined from engaging in similar conduct in the future.

On March 9, New York Attorney General Letisha James filed a complaint against leading cryptocurrency exchange KuCoin, alleging violations of the Martin Act, which prevents security sales fraud. AG James claimed that Ethereum — the second-largest cryptocurrency by market capitalization — is a security in the first regulator-initiated court claim.

On March 18, New Mexico Attorney General Raúl Torrez announced the state’s first-ever Civil Rights Division inside the AG’s office, broadly giving the AG investigative authority over state and local agencies to protect New Mexicans from civil rights inequities and injustices. With the passage of Senate Bill 426, New Mexico now joins other states nationwide already leveraging an active civil rights unit to safeguard their citizens’ rights.

On March 15, New York Attorney General Letitia James announced a settlement with Coldwell Banker for allegedly violating fair housing laws and discriminating against homebuyers of color. According to the settlement, Coldwell must pay $20,000 in penalties and $10,000 to Suffolk County to promote fair house enforcement and compliance. Coldwell also must provide fair housing training to its agents and install a form for discrimination complaints on its website.