OHIO (June 16,, 2021)—Ohio Attorney General Dave Yost filed a lawsuit against Google LLC (“Google”), seeking a legal declaration that the tech giant’s search engine qualifies as a common carrier and/or public utility under Ohio common law, which would subject the company to a heightened duty to provide its competitors equal access to its search engine infrastructure and enhanced search features.
“Google kind of has their thumb on the scale in their search results,” he said. “[We’re] not going to ask them to break them up. We’re not asking for money damages.”
“Say I want to fly from Cleveland to Dallas and I Google it, the first thing that comes up is Google Flights,” Yost said. “Travelocity or Orbitz can’t get that top spot for any amount of money.”
“Google search is designed to provide people with the most relevant and helpful results. AG Yost’s lawsuit would make Google search results worse and make it harder for small businesses to connect directly with customers. Ohioans simply don’t want the government to run google like a gas or electric company. This lawsuit has no basis in fact or law and we’ll defend ourselves against it in court.”
- The complaint alleges that Google engaged in discriminatory and anti-competitive conduct relating to common carriers and public utilities when it prioritized and accentuated Google products or services on its search results page with enhanced features unavailable to competitors. The complaint further argues that Google should be characterized as a common carrier and/or public utility under common law because its search services are indiscriminately made available to the public and its allegedly dominant position in online search makes its methods of operation a matter of public concern.
- In addition to a legal declaration, the complaint also seeks injunctive relief prohibiting Google from self-preferencing in Ohio and requiring the company to offer competitors access to the enhanced search features it uses for Google-owned businesses.
- Ohio’s lawsuit is the latest in a wave of state antitrust actions filed against Google. As previously reported, two multistate AG coalitions filed antitrust lawsuits against the company in December 2020.
Google Is in the Crosshairs of Two Multistate Antitrust Suits
- Two groups of AGs filed antitrust lawsuits against Google LLC (“Google”).
- A group of seven Republican AGs, led by Texas AG Ken Paxton, sued Google over allegations that it violated the Sherman Act and state antitrust and consumer protection laws by using exclusionary tactics and agreements to monopolize the market in display advertisements to manipulate advertising auctions. The complaint seeks declaratory and injunctive relief, including structural relief to restore competitive conditions to the market, disgorgement, restitution, civil penalties and fines, and attorneys’ fees and costs.
- Separately, a bipartisan group of 38 AGs, led by Colorado AG Phil Weiser sued Google over allegations that it violated the Sherman Act by engaging in anticompetitive conduct and entering into agreements that harmed competition in general search services, general search text advertising, and general search advertising in the United States. The complaint alleges that Google entered into a number of exclusionary agreements to make its search engine the default search engine on browsers shipped to consumers in exchange for revenue sharing. The complaint seeks declaratory and injunctive relief, relief to cure and prevent future harms from Google’s alleged anticompetitive conduct, including but not limited to structural divestitures as well as monitorable and measurable conduct remedies, and attorneys’ fees and costs.
Consumer Financial Protection Bureau
Lender Runs Afoul of Military Lending Act; Agrees to Pay $2 Million Fine to CFPB
- The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with consumer lender Omni Financial of Nevada, Inc. (“Omni”) to resolve allegations that it used prohibited collection practices in its dealings with consumers affiliated with the military as well as civilians in violation of the Military Lending Act (“MLA”), the Electronic Fund Transfer Act (“EFTA”), and the Dodd–Frank Wall Street Reform and Consumer Protection Act (“CFPA”).
- According to the consent order, the CFPB found that Omni violated the MLA by offering loans to active-duty servicemembers and their dependents that required repayment by allotment, a system that allows servicemembers to designate the payment of a portion of their paychecks to specific recipients. The MLA prohibits lenders from extending credit to servicemembers if the lender requires repayment by allotment. In addition, the CFPB found that Omni violated the EFTA and the CFPA with its consumer loans to civilians by requiring prohibited preauthorized electronic fund transfers as a condition of extending credit to the borrower.
- Under the terms of the consent order, Omni will pay a civil money penalty of $2.175 million and will be enjoined from continuing its illegal practices. In addition, Omni is required to provide notice to its military customers that they may change their repayment method from payment by allotment. It is also required to stop incentivizing its employees on the basis of signing up consumers who pay by allotment, among other things.
Santander Settles Allegations of Supplying Inaccurate Information to Consumer Reporting Agencies
- The CFPB reached a settlement with subprime auto loan company Santander Consumer USA Inc. (“Santander”) to resolve allegations that it provided erroneous consumer loan information to consumer reporting agencies (“CRAs”) in violation of the Fair Credit Reporting Act, and its implementing regulation, Regulation V.
