1. 2017 PACE Washington Summit Director, Office of Consumer Protection
September 18, 2017
Philip D. Ziperman
Director, Office of Consumer Protection

2. 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

3. 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

4. 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

5. 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;

6. 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.

7. 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.

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

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

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

11. 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.

12. 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.

13. 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.

14. 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.

15. 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.

16. 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.

17. 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

18. DC OAG Cases – Volkswagen
Above is advertisement for Volkswagen Clean Diesel.
VW advertised various 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.

19. DC OAG Cases – Volkswagen

20. DC OAG Cases – Volkswagen