2017 PACE Washington Summit Director, Office of Consumer Protection September 18, 2017 Philip D. Ziperman Director, Office of Consumer Protection  

Introduction OAG Office of Consumer Protection: Mediates Consumer Complaints Brings Enforcement Actions: -In the District of Columbia -Multi-state Drafts/Supports Consumer-Facing Legislation Public Outreach and Education

Enforcement Remedies Injunctions: -Mandatory (actions a defendant must take) -Prohibitory (actions a defendant must not take) Restitution Penalties - $1,000 per violation Costs and Attorneys’ Fees

Sources of Cases – The Process Cases Investigated and/or Prosecuted by OAG OAG Consumer Protection Program District Agency Referrals AAG-Initiated Investigations Cooperation with other AG Offices (NAAG) Multi-State Actions Federal Trade Commission Consumer Financial Protection Bureau Nonprofit Organizations

Areas of Consumer Concern/Trends Examples of particular areas of concern: Debt collection: Fair Debt Collection Practices laws (federal and state; District currently looking at establishing a state law); Payday/online lenders violating usury laws; Fair Collections & Outsourcing (FCO) lawsuit/settlement: FCO is required to pay full restitution to consumers from whom it unlawfully collected court costs and attorney’s fees and is prohibited from further violations of the District’s laws on debt collection and consumer protection;

Unfair or Deceptive Trade Practices A statement is deceptive if it either contains a misrepresentation or omits material information and is capable or has a tendency of deceiving a reasonable consumer. Most State UDAP statutes do not require a showing of intent. A practice is unfair if it: (i) causes substantial harm; (ii) the harm cannot be reasonably avoided; and (iii) it does not benefit the marketplace. We do not need to pierce the corporate veil to establish liability of officers or managers. We use a tort standard – if the individual participated in the deceptive conduct.

Individual Liability Individuals are liable for unfair or deceptive trade practices if they: possess and exercise authority to control the practices; are responsible for creating and implementing practices; commit the practices; or have authority they fail to use to stop the practices. We do not need to pierce the corporate veil to establish liability of officers or managers. We use a tort standard – if the individual participated in the deceptive conduct.

Cooperation between States and Federal Agencies Skechers Shoes Telemarketing Auto Advertising Debt Collection FTC Mobile Cramming Data Breaches CFPB/FCC/FTC

Multi-State Work Group Organization Lead States Executive Committees Participating States

National Association of Attorneys General NAAG Consumer Protection Work Groups: Autos Debt Collection/Debt Relief Health Fraud Privacy Telecommunications

Deceptive Marketing – Pharmaceuticals / Dietary Supplements Off-Label Promotion Marketing for unapproved purpose. Disclosing Side-Effects and Risks Opioid Cases Dietary Supplements Unsubstantiated safety, efficacy claims or ingredient claims It is deceptive to promote a pharmaceutical for a purpose for which it was not approved. Marketers of dietary supplements must have adequate and well controlled research to prove their products do what they say they can do.

Deceptive Marketing – Automobiles Adequately Disclosing Recalls Fuel Economy Estimates -- Hyundai Volkswagen Advertising “clean diesel” vehicles Failing to timely disclose a recall is a deceptive trade practice. So is overstating a fuel economy estimate – Hyundai Kia.

Deceptive Marketing – Privacy Privacy Policies Are they being adhered to? Are they providing sufficient information about data collection? Data Breaches Wyndham case State Notification Laws Delays in notification State Personal Information Protection Acts When business collects consumers’ personal information make express representation (privacy policies) or implied representation will take reasonable steps to protect it. When fail to take reasonable steps to protect personal information it is deceptive. State data protection laws also require reasonable care to protect consumer data.

Deceptive Marketing - Telecommunications Mobile Cramming Unauthorized third-party charges Settlements with Sprint and Verizon Unlimited Data Claims FCC cases against Tracfone and AT&T regarding data throttling Cramming involves adding charges to mobile telephone bills for services consumers did not authorize or use. Unlimited data claims where telecoms promise unlimited data, but throttle the service speeds when many users on network.

Deceptive Marketing – For-Profit Schools Deceptive/Abusive Recruitment Practices Misleading claims regarding median incomes of graduates, job placement rates and cost of education Student Debt Relief Agencies Overstated graduation rates. Made deceptive claims of possibility of employment.

Basic Principles of Fair Advertising Must be truthful. Must substantiate claims (safety and efficacy highest levels). Must not be deceptive. Must disclose all material facts.

OAG Advertising Cases: Handy.Com Above is a page from Handy.com website – emphasizes Trusted Case filed in September 2016 in DC Superior Court Sharing economy company. Cleaners used website to offer services. Consumers made reservations on website. Claimed cleaners were “Trusted” (see above). Also claimed fully vetted and background checked. In fact, limited background checks, numerous felons sent to consumers homes, over 100 reports of theft. This advertising claim violated CPPA. Settled last week Restitution to harmed consumers $150,000 penalty Injunction limiting representations

DC OAG Cases – Volkswagen Above is advertisement for Volkswagen Clean Diesel. VW advertised various 2009-2016 model year vehicles as clean diesel. In fact, cars were equipped with software to cheat on emissions testing. Actually were emitting illegal nitrogen oxides. Companies primary defense was that it did not advertise that its vehicles were clean diesel. Play video Case settled - $570 million to States Buying consumers cars back. $2.7 billion environmental trust.

DC OAG Cases – Volkswagen

DC OAG Cases – Volkswagen