- According to the consent order, the CFPB found that Santander sent information it knew or reasonably should have known to be inaccurate to CRAs, including providing inaccurate information about whether accounts were open or closed, and whether accounts were delinquent. The CFPB also found that Santander failed to promptly correct inaccurate consumer credit information and that it did not have proper policies and procedures in place to prevent inaccurate information being sent to CRAs.
- Under the terms of the consent order, Santander will pay a $4.75 million civil money penalty, as well as correct all errors that the CFPB identified in its investigation. In addition, Santander must implement policies and procedures to ensure the accuracy of the consumer information sent to CRAs, including conducting monthly reviews of account information, among other things.
- As previously reported, Santander entered into a $550 million settlement with a bipartisan group of 38 AGs to resolve allegations that it knowingly exposed subprime borrowers to unnecessary risk by offering them loans with a high probability of default in violation of state consumer protection laws.
Glue Manufacturer in Sticky Situation Over Unqualified “Made in USA” Claims
- The Federal Trade Commission (“FTC”) reached a settlement with glue manufacturer Chemence, Inc. and its president (collectively “Chemence”) to resolve allegations that Chemence deceptively labeled its fast-acting glues as “Made in USA” in violation of the FTC Act.
- The complaint alleged that Chemence’s glues were sold to trade customers and third-party retailers in packages with the deceptive and unqualified “Made in USA” label, with some including a picture of the U.S. flag, and that it misleadingly represented that its glues were made in the U.S. in its marketing materials. In reality, however, foreign materials accounted for more than 50% of the overall cost of manufacturing for its glues. The complaint further alleges that Chemence’s actions violated a 2016 consent order it entered with the FTC to resolve similar allegations.
- Under the terms of the proposed consent order, among other things, Chemence is required to pay $1.2 million to the FTC, and it is prohibited from making claims about the U.S. origins of its products unless it can show that a product is assembled in the United States, or show that the product is last substantially transformed and assembled in the United States. In addition, for every qualified Made in USA claim, Chemence must clearly and conspicuously disclose the extent to which the product contains foreign parts, ingredients, components, or processing. The order further requires Chemence to notify certain customers of the order and to provide compliance reports to the FTC.
Data Privacy & Security
CafePress Settles Multistate Probe over 2019 Data Breach
- A bipartisan group of seven AGs, including Connecticut AG William Tong and New York AG Letitia James, reached a settlement with online retailer of personalized apparel and other items CafePress, Inc. (“CafePress”) to resolve allegations that it failed to protect the personal information of 22 million consumers in a 2019 data breach in violation of the states’ respective consumer protection laws.
- According to the New York AG’s office, in February 2019, a hacker accessed CafePress’s network and obtained customer and seller information, including names, email addresses, passwords, physical addresses, and phone numbers, and in some instances, Social Security or tax identification numbers. CafePress became aware of a security flaw in its network after the hack and applied a patch to fix it, but it did not investigate the possibility of an intrusion and did not notify customers of the breach until six months after the hack took place.
- Under the terms of the assurance of voluntary compliance, CafePress agreed to pay a total of $2 million to the states, of which $750,000 will be paid immediately and the remainder will be suspended pending CafePress’s compliance with the other provisions of the agreement, which include taking steps to better protect consumer information including creating a comprehensive security program and an incident response and data breach notification plan, adding safeguards and controls including encryption, segmentation, logging and monitoring, and data minimization, and third-party security assessments. Since the agreement was reached, substantially all of CafePress’s assets were bought by PlanetArt, LLC, which agreed to abide by the provisions of the agreement.
Maryland Attorney General Secures $18 Million Settlement from RMBS Underwriter
- Maryland AG Brian Frosh reached a settlement with a subsidiary of the Royal Bank of Scotland, RBS Financial Products, Inc. (“RBSFP”), to resolve allegations that it misled investors in its packaging and underwriting of residential mortgage-backed securities (“RMBS”) in violation of the Maryland Securities Act.
- According to the consent order, RBSFP made misrepresentations about its RMBS, including making misleading or untrue statements about the quality of the loans backing its RMBS and its offering documents also failed to disclose agreements with mortgage originators limiting its due diligence of the loans and failed to disclose the findings of the due diligence reports.
- Under the terms of the consent order, RBSFP will pay approximately $18 million to the state and the funds will be used for restitution to certain investors and for enforcement costs, with any remaining funds credited to the Mortgage Loan Servicing Practices Settlement Fund.
Source: JD Supra contributed to the article